<PAGE> 1
===============================================================================
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ------------- to --------------------
Commission file number 1-3750
-----------------
BOATMEN'S BANCSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSOURI 43-0672260
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
ONE BOATMEN'S PLAZA, 800 MARKET STREET, ST. LOUIS, MISSOURI 63101
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (314) 466-6000
-----------------
<TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<CAPTION>
NAME OF EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- -------------------
<S> <C>
None None
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $1.00 PAR VALUE
(TITLE OF CLASS)
CONVERTIBLE SUBORDINATED DEBENTURES, 6.25%, DUE 2011
(TITLE OF CLASS)
-----------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes. X No.
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
<TABLE>
Indicate the number of shares outstanding of each of the registrant's
classes of common stock:
<CAPTION>
NUMBER OF SHARES OUTSTANDING
CLASS OF COMMON STOCK AS OF MARCH 10, 1995
--------------------- ----------------------------
<S> <C>
$1 Par Value 127,572,796
</TABLE>
The aggregate market value of registrant's common stock (based upon
the closing trade price on March 10, 1995) held by non-affiliates was
approximately $3,844,600,000.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 1994 (Part I, Part II, and Part IV).
(2) Portions of registrant's Proxy Statement filed for its Annual
Meeting of Shareholders scheduled for April 25, 1995 (Part III).
===============================================================================
<PAGE> 2
PART I
ITEM 1. BUSINESS
BOATMEN'S BANCSHARES, INC. ("CORPORATION")
The Corporation was incorporated under the laws of the State of
Missouri in June, 1946 and was known as General Bancshares Corporation
until the time of its merger with Boatmen's Bancshares, Inc. on March
29, 1986. The Corporation's principal office is located in St. Louis,
Missouri where its largest subsidiary, The Boatmen's National Bank of
St. Louis ("Boatmen's Bank"), is located. The Corporation directly or
indirectly owns substantially all of the capital stock of 45 subsidiary
banks, a trust company and its subsidiaries, a mortgage banking
company, a credit life insurance company, an insurance agency and a
credit card bank. The subsidiary banks operate from approximately 410
banking offices and over 500 off-site automated teller machine
locations in Missouri, New Mexico, Oklahoma, Iowa, Texas, Illinois,
Arkansas, Tennessee and Kansas.
The business of the Corporation consists primarily of the ownership,
supervision and control of its subsidiaries. The Corporation provides
its subsidiaries with advice, counsel and specialized services in
various fields of financial and banking policy and operations. The
Corporation also engages in negotiations designed to lead to the
acquisition of other banks and closely related businesses.
Based on total assets as of December 31, 1994, the Corporation was
the largest bank holding company headquartered in the State of Missouri
and among the 30 largest bank holding companies in the United States.
There are numerous bank holding companies and groupings of banks
located throughout the Corporation's markets which offer substantial
competition in the acquisition and operation of banks and non-bank
financial institutions. The Corporation's subsidiaries encounter
substantial competition in all of their banking and related activities,
and its banking subsidiaries face increasing competition from various
non-banking financial institutions that are not subject to the same
geographic and other regulatory restraints applicable to banks.
The information under the caption Acquisition Overview on pages 18
through 20 and Table 2 on page 18 of the Corporation's Annual Report to
Shareholders for the year ended December 31, 1994, is incorporated
herein by reference.
Banking Operations
<TABLE>
The following table summarizes the banking operations for each state
in which the Corporation has banking locations.
<CAPTION>
12/31/94 12/31/94 12/31/94
ASSETS LOANS DEPOSITS
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Missouri........................................................ $17,025 $9,811 $13,211
New Mexico...................................................... 3,207 1,431 2,643
Oklahoma........................................................ 1,982 1,093 1,573
Texas........................................................... 1,575 805 1,205
Iowa............................................................ 1,249 729 1,038
Illinois........................................................ 1,045 715 918
Arkansas........................................................ 955 499 743
Tennessee....................................................... 833 755 640
Kansas.......................................................... 200 114 150
</TABLE>
On January 31, 1995, the Corporation completed the acquisition of
National Mortgage Company ("National"), headquartered in Memphis,
Tennessee. National had a loan servicing portfolio of $13.8 billion at
December 31, 1994.
On January 31, 1995, the Corporation completed the acquisition of
Dalhart Bancshares, Inc. ("Dalhart") and its banking subsidiary,
Citizens State Bank of Dalhart ("Citizens"), both headquartered
in Dalhart, Texas. Citizens operated from three branches and
had assets of approximately $138 million at December 31, 1994.
<PAGE> 3
Citizens was merged into Boatmen's First National Bank of Amarillo upon
completion of the Dalhart acquisition.
Recent Developments
On February 28, 1995, the Corporation completed the acquisition of
Worthen Banking Corporation ("Worthen"). Worthen, headquartered in
Little Rock, Arkansas, had assets of approximately $3.5 billion at
December 31, 1994, and operates from 112 offices throughout Arkansas
and six offices in the Austin, Texas area.
On February 28, 1995, the Corporation completed the acquisition of
Salem Community Bancorp, Inc. ("Salem"). Salem, and its banking
subsidiary, Community State Bank, Salem, Illinois, has two locations
with approximately $80 million in assets at December 31, 1994.
Trust Operations
The Corporation provides a wide range of trust services to both
individuals and institutions through Boatmen's Trust Company and its
subsidiaries, as well as the trust departments of certain of its
subsidiary banks. The Corporation's trust operations rank among the 15
largest providers of trust services in the United States, with total
trust assets of $69.2 billion at December 31, 1994, including $36.4
billion under management.
Other Non-Bank Subsidiaries
The Corporation's other non-bank subsidiaries include: (1) a mortgage
banking company, whose business is the origination and servicing of
real estate mortgage loans for the account of long-term investors and
the servicing of real estate loans originated by its affiliate banks;
(2) a credit life insurance company which insures or reinsures credit
life and accident and health insurance written by the Corporation's
subsidiary banks; (3) an insurance agency; and (4) a credit card bank.
Regulation and Supervision
As a bank holding company, the Corporation is subject to regulation
pursuant to the Bank Holding Company Act of 1956 (the "Act"), which is
administered by the Board of Governors of the Federal Reserve System
(the "Board").
A bank holding company must obtain Board approval before acquiring,
directly or indirectly, ownership or control of any voting shares of a
bank or bank holding company if, after such acquisition, it would own
or control more than 5% of such shares. Board approval must also be
obtained before any bank holding company acquires all or substantially
all of the assets of another bank or bank holding company or merges or
consolidates with another bank holding company. Furthermore, any
acquisition by a bank holding company of more than 5% of the voting
shares, or of all or substantially all of the assets, of a bank located
in another state may not be approved by the Board unless the laws of
the second state specifically authorize such an acquisition. Missouri
law authorizes bank holding companies domiciled in contiguous states to
acquire Missouri banks and bank holding companies provided their home
states have similar laws. All of the eight contiguous states have
similar laws.
The Act also prohibits a bank holding company, with certain limited
exceptions, from acquiring or retaining direct or indirect ownership or
control of more than 5% of the voting shares of any company which is
not a bank or a bank holding company, or from engaging in any
activities other than those of banking, managing or controlling banks,
or providing services for its subsidiaries. The principal exceptions to
these prohibitions involve certain activities which the Board has
determined to be closely related to the business of banking or managing
or controlling banks.
In September, 1994, the Interstate Banking and Branching Efficiency
Act of 1994 was enacted. One year from date of enactment, bank holding
companies will be permitted to acquire banks in any state subject to
state deposit caps and a 10% nationwide cap. In addition, this law
provides for full interstate branching by bank merger commencing on
June 1, 1997. States may "opt out" of this branching provision prior to
the effective date, and alternatively, states may "opt in" earlier than
June, 1997.
A bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with the
extension of credit, with limited exemptions. Subsidiary banks of a
bank holding
2
<PAGE> 4
company are also subject to certain restrictions imposed by the Federal
Reserve Act on any extensions of credit to the bank holding company or
any of its subsidiaries, or investment in the stock or other securities
thereof, and on the taking of such stocks or securities as collateral
for loans. The Board possesses cease and desist powers over bank
holding companies if their actions represent unsafe or unsound
practices or violations of law.
In August, 1989, the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") was enacted. FIRREA allows bank
holding companies to acquire healthy savings institutions, removing
certain restrictions on operations of such institutions. Acquired
savings institutions may now be operated as separate savings
subsidiaries, converted to bank charters or merged into existing bank
subsidiaries, subject to certain requirements. FIRREA also contains a
"cross-guarantee" provision which could result in depository
institutions being assessed for losses incurred by the FDIC in the
assistance provided to, or the failure of, an affiliated depository
institution.
On December 16, 1988, the Board adopted final risk-based capital
guidelines for use in its examination and supervision of bank holding
companies and banks. The guidelines have three main goals: (1) to make
regulatory capital requirements more sensitive to differences in risk
profiles among banking organizations; (2) to take off-balance sheet
risk exposures into explicit account in assessing capital adequacy; and
(3) to minimize disincentives to holding liquid, low-risk assets. A
bank holding company's ability to pay dividends and expand its business
through the acquisition of new banking or non-banking subsidiaries
could be restricted if its capital falls below levels established by
these guidelines. The risk-based capital ratios were fully implemented
by the end of 1992. In 1991, the Board required bank holding companies
and banks to adhere to another capital guideline referred as the Tier 1
leverage ratio. This guideline places a constraint on the degree to
which a banking institution can leverage its equity capital base. The
Corporation substantially exceeds the requirements of these capital
guidelines.
In December, 1991, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") was enacted. FDICIA, among other
things, identifies the following capital standards for depository
institutions: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. A depository institution is well capitalized if it
significantly exceeds the minimum level required by regulation for each
relevant capital measure, adequately capitalized if it meets each such
measure, undercapitalized if it fails to meet any such measure,
significantly undercapitalized if it is significantly below any such
measure, and critically undercapitalized if it fails to meet any
critical capital level set forth in the regulations. FDICIA requires a
bank that is determined to be undercapitalized to submit a capital
restoration plan, and the bank's holding company must guarantee that
the bank will meet its capital plan, subject to certain limitations.
FDICIA also prohibits banks from making any capital distribution or
paying any management fee if the bank would thereafter be
undercapitalized. The Corporation's bank subsidiaries currently meet
the well capitalized standards.
FDICIA grants the FDIC authority to impose special assessments on
insured depository institutions to repay FDIC borrowings from the
United States Treasury or other sources and to establish semiannual
assessment rates on Bank Insurance Fund ("BIF") member banks so as to
maintain the BIF at the designated reserve ratio defined in FDICIA.
FDICIA also required the FDIC to implement a risk-based insurance
assessment system pursuant to which the premiums paid by a depository
institution will be based on the probability that the BIF will incur a
loss in respect of such institution. The FDIC has adopted a deposit
insurance assessment system that places each insured institution in one
of nine risk categories based on the level of its capital, evaluation
of its risk by its primary state or federal supervisor, statistical
analysis and other information. In 1995, deposit insurance premiums
will range between 23 cents and 31 cents per $100 of domestic deposits.
In January, 1995, the FDIC proposed reduction of such premiums to between
4 cents and 31 cents effective in the second half of 1995.
The Corporation's national bank subsidiaries are subject to
supervision by the Comptroller of the Currency. The Arkansas federal
savings bank is subject to supervision by the Office of Thrift
Supervision. The FDIC has primary federal supervisory responsibility
for the Corporation's state banks, with the exception of three state
banks that are members of the Federal Reserve System. The Corporation's
state banks and trust companies are also subject to supervision by
the bank supervisory authorities in their respective states. Various
federal and state laws and regulations apply to many aspects of
the operations of the Corporation's subsidiary banks, including
interest rates paid on deposits and loans, investments, mergers
and acquisitions and the establishment of branch offices and
facilities. The payment of dividends by the Corporation's
3
<PAGE> 5
subsidiary banks, which is the Corporation's principal source of
income, is also subject to certain statutory restrictions and to
regulation by governmental agencies.
Statistical Disclosure
Pages 17 through 49 and footnote number 11 on page 60 of the
Corporation's Annual Report to Shareholders for the year ended December
31, 1994, are incorporated herein by reference.
ITEM 2. PROPERTIES
The Corporation's headquarters building, Boatmen's Plaza, is located
in downtown St. Louis, Missouri. Through a joint venture, Boatmen's
Bank owns a one-half undivided interest in two-thirds of the building.
On December 31, 1981, Boatmen's Bank entered into a lease agreement for
approximately 60 percent of the building for a term of 30 years. This
long-term lease obligation was capitalized in accordance with Statement
of Financial Accounting Standards No. 13. The principal office of
Boatmen's Trust Company, also located in downtown St. Louis, was
purchased on January 4, 1994.
In January, 1995, the Corporation completed construction of a
technology center in Kansas City, Missouri, and moved existing data
operations into this center. The Corporation's principal banking
offices in Oklahoma, Iowa and Tennessee are leased under long-term
leases. The principal banking offices in New Mexico, Illinois, Arkansas
and Texas are owned. The majority of the other banking offices are
owned by the respective subsidiary banks. In the opinion of management,
the physical properties of the Corporation and its subsidiaries are
suitable and adequate and are being fully utilized.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE CORPORATION
<TABLE>
The following sets forth certain information regarding the executive
officers of the Corporation:
<CAPTION>
POSITIONS WITH OFFICER
NAME AGE CORPORATION SINCE
---- --- -------------- -------
<S> <C> <C> <C>
Andrew B. Craig, III............................ 63 Chairman of the Board and 1985
Chief Executive Officer
Samuel B. Hayes, III............................ 58 President and Director 1988
Gregory L. Curl................................. 46 Vice Chairman 1982
John Peters MacCarthy........................... 61 Vice Chairman and Director 1988
John M. Brennan................................. 59 Executive Vice President 1977
J. Robert Brubaker.............................. 59 Executive Vice President and Senior 1987
Operations Officer
Alfred S. Dominick, Jr. ........................ 49 Executive Vice President 1992
Retail Banking
James W. Kienker................................ 48 Executive Vice President and 1979
Chief Financial Officer
Phillip E. Peters............................... 55 Executive Vice President and 1988
Chief Investment Officer
</TABLE>
There are no family relationships among any of the named persons.
Each executive officer is elected by the Board of Directors to serve
until the close of the next annual meeting of the shareholders
following his election and until the election of his successor. No
executive officer of the Corporation was selected to his position
pursuant to any arrangement or understanding with any other person.
Each executive officer has held the same position or another
executive position with the Corporation or Boatmen's Bank during the
past five years, except as follows:
4
<PAGE> 6
Mr. Dominick was Executive Vice President of Bank One, Dallas, Texas
from March 1990 until joining the Corporation on August 4, 1992. Prior
to his employment with Bank One, Mr. Dominick was a partner in
Dominick/Frerichs Associates Ltd. (a bank consulting firm) from
February, 1989 to March 1990.
PART II
ITEM 5. MARKET FOR THE CORPORATION'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Footnote number 21 on pages 65 and 66 and page 69 of the
Corporation's Annual Report to Shareholders for the year ended December
31, 1994, are incorporated herein by reference. The last trade price
for the Corporation's common stock on March 10, 1995, was $30.375.
ITEM 6. SELECTED FINANCIAL DATA
Page 17 of the Corporation's Annual Report to Shareholders for the
year ended December 31, 1994, is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Pages 17 through 41 of the Corporation's Annual Report to
Shareholders for the year ended December 31, 1994, are incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements together with the report thereon of Ernst &
Young LLP on pages 50 through 67 and the supplementary quarterly
information on page 41 and pages 42 through 45 of the Corporation's
Annual Report to Shareholders for the year ended December 31, 1994, are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATION
The information under the item captioned Election of Directors and
Information With Respect to Directors and Executive Officers in the
Corporation's Proxy Statement filed for its Annual Meeting of
Shareholders scheduled for April 25, 1995, is incorporated herein by
reference. The required information regarding the Corporation's
executive officers is contained in PART I in the item captioned
Executive Officers of the Corporation.
ITEM 11. EXECUTIVE COMPENSATION
The information under the caption Executive Compensation on pages 10
through the graph on page 16 in the Corporation's Proxy Statement filed
for its Annual Meeting of Shareholders scheduled for April 25, 1995, is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the table captioned Amount and Nature of
Beneficial Ownership and the caption Security Ownership of Management
in the Corporation's Proxy Statement filed for its Annual Meeting of
Shareholders scheduled for April 25, 1995, is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption Certain Transactions in the
Corporation's Proxy Statement filed for its Annual Meeting of
Shareholders scheduled for April 25, 1995, is incorporated herein by
reference.
5
<PAGE> 7
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following financial statements of the Corporation and its
consolidated subsidiaries, and the accountants' report thereon, are
incorporated herein by reference.
Consolidated Financial Statements
Balance Sheets-December 31, 1994 and 1993.
Statements of Income-Years ended December 31, 1994, 1993 and 1992.
Statements of Changes in Stockholders' Equity-Years ended December
31, 1994, 1993 and 1992.
Statements of Cash Flows-Years Ended December 31, 1994, 1993 and
1992.
Notes to Consolidated Financial Statements.
Financial Statement Schedules
All required schedules for the Corporation and its subsidiaries
have been included in the consolidated financial statements or
related notes thereto.
The following exhibits are incorporated herein by reference (a):
Exhibit 3(a) - Restated Articles of Incorporation of the
Corporation, Exhibit 3(a) to Boatmen's Bancshares,
Inc.'s S-4 Registration Statement (File
No. 33-55625).
Exhibit 3(b) - Statement of Change of Registered Agent of the
Corporation, Exhibit 3(b) to Boatmen's Bancshares,
Inc.'s S-4 Registration Statement (File
No. 33-55625).
Exhibit 3(c) - Amended By-laws of the Corporation, Exhibit 3(c) to
Boatmen's Bancshares, Inc.'s S-4 Registration
Statement (File No. 33-55625).
Exhibit 4(a) - Rights Agreement dated as of August 14, 1990,
Exhibits 1 and 2 to Registration Statement on Form
8-A.
Exhibit 4(b) - Amendment dated as of January 26, 1993 to Rights
Agreement dated as of August 14, 1990, Exhibit 4(a)
to Boatmen's Bancshares, Inc.'s Annual Report to
the Securities and Exchange Commission on Form 10-K
(File No. 1-3750) for the fiscal year ended
December 31, 1992.
Note: No long-term debt instrument issued by the
Corporation exceeds 10% of the consolidated total
assets of the Corporation and its subsidiaries. In
accordance with paragraph 4(iii) of Item 601 of
Regulation S-K, the Corporation will furnish to the
Commission upon request copies of long-term debt
instruments and related agreements.
Exhibit 10(c) - Boatmen's Bancshares, Inc. Amended 1981 Incentive
Stock Option Plan, Exhibit 10(h) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1986.
Exhibit 10(d) - Boatmen's Bancshares, Inc. Amended 1982 Long-Term
Incentive Plan, Exhibit 10(d) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1992.
Exhibit 10(e) - Boatmen's Bancshares, Inc. 1987 Non-Qualified Stock
Option Plan, Exhibit 10(e) to Boatmen's Bancshares,
Inc.'s Annual Report to the Securities and Exchange
Commission on Form 10-K (File No. 1-3750) for the
fiscal year ended December 31, 1992.
Exhibit 10(f) - Boatmen's Supplemental Retirement Plan dated
November 9, 1993, Exhibit 10(v) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) fror the fiscal year ended December 31,
1993.
6
<PAGE> 8
Exhibit 10(j) - Boatmen's Executive Deferred Compensation Plan
dated August 8, 1989, effective January 1, 1990,
Exhibit 10(aa) to Boatmen's Bancshares, Inc.'s
Annual Report to the Securities and Exchange
Commission on Form 10-K (File No. 1-3750) for the
fiscal year ended December 31, 1989.
Exhibit 10(k) - Boatmen's Supplemental Retirement Participation
Agreement dated August 4, 1993, between the
Corporation and Andrew B. Craig, III, Exhibit 10(w)
to Boatmen's Bancshares, Inc.'s Annual Report to
the Securities and Exchange Commission on Form 10-K
(File No. 1-3750) for the fiscal year ended
December 31, 1993.
Exhibit 10(l) - Letter agreement dated November 9, 1993, between
the Corporation and John Peters MacCarthy, Exhibit
10(aa) to Boatmen's Bancshares, Inc.'s Annual
Report to the Securities and Exchange Commission on
Form 10-K (File No. 1-3750) for the fiscal year
ended December 31, 1993.
Exhibit 10(m) - Boatmen's Supplemental Retirement Participation
Agreement dated June 22, 1994, between the
Corporation and Samuel B. Hayes, III, Exhibit 10 to
Boatmen's Bancshares, Inc.'s Quarterly Report to
the Securities and Exchange Commission on Form 10-Q
(File No. 1-3750) for the quarter ended June 30,
1994.
Exhibit 10(n) - Boatmen's Supplemental Retirement Participation
Agreement dated August 8, 1989, between the
Corporation and John Peters MacCarthy, Exhibit
10(ee) to Boatmen's Bancshares, Inc.'s Annual
Report to the Securities and Exchange Commission on
Form 10-K (File No. 1-3750) for the fiscal year
ended December 31, 1989.
Exhibit 10(o) - Boatmen's Bancshares, Inc. 1991 Incentive Stock
Option Plan, Exhibit 10(dd) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities
and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31,
1991.
Exhibit 10(p) - Boatmen's Bancshares, Inc. 1992 Annual Incentive
Bonus Plan, Exhibit 10(ee) to Boatmen's Bancshares,
Inc.'s Annual Report to the Securities and Exchange
Commission on Form 10-K (File No. 1-3750) for the
fiscal year ended December 31, 1991.
The following exhibits are submitted herewith:
Exhibit 10(a) - Employment Agreement dated July 1, 1994, between
the Corporation and Andrew B. Craig, III.
Exhibit 10(b) - Employment Agreement dated July 1, 1994, between
the Corporation and Samuel B. Hayes, III.
Exhibit 10(g) - Centerre Executive Retirement Program, as amended.
Exhibit 10(h) - Centerre Bancorporation Executive Deferred
Compensation Plan, as amended.
Exhibit 10(i) - Boatmen's Bancshares, Inc. Deferred Compensation
Plan for Directors.
Exhibit 10(q) - Employment Agreement dated July 1, 1994, between
the Corporation and Gregory L. Curl.
Exhibit 13 - Portions of the Annual Report to Shareholders for
the year ended December 31, 1994.
Exhibit 21 - Subsidiaries of the Corporation.
Exhibit 23 - Independent Auditors' Consent of Ernst & Young LLP.
Exhibit 27 - Financial data schedule.
[FN]
- -----
<Fa> The exhibits included under Exhibit 10 constitute all management
contracts, compensatory plans and arrangements required to be filed
as an exhibit to this form pursuant to Item 14(c) of this report.
No Form 8-K's were filed by the Corporation in the fourth quarter of
1994.
7
<PAGE> 9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Corporation has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
BOATMEN'S BANCSHARES, INC.
--------------------------------------------
(Registrant)
By ANDREW B. CRAIG, III
--------------------------------------------
Andrew B. Craig, III, Chairman of the
Board and Chief Executive Officer
(principal executive officer)
By JAMES W. KIENKER
--------------------------------------------
James W. Kienker, Executive Vice President
and Chief Financial Officer
(principal financial and accounting officer)
Date: March 14, 1995
<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Corporation and in the capacities and on the date indicated.
<CAPTION>
SIGNATURES TITLES DATE
---------- ------ ----
<S> <C> <C>
ANDREW B. CRAIG, III Chairman of the Board and Chief March 14, 1995
- ---------------------------------------------------------- Executive Officer
Andrew B. Craig, III
SAMUEL B. HAYES, III President and Director March 14, 1995
- ----------------------------------------------------------
Samuel B. Hayes, III
JOHN PETERS MACCARTHY Vice Chairman and Director March 14, 1995
- ----------------------------------------------------------
John Peters MacCarthy
RICHARD L. BATTRAM Director March 14, 1995
- ----------------------------------------------------------
Richard L. Battram
B. A. BRIDGEWATER, JR. Director March 14, 1995
- ----------------------------------------------------------
B. A. Bridgewater, Jr.
WILLIAM E. CORNELIUS Director March 14, 1995
- ----------------------------------------------------------
William E. Cornelius
ILUS W. DAVIS Director March 14, 1995
- ----------------------------------------------------------
Ilus W. Davis
JOHN E. HAYES, JR. Director March 14, 1995
- ----------------------------------------------------------
John E. Hayes, Jr.
LEE M. LIBERMAN Director March 14, 1995
- ----------------------------------------------------------
Lee M. Liberman
8
<PAGE> 10
<CAPTION>
SIGNATURES TITLES DATE
---------- ------ ----
<S> <C> <C>
WILLIAM E. MARITZ Director March 14, 1995
- ----------------------------------------------------------
William E. Maritz
ANDREW E. NEWMAN Director March 14, 1995
- ----------------------------------------------------------
Andrew E. Newman
Director March -, 1995
- ----------------------------------------------------------
Jerry E. Ritter
WILLIAM P. STIRITZ Director March 14, 1995
- ----------------------------------------------------------
William P. Stiritz
ALBERT E. SUTER Director March 14, 1995
- ----------------------------------------------------------
Albert E. Suter
DWIGHT D. SUTHERLAND Director March 14, 1995
- ----------------------------------------------------------
Dwight D. Sutherland
Director March -, 1995
- ----------------------------------------------------------
Theodore C. Wetterau
</TABLE>
9
<PAGE> 11
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
NUMBER EXHIBIT PAGE
------ ------- ----
<C> <S> <C>
3(a) The Corporation's Restated Articles of Incorporation as adopted by its Board of Directors on June
14, 1994, Exhibit 3(a) to Boatmen's Bancshares, Inc.'s S-4 Registration Statement (File
No. 33-55625) is incorporated herein by reference................................................ <F*>
3(b) Statement of Change of Registered Agent of the Corporation, Exhibit 3(b) to Boatmen's Bancshares,
Inc.'s S-4 Registration Statement (File No. 33-55625), is incorporated herein by reference....... <F*>
3(c) The Corporation's Amended By-laws as adopted by its Board of Directors on August 9, 1994, Exhibit
3(c) to Boatmen's Bancshares, Inc.'s S-4 Registration Statement (File No. 33-55625) is
incorporated herein by reference................................................................. <F*>
4(a) Conformed copy of Rights Agreement dated as of August 14, 1990,
Exhibits 1 and 2 to Registration Statement on Form 8-A is incorporated herein
by reference..................................................................................... <F*>
4(b) Amendment dated as of January 26, 1993 to Rights Agreement dated August 14, 1990, Exhibit 4(a) to
Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K
(File No. 1-3750) for the fiscal year ended December 31, 1992, is incorporated herein by
reference........................................................................................ <F*>
10(a) Employment Agreement dated July 1, 1994, between the Corporation and Andrew B. Craig, III........
10(b) Employment Agreement dated July 1, 1994, between the Corporation and Samuel B. Hayes, III........
10(c) Boatmen's Bancshares, Inc. Amended 1981 Incentive Stock Option Plan, Exhibit 10(h) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31, 1986, is incorporated herein by reference......... <F*>
10(d) Boatmen's Bancshares, Inc. Amended 1982 Long Term Incentive Plan, Exhibit 10(d) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31, 1992, is incorporated herein by reference......... <F*>
10(e) Boatmen's Bancshares, Inc. 1987 Non-Qualified Stock Option Plan, Exhibit 10(e) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31, 1992, is incorporated herein by reference......... <F*>
10(f) Boatmen's Supplemental Retirement Plan dated November 9, 1993, Exhibit 10(v) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31, 1993, is incorporated herein by reference......... <F*>
10(g) Centerre Executive Retirement Program, as amended................................................
10(h) Centerre Bancorporation Executive Deferred Compensation Plan, as amended.........................
10(i) Boatmen's Bancshares, Inc. Deferred Compensation Plan for Directors..............................
10(j) Boatmen's Executive Deferred Compensation Plan dated August 8, 1989, effective January 1, 1990,
Exhibit 10(aa) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange
Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989, is
incorporated herein by reference................................................................. <F*>
<PAGE> 12
<CAPTION>
INDEX TO EXHIBITS (CONTINUED)
NUMBER EXHIBIT PAGE
------ ------- ----
<C> <S> <C>
10(k) Boatmen's Supplemental Retirement Participation Agreement dated August 4, 1993, between the
Corporation and Andrew B. Craig, III, Exhibit 10(w) to Boatmen's Bancshares, Inc.'s Annual Report
to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year
ended December 31, 1993, is incorporated herein by reference..................................... <F*>
10(l) Letter Agreement dated November 9, 1993, between the Corporation and John Peters MacCarthy,
Exhibit 10(aa) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange
Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1993, is
incorporated herein by reference................................................................. <F*>
10(m) Boatmen's Supplemental Retirement Participation Agreement dated June 22, 1994, between the
Corporation and Samuel B. Hayes, III, Exhibit 10 to Boatmen's Bancshares, Inc.'s Quarterly Report
to the Securities and Exchange Commission on Form 10-Q (File No. 1-3750) for the quarter ended
June 30, 1994, is incorporated herein by reference............................................... <F*>
10(n) Boatmen's Supplemental Retirement Participation Agreement dated August 8, 1989, between the
Corporation and John Peters MacCarthy, Exhibit 10(ee) to Boatmen's Bancshares, Inc.'s Annual
Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal
year ended December 31, 1989, is incorporated herein by reference................................ <F*>
10(o) Boatmen's Bancshares, Inc. 1991 Incentive Stock Option Plan, Exhibit 10(dd) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31, 1991, is incorporated herein by reference......... <F*>
10(p) Boatmen's Bancshares, Inc. 1992 Annual Incentive Bonus Plan, Exhibit 10(ee) to Boatmen's
Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No.
1-3750) for the fiscal year ended December 31, 1991, is incorporated herein by reference......... <F*>
10(q) Employment Agreement dated July 1, 1994, between the Corporation and Gregory L. Curl.............
<PAGE> 13
<CAPTION>
INDEX TO EXHIBITS (CONTINUED)
NUMBER EXHIBIT PAGE
------ ------- ----
<C> <S> <C>
13 Portions of the Annual Report to Shareholders for the year ended December 31, 1994...............
</TABLE>
<TABLE>
GRAPHICS APPENDIX
<CAPTION>
CROSS REFERENCE
TO PAGE OF
OMITTED CHARTS ANNUAL REPORT
-------------- ---------------
<S> <C>
1. Earnings per Share........................................................... Page 3
2. Return on Assets............................................................. Page 3
3. Return on Equity............................................................. Page 4
4. Asset Growth................................................................. Page 20
5. Equity Growth................................................................ Page 20
6. Net Interest Margin.......................................................... Page 22
7. Quarterly Net Interest Margin................................................ Page 22
8. Average Earning Asset Mix.................................................... Page 27
9. Funding Mix.................................................................. Page 27
10. Noninterest Income........................................................... Page 31
11. Noninterest Expense.......................................................... Page 33
12. Loan Portfolio............................................................... Page 34
13. Loan Loss Experience......................................................... Page 36
14. Loan Reserve Coverage........................................................ Page 37
15. Nonperforming Assets......................................................... Page 37
16. Risk-Based Capital........................................................... Page 40
The above listed charts were omitted from the EDGAR version
of Exhibit 13; however, the information depicted in the
charts was adequately discussed and/or displayed in tabular
format within the Management's Discussion and Analysis
section of the Annual Report.
</TABLE>
<TABLE>
<C> <S> <C>
21 Subsidiaries of the Corporation..................................................................
23 Independent Auditors' Consent of Ernst & Young LLP...............................................
27 Financial Data Schedule..........................................................................
<FN>
- -----
<F*>Incorporated by reference.
</TABLE>
<PAGE> 1
Exhibit 10(a)
EMPLOYMENT AGREEMENT FOR
ANDREW B. CRAIG, III
--------------------
BOATMEN'S BANCSHARES, INC.
AUGUST, 1994
<PAGE> 2
Boatmen's Bancshares, Inc.
Employment Agreement For ANDREW B. CRAIG, III
----------------------------
This EMPLOYMENT AGREEMENT is made, entered into, and is
effective, contingent upon Compensation Committee approval and
ratification by the Board of Directors, as of this first day of
July, 1994 (the "Effective Date"), by and between Boatmen's
Bancshares, Inc., a Missouri corporation, (the "Company") and
Andrew B. Craig, III (the "Executive").
WHEREAS, the Executive is presently employed by the Company in
the capacity of Chairman and Chief Executive Officer; and
WHEREAS, the Executive possesses considerable experience and
an intimate knowledge of the business and affairs of the Company,
its policies, methods, personnel, and operations; and
WHEREAS, the Company recognizes that the Executive's
contributions have been substantial and meritorious and, as such,
the Executive has demonstrated unique qualifications to act in an
executive capacity for the Company; and
WHEREAS, the Company is desirous of assuring the continued
employment of the Executive in the above stated capacities, and
Executive is desirous of having such assurance;
NOW THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements of the parties set forth in this
Agreement, and of other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
Article 1. Term of Employment
The Company hereby agrees to employ the Executive and the
Executive hereby agrees to continue to serve the Company, in
accordance with the terms and conditions set forth herein, for an
initial period of three (3) years, commencing as of the Effective
Date of this Agreement, as indicated above; subject, however, to
earlier termination as expressly provided herein.
The initial three (3) year period of employment automatically
shall be extended for one (1) additional year at the end of the
initial three (3) year term, and then again after each successive
year thereafter. However, either party may terminate this
Agreement at the end of the initial three (3) year period, or at
the end of any successive one (1) year term thereafter, by giving
the other party written notice of intent not to renew, delivered
at least three (3) months prior to the end of such initial period
or successive term.
1
<PAGE> 3
In the event such notice of intent not to renew is properly
delivered, this Agreement, along with all corresponding rights,
duties, and covenants, automatically shall expire at the end of
the initial period or successive term then in progress.
However, regardless of the above, if at any time during the
initial period of employment, or successive term, a Change in
Control of the Company occurs (as defined in Article 7 herein),
then this Agreement shall become immediately irrevocable for the
longer of: (a) three (3) years beyond the month in which the
effective date of such Change in Control occurs; or (b) until all
obligations of the Company hereunder have been fulfilled, and
until all benefits provided hereunder have been paid.
Article 2. Position and Responsibilities
During the term of this Agreement, the Executive agrees to
serve as Chairman and Chief Executive Officer of the Company, and
as a member of the Company's Board of Directors if so elected. In
his capacity as Chairman and Chief Executive Officer of the
Company, the Executive shall report directly to the Board of
Director's of the Company, and shall maintain the level of duties
and responsibilities as in effect as of the Effective Date, or
such higher level of duties and responsibilities as he may be
assigned during the term of this Agreement. The Executive shall
have the same status, privileges, and responsibilities normally
inherent in such capacities in financial institutions of similar
size and character.
Article 3. Standard of Care
During the term of this Agreement, the Executive agrees to
devote substantially his full time, attention, and energies to
the Company's business and shall not be engaged in any other
business activity, whether or not such business activity is
pursued for gain, profit, or other pecuniary advantage. However,
subject to Article 9 herein, the Executive may serve as a
director of other companies so long as such service is not
injurious to the Company. The Executive covenants, warrants, and
represents that he shall:
(a) Devote his full and best efforts to the fulfillment of
his employment obligations; and
(b) Exercise the highest degree of loyalty and the highest
standards of conduct in the performance of his duties.
This Article 3 shall not be construed as preventing the
Executive from investing assets in such form or manner as will
not require his services in the daily operations of the affairs
of the companies in which such investments are made.
2
<PAGE> 4
Article 4. Compensation
As remuneration for all services to be rendered by the
Executive during the term of this Agreement, and as consideration
for complying with the covenants herein, the Company shall pay
and provide to the Executive the following:
4.1. BASE SALARY. The Company shall pay the Executive a Base
Salary in an amount which shall be established from time to time
by the Board of Directors of the Company or the Board's designee;
provided, however, that such Base Salary shall not be less than
Six Hundred Fifty Thousand Dollars ($650,000.00) per year. This
Base Salary shall be paid to the Executive in equal bimonthly
installments throughout the year, consistent with the normal
payroll practices of the Company.
The annual Base Salary shall be reviewed at least annually
following the Effective Date of this Agreement, while this
Agreement is in force, to ascertain whether, in the judgment of
the Board or the Board's designee, such Base Salary should be
increased. If so increased, the Base Salary as stated above
shall, likewise, be increased for all purposes of this Agreement.
4.2. ANNUAL BONUS. In addition to his Base Salary, the
Executive shall be eligible to participate in the Company's
short-term incentive program, as such program may exist from
time-to-time, at a level commensurate with the Executive's
position with the Company, as determined at the sole discretion
of the Compensation Committee.
4.3. LONG-TERM INCENTIVES. The Executive shall be eligible to
participate in the Company's Long-Term Incentive Plan, as such
shall be amended or superseded from time-to-time, at a level
commensurate with the Executive's position, as determined at the
sole discretion of the Compensation Committee.
4.4. RETIREMENT BENEFITS. The Company shall provide to the
Executive participation in all Company qualified defined benefit
and defined contribution retirement plans, subject to the
eligibility and participation requirements of such plans. The
Executive's retirement benefits shall not be less than those that
would be provided him under the terms of the Boatmen's
Bancshares, Inc. Retirement Plan for Employees and the Boatmen's
Supplemental Retirement Plan in effect as of the Effective Date
or as such benefits shall be increased, whether or not the
benefits under such programs shall be decreased or eliminated.
The obligations of the Company pursuant to this Section 4.4 shall
survive the termination of this Agreement.
4.5. EMPLOYEE BENEFITS. The Company shall provide to the
Executive all benefits to which other executives and employees of
the Company are entitled, as commensurate with the Executive's
position, subject to the eligibility requirements and other
provisions of such arrangements. Such benefits shall include,
but shall not be limited to, group term life insurance,
comprehensive health and major medical insurance, dental and life
insurance, and short-term and long-term disability.
3
<PAGE> 5
4.6. PERQUISITES. The Company shall provide to the Executive,
at the Company's cost, all perquisites which are suitable to the
character of Executive's position with the Company and adequate
for the performance of his duties hereunder.
4.7. RIGHT TO CHANGE PLANS. By reason of Sections 4.5 and 4.6
herein, the Company shall not be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing
any benefit plan or perquisite, so long as such changes are
similarly applicable to executive employees generally.
Article 5. Expenses
The Company shall pay, or reimburse the Executive, for all
ordinary and necessary expenses, in a reasonable amount, which
the Executive incurs in performing his duties under this
Agreement including, but not limited to, travel, entertainment,
professional dues and subscriptions, and all dues, fees, and
expenses associated with membership in various professional,
business, and civic associations and societies in which the
Executive's participation is in the best interest of the Company.
Article 6. Employment Terminations
6.1. TERMINATION DUE TO RETIREMENT OR DEATH. In the event
the Executive's employment is terminated while this Agreement is
in force by reason of Retirement (as defined under the then
established rules of the Company's tax-qualified retirement
plan), or death, the Executive's benefits shall be determined in
accordance with the Company's retirement, survivor's benefits,
insurance, and other applicable programs of the Company then in
effect; provided, however, that such benefits shall be no less
than those set forth in Section 4.4 herein. Upon the effective
date of such termination, the Company's obligation under this
Agreement to pay and provide to the Executive the elements of pay
described in Sections 4.1, 4.2, and 4.3 shall immediately expire.
However, the Executive shall receive all other rights and
benefits that he is vested in, pursuant to other plans and
programs of the Company.
6.2. TERMINATION DUE TO DISABILITY. In the event that the
Executive becomes Disabled (as defined below) during the term of
this Agreement and is, therefore, unable to perform his duties
herein for more than one hundred eighty (180) total calendar days
during any period of twelve (12) consecutive months, or in the
event of the Board's reasonable expectation that the Executive's
Disability will exist for more than a period of one hundred
eighty (180) calendar days, the Company shall have the right to
terminate the Executive's active employment as provided in this
Agreement. However, the Board shall deliver written notice to the
Executive of the Company's intent to terminate for Disability at
least thirty (30) calendar days prior to the effective date of
such termination.
A termination for Disability shall become effective upon the
end of the thirty (30) day notice period. Upon such effective
date, the Company's obligation to pay and provide to the
Executive the elements of pay described in Sections 4.1, 4.2, and
4.3 shall immediately expire. However, the Executive shall
receive all rights and benefits that he is vested in, pursuant to
other plans and programs of the Company.
4
<PAGE> 6
The term "Disability" shall mean, for all purposes of this
Agreement, the incapacity of the Executive, due to injury,
illness, disease, or bodily or mental infirmity, to engage in the
performance of substantially all of the usual duties of
employment with the Company as contemplated by Article 2 herein,
such Disability to be determined by the Board of Directors of the
Company upon receipt and in reliance on competent medical advice
from one (1) or more individuals, selected by the Board, who are
qualified to give such professional medical advice.
It is expressly understood that the Disability of the
Executive for a period of one hundred eighty (180) calendar days
or less in the aggregate during any period of twelve (12)
consecutive months, in the absence of any reasonable expectation
that his Disability will exist for more than such a period of
time, shall not constitute a failure by him to perform his duties
hereunder and shall not be deemed a breach or default and the
Executive shall receive full compensation for any such period of
Disability or for any other temporary illness or incapacity
during the term of this Agreement.
6.3. VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive
may terminate this Agreement at any time by giving the Board of
Directors of the Company written notice of intent to terminate,
delivered at least ninety (90) calendar days prior to the
effective date of such termination.
Upon the effective date of such termination, following the
expiration of the ninety (90) day notice period, the Company
shall pay the Executive his full Base Salary, at the rate then in
effect as provided in Section 4.1 herein, through the effective
date of termination, plus all other benefits to which the
Executive has a vested right at that time (for this purpose, the
Executive shall not be paid any Bonus with respect to the fiscal
year in which voluntary termination under this Section 6.3
occurs). In the event that the terms and provisions of Article 7
herein do not apply to such termination, the Company and the
Executive thereafter shall have no further obligations under this
Agreement. However, in the event the terms and provisions of
Article 7 herein apply, the payments and benefits set forth
therein shall apply.
6.4. INVOLUNTARY TERMINATION BY THE COMPANY WITHOUT CAUSE. At
all times prior to six (6) full calendar months before the
effective date of a Change in Control, or at any time more than
three (3) years after the effective date of a Change in Control,
the Board may terminate the Executive's employment, as provided
under this Agreement, at any time, for reasons other than death,
Disability, Retirement, or for Cause, by notifying the Executive
in writing of the Company's intent to terminate, at least thirty
(30) calendar days prior the effective date of such termination.
Upon the effective date of such termination, following the
expiration of the thirty (30) day notice period, the Company
shall pay to the Executive a lump sum cash payment equal to the
greater of: (a) the Base Salary then in effect for the remaining
term of this Agreement (assuming no additional extensions of this
Agreement's term beyond that in effect as of the effective date
of termination), together with
5
<PAGE> 7
continuation of health and welfare benefits for the remaining
term of this Agreement; or (b) one (1) full year of his Base
Salary in effect as of the effective date of termination, plus a
one (1) year continuation of his health and welfare benefits.
Further, the Company shall pay the Executive all other
benefits to which the Executive has a vested right at the time,
according to the provisions of the governing plan or program. The
Company and the Executive thereafter shall have no further
obligations under this Agreement.
If the Executive's employment is terminated for any of the
reasons set forth in Section 7.1 herein, the Executive shall be
entitled to receive the benefits provided in Section 7.1 herein
in lieu of the benefits set forth in this Section 6.4.
6.5. TERMINATION FOR CAUSE. Nothing in this Agreement shall
be construed to prevent the Board from terminating the
Executive's employment under this Agreement for "Cause."
"Cause" shall be defined as conduct of the Executive which is
finally adjudged to be knowingly fraudulent, deliberately
dishonest or willful misconduct. The Company's Board of
Directors, by majority vote, shall make the determination of
whether Cause exists, after providing the Executive with notice
of the reasons the Board believes Cause may exist, and after
giving the Executive the opportunity to respond to the allegation
that Cause exists.
In the event this Agreement is terminated by the Board for
Cause, the Company shall pay the Executive his Base Salary
through the effective date of the employment termination and the
Executive shall immediately thereafter forfeit all rights and
benefits (other than vested benefits) he would otherwise have
been entitled to receive under this Agreement. The Company and
the Executive thereafter shall have no further obligations under
this Agreement.
6.6. TERMINATION FOR GOOD REASON. At any time during the term
of this Agreement, the Executive may terminate this Agreement for
Good Reason (as defined below) by giving the Board of Directors
of the Company thirty (30) calendar days written notice of intent
to terminate, which notice sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for such
termination.
Upon the expiration of the thirty (30) day notice period, the
Good Reason termination shall become effective, and the Company
shall pay and provide to the Executive the benefits set forth in
this Section 6.6 (or, in the event of termination for Good Reason
within the six (6) full calendar month period prior to the
effective date of a Change in Control, or the three (3) year
period following the effective date of a Change in Control, the
benefits set forth in Section 7.1 herein).
6
<PAGE> 8
Good Reason shall mean, without the Executive's express
written consent, the occurrence of any one or more of the
following:
(a) The assignment of the Executive to duties materially
inconsistent with the Executive's authorities, duties,
responsibilities, and status (including offices, titles,
and reporting requirements) as an officer of the
Company, or a material reduction or alteration in the
nature or status of the Executive's authorities, duties,
or responsibilities from those in effect during the
immediately preceding fiscal year;
(b) Without the Executive's consent, the Company's requiring
the Executive to be based at a location which is at
least fifty (50) miles further from the Executive's
current primary residence than is such residence from
the Company's current headquarters, except for required
travel on the Company's business to an extent
substantially consistent with the Executive's business
obligations as of the Effective Date;
(c) A reduction by the Company in the Executive's Base
Salary as in effect on the Effective Date, as provided
in Section 4.1 herein, or as the same shall be increased
from time to time;
(d) The failure of the Company to continue in effect any of
the Company's short- and/or long-term incentive
compensation plans, or employee benefit or retirement
plans, policies, practices, or arrangements in which the
Executive participates as of the Effective Date (for
this purpose, a replacement program, the effect of which
continues the Executive's participation in such program
on substantially the same basis as existed immediately
prior to the effective date of a Change in Control shall
be deemed to be a continuation of the previous program),
or the failure by the Company to continue the
Executive's participation therein on substantially the
same basis, both in terms of the amount of the benefits
provided and the level of the Executive's participation,
relative to other executives of the Company; or
(e) The failure of the Company to obtain a satisfactory
agreement from any successor to the Company to assume
and agree to perform this Agreement, as contemplated in
Section 10.1 herein.
Upon a termination of the Executive's employment for Good
Reason at any time other than the six (6) full calendar month
period prior to the effective date of a Change in Control, or the
three (3) year period following the effective date of a Change in
Control, the Executive shall be entitled to receive the same
payments and benefits as he is entitled to receive following an
involuntary termination of his employment by the Company without
Cause, as specified in Section 6.4 herein. The payment of Base
Salary and pro rata Bonus shall be made to the Executive within
thirty (30) calendar days following the effective date of
employment termination. Upon a termination for Good Reason within
the six (6) full calendar month period prior to the effective
date of a Change in Control, or within the three (3) year period
7
<PAGE> 9
following the effective date of a Change in Control, the
Executive shall be entitled to receive the payments and benefits
set forth in Section 7.1 herein in lieu of those set forth in
this Section 6.6.
The Executive's right to terminate employment for Good Reason
shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment
shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason herein.
Article 7. Change in Control
7.1. EMPLOYMENT TERMINATIONS IN CONNECTION WITH A CHANGE IN
CONTROL. In the event of a Qualifying Termination (as defined
below) within six (6) full calendar months prior to the effective
date of a Change in Control, or within three (3) years following
the effective date of a Change in Control, then in lieu of all
other benefits provided to the Executive under the provisions of
this Agreement, the Company shall pay to the Executive and
provide him with the following severance benefits:
(a) An amount equal to three (3) times the highest rate of
the Executive's annualized Base Salary rate in effect at
any time up to and including the effective date of
termination;
(b) An amount equal to three (3) times the Executive's
average annual bonus earned over the three (3) fiscal
years prior to the Change in Control (whether or not
deferred);
(c) An amount equal to the Executive's unpaid Base Salary
and accrued vacation pay through the effective date of
termination; and
(d) A continuation of the welfare benefits of medical
insurance, dental insurance, and group term life
insurance for three (3) full years from the effective
date of termination. These benefits shall be provided to
the Executive at the same premium cost, and at the same
coverage level, as in effect as of the Executive's
effective date of termination. However, in the event the
premium cost and/or level of coverage shall change for
all employees of the Company, the cost and/or coverage
level, likewise, shall change for the Executive in a
corresponding manner.
The continuation of these welfare benefits shall be
discontinued prior to the end of the three (3) year period
in the event the Executive has available substantially
similar benefits from a subsequent employer, as determined
by the Company's Board of Directors or the Board's
designee.
8
<PAGE> 10
For purposes of this Article 7, a Qualifying Termination shall
mean any termination of the Executive's employment OTHER THAN:
(1) by the Company for Cause (as provided in Section 6.5 herein);
(2) by reason of death, Disability (as provided in Section 6.2
herein), or Retirement (as such term is then defined in the
Company's tax qualified defined benefit retirement plan); or (3)
by the Executive without Good Reason (as provided in Section 6.6
herein, but specifically excluding voluntary terminations within
the period beginning on the first anniversary of the effective
date of the Change in Control and ending thirty (30) days after
such date"i.e., any voluntary termination by the Executive within
such thirty (30) day period shall result in the Company's
obligation to make the payments and provide the benefits set
forth in this Section 7.1 in lieu of any other benefits
hereunder).
7.2. DEFINITION OF "CHANGE IN CONTROL". A Change in Control
of the Company shall be deemed to have occurred as of the first
day any one or more of the following conditions shall have been
satisfied:
(a) Any individual, corporation (other than the Company),
partnership, trust, association, pool, syndicate, or any
other entity or any group of persons acting in concert
becomes the beneficial owner, as that concept is defined
in Rule 13d-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, of
securities of the Company possessing twenty percent
(20%) or more of the voting power for the election of
directors of the Company;
(b) There shall be consummated any consolidation, merger, or
other business combination involving the Company or the
securities of the Company in which holders of voting
securities of the Company immediately prior to such
consummation own, as a group, immediately after such
consummation, voting securities of the Company (or, if
the Company does not survive such transaction, voting
securities of the corporation surviving such
transaction) having less than fifty percent (50%) of the
total voting power in an election of directors of the
Company (or such other surviving corporation);
(c) During any period of two (2) consecutive years,
individuals who at the beginning of such period
constitute the directors of the Company cease for any
reason to constitute at least a majority thereof unless
the election, or the nomination for election by the
Company's shareholders, of each new director of the
Company was approved by a vote of at least two-thirds
(2/3) of the directors of the Company then still in
office who were directors of the Company at the
beginning of any such period;
(d) Removal by the stockholders of all or any of the
incumbent directors of the Company other than a removal
for Cause; or
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(e) There shall be consummated any sale, lease, exchange, or
other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of
the assets of the Company (on a consolidated basis) to a
party which is not controlled by or under common control
with the Company.
7.3. LIMITATION ON CHANGE-IN-CONTROL BENEFITS.
Notwithstanding any other provision of this Agreement, if any
portion of the benefits provided in Section 7.1 herein (the
"Benefits") or any other payment under this Agreement, or under
any other agreement with or plan of the Company (in the aggregate
"Total Payments") would constitute an "excess parachute payment,"
then the payments to be made to the Executive under this
Agreement shall be reduced such that the value of the aggregate
Total Payments that the Executive is entitled to receive shall be
one dollar ($1) less than the maximum amount which the Executive
may receive without becoming subject to the tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), or which the Company may pay without loss of
deduction under Section 280G(a) of the Code.
For purposes of this Agreement, the terms "excess parachute payment"
and "parachute payments" shall have the meanings assigned to them
in Section 280G of the Code, and such "parachute payments" shall
be valued as provided therein.
Within sixty (60) days following delivery of the notice of
employment termination by the Executive or the Company pursuant
to the terms of this Agreement, or notice by the Company to the
Executive of its belief that there is a payment or benefit due
the Executive which will result in an "excess parachute payment"
as defined in Section 280G of the Code, the Executive and the
Company, at the Company's expense, shall obtain the opinion of
such legal counsel, which need not be unqualified, as the
Executive may choose, which sets forth: (i) the amount of the
Executive's "annualized includible compensation for the base
period" (as defined in Code Section 280G(d)(1)); (ii) the present
value of the Total Payments; and (iii) the amount and present
value of any "excess parachute payment." The opinion of such
legal counsel shall be supported by the opinion of a certified
public accounting firm. Such opinion shall be binding upon the
Company and the Executive.
In the event that such opinion determines that there would be
an "excess parachute payment," the benefits provided in Section
7.1 herein, or any other payment determined by such counsel to be
includible in Total Payments shall be reduced or eliminated as
specified by the Executive in writing delivered to the Company
within thirty (30) days of his receipt of such opinion, or, if
the Executive fails to so notify the Company, then as the Company
shall reasonably determine, so that under the basis of
calculations set forth in such opinion, there will be no "excess
parachute payment."
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The provisions of this Section 7.3, including the
calculations, notices, and opinion provided for herein shall be
based upon the conclusive presumption that: (i) the compensation
and benefits provided for in Section 7.1 herein; and (ii) any
other compensation earned prior to the effective date of
employment termination by the Executive pursuant to the Company's
compensation programs (if such payments would have been made in
the future in any event, even though the timing of such payment
is triggered by the Change in Control), are reasonable.
7.4. SUBSEQUENT IMPOSITION OF EXCISE TAX. If, notwithstanding
compliance with the provisions of Section 7.3 herein, it is
ultimately determined by a court or pursuant to a final
determination by the Internal Revenue Service that any portion of
the Total Payments is considered to be a "parachute payment,"
subject to the excise tax under Section 4999 of the Code, which
was not contemplated to be a "parachute payment" at the time of
payment (so as to accurately determine whether a limitation
should have been applied to the Total Payments to maximize the
net benefit to the Executive, as provided in Section 7.3 hereof),
the Executive shall be entitled to receive a lump sum cash
payment sufficient to place the Executive in the same net after-
tax position, computed by using the "Special Tax Rate" as such
term is defined below, that the Executive would have been in had
such payment not been subject to such excise tax, and had the
Executive not incurred any interest charges or penalties with
respect to the imposition of such excise tax. For purposes of
this Agreement, the "Special Tax Rate" shall be the highest
effective Federal and state marginal tax rates applicable to the
Executive in the year in which the payment contemplated under
this Section 7.4 is made.
Article 8. Outplacement Assistance
Following a Qualifying Termination (as defined in Section 7.1
herein) the Executive shall be reimbursed by the Company for the
costs of all outplacement services obtained by the Executive
within the two (2) year period after the effective date of
termination; provided, however, that the total reimbursement
shall be limited to an amount equal to fifteen percent (15%) of
the Executive's Base Salary as of the effective date of
termination.
Article 9. Noncompetition
9.1. PROHIBITION ON COMPETITION. Without the prior written
consent of the Company, during the term of this Agreement, and
for the greater of twelve (12) months following the expiration of
this Agreement, or any other period in which amounts are paid
hereunder, the Executive shall not, as an employee or an officer,
engage directly or indirectly in any business or enterprise which
is "in competition" with the Company or its successors or
assigns. For purposes of this Agreement, a business or
enterprise will be deemed to be "in competition" if it is engaged
in any significant business activity of the Company or its
subsidiaries within the State of Missouri.
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However the Executive shall be allowed to purchase and hold
for investment less than three percent (3%) of the shares of any
corporation whose shares are regularly traded on a national
securities exchange or in the over-the-counter market.
9.2. DISCLOSURE OF INFORMATION. The Executive recognizes
that he has access to and knowledge of certain confidential and
proprietary information of the Company which is essential to the
performance of his duties under this Agreement. The Executive
will not, during or after the term of his employment by the
Company, in whole or in part, disclose such information to any
person, firm, corporation, association, or other entity for any
reason or purpose whatsoever, nor shall he make use of any such
information for his own purposes.
9.3. COVENANTS REGARDING OTHER EMPLOYEES. During the term of
this Agreement, and for a period of twenty four (24) months
following the expiration of this Agreement, the Executive agrees
not to attempt to induce any employee of the Company to terminate
his or her employment with the Company, accept employment with
any competitor of the Company, or to interfere in a similar
manner with the business of the Company.
Article 10. Assignment
10.1. ASSIGNMENT BY COMPANY. This Agreement may and shall
be assigned or transferred to, and shall be binding upon and
shall inure to the benefit of, any successor of the Company, and
any such successor shall be deemed substituted for all purposes
of the "Company" under the terms of this Agreement. As used in
this Agreement, the term "successor" shall mean any person, firm,
corporation, or business entity which at any time, whether by
merger, purchase, or otherwise, acquires all or substantially all
of the assets or the business of the Company. Notwithstanding
such assignment, the Company shall remain, with such successor,
jointly and severally liable for all its obligations hereunder.
Failure of the Company to obtain the agreement of any
successor to be bound by the terms of this Agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement, and shall immediately entitle the Executive to
compensation from the Company in the same amount and on the same
terms as the Executive would be entitled in the event of a
termination of employment for Good Reason within three (3) years
after a Change in Control, as provided in Article 7 herein.
Except as herein provided, this Agreement may not otherwise be
assigned by the Company.
10.2. ASSIGNMENT BY EXECUTIVE. The services to be provided by
the Executive to the Company hereunder are personal to the
Executive, and the Executive's duties may not be assigned by the
Executive; provided, however that this Agreement shall inure to
the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, and administrators, successors,
heirs, distributees, devisees, and legatees. If the Executive
dies while any amounts payable to the
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Executive hereunder remain outstanding, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee, or
other designee or, in the absence of such designee, to the
Executive's estate.
Article 11. Dispute Resolution and Notice
11.1. DISPUTE RESOLUTION. The Executive shall have the right
and option to elect to have any good faith dispute or controversy
arising under or in connection with this Agreement settled by
litigation or by arbitration.
If arbitration is selected, such proceeding shall be conducted
before a panel of three (3) arbitrators sitting in a location
selected by the Executive within fifty (50) miles from the
location of his principal place of employment, in accordance with
the rules of the American Arbitration Association then in effect.
Judgment may be entered on the award of the arbitrators in any
court having competent jurisdiction.
All expenses of such litigation or arbitration, including the
reasonable fees and expenses of the legal representative for the
Executive, and necessary costs and disbursements incurred as a
result of such dispute or legal proceeding, and any prejudgment
interest, shall be borne by the Company.
11.2. NOTICE. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient
if in writing and if sent by registered or certified mail to the
Executive at the last address he has filed in writing with the
Company or, in the case of the Company, at its principal offices.
Article 12. Miscellaneous
12.1. ENTIRE AGREEMENT. This Agreement supersedes any prior
agreements or understandings, oral or written, between the
parties hereto, with respect to the subject matter hereof, and
constitutes the entire agreement of the parties with respect
thereto. Without limiting the generality of the foregoing
sentence, this Agreement completely replaces and supersedes the
Employment Agreement entered into by and between the Company and
the Executive dated the ninth day of November, 1993, and all
amendments thereto, in their entirety.
12.2. MODIFICATION. This Agreement shall not be varied,
altered, modified, canceled, changed, or in any way amended
except by mutual agreement of the parties in a written instrument
executed by the parties hereto or their legal representatives.
12.3. SEVERABILITY. In the event that any provision or
portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full
force and effect.
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12.4. COUNTERPARTS. This Agreement may be executed in one (1)
or more counterparts, each of which shall be deemed to be an
original, but all of which together will constitute one and the
same Agreement.
12.5. TAX WITHHOLDING. The Company may withhold from any
benefits payable under this Agreement all Federal, state, city,
or other taxes as may be required pursuant to any law or
governmental regulation or ruling.
12.6. BENEFICIARIES. The Executive may designate one or more
persons or entities as the primary and/or contingent
beneficiaries of any amounts to be received under this Agreement.
Such designation must be in the form of a signed writing
acceptable to the Board or the Board's designee. The Executive
may make or change such designation at any time.
12.7. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation
to make the payments and the arrangements provided for herein
shall be absolute and unconditional, and shall not be affected by
any circumstances, including, without limitation, any offset,
counterclaim, recoupment, defense, or other right which the
Company may have against the Executive or anyone else. All
amounts payable by the Company hereunder shall be paid without
notice or demand. Each and every payment made hereunder by the
Company shall be final, and the Company shall not seek to recover
all or any part of such payment from the Executive or from
whomsoever may be entitled thereto, for any reasons whatsoever.
The Executive shall not be obligated to seek other employment
in mitigation of the amounts payable or arrangements made under
any provision of this Agreement, and the obtaining of any such
other employment shall in no event effect any reduction of the
Company's obligations to make the payments and arrangements
required to be made under this Agreement, except to the extent
provided in Section 7.1(d) herein.
12.8. CONTRACTUAL RIGHTS TO BENEFITS. Subject to approval by
the Company's Compensation Committee and ratification by the
Board of Directors, this Agreement establishes and vests in the
Executive a contractual right to the benefits to which he is
entitled hereunder. However, nothing herein contained shall
require or be deemed to require, or prohibit or be deemed to
prohibit, the Company to segregate, earmark, or otherwise set
aside any funds or other assets, in trust or otherwise, to
provide for any payments to be made or required hereunder.
12.9. PAYMENT OF LEGAL FEES. To the extent permitted by law,
the Company shall pay all legal fees, costs of litigation,
prejudgment interest, and other expenses incurred in good faith
by the Executive as a result of the Company's refusal to provide
the benefits to which the Executive becomes entitled under this
Agreement, or as a result of the Company's contesting the
validity, enforceability, or interpretation of this Agreement, or
as a result of any conflict between the parties pertaining to
this Agreement.
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Article 13. Governing Law
To the extent not preempted by Federal law, the provisions of
this Agreement shall be construed and enforced in accordance with
the laws of the state of Missouri.
IN WITNESS WHEREOF, the Executive and the Company have
executed this Agreement, subject to Compensation Committee
approval and ratification by the Board of Directors, as of the
Effective Date.
BOATMEN'S BANCSHARES, INC. EXECUTIVE:
By:---------------------------- ----------------------------
ARTHUR J. FLEISCHER ANDREW B. CRAIG, III
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Exhibit 10(b)
EMPLOYMENT AGREEMENT FOR
SAMUEL B. HAYES, III
--------------------
BOATMEN'S BANCSHARES, INC.
AUGUST, 1994
<PAGE> 2
Boatmen's Bancshares, Inc.
Employment Agreement For SAMUEL B. HAYES, III
----------------------------
This EMPLOYMENT AGREEMENT is made, entered into, and is
effective, contingent upon Compensation Committee
approval and ratification by the Board of Directors, as
of this first day of July, 1994 (the "Effective Date"),
by and between Boatmen's Bancshares, Inc., a Missouri
corporation, (the "Company") and Samuel B. Hayes, III
(the "Executive").
WHEREAS, the Executive is presently employed by the
Company in the capacity of President; and
WHEREAS, the Executive possesses considerable
experience and an intimate knowledge of the business
and affairs of the Company, its policies, methods,
personnel, and operations; and
WHEREAS, the Company recognizes that the Executive's
contributions have been substantial and meritorious
and, as such, the Executive has demonstrated unique
qualifications to act in an executive capacity for the
Company; and
WHEREAS, the Company is desirous of assuring the
continued employment of the Executive in the above
stated capacities, and Executive is desirous of having
such assurance;
NOW THEREFORE, in consideration of the foregoing and
of the mutual covenants and agreements of the parties
set forth in this Agreement, and of other good and
valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
Article 1. Term of Employment
The Company hereby agrees to employ the Executive
and the Executive hereby agrees to continue to serve
the Company, in accordance with the terms and
conditions set forth herein, for an initial period of
three (3) years, commencing as of the Effective Date of
this Agreement, as indicated above; subject, however,
to earlier termination as expressly provided herein.
The initial three (3) year period of employment
automatically shall be extended for one (1) additional
year at the end of the initial three (3) year term, and
then again after each successive year thereafter.
However, either party may terminate this Agreement at
the end of the initial three (3) year period, or at the
end of any successive one (1) year term thereafter, by
giving the other party written notice of intent not to
renew, delivered at least three (3) months prior to the
end of such initial period or successive term.
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In the event such notice of intent not to renew is
properly delivered, this Agreement, along with all
corresponding rights, duties, and covenants,
automatically shall expire at the end of the initial
period or successive term then in progress.
However, regardless of the above, if at any time
during the initial period of employment, or successive
term, a Change in Control of the Company occurs (as
defined in Article 7 herein), then this Agreement shall
become immediately irrevocable for the longer of: (a)
three (3) years beyond the month in which the effective
date of such Change in Control occurs; or (b) until all
obligations of the Company hereunder have been
fulfilled, and until all benefits provided hereunder
have been paid.
Article 2. Position and Responsibilities
During the term of this Agreement, the Executive
agrees to serve as President of the Company, and as a
member of the Company's Board of Directors if so
elected. In his capacity as President of the Company,
the Executive shall report directly to the Chairman and
Chief Executive Officer of the Company, and shall
maintain the level of duties and responsibilities as in
effect as of the Effective Date, or such higher level
of duties and responsibilities as he may be assigned
during the term of this Agreement. The Executive shall
have the same status, privileges, and responsibilities
normally inherent in such capacities in financial
institutions of similar size and character.
Article 3. Standard of Care
During the term of this Agreement, the Executive
agrees to devote substantially his full time,
attention, and energies to the Company's business and
shall not be engaged in any other business activity,
whether or not such business activity is pursued for
gain, profit, or other pecuniary advantage. However,
subject to Article 9 herein, the Executive may serve as
a director of other companies so long as such service
is not injurious to the Company. The Executive
covenants, warrants, and represents that he shall:
(a) Devote his full and best efforts to the
fulfillment of his employment obligations; and
(b) Exercise the highest degree of loyalty and the
highest standards of conduct in the
performance of his duties.
This Article 3 shall not be construed as preventing
the Executive from investing assets in such form or
manner as will not require his services in the daily
operations of the affairs of the companies in which
such investments are made.
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Article 4. Compensation
As remuneration for all services to be rendered by
the Executive during the term of this Agreement, and as
consideration for complying with the covenants herein,
the Company shall pay and provide to the Executive the
following:
4.1. BASE SALARY. The Company shall pay the
Executive a Base Salary in an amount which shall be
established from time to time by the Board
of Directors of the Company or the Board's designee;
provided, however, that such Base Salary shall not be
less than Four Hundred Eighty Five Thousand Dollars
($485,000.00) per year. This Base Salary shall be paid
to the Executive in equal bimonthly installments
throughout the year, consistent with the normal payroll
practices of the Company.
The annual Base Salary shall be reviewed at least
annually following the Effective Date of this
Agreement, while this Agreement is in force, to
ascertain whether, in the judgment of the Board or the
Board's designee, such Base Salary should be increased.
If so increased, the Base Salary as stated above shall,
likewise, be increased for all purposes of this
Agreement.
4.2. ANNUAL BONUS. In addition to his Base Salary,
the Executive shall be eligible to participate in the
Company's short-term incentive program, as such program
may exist from time-to-time, at a level commensurate
with the Executive's position with the Company, as
determined at the sole discretion of the Compensation
Committee.
4.3. LONG-TERM INCENTIVES. The Executive shall be
eligible to participate in the Company's Long-Term
Incentive Plan, as such shall be amended or superseded
from time-to-time, at a level commensurate with the
Executive's position, as determined at the sole
discretion of the Compensation Committee.
4.4. RETIREMENT BENEFITS. The Company shall provide
to the Executive participation in all Company qualified
defined benefit and defined contribution retirement
plans, subject to the eligibility and participation
requirements of such plans. The Executive's retirement
benefits shall not be less than those that would be
provided him under the terms of the Boatmen's
Bancshares, Inc. Retirement Plan for Employees and the
Boatmen's Supplemental Retirement Plan in effect as of
the Effective Date or as such benefits shall be
increased, whether or not the benefits under such
programs shall be decreased or eliminated. The
obligations of the Company pursuant to this Section 4.4
shall survive the termination of this Agreement.
4.5. EMPLOYEE BENEFITS. The Company shall provide
to the Executive all benefits to which other executives
and employees of the Company are entitled, as
commensurate with the Executive's position, subject to
the eligibility requirements and other provisions of
such arrangements. Such benefits shall include, but
shall not be limited to, group term life insurance,
comprehensive health and major medical insurance,
dental and life insurance, and short-term and long-term
disability.
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4.6. PERQUISITES. The Company shall provide to the
Executive, at the Company's cost, all perquisites which
are suitable to the character of Executive's position
with the Company and adequate for the performance of
his duties hereunder.
4.7. RIGHT TO CHANGE PLANS. By reason of Sections
4.5 and 4.6 herein, the Company shall not be obligated
to institute, maintain, or refrain from changing,
amending, or discontinuing any benefit plan or
perquisite, so long as such changes are similarly
applicable to executive employees generally.
Article 5. Expenses
The Company shall pay, or reimburse the Executive,
for all ordinary and necessary expenses, in a
reasonable amount, which the Executive incurs in
performing his duties under this Agreement including,
but not limited to, travel, entertainment, professional
dues and subscriptions, and all dues, fees, and
expenses associated with membership in various
professional, business, and civic associations and
societies in which the Executive's participation is in
the best interest of the Company.
Article 6. Employment Terminations
6.1. TERMINATION DUE TO RETIREMENT OR DEATH. In
the event the Executive's employment is terminated
while this Agreement is in force by reason of
Retirement (as defined under the then established rules
of the Company's tax-qualified retirement plan), or
death, the Executive's benefits shall be determined in
accordance with the Company's retirement, survivor's
benefits, insurance, and other applicable programs of
the Company then in effect; provided, however, that
such benefits shall be no less than those set forth in
Section 4.4 herein. Upon the effective date of such
termination, the Company's obligation under this
Agreement to pay and provide to the Executive the
elements of pay described in Sections 4.1, 4.2, and 4.3
shall immediately expire. However, the Executive shall
receive all other rights and benefits that he is vested
in, pursuant to other plans and programs of the
Company.
6.2. TERMINATION DUE TO DISABILITY. In the event
that the Executive becomes Disabled (as defined below)
during the term of this Agreement and is, therefore,
unable to perform his duties herein for more than one
hundred eighty (180) total calendar days during any
period of twelve (12) consecutive months, or in the
event of the Board's reasonable expectation that the
Executive's Disability will exist for more than a
period of one hundred eighty (180) calendar days, the
Company shall have the right to terminate the
Executive's active employment as provided in this
Agreement. However, the Board shall deliver written
notice to the Executive of the Company's intent to
terminate for Disability at least thirty (30) calendar
days prior to the effective date of such termination.
A termination for Disability shall become effective
upon the end of the thirty (30) day notice period. Upon
such effective date, the Company's obligation to pay
and provide to the Executive the elements of pay
described in Sections 4.1, 4.2, and 4.3 shall
immediately expire. However, the Executive shall
receive all rights and benefits that he is vested in,
pursuant to other plans and programs of the Company.
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The term "Disability" shall mean, for all purposes
of this Agreement, the incapacity of the Executive, due
to injury, illness, disease, or bodily or mental
infirmity, to engage in the performance of
substantially all of the usual duties of employment
with the Company as contemplated by Article 2 herein,
such Disability to be determined by the Board of
Directors of the Company upon receipt and in reliance
on competent medical advice from one (1) or more
individuals, selected by the Board, who are qualified
to give such professional medical advice.
It is expressly understood that the Disability of
the Executive for a period of one hundred eighty (180)
calendar days or less in the aggregate during any
period of twelve (12) consecutive months, in the
absence of any reasonable expectation that his
Disability will exist for more than such a period of
time, shall not constitute a failure by him to perform
his duties hereunder and shall not be deemed a breach
or default and the Executive shall receive full
compensation for any such period of Disability or for
any other temporary illness or incapacity during the
term of this Agreement.
6.3. VOLUNTARY TERMINATION BY THE EXECUTIVE. The
Executive may terminate this Agreement at any time by
giving the Board of Directors of the Company written
notice of intent to terminate, delivered at least
ninety (90) calendar days prior to the effective date
of such termination.
Upon the effective date of such termination,
following the expiration of the ninety (90) day notice
period, the Company shall pay the Executive his full
Base Salary, at the rate then in effect as provided in
Section 4.1 herein, through the effective date of
termination, plus all other benefits to which the
Executive has a vested right at that time (for this
purpose, the Executive shall not be paid any Bonus with
respect to the fiscal year in which voluntary
termination under this Section 6.3 occurs). In the
event that the terms and provisions of Article 7 herein
do not apply to such termination, the Company and the
Executive thereafter shall have no further obligations
under this Agreement. However, in the event the terms
and provisions of Article 7 herein apply, the payments
and benefits set forth therein shall apply.
6.4. INVOLUNTARY TERMINATION BY THE COMPANY WITHOUT
CAUSE. At all times prior to six (6) full calendar
months before the effective date of a Change in
Control, or at any time more than three (3) years after
the effective date of a Change in Control, the Board
may terminate the Executive's employment, as provided
under this Agreement, at any time, for reasons other
than death, Disability, Retirement, or for Cause, by
notifying the Executive in writing of the Company's
intent to terminate, at least thirty (30) calendar days
prior the effective date of such termination.
Upon the effective date of such termination,
following the expiration of the thirty (30) day notice
period, the Company shall pay to the Executive a lump
sum cash payment equal to the greater of: (a) the Base
Salary then in effect for the remaining term of this
Agreement (assuming no additional extensions of this
Agreement's term beyond that in effect as of the
effective date of termination), together with
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continuation of health and welfare benefits for the
remaining term of this Agreement; or (b) one (1) full
year of his Base Salary in effect as of the effective
date of termination, plus a one (1) year continuation
of his health and welfare benefits.
Further, the Company shall pay the Executive all
other benefits to which the Executive has a vested
right at the time, according to the provisions of the
governing plan or program. The Company and the
Executive thereafter shall have no further obligations
under this Agreement.
If the Executive's employment is terminated for any
of the reasons set forth in Section 7.1 herein, the
Executive shall be entitled to receive the benefits
provided in Section 7.1 herein in lieu of the benefits
set forth in this Section 6.4.
6.5. TERMINATION FOR CAUSE. Nothing in this
Agreement shall be construed to prevent the Board from
terminating the Executive's employment under this
Agreement for "Cause."
"Cause" shall be defined as conduct of the Executive
which is finally adjudged to be knowingly fraudulent,
deliberately dishonest or willful misconduct. The
Company's Board of Directors, by majority vote, shall
make the determination of whether Cause exists, after
providing the Executive with notice of the reasons the
Board believes Cause may exist, and after giving the
Executive the opportunity to respond to the allegation
that Cause exists.
In the event this Agreement is terminated by the
Board for Cause, the Company shall pay the Executive
his Base Salary through the effective date of the
employment termination and the Executive shall
immediately thereafter forfeit all rights and benefits
(other than vested benefits) he would otherwise have
been entitled to receive under this Agreement. The
Company and the Executive thereafter shall have no
further obligations under this Agreement.
6.6. TERMINATION FOR GOOD REASON. At any time
during the term of this Agreement, the Executive may
terminate this Agreement for Good Reason (as defined
below) by giving the Board of Directors of the Company
thirty (30) calendar days written notice of intent to
terminate, which notice sets forth in reasonable detail
the facts and circumstances claimed to provide a basis
for such termination.
Upon the expiration of the thirty (30) day notice
period, the Good Reason termination shall become
effective, and the Company shall pay and provide to the
Executive the benefits set forth in this Section 6.6
(or, in the event of termination for Good Reason within
the six (6) full calendar month period prior to the
effective date of a Change in Control, or the three (3)
year period following the effective date of a Change in
Control, the benefits set forth in Section 7.1 herein).
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Good Reason shall mean, without the Executive's
express written consent, the occurrence of any one or
more of the following:
(a) The assignment of the Executive to duties
materially inconsistent with the Executive's
authorities, duties, responsibilities, and
status (including offices, titles, and
reporting requirements) as an officer of the
Company, or a material reduction or alteration
in the nature or status of the Executive's
authorities, duties, or responsibilities from
those in effect during the immediately
preceding fiscal year;
(b) Without the Executive's consent, the Company's
requiring the Executive to be based at a
location which is at least fifty (50) miles
further from the Executive's current primary
residence than is such residence from the
Company's current headquarters, except for
required travel on the Company's business to
an extent substantially consistent with the
Executive's business obligations as of the
Effective Date;
(c) A reduction by the Company in the Executive's
Base Salary as in effect on the Effective
Date, as provided in Section 4.1 herein, or as
the same shall be increased from time to time;
(d) The failure of the Company to continue in
effect any of the Company's short- and/or
long-term incentive compensation plans, or
employee benefit or retirement plans,
policies, practices, or arrangements in which
the Executive participates as of the Effective
Date (for this purpose, a replacement program,
the effect of which continues the Executive's
participation in such program on substantially
the same basis as existed immediately prior to
the effective date of a Change in Control
shall be deemed to be a continuation of the
previous program), or the failure by the
Company to continue the Executive's
participation therein on substantially the
same basis, both in terms of the amount of the
benefits provided and the level of the
Executive's participation, relative to other
executives of the Company; or
(e) The failure of the Company to obtain a
satisfactory agreement from any successor to
the Company to assume and agree to perform
this Agreement, as contemplated in Section
10.1 herein.
Upon a termination of the Executive's employment for
Good Reason at any time other than the six (6) full
calendar month period prior to the effective date of a
Change in Control, or the three (3) year period
following the effective date of a Change in Control,
the Executive shall be entitled to receive the same
payments and benefits as he is entitled to receive
following an involuntary termination of his employment
by the Company without Cause, as specified in Section
6.4 herein. The payment of Base Salary and pro rata
Bonus shall be made to the Executive within thirty (30)
calendar days following the effective date of
employment termination. Upon a termination for Good
Reason within the six (6) full calendar month period
prior to the effective date of a Change in Control, or
within the three (3) year period
7
<PAGE> 9
following the effective date of a Change in Control, the
Executive shall be entitled to receive the payments and benefits
set forth in Section 7.1 herein in lieu of those set forth in
this Section 6.6.
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's
incapacity due to physical or mental illness. The
Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason herein.
Article 7. Change in Control
7.1. EMPLOYMENT TERMINATIONS IN CONNECTION WITH A
CHANGE IN CONTROL. In the event of a Qualifying
Termination (as defined below) within six (6) full
calendar months prior to the effective date of a Change
in Control, or within three (3) years following the
effective date of a Change in Control, then in lieu of
all other benefits provided to the Executive under the
provisions of this Agreement, the Company shall pay to
the Executive and provide him with the following
severance benefits:
(a) An amount equal to three (3) times the highest
rate of the Executive's annualized Base Salary
rate in effect at any time up to and including
the effective date of termination;
(b) An amount equal to three (3) times the
Executive's average annual bonus earned over
the three (3) fiscal years prior to the Change
in Control (whether or not deferred);
(c) An amount equal to the Executive's unpaid Base
Salary and accrued vacation pay through the
effective date of termination; and
(d) A continuation of the welfare benefits of
medical insurance, dental insurance, and group
term life insurance for three (3) full years
from the effective date of termination. These
benefits shall be provided to the Executive at
the same premium cost, and at the same
coverage level, as in effect as of the
Executive's effective date of termination.
However, in the event the premium cost and/or
level of coverage shall change for all
employees of the Company, the cost and/or
coverage level, likewise, shall change for the
Executive in a corresponding manner.
The continuation of these welfare benefits shall
be discontinued prior to the end of the three (3)
year period in the event the Executive has
available substantially similar benefits from a
subsequent employer, as determined by the
Company's Board of Directors or the Board's
designee.
8
<PAGE> 10
For purposes of this Article 7, a Qualifying
Termination shall mean any termination of the
Executive's employment OTHER THAN: (1) by the Company
for Cause (as provided in Section 6.5 herein); (2) by
reason of death, Disability (as provided in Section 6.2
herein), or Retirement (as such term is then defined in
the Company's tax qualified defined benefit retirement
plan); or (3) by the Executive without Good Reason (as
provided in Section 6.6 herein, but specifically
excluding voluntary terminations within the period
beginning on the first anniversary of the effective
date of the Change in Control and ending thirty (30)
days after such date"i.e., any voluntary termination by
the Executive within such thirty (30) day period shall
result in the Company's obligation to make the payments
and provide the benefits set forth in this Section 7.1
in lieu of any other benefits hereunder).
7.2. DEFINITION OF "CHANGE IN CONTROL". A Change in
Control of the Company shall be deemed to have occurred
as of the first day any one or more of the following
conditions shall have been satisfied:
(a) Any individual, corporation (other than the
Company), partnership, trust, association,
pool, syndicate, or any other entity or any
group of persons acting in concert becomes the
beneficial owner, as that concept is defined
in Rule 13d-3 promulgated by the Securities
and Exchange Commission under the Securities
Exchange Act of 1934, of securities of the
Company possessing twenty percent (20%) or
more of the voting power for the election of
directors of the Company;
(b) There shall be consummated any consolidation,
merger, or other business combination
involving the Company or the securities of the
Company in which holders of voting securities
of the Company immediately prior to such
consummation own, as a group, immediately
after such consummation, voting securities of
the Company (or, if the Company does not
survive such transaction, voting securities of
the corporation surviving such transaction)
having less than fifty percent (50%) of the
total voting power in an election of directors
of the Company (or such other surviving
corporation);
(c) During any period of two (2) consecutive
years, individuals who at the beginning of
such period constitute the directors of the
Company cease for any reason to constitute at
least a majority thereof unless the election,
or the nomination for election by the
Company's shareholders, of each new director
of the Company was approved by a vote of at
least two-thirds (2/3) of the directors of the
Company then still in office who were
directors of the Company at the beginning of
any such period;
(d) Removal by the stockholders of all or any of
the incumbent directors of the Company other
than a removal for Cause; or
9
<PAGE> 11
(e) There shall be consummated any sale, lease,
exchange, or other transfer (in one
transaction or a series of related
transactions) of all, or substantially all, of
the assets of the Company (on a consolidated
basis) to a party which is not controlled by
or under common control with the Company.
7.3. LIMITATION ON CHANGE-IN-CONTROL BENEFITS.
Notwithstanding any other provision of this Agreement,
if any portion of the benefits provided in Section 7.1
herein (the "Benefits") or any other payment under this
Agreement, or under any other agreement with or plan of
the Company (in the aggregate "Total Payments") would
constitute an "excess parachute payment," then the
payments to be made to the Executive under this
Agreement shall be reduced such that the value of the
aggregate Total Payments that the Executive is entitled
to receive shall be one dollar ($1) less than the
maximum amount which the Executive may receive without
becoming subject to the tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the
"Code"), or which the Company may pay without loss of
deduction under Section 280G(a) of the Code.
For purposes of this Agreement, the terms "excess
parachute payment" and "parachute payments" shall have
the meanings assigned to them in Section 280G of the
Code, and such "parachute payments" shall be valued as
provided therein.
Within sixty (60) days following delivery of the
notice of employment termination by the Executive or
the Company pursuant to the terms of this Agreement, or
notice by the Company to the Executive of its belief
that there is a payment or benefit due the Executive
which will result in an "excess parachute payment" as
defined in Section 280G of the Code, the Executive and
the Company, at the Company's expense, shall obtain the
opinion of such legal counsel, which need not be
unqualified, as the Executive may choose, which sets
forth: (i) the amount of the Executive's "annualized
includible compensation for the base period" (as
defined in Code Section 280G(d)(1)); (ii) the present
value of the Total Payments; and (iii) the amount and
present value of any "excess parachute payment." The
opinion of such legal counsel shall be supported by the
opinion of a certified public accounting firm. Such
opinion shall be binding upon the Company and the
Executive.
In the event that such opinion determines that there
would be an "excess parachute payment," the benefits
provided in Section 7.1 herein, or any other payment
determined by such counsel to be includible in Total
Payments shall be reduced or eliminated as specified by
the Executive in writing delivered to the Company
within thirty (30) days of his receipt of such opinion,
or, if the Executive fails to so notify the Company,
then as the Company shall reasonably determine, so that
under the basis of calculations set forth in such
opinion, there will be no "excess parachute payment."
10
<PAGE> 12
The provisions of this Section 7.3, including the
calculations, notices, and opinion provided for herein
shall be based upon the conclusive presumption that:
(i) the compensation and benefits provided for in
Section 7.1 herein; and (ii) any other compensation
earned prior to the effective date of employment
termination by the Executive pursuant to the Company's
compensation programs (if such payments would have been
made in the future in any event, even though the timing
of such payment is triggered by the Change in Control),
are reasonable.
7.4. SUBSEQUENT IMPOSITION OF EXCISE TAX. If,
notwithstanding compliance with the provisions of
Section 7.3 herein, it is ultimately determined by a
court or pursuant to a final determination by the
Internal Revenue Service that any portion of the Total
Payments is considered to be a "parachute payment,"
subject to the excise tax under Section 4999 of the
Code, which was not contemplated to be a "parachute
payment" at the time of payment (so as to accurately
determine whether a limitation should have been applied
to the Total Payments to maximize the net benefit to
the Executive, as provided in Section 7.3 hereof), the
Executive shall be entitled to receive a lump sum cash
payment sufficient to place the Executive in the same
net after-tax position, computed by using the "Special
Tax Rate" as such term is defined below, that the
Executive would have been in had such payment not been
subject to such excise tax, and had the Executive not
incurred any interest charges or penalties with respect
to the imposition of such excise tax. For purposes of
this Agreement, the "Special Tax Rate" shall be the
highest effective Federal and state marginal tax rates
applicable to the Executive in the year in which the
payment contemplated under this Section 7.4 is made.
Article 8. Outplacement Assistance
Following a Qualifying Termination (as defined in
Section 7.1 herein) the Executive shall be reimbursed
by the Company for the costs of all outplacement
services obtained by the Executive within the two (2)
year period after the effective date of termination;
provided, however, that the total reimbursement shall
be limited to an amount equal to fifteen percent (15%)
of the Executive's Base Salary as of the effective date
of termination.
Article 9. Noncompetition
9.1. PROHIBITION ON COMPETITION. Without the prior
written consent of the Company, during the term of this
Agreement, and for the greater of twelve (12) months
following the expiration of this Agreement, or any
other period in which amounts are paid hereunder, the
Executive shall not, as an employee or an officer,
engage directly or indirectly in any business or
enterprise which is "in competition" with the Company
or its successors or assigns. For purposes of this
Agreement, a business or enterprise will be deemed to
be "in competition" if it is engaged in any significant
business activity of the Company or its subsidiaries
within the State of Missouri.
11
<PAGE> 13
However the Executive shall be allowed to purchase
and hold for investment less than three percent (3%) of
the shares of any corporation whose shares are
regularly traded on a national securities exchange or
in the over-the-counter market.
9.2. DISCLOSURE OF INFORMATION. The Executive
recognizes that he has access to and knowledge of
certain confidential and proprietary information of the
Company which is essential to the performance of his
duties under this Agreement. The Executive will not,
during or after the term of his employment by the
Company, in whole or in part, disclose such information
to any person, firm, corporation, association, or other
entity for any reason or purpose whatsoever, nor shall
he make use of any such information for his own
purposes.
9.3. COVENANTS REGARDING OTHER EMPLOYEES. During
the term of this Agreement, and for a period of twenty
four (24) months following the expiration of this
Agreement, the Executive agrees not to attempt to
induce any employee of the Company to terminate his or
her employment with the Company, accept employment with
any competitor of the Company, or to interfere in a
similar manner with the business of the Company.
Article 10. Assignment
10.1. ASSIGNMENT BY COMPANY. This Agreement may and
shall be assigned or transferred to, and shall be
binding upon and shall inure to the benefit of, any
successor of the Company, and any such successor shall
be deemed substituted for all purposes of the "Company"
under the terms of this Agreement. As used in this
Agreement, the term "successor" shall mean any person,
firm, corporation, or business entity which at any
time, whether by merger, purchase, or otherwise,
acquires all or substantially all of the assets or the
business of the Company. Notwithstanding such
assignment, the Company shall remain, with such
successor, jointly and severally liable for all its
obligations hereunder.
Failure of the Company to obtain the agreement of
any successor to be bound by the terms of this
Agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement, and
shall immediately entitle the Executive to compensation
from the Company in the same amount and on the same
terms as the Executive would be entitled in the event
of a termination of employment for Good Reason within
three (3) years after a Change in Control, as provided
in Article 7 herein.
Except as herein provided, this Agreement may not
otherwise be assigned by the Company.
10.2. ASSIGNMENT BY EXECUTIVE. The services to be
provided by the Executive to the Company hereunder are
personal to the Executive, and the Executive's duties
may not be assigned by the Executive; provided, however
that this Agreement shall inure to the benefit of and
be enforceable by the Executive's personal or legal
representatives, executors, and administrators,
successors, heirs, distributees, devisees, and
legatees. If the Executive dies while any amounts
payable to the
12
<PAGE> 14
Executive hereunder remain outstanding, all such amounts,
unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee or, in the
absence of such designee, to the Executive's estate.
Article 11. Dispute Resolution and Notice
11.1. DISPUTE RESOLUTION. The Executive shall have
the right and option to elect to have any good faith
dispute or controversy arising under or in connection
with this Agreement settled by litigation or by
arbitration.
If arbitration is selected, such proceeding shall be
conducted before a panel of three (3) arbitrators
sitting in a location selected by the Executive within
fifty (50) miles from the location of his principal
place of employment, in accordance with the rules of
the American Arbitration Association then in effect.
Judgment may be entered on the award of the arbitrators
in any court having competent jurisdiction.
All expenses of such litigation or arbitration,
including the reasonable fees and expenses of the legal
representative for the Executive, and necessary costs
and disbursements incurred as a result of such dispute
or legal proceeding, and any prejudgment interest,
shall be borne by the Company.
11.2. NOTICE. Any notices, requests, demands, or
other communications provided for by this Agreement
shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the
last address he has filed in writing with the Company
or, in the case of the Company, at its principal
offices.
Article 12. Miscellaneous
12.1. ENTIRE AGREEMENT. This Agreement supersedes
any prior agreements or understandings, oral or
written, between the parties hereto, with respect to
the subject matter hereof, and constitutes the entire
agreement of the parties with respect thereto. Without
limiting the generality of the foregoing sentence, this
Agreement completely replaces and supersedes the
Employment Agreement entered into by and between the
Company and the Executive dated the ninth day of
November, 1993, and all amendments thereto, in their
entirety.
12.2. MODIFICATION. This Agreement shall not be
varied, altered, modified, canceled, changed, or in any
way amended except by mutual agreement of the parties
in a written instrument executed by the parties hereto
or their legal representatives.
12.3. SEVERABILITY. In the event that any provision
or portion of this Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.
13
<PAGE> 15
12.4. COUNTERPARTS. This Agreement may be executed
in one (1) or more counterparts, each of which shall be
deemed to be an original, but all of which together
will constitute one and the same Agreement.
12.5. TAX WITHHOLDING. The Company may withhold
from any benefits payable under this Agreement all
Federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or
ruling.
12.6. BENEFICIARIES. The Executive may designate
one or more persons or entities as the primary and/or
contingent beneficiaries of any amounts to be received
under this Agreement. Such designation must be in the
form of a signed writing acceptable to the Board or the
Board's designee. The Executive may make or change such
designation at any time.
12.7. PAYMENT OBLIGATIONS ABSOLUTE. The Company's
obligation to make the payments and the arrangements
provided for herein shall be absolute and
unconditional, and shall not be affected by any
circumstances, including, without limitation, any
offset, counterclaim, recoupment, defense, or other
right which the Company may have against the Executive
or anyone else. All amounts payable by the Company
hereunder shall be paid without notice or demand. Each
and every payment made hereunder by the Company shall
be final, and the Company shall not seek to recover all
or any part of such payment from the Executive or from
whomsoever may be entitled thereto, for any reasons
whatsoever.
The Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or
arrangements made under any provision of this
Agreement, and the obtaining of any such other
employment shall in no event effect any reduction of
the Company's obligations to make the payments and
arrangements required to be made under this Agreement,
except to the extent provided in Section 7.1(d) herein.
12.8. CONTRACTUAL RIGHTS TO BENEFITS. Subject to
approval by the Company's Compensation Committee and
ratification by the Board of Directors, this Agreement
establishes and vests in the Executive a contractual
right to the benefits to which he is entitled
hereunder. However, nothing herein contained shall
require or be deemed to require, or prohibit or be
deemed to prohibit, the Company to segregate, earmark,
or otherwise set aside any funds or other assets, in
trust or otherwise, to provide for any payments to be
made or required hereunder.
12.9. PAYMENT OF LEGAL FEES. To the extent permitted
by law, the Company shall pay all legal fees, costs of
litigation, prejudgment interest, and other expenses
incurred in good faith by the Executive as a result of
the Company's refusal to provide the benefits to which
the Executive becomes entitled under this Agreement, or
as a result of the Company's contesting the validity,
enforceability, or interpretation of this Agreement, or
as a result of any conflict between the parties
pertaining to this Agreement.
14
<PAGE> 16
Article 13. Governing Law
To the extent not preempted by Federal law, the
provisions of this Agreement shall be construed and
enforced in accordance with the laws of the state of
Missouri.
IN WITNESS WHEREOF, the Executive and the Company
have executed this Agreement, subject to Compensation
Committee approval and ratification by the Board of
Directors, as of the Effective Date.
BOATMEN'S BANCSHARES, INC. EXECUTIVE:
By:---------------------------- ----------------------------
ARTHUR J. FLEISCHER SAMUEL B. HAYES, III
15
<PAGE> 1
Exhibit 10(g)
CENTERRE EXECUTIVE RETIREMENT PROGRAM
-------------------------------------
SECTION I
---------
DEFINITIONS
-----------
A. "Average Compensation" means one-third of the aggregate Compensation during
the three consecutive calendar years which give rise to the highest
aggregate.
B. "Committee" means the Plan committee appointed pursuant to Section V.
C. "Company" means Centerre Bancorporation.
D. "Compensation" means annual rate of remuneration paid to an Employee,
(determined as of each February 1 if the Participant is an Employee
on such date), including bonuses earned under the Centerre Executive
Incentive Compensation Plan during the prior year but excluding all other
forms of irregular payments.
E. "Effective Date" means January 1, 1983.
F. "Employee means a person employed by the Employer.
G. "Employer" means Company, Centerre Trust Company, Centerre Bank or any
other corporation which adopts the plan with the consent of the Company
and in which the majority of the issued and outstanding voting stock is
owned directly or indirectly by the Company.
H. "Participant" means a current Employee who has satisfied the eligibility
requirements of Section II.
#P" "
I. "Pension Credited Service" is the total number of years (and fractions
thereof) of Pension Credited Service as of the date of computation as
determined for purposes of calculating benefits under the Centerre
Bancorporation Retirement Income Plan, Centerre Trust Company Retirement
Plan and the Centerre Bank Retirement Income Plan.
J. "Plan" means Centerre Executive Retirement Program.
K. "Social Security Estimate" means the estimated amount determined by the
Committee of the annual Primary Insurance Amount under the Act in effect
as of the date of computation adjusted for early retirement if retirement
occurs after age 62 or adjusted as though retirement age were 62, in the
event retirement occurs prior to age 62.
L. "Special Deferred Income" means the amount determined by the Committee,
actuarially adjusted to reflect the form of benefit payable under the
Plan, payable as a retirement allowance under an employment agreement with
the Employer excluding benefits under the Centerre Bancorporation
Incentive Compensation Plan.
SECTION II
----------
ELIGIBILITY
-----------
On and after the Effective Date, the Committee may, in its discretion, make
any highly paid key Employee a Participant provided that the total number
of Participants shall not exceed 1.5% of the total number of Employees.
Notwithstanding the preceding an Employee shall not become a Participant
unless the
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<PAGE> 2
Employee and the Employer have both executed a participation agreement
(substantially in the form contained in Appendix A) provided by the
Committee.
SECTION III
-----------
RETIREMENT DATES
----------------
A. Normal Retirement Date - A Participant's Normal Retirement
----------------------
Date shall be the date he attains age 65.
B. Early Retirement Date - A Participant's Early Retirement Date shall
---------------------
be the date he attains age 55 but not age 65, has 10 years of Pension
Credited Service, and ceases employment with the Employer other than
by death.
C. Postponed Retirement Date - A Participant's Postponed Retirement Date
-------------------------
shall be the date he ceases employment with the Employer after his
Normal Retirement Date other than by death.
SECTION IV
----------
PENSION BENEFITS
----------------
A. Normal Retirement Benefit -
-------------------------
A Participant who retires at his Normal Retirement Date shall receive,
commencing on the first day of the month coincident with or next following
his Normal Retirement Date, a monthly Normal Retirement Benefit for his
life equal to one-twelfth of (1) minus (2) below:
(1) 2.25% of Average Compensation multiplied by his years (and fractions
thereof) of Pension Credited Service (up to a maximum of ten such
years) plus 1.75% of
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<PAGE> 3
Average Compensation multiplied by his years (and fractions thereof) of
Pension Credited Service in excess of ten (up to a maximum of ten such
years) plus 1.00% of Average Compensation multiplied by his years (and
fractions thereof) of Pension Credited Service in excess of twenty
(up to a maximum of ten such years) plus .50% of Average Compensation
multiplied by his years (and fractions thereof) of Pension Credited
Service in excess of thirty (up to a maximum of ten such years).
(2) Annual amounts of benefits payable at his Normal Retirement Date
(determined without regard to any options elected) under the
(a) Centerre Bancorporation Retirement Income Plan, (b) Centerre Trust
Company Retirement Income Plan, (c) Centerre Bank Retirement Income
Plan, (d) Special Deferred Income and (e) Social Security Estimate.
B. Early Retirement Benefit -
------------------------
(1) A Participant who retires at his Early Retirement Date shall
receive a monthly Early Retirement Benefit commencing on the
first day of the month coincident with or next following his
Early Retirement Date equal to the monthly benefit to which he
would be entitled at his Normal Retirement Date as calculated under
Section IV A above based on his year of Pension
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<PAGE> 4
Credited Service and Average Compensation up to such Early
Retirement Date, such benefit to be reduced by one-sixth of 1% for
each of the first 36 full months (2% per year) between his Early
Retirement Date and his Normal Retirement Date and further reduced
by five-twelfths of 1% for each full month in excess of 36 months
(5% per year) between his Early Retirement Date and his Normal
Retirement Date.
(2) Notwithstanding any other provision of the Plan, a Participant
who retires prior to age 62 and receives the early retirement
benefit described in B.1 shall receive an additional monthly
benefit until the earlier of his death or attainment of age 62
equal to one-twelfth the Social Security Estimate.
C. Postponed Retirement Benefit -
----------------------------
A Participant who retires at his Postponed Retirement Date shall receive
a monthly Postponed Retirement Benefit for his life in an amount equal
to the amount of monthly benefit he would have received at his Normal
Retirement Date.
D. Optional Forms -
--------------
If an optional form of benefit is elected prior to the participant's
termination of employment and becomes effective with respect to the
benefits of a Participant under the Centerre Bancorporation Retirement
Income Plan,
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<PAGE> 5
the Centerre Trust Company Retirement Plan or the Centerre Bank
Retirement Income Plan, then the benefits under the Plan shall
automatically be converted into the same optional form based on the
same actuarial factors and with the same beneficiaries.
E. Death Benefits -
--------------
If a death benefit with respect to the Participant (other than under an
optional form of benefit) is paid to any person under the Centerre
Bancorporation Retirement Income Plan, the Centerre Trust Company
Retirement Plan or the Centerre Bank Retirement Income Plan, then the Plan
shall pay a death benefit to such person which bears the same ratio to the
monthly amount the Participant would have received if he had retired on the
date of his death that the death benefit under such plan bears to the
monthly amount the Participant would have received under such plan if he had
retired on the date of his death.
SECTION V
---------
ADMINISTRATION AND CLAIMS PROCEDURE
-----------------------------------
A. The Chief Executive Officer of the Company shall appoint a Committee of
three persons, who shall serve without compensation at the pleasure of
the Chief Executive Officer.
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<PAGE> 6
Upon death, resignation or inability of a Committeeman to continue,
the Chief Executive Officer shall appoint a successor. The General
Counsel of Centerre Bank, National Association shall not serve as a
member of the Committee.
B. The Committee shall construe, interpret and administer all provisions
of the Plan and a decision of a majority of the then Committeemen shall
govern.
C. A decision of the Committee may be made by a written document signed
by a majority of the then Committeemen or by a meeting of the
Committee. The Committee may authorize any of its members to sign
documents or papers on its behalf.
D. The Committee shall appoint a Chairman from among its members, and
a Secretary who need not be a Committeeman. The Secretary shall keep
all records of meetings and of any action by the Committee and any and
all other records desired by the Committee. The Committee may appoint
such agents, who need not be members of the Committee, as it may deem
necessary for the effective exercise of its duties, and may, to the extent
not inconsistent herewith, delegate to such agents any powers and duties,
both ministerial and discretionary, as the Committee may deem expedient and
appropriate.
E. No Committeeman, as such, shall make any decision or take any action
covering exclusively his own benefits under the Plan, if he be an
Employee, but all such matters shall be decided by a majority of the
remaining Committeemen or, in
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<PAGE> 7
the event of inability to obtain a majority, by the Chief Executive
Officer of the Company.
G. A Participant or beneficiary or other person who believes that he is
being denied a benefit to which he is entitled (hereinafter referred
to as "Claimant") may file a written request for such benefit with the
Committee setting forth his claim. The request must be addressed to:
Committee, Centerre Executive Retirement Program, One Centerre Plaza,
St. Louis, Missouri 63101.
H. Upon receipt of a claim the Committee shall advise the Claimant
that a reply will be forthcoming within 90 days and shall in fact
deliver such reply within such period. However, the Committee may
extend the reply period for an additional 90 days for reasonable
cause. If the claim is denied in whole or in part, the Committee will
adopt a written opinion using language calculated to be understood
by the Claimant setting forth:
1. the specific reason or reasons for denial,
2. the specific references to pertinent Plan provisions
on which the denial is based,
3. a description of any additional material or information
necessary for the Claimant to perfect the claim and an
explanation why such material or such information is necessary,
4. appropriate information as to the steps to be taken if the
Claimant wishes to submit the claim for review, and
-8-
<PAGE> 8
5. the time limits for requesting a review under Subsection I and for
the review under Subsection J.
I. Within sixty days after the receipt by the Claimant of the written
opinion described above, the Claimant may request in writing that the
General Counsel of Centerre Bank review the determination of the
Committee. Such request must be addressed to: General Counsel, Centerre
Bank, National Association, One Centerre Plaza, St. Louis, Missouri 63101.
The Claimant or his duly authorized representative may, but need not,
review the pertinent documents and submit issues and comments in
writing for consideration by the General Counsel. If the Claimant
does not request a review of the Committee's determination by the
General Counsel within such sixty-day period, he shall be barred and
estopped from challenging the Committee's determination.
J. Within sixty days after the General Counsel's receipt of a request for
review, he will review the Committee's determination. After considering
all materials presented by the Claimant, the General counsel will
render a written opinion, written in a manner calculated to be
understood by the Claimant, setting forth the specific reasons for the
decision and containing specific references to the pertinent Plan
provisions on which the decision is based. If special circumstances
require that the sixty-day time period be extended, the General
Counsel will so notify the Claimant
-9-
<PAGE> 9
and will render the decision as soon as possible but not later than
120 days after receipt of the request for review.
SECTION VI
----------
MISCELLANEOUS
-------------
A. Plan Year
---------
The Plan shall operate on a calendar year basis.
B. Spendthrift
-----------
No Participant or beneficiary shall have the right to assign, transfer,
encumber or otherwise subject to lien any of the benefits payable or to
to be payable under this Plan.
C. Incapacity
----------
If, in the opinion of the Committee, a person to whom a benefit is
payable is unable to care for his affairs because of illness, accident or
any other reason, any payment due the person, unless prior claim
therefor shall have been made by a duly qualified guardian or other
duly appointed and qualified representative of such person, may be
paid to some member of the person's family, or to some party who,
in the opinion of the Committee, has incurred expense for such
person. Any such payment shall be a payment for the account of such
person and shall be a complete discharge of any liability.
D. Employee Rights
---------------
The Employer, in adopting this Plan, shall not be held to create or
vest in any Employee or any other person any
-10-
<PAGE> 10
interest, pension or benefits other than the benefits specifically
provided herein, or to confer upon any Employee the right to remain in
the service of the Employer.
E. Service of Process and Plan Administrator
-----------------------------------------
1. The General Counsel of Centerre Bank, National Association
shall be the agent for service of legal process.
2. The Company shall constitute the Plan Administrator.
F. Benefit Forfeiture
------------------
Notwithstanding the other provisions of the Plan, in the event the
Committee reasonably believes that a Participant has either:
(1) committed an illegal act which has damaged an Employer or
(2) breached any of the provisions of the Participation Agreement
which he entered into pursuant to Section II.
The Committee shall cancel any further payments under the Plan.
G. Unfunded Plan
-------------
The Plan shall be unfunded. Each Employer shall pay to the
Participant that portion of the benefits attributable to the
Participant's employment by that Employer based on the ratio
of the Pension Credited Serviced earned while employed by that Employer.
H. Company Rights
--------------
The Company reserves the right to amend or terminate the Plan.
-11-
<PAGE> 11
I. Employee Contributions
----------------------
There shall be no contributions by Employees.
J. Vesting
-------
A Participant whose employment is terminated prior to the earliest of
his Early Retirement Date or his Normal Retirement Date shall receive
no benefits under the Plan.
IN WITNESS WHEREOF, the Employers have caused this Plan to be
executed by their duly authorized officers this 23rd
----
day of February, 1983.
--------
Centerre Bancorporation
By /s/
-------------------------------
Centerre Trust Company
By /s/
-------------------------------
Centerre Bank
By /s/
-------------------------------
-12-
<PAGE> 12
AMENDMENT TO THE
CENTERRE EXECUTIVE RETIREMENT PROGRAM
-------------------------------------
WHEREAS, Centerre Bancorporation ("Company") previously adopted the
Centerre Executive Retirement Program ("Plan") for the benefit of eligible
employees; and
WHEREAS, the Company retained the right to amend the Plan pursuant to
Section VI-H; and
WHEREAS, the Company desires to amend the Plan effective as of
January 1, 1988.
NOW, THEREFORE, effective January 1, 1988, the Plan is amended as follows:
1. Sections I-B through I-L are renumbered Sections I-C through
I-M respectively.
2. A new Section I-B is added to read as follows:
"Change of Control" means a change of control of a nature that would
be required to be reported in response to Item 1(a) of the Current Report
on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, or any comparable successor
provision (the "Exchange Act"). Without limiting the foregoing a Change
of Control shall be deemed to have occurred for the purposes of this
Agreement, regardless of the provisions of the Exchange Act, if (i) any
"person"
<PAGE> 13
including any "group" of persons, (as such terms are used in Sections
13(d) or 14(d)(2) of the Exchange Act), is or becomes the beneficial
owner (as determined in accordance with Rule 13d-3 promulgated under
the Exchange Act), directly or indirectly, of securities of Centerre
which, when combined with all securities of Centerre theretofore directly
or indirectly beneficially owned by such person, represent 20% or more
of the combined voting power of Centerre's then outstanding securities;
(ii) at any time persons who are directors of Centerre at the date
hereof, together with persons becoming directors of Centerre subsequent
to the date hereof whose election, or nomination for election, was
approved by a vote of at least three-quarters of (or if less, all but
one of) the persons then comprising the Board of Directors of Centerre,
("Continuing Directors") cease for any reason to constitute at least
two-thirds of the directors of Centerre; (iii) Centerre is a party to a
merger or consolidation (other than with a wholly owned subsidiary of
Centerre) in which Centerre is not the surviving parent corporation;
(iv) Centerre is the surviving parent corporation in a merger or
consolidation which results in Continuing Directors prior to such merger
or consolidation ceasing to constitute at least two-thirds of the
directors of Centerre.
-2-
<PAGE> 14
3. Section I-M is deleted and replaced with the following:
"Special Deferred Income" means the amount determined by the
Committee, actuarially adjusted to reflect the form of benefit payable
under the plan, payable as a retirement allowance under an employment
agreement with the employer, excluding (i) benefits payable under the
Centerre Bancorporation Capital Accumulation Plan (formerly known as the
Centerre Bancorporation Savings Plan and the Centerre Bancorporation
Incentive Compensation Plan), (ii) payments under the Executive Deferred
Compensation Plan and (iii) amounts payable under an employment and
deferred compensation agreement entered into between Centerre Trust
Company of St. Louis and John Peters MacCarthy on December 27, 1977.
-------------------------------------------
4. Section VI-J is deleted and replaced with the following:
"A participant whose employment is terminated other than through
a `Change of Control' prior to the earlier of his Early Retirement
Date or his Normal Retirement Date shall receive no benefits under the
plan. A person whose employment is terminated after a Change of Control or
after attainment of the earlier of his Early Retirement Date or his
Normal Retirement Date shall be fully vested in his benefits under
the Plan."
-3-
<PAGE> 15
IN WITNESS WHEREOF, the Amendment is adopted on this
16th day of June, 1988 effective as of January 1, 1988.
- ---- -----
CENTERRE BANCORPORATION
By /s/
---------------------------------------
ATTEST:
/s/
- -------------------------
<PAGE> 16
EXHIBIT F
SECOND AMENDMENT TO THE
CENTERRE EXECUTIVE RETIREMENT PROGRAM
WHEREAS, Centerre Bancorporation ("Company") previously adopted
the Centerre Executive Retirement Program ("Plan") for the benefit of
eligible employees; and
WHEREAS, the Company retained the right to amend the Plan pursuant
to Section VI-H; and
WHEREAS, the Company desires to amend the Plan effective as of
January 1, 1988.
NOW, THEREFORE, effective January 1, 1988, the Plan is amended as follows:
1. Section I-D is deleted and the following is substituted in its
place:
D. "Compensation" means the annual salary paid to an Employee in
a calendar year (prior to any adjustment for contributions to the
- - ------- ----
Executive Deferred Compensation Plan and the Centerre Bancorporation Capital
Accumulation Plan), including bonuses earned under the Centerre Executive
Incentive Compensation Plan during the prior year, but excluding all other
forms of irregular payments.
2. Section I-I is deleted and the following is substituted in its
place:
I. "Pension Credited Service" is the total number of years (and
fractions thereof) of Pension Credited Service as of the date of computation
as determined for purposes of calculating benefits under the Centerre
Retirement Plan.
<PAGE> 17
3. Section IV-A-(2) is deleted and the following is substituted
in its place:
(2) Annual amounts of benefits payable at his Normal Retirement
Date (determined without regard to any options elected) under the (a)
Centerre Retirement Plan, (b) Special Deferred Income and (c) Social
Security Estimate.
4. Section IV-D is deleted and the following is substituted
in its place:
D. Optional Forms - If an optional form of benefit is elected prior
--------------
to the participant's termination of employment and becomes effective with
respect to the benefits of a Participant under the Centerre Retirement Plan,
then the benefits under the Plan shall automatically be converted into the
same optional form based on the same actuarial factors and with the same
beneficiaries.
5. Section IV-E is deleted and the following is substituted
in its place:
E. Death Benefits - If a death benefit payable with respect to a
--------------
Participant (other than under an optional form of benefit) is paid to any
person under the Centerre Retirement Plan, the Plan shall pay a death
benefit which is paid under the Centerre Retirement Plan. The amount of
the death benefit under the Plan will be calculated using the formula in
IV-A of the Plan but subject to the same calculations and adjustments used
in the Centerre Retirement Plan for calculating such death benefit.
-2-
<PAGE> 18
IN WITNESS WHEREOF, the Amendment is adopted on this 21st day of
----
September, 1988 effective as of January 1, 1988.
- ---------
CENTERRE BANCORPORATION
By: /s/
------------------------------------
ATTEST:
/s/
- ------------------------
-3-
<PAGE> 19
THIRD AMENDMENT TO THE
CENTERRE EXECUTIVE RETIREMENT PROGRAM
WHEREAS, Centerre Bancorporation merged into Boatmen's Bancshares, Inc.,
effective December 9, 1988, so that, by operation of law and as reflected
below, Boatmen's Bancshares, Inc. became the "Company" for purposes of the
Centerre Executive Retirement Program ("Plan"), and
WHEREAS, Boatmen's Bancshares, Inc. desires to amend the Plan effective
as of December 9, 1988.
NOW, THEREFORE, effective December 9, 1988, the Plan is amended as follows:
I. Section I-A is deleted and the following is substituted in its place:
A. "Average Compensation" means one-third of the Aggregate Compensation
during the three consecutive calendar years through 1988 which give rise to
the highest aggregate.
II. Section I-D (formerly I-C) is deleted and the following is substituted
in its place:
D. "Company" means Boatmen's Bancshares, Inc.
III. Section I-J (formerly I-I) is deleted and the following is
substituted in its place:
I. "Pension Credited Service" is the total number of years (and
fractions thereof) of Pension Credited Service through 1988 as determined
for purposes of calculating benefits for employees of Centerre Bancorporation
and it subsidiaries under the retirement plans applicable to them prior to
December 9, 1988.
IV. A new Section I-N is added as follows:
N. "Centerre Retirement Plan" means the Boatmen's Bancshares, Inc.
Retirement Plan for Employees.
<PAGE> 20
V. Section V-I is deleted and the following is substituted in its place:
I. Within sixty (60) days after the receipt by the Claimant of the
written opinion described above, the Claimant may request in writing that the
Compensation and Stock Option Committee of the Company review the determination
of the Committee. Such request must be addressed to: Secretary, Boatmen's
Bancshares, Inc., One Boatmen's Plaza, 800 Market Street, St. Louis,
Missouri 63101. The Claimant or his duly authorized representative may, but
need not, review the pertinent documents and submit issues and comments in
writing for consideration by the Compensation and Stock Option Committee.
If the Claimant does not request a review of the Committee's determination
by the Compensation and Stock Option Committee within such sixty (60) day
period, he shall be barred and estopped from challenging the Committee's
determination.
VI. Section V-J is deleted and the following is substituted in its place:
J. Decisions of the Compensation and Stock Option Committee shall
be final.
VII. Section VI-E-1 is deleted and the following is substituted in its
place:
1. The Secretary of Company shall be the agent for service of legal
process.
IN WITNESS WHEREOF, this Third Amendment is adopted on this 31 day
--
of March, 1989, effective as of December 9, 1988.
------
BOATMEN'S BANCSHARES, INC.
By /s/
----------------------------------------
-2-
<PAGE> 21
FOURTH AMENDMENT TO THE
CENTERRE EXECUTIVE RETIREMENT PROGRAM
WHEREAS, Boatmen's Bancshares, Inc., (the "Company") has been informed
by its actuarial consultants that, based upon information provided by the
actuarial consultants of Centerre Bancorporation, the Centerre Executive
Retirement Program (the "Plan") has been consistently administered to
commence benefit service from date of hire, has been communicated to
participants to include service from date of hire and has had all financial
accounting calculations and reserves based upon service from date of hire,
even though the Plan does not reflect the foregoing; and
WHEREAS, the Company desires to amend the Plan to reflect the practices
referred to above, effective as of the conception of the Plan;
NOW, THEREFORE, effective January 1, 1983, the Plan is amended so as to
change the period at the end of Section I-J (formerly I-I) to a semicolon
and to add following it this proviso: "provided, however, that such Pension
Credited Service shall be deemed to have commenced on the date of hire."
IN WITNESS WHEREOF, this Fourth Amendment is adopted on this
twenty-fifth day of June, 1990, effective as of January 1, 1983.
BOATMEN'S BANCSHARES, INC.
BY: /s/
------------------------------------------
<PAGE> 1
Exhibit 10(h)
CENTERRE BANCORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
------------------------------------
ARTICLE 1
PURPOSE
The purpose of this Executive Deferred Compensation Plan is to provide
a means whereby Centerre Bancorporation may provide for the financial security
of a select group of key management employees who have rendered valuable
services so that such employees may be retained and their productive efforts
encouraged.
ARTICLE 2
DEFINITIONS AND CERTAIN PROVISIONS
Beneficiary. "Beneficiary" means the person or persons designated
-----------
under Article 6 to receive benefits upon the death of a Participant.
Benefit Deferral Period. "Benefit Deferral Period" means the period
-----------------------
of four (4) consecutive Plan Years over which a Participant defers a portion
of his or her Compensation with respect to a Benefit Unit pursuant to
Section 4.1.
Benefit Unit. "Benefit Unit" means a unit enrolled in by a
------------
a Participant pursuant to Article 4 providing the benefits described in
Article 5.
Committee. "Committee" means the Deferred Compensation Plan
---------
Committee appointed to administer the Plan under Article 3.
<PAGE> 2
Company. "Company" means Centerre Bancorporation, a Missouri
-------
corporation.
Compensation. "Compensation" means the base salary paid to a
------------
Participant by the Company or a Subsidiary, excluding bonuses, and other
special cash or non-cash compensation, before any reduction pursuant to
this Plan.
Cumulative Deferral Amount. "Cumulative Deferral Amount" means with
--------------------------
respect to each Benefit Unit the total cumulative amount by which a
Participant's Compensation is reduced over the period prescribed in Section 4.1.
Declared Rate. "Declared Rate" means with respect to any Plan Year,
-------------
Moody's Corporate Bond Yield Average - Monthly Average Corporates as
published by Moody's Investor's Service, Inc. (or any successor thereto)
for the calendar month ending two months before the first month in such
Plan Year, or, if such yield is no longer published, a substantially similar
average selected by the Committee.
Deferral Account. "Deferral Account" means the account maintained
----------------
on the books of the Company for each Benefit Unit pursuant to Section 4.2.
Disability. "Disability" means the inability of a Participant to
----------
engage in any occupation or employment for remuneration or financial benefit
to himself or others on account of bodily injury or disease incurred while a
Participant, if such inability shall have continued for a period of six
consecutive months and will, in the opinion of a
-2-
<PAGE> 3
qualified physician satisfactory to the Committee, be permanent and continuous
during the remainder of such Participant's lifetime.
Disability Retirement. "Disability Retirement" means with respect
---------------------
to any Benefit Unit termination of a Participant's Employment by reason of
a Disability.
Disability Retirement Benefit. "Disability Retirement Benefit" means
-----------------------------
the benefit determined under Section 5.2 with respect to a Benefit Unit.
Eligible Employee. "Eligible Employee" means a key management
-----------------
Employee selected by the committee to be eligible to participate in the Plan.
The Committee's selection shall be based upon an objective formula (such as
attainment of a level of compensation, or other objective measure) uniformly
applied, which may change from time to time in the discretion of the Committee.
Employee. "Employee" means any person employed by the Employer on a
--------
regular full-time salaried basis, including officers of the Employer.
Employer. "Employer" means the Company and any Subsidiary.
--------
Employment. "Employment" means employed by an Employer.
----------
Enrollment Agreement. "Enrollment Agreement" means the written
--------------------
agreement that shall be entered into between the Employer and an
Eligible Employee pursuant to which the
-3-
<PAGE> 4
Eligible Employee becomes a Participant. In the sole discretion of the
Committee, authorization forms filed by any Participant for the first Plan
Year for which the Plan is effective and by which the Participant makes the
elections provided for by the Plan may be treated as a completed and fully
executed Enrollment Agreement for all purposes under the Plan.
Incentive Rate. "Incentive Rate" with respect to any Plan Year is the
--------------
interest rate designated by the Committee to be credited to the Deferral
Accounts in addition to the Declared Rate pursuant to Paragraphs 4.2(a) and
7.2 hereof. The Incentive Rate shall be six percent (6%) unless the
Committee sets a different rate, and any changes in the Incentive Rate shall
have only prospective application. In no event shall the Incentive Rate be
less than three percent (3%).
Normal Retirement. "Normal Retirement" means with respect to any
-----------------
Benefit Unit, termination of a Participant's Employment for reasons other
than death, (a) on or after his Normal Retirement Eligibility Date, (b) within
one (1) year following a 50% or more change in the ownership of the common
stock of the Company or the Participant's Employer, or (c) on such other
date (if any) with respect to which the Committee has consented that a
particular Participant, on a case by case basis, may retire with a Normal
Retirement Benefit without having satisfied (a) or (b), above.
-4-
<PAGE> 5
Normal Retirement Benefit. "Normal Retirement Benefit" means the
-------------------------
benefit determined under Section 5.1 with respect to a Benefit Unit.
Normal Retirement Eligibility Date. "Normal Retirement Eligibility
----------------------------------
Date" means the date on which the sum of a Participant's age and Years of
Service equal seventy (70).
Participant. "Participant" means an Eligible Employee who has
-----------
filed a completed and executed Enrollment Agreement with the Committee
and is participating in the Plan in accordance with the provisions of
Article 4.
Plan. "Plan" means this Centerre Bancorporation Executive Deferred
----
Compensation Plan.
Plan Year. "Plan Year" means the calendar year.
---------
Subsidiary. "Subsidiary" means a corporation more than 50% of
----------
whose stock is owned directly or indirectly by the Company.
Survivor Benefit. "Survivor Benefit" means the benefit determined
----------------
under Section 5.4(a) with respect to a Benefit Unit.
Termination Benefit. "Termination Benefit" means the benefit
-------------------
determined under Section 5.3 with respect to a Benefit Unit.
Year of Service. "Year of Service" means each complete Plan Year
---------------
(before and after the effective date of the Plan) during the entirety
of which an Employment relationship
-5-
<PAGE> 6
exists between the Employee and the Employer including years during which
an Employee is not a Participant and including employment with an
Employer prior to its becoming a Subsidiary.
ARTICLE 3
ADMINISTRATION OF THE PLAN
A Deferred Compensation Plan Committee shall be appointed by the
Company's Board of Directors to administer the Plan and establish, adopt,
or revise such rules and regulations as it may deem necessary or advisable
for the administration and interpretation of the Plan. Members of the
Committee shall be eligible to participate in the Plan while serving as
members of the Committee, but a member of the Committee shall not vote
or act upon any matter which relates solely to such member's interest in
the Plan as a Participant. The Committee may delegate such of its
responsibilities to such agents as it deems appropriate, and the Company
shall pay their compensation, if any.
ARTICLE 4
PARTICIPATION
4.1 Election to Participate. Any eligible Employee may enroll
-----------------------
in a Benefit Unit under the Plan effective as of the first day of a Plan
Year (commencing on or after January 1, 1986) by filing a completed
Enrollment Agreement with the Committee prior to the beginning of such
Plan Year. Pursuant to said Enrollment Agreement, the Eligible Employee
shall irrevocably designate a dollar amount by which the aggregate
-6-
<PAGE> 7
Compensation of such Participant shall be reduced over the Benefit Deferral
Period consisting of the four (4) consecutive Plan Years beginning with
the Plan Year next following the execution of the Enrollment Agreement,
provided, however, that:
(a) Discontinuance of Deferral. The Participant's obligation
--------------------------
to continue deferral for the entire Benefit Deferral Period shall
terminate upon his death. The Committee, in its discretion, may allow a
Participant to discontinue his deferral prior to completion of the Benefit
Deferral Period due to the Participant's termination of Employment or
otherwise.
(b) Minimum Deferral. The Cumulative Deferral Amount for any
----------------
Benefit Unit shall not be less than One Thousand Two Hundred Dollars
($1,200.00) multiplied by the number of Plan Years in the Benefit Deferral
Period.
(c) Reduction in Compensation. Except as otherwise provided
-------------------------
in this Section 4.1, the Compensation of the Participant for each of the
Plan Years in the Benefit Deferral Period shall be reduced by an amount
equal to the quotient obtained by dividing the Cumulative Deferral
Amount by the number of Plan Years in the Benefit Deferral Period.
(d) Maximum Reduction in Compensation. A Participant may not
---------------------------------
elect a Cumulative Deferral Amount for any Benefit Unit that would
cause the aggregate total reduction in Compensation in any Plan Year
with respect to
-7-
<PAGE> 8
all Benefit Units to exceed ten percent (10%) of the Compensation
otherwise payable to the Participant during the first Plan Year in
the Benefit Deferral Period for such Benefit Unit. In the event that a
Participant elects a Cumulative Deferral Amount that would violate the
limitation described in this paragraph (d), either initially or on
account of a subsequent decrease in Compensation, the election shall be
valid except that the Cumulative Deferral Amount so elected shall
automatically be reduced to comply with such limitation.
(e) Disability Retirement. In the event of a Disability
---------------------
Retirement of a Participant with respect to a Benefit Unit, his
Employer shall continue to credit to his Deferral Accounts the amounts
by which his Compensation would have been reduced pursuant to any then
outstanding Enrollment Agreements had there been no Disability Retirement.
For purposes of the Plan, a Benefit Unit shall be deemed to be a Benefit Unit
in which a Participant is enrolled only on and after the first day of the
Benefit Deferral Period with respect to such Benefit Unit.
4.2 Deferral Accounts. The Committee shall establish and maintain
-----------------
a separate Deferral Account for each of a Participant's Benefit Units. The
amount by which a Participant's Compensation is reduced pursuant to
Section 4.1 with respect to any Benefit Unit shall be credited by the
-8-
<PAGE> 9
Employer to the Participant's Deferral Account for such Benefit Unit no
later than the first day of the month following the month in which such
Compensation would otherwise have been paid. Such Deferral Account shall
be debited by the amount of any payments made by the Employer to the
Participant or the Participant's Beneficiary with respect to such Benefit
Unit pursuant to the Plan.
(a) Crediting of Interest - Normal or Disability Retirement,
--------------------------------------------------------
or Death. Each Deferral Account of a Participant who terminates
--------
Employment on account of Normal or Disability Retirement, or death,
shall be credited with interest as of date such Deferral Account was
established through the date of such termination of Employment at a rate
equal to the sum of the Declared Rate, plus the Incentive Rate,
compounded annually, on the balance from month to month in such Deferral
Account. Following such termination of Employment the Participant's
Deferral Accounts shall be credited with interest on the balance in
such Deferral Account from month to month at a rate equal to the sum of
(i) the average of the Declared Rate for the five (5) Plan Years
ending prior to such termination of Employment, plus (ii) the Incentive
Rate, compounded annually. Interest shall be credited to each Deferral
Account as of the last day of each month.
-9-
<PAGE> 10
(b) Other Interest. In the case of a Participant's termination
--------------
of Employment other than by death or Normal or Disability Retirement,
the Deferral Accounts shall be credited with interest, compounded
annually, as of the date such Deferral Account was established through
the date of such termination of Employment on the balance from month to
month in such Deferral Account at a rate equal to the Declared Rate.
Following such termination of Employment, the Participant's Deferral
Accounts shall be credited with interest on the balance in such Deferral
Account from month to month at a rate equal to the average of the
Declared Rate for the five (5) Plan Years ending prior to the date of
such termination of Employment. Interest shall be credited to each
Deferral Account as of the last day of the month.
4.3 Statement of Accounts. The Committee shall submit to each
---------------------
Participant, within one hundred twenty (120) days after the close of each
Plan Year, a statement in such form as the Committee deems desirable setting
forth the balance standing to the credit of each Participant in each of his
Deferral Accounts.
ARTICLE 5
BENEFITS
5.1 Normal Retirement. A Participant who terminates Employment
-----------------
on account of Normal Retirement with respect to a Benefit Unit shall be
paid a Normal Retirement Benefit equal to
-10-
<PAGE> 11
the value as of the date of Normal Retirement of the Participant's Deferral
Accounts for such Benefit Unit, plus the interest that will be credited to
such Deferral Account pursuant to Section 4.2. Payment of such Normal
Retirement Benefit shall be made in substantially equal monthly installments
for one hundred eighty (180) months beginning with the month following the
date of Normal Retirement. Provided, that a Participant may instead elect
in the Enrollment Agreement for any Benefit Unit to have the Normal Retirement
Benefit for such Benefit Unit paid to him in either a lump sum or sixty (60)
or one hundred twenty (120) equal monthly payments. A Participant may also
elect in his Enrollment Agreement for any Benefit Unit to defer making the
election as to the form of payment until a date no later than sixty (60) days
preceding his Normal Retirement.
5.2 Disability Retirement. A Participant who terminates Employment
---------------------
on account of Disability Retirement with respect to a Benefit Unit shall be
paid a Disability Retirement Benefit equal to the value of the Participant's
Deferral Accounts for such Benefit Unit as of the later of (a) the
December 31 coinciding with or next following the Participant's Disability
Retirement or (b) the completion of the crediting to the Deferral Account
of the entire Cumulative Deferral Amount for a Benefit Unit, plus the
interest that will be credited to such Deferral Account pursuant to
Section 4.2. Payment of such Disability Retirement Benefit shall be made in
-11-
<PAGE> 12
substantially equal monthly installments for one hundred eighty (180) months
commencing with the month next following the later of (a) the December 31
coinciding with or next following the Participant's Disability Retirement
or (b) the completion of the crediting to the Deferral Account of the entire
Cumulative Deferral Amount for a Benefit Unit. Provided, that a Participant
may instead elect in the Enrollment Agreement for any Benefit Unit to
have the Disability Retirement Benefit for such Benefit Unit paid to him in
either sixty (60) or one hundred twenty (120) equal monthly payments, or in
a lump sum payment, or to have commencement of the payment of the Disability
Retirement Benefit deferred until attainment of age sixty-five (65), with
payment thereafter over a sixty (60), one hundred twenty (120) or one
hundred eighty (180) month period, as elected by the Participant. A
Participant may also elect in his Enrollment Agreement for any Benefit Unit
to defer making an election as to the number of equal payments or lump sum
distribution until a date no later than sixty (60) days preceding the date
that the payment of the Disability Retirement Benefit would otherwise
commence payment.
5.3 Termination Benefit. A Participant who terminates Employment
-------------------
for any reason other than death, or Normal or Disability Retirement with
respect to a Benefit Unit, shall be paid a Termination Benefit equal to the
value, as of the date of termination of Employment, of the Deferral Account
for such Benefit Unit plus the interest that will be credited
-12-
<PAGE> 13
to such Deferral Account pursuant to Section 4.2. Payment of such Termination
Benefit shall be made in substantially equal monthly installments for sixty
(60) months.
5.4 Survivor Benefits.
-----------------
(a) The Beneficiary of a Participant who dies while still in
Employment prior to his Normal Retirement Eligibility Date or his
Disability Retirement shall be paid a Survivor Benefit equal to the value
of the Participant's Deferral Account for each Benefit Unit as of the
date of his death, plus the interest that will be credited to such
Deferral Account pursuant to Section 4.2. Payment of such Survivor Benefit
shall be made in substantially equal monthly installments for one hundred
eighty (180) months. Provided, that if the aggregate balance in all of the
Deferral Accounts of such Participant as of the date of his death is
less than Twenty-Five Thousand Dollars ($25,000.00), the balance in
the Deferral Account for each Benefit Unit as of such date shall be
paid to the Beneficiary with respect to such Benefit Units in one lump
sum.
(b) A Participant who dies while still in Employment after
his Normal Retirement Eligibility Date shall be deemed to have terminated
his Employment the day before his death, and the Beneficiary of such
Participant shall be paid a Survivor Benefit pursuant to Paragraph 5.4(c).
-13-
<PAGE> 14
(c) If a Participant dies after termination of Employment
but prior to the payment of all benefits due to him with respect to
a Benefit Unit, the Employer will pay to the Participant's Beneficiary
the remaining installments of any such benefit that would have been
paid to the Participant had the Participant survived, provided, however,
that if pursuant to a Disability Retirement the Participant had deferred
commencement of payment of the Disability Retirement Benefit for any
Benefit Unit until age sixty-five (65), commencement of payment of the
Disability Retirement Benefit to the Beneficiary shall be accelerated
and shall commence on the first day of the month next following the
date of the Participant's death.
5.5 Withholding; Unemployment Taxes. To the extent required by the
-------------------------------
law in effect at the time payments are made, the Employer shall withhold
from payments made hereunder the minimum taxes required to be withheld by
federal or any state or local government.
ARTICLE 6
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate
any person or persons as Beneficiary or Beneficiaries to whom payment under
the Plan shall be made in the event of Participant's death prior to complete
distribution to the Participant of the benefits due under the Plan. Each
-14-
<PAGE> 15
Beneficiary designation shall become effective only when filed in writing
with the Committee during the Participant's lifetime on a form prescribed
by the Committee.
The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed. The Committee may require that
the spouse of a married Participant domiciled in a community property
jurisdiction join in any designation of Beneficiary or Beneficiaries other
than the spouse in order for such designation to be valid.
If a Participant fails to designate a Beneficiary as provided above,
or if his Beneficiary designation is revoked without execution of a new
designation, or if all designated Beneficiaries predecease the Participant
or die prior to complete distribution of the Participant's benefits, then the
Committee shall direct the distribution of such benefits to the Participant's
estate.
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Board of Directors of the Company may at any
---------
time amend the Plan in whole or in part; provided, however, that no
amendment shall retroactively decrease the benefits under the Plan payable
to any Participant. Written notice of any amendment shall be given each
Employee then participating in the Plan.
-15-
<PAGE> 16
7.2 Termination.
-----------
(a) Employer's Right to Terminate. The Board of Directors of
-----------------------------
any Employer may at any time terminate the Plan, as to said Employer.
(b) Payments Upon Termination. Upon any termination of the Plan
-------------------------
as to an Employer the Participants employed by such Employer will be
deemed to have voluntarily terminated their participation in all Benefit
Units under the Plan as of the date of such termination. Compensation
shall cease to be deferred for the then Plan Year and all future Plan
Years, and the Employer will pay each Participant in a lump sum the
value of such Participant's Deferral Accounts, determined as if such
Participant had terminated Employment on the date of such termination
of the Plan but with interest credited on each such Deferral Account at
a rate for purposes of Section 4.2(b) equal to the sum of the Declared
Rate plus the Incentive Rate compounded annually.
ARTICLE 8
MISCELLANEOUS
8.1 Transfer of Employment. If a Participant transfers Employment
----------------------
from one Employer to another, such transfer shall not be deemed to be a
termination of Employment unless the Employer to which the Participant was
transferred shall not have adopted the Plan.
-16-
<PAGE> 17
8.2 Unsecured General Creditor. No Participant or Beneficiary,
--------------------------
shall have any legal or equitable right, interest, or claim in any specific
property or assets of the Employer, nor shall any Participant or Beneficiary
have any rights, claims, or interests in any life insurance policies, annuity
contracts, or the proceeds therefrom owned or which may be acquired by the
Employer. The assets of the Employer shall not be held under any trust for
the benefit of Participants or Beneficiaries or held in any way as collateral
security for the fulfilling of the obligations of the Employer under the
Plan. Any assets, including life insurance policies, annuity contracts or
the proceeds therefrom which the Employer may acquire in anticipation of its
obligations under the Plan shall remain the assets of the Employer. The
Employer's obligation to pay benefits under the Plan shall be that of an
unfunded and unsecured promise of the Employer to pay money in the
future.
8.3 Obligations to Employer. If a Participant becomes entitled to
-----------------------
a distribution of benefits under the Plan, and if at such time the
Participant has outstanding any debt, obligation, or other liability
representing an amount owing to the Company or any other Employer, then
the Employer may offset such amount so owing against the amount of benefits
otherwise distributable. Such determination shall be made by the Committee.
-17-
<PAGE> 18
8.4 Nonassignability. Neither a Participant nor any other person
----------------
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, or
interest therein, and all rights are expressly declared to be unassignable
and nontransferable. No part of the amounts payable shall, prior to
actual payment, be subject to seizure or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a Participant
or any other person, nor shall any such part be transferable by operation
of law in the event of a Participant's or any other person's bankruptcy
or insolvency.
8.5 Employment Not Guaranteed. Nothing contained in the Plan nor
-------------------------
any action taken hereunder shall be construed as a contract of employment
or as giving any Participant any right to be retained in the employ of the
Employer.
8.6 Protective Provisions. Each Participant shall cooperate with
---------------------
the Employer by furnishing any and all information requested by the
Employer in order to facilitate the payment of benefits hereunder,
including the taking of such physical examinations as the Employer may
deem necessary and the taking of such other relevant action as may be
requested by the Employer. If a Participant refuses so to cooperate, the
Employer shall have no further obligation to the Participant under the Plan,
other than payment to such Participant of the
-18-
<PAGE> 19
cumulative reductions in Compensation theretofore made pursuant to the Plan.
If a Participant commits suicide during the two (2) year period beginning
on the later of (a) the date of adoption of this Plan or (b) the first
day of the first Plan Year of such Participant's participation in the Plan,
or if the Participant makes any material misstatement of information or
nondisclosure of medical history, then no benefits will be payable
hereunder to such Participant or his Beneficiary, other than payment to
such Participant (or his Beneficiary if the Participant has died) of the
cumulative reductions in Compensation theretofore made pursuant to the
Plan; provided, that in the Employer's sole discretion, benefits may be
payable in a reduced amount to compensate the Employer for any loss, cost,
damage or expense suffered or incurred by the Employer as a result
in any way of such misstatement or nondisclosure.
8.7 Gender, Singular and Plural. All pronouns and any variations
---------------------------
thereof shall be deemed to refer to the masculine, feminine, or neuter,
as the identity of the person or persons may require. As the context may
require, the singular may be read as the plural and the plural as the
singular.
8.8 Captions. The captions of the articles, sections, and
--------
paragraphs of this Plan are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.
-19-
<PAGE> 20
8.9 Validity. In the event any provision of this Plan is held
--------
invalid, void, or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.
8.10 Notice. Any notice or filing required or permitted to be
------
given to the Committee under the Plan shall be sufficient if in writing
and hand delivered, or sent by registered or certified mail, to the
principal office of the Employer, directed to the attention of the President
of the Employer. Such notice shall be deemed given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
8.11 Applicable Law. This Plan shall be governed and construed in
--------------
accordance with the laws of the State of Missouri.
IN WITNESS WHEREOF, the Company has executed this Plan instrument
by authority of its Board of Directors this 15th day of October, 1985.
---- -------
CENTERRE BANCORPORATION
By------------------------------
ATTEST:
- ----------------------------------
-20-
<PAGE> 21
AMENDMENT TO THE
CENTERRE BANCORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
------------------------------------
WHEREAS, Centerre Bancorporation ("Company"), previously adopted
the Centerre Bancorporation Executive Deferred Compensation Plan ("Plan")
for the benefit of eligible employees; and
WHEREAS, the Company retained the right to amend the Plan pursuant
to Article 7 thereof; and,
WHEREAS, the Company desires to amend the Plan effective
January 1, 1987;
NOW, THEREFORE, effective January 1, 1987, the Plan is amended as
follows:
1. Section 4.1(d) is deleted and the following is substituted
in its place:
(d) Maximum Reduction in Compensation. Except as otherwise provided
---------------------------------
in this paragraph (d), a Participant may not elect a Cumulative Deferral
Amount for any Benefit Unit that would cause the aggregate total reduction
in Compensation in any Plan Year with respect to all Benefit Units to
exceed ten percent (10%) of the Compensation otherwise payable to the
Participant during the first Plan Year in the Benefit Deferral Period
for such Benefit Unit. In the event that a Participant elects a Cumulative
Deferral Amount that would violate the limitation described in this
paragraph (d), either initially or on account of a subsequent decrease in
Compensation, the election shall be valid except that the Cumulative
<PAGE> 22
Deferral Amount so elected shall automatically be reduced to comply with
such limitation. Nonwithstanding the foregoing provisions of this
Section 4.1, if in any Plan Year a Participant who is participating in the
Centerre Bancorporation Capital Accumulation Plan (the "401(k) Plan") is
prohibited by law from electing to have 5% of his "Compensation" (as
defined in the 401(k) Plan but prior to taking into account the "Additional
------------------------------------------------
Deferral" as hereinafter defined) contributed to the 401(k) Plan, he may
- ---------------------------------
elect to have the excess of (i) over (ii) below deferred under this Plan
with respect to a Benefit Unit provided he elects the maximum permissible
amount of such Compensation to be contributed to the 401(k) Plan. Such
amount shall be defined as an "Additional Deferral".
-------
"(i)" is equal to 5% of the Participant's "Compensation" as
defined in the 401(k) Plan prior to taking into account the Additional
-------------------------------------------
Deferral, and
--------
"(ii)" is the maximum amount of his Compensation which he is
permitted to elect and has elected to be contributed to the 401(k)
Plan.
The additional Deferral may be made in a Plan Year regardless of
whether it will also be made over four Plan Years.
2. The first paragraph of Section 4.2 is deleted and the
following is substituted in its place:
4.2 Deferral Accounts. The Committee shall establish and maintain
-----------------
a separate Deferral Account for each of a Participant's Benefit Units. The
amount by which a Participant's Compensation is reduced pursuant to
Section 4.1 (including any Additional Deferral) with respect to any Benefit
unit shall be credited by the Employer
-2-
<PAGE> 23
to the Participant's Deferral Account for such Benefit Unit no later than
the first day of the month following the month in which such Compensation
would otherwise have been paid. If a Participant has made an Additional
Deferral with respect to a Benefit Unit pursuant to Section 4.1(d), the
Employer shall also credit the Participant's Deferral Account for such
Benefit Unit with an amount equal to the excess of (i) over (ii) below,
where
"(i)" equals one half the sum of the Additional Deferral and the
amount by which the Participant elected to have his Compensation
contributed to the 401(k) Plan for such month, but not to exceed 2.5%
of his Compensation as defined in the Article 2 of this Plan; and
"(ii)" equals the amount contributed by his Employer as an Employer
Matching Contribution under the 401(k) Plan.
Such amount shall be credited at the time the respective Employer Matching
Contribution is made to the 401(k) Plan. The Deferral Account shall be
debited by the amount of any payments made by the Employer to the
Participant or the Participant's Beneficiary with respect to such Benefit
Unit pursuant to the Plan.
IN WITNESS WHEREOF, the foregoing Amendment is adopted effective
January 1, 1987.
CENTERRE BANCORPORATION
By------------------------------
ATTEST:
- -----------------------------
-3-
<PAGE> 24
SECOND AMENDMENT TO THE
CENTERRE BANCORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
------------------------------------
WHEREAS, Centerre Bancorporation ("Company") previously adopted
the Centerre Bancorporation Executive Deferred Compensation Plan ("Plan")
for the benefit of eligible employees; and
WHEREAS, the Company retained the right to amend the Plan pursuant
to Article 7 thereof; and,
WHEREAS, the Company desires to amend the Plan effective
January 1, 1988;
NOW, THEREFORE, effective January 1, 1988, the Plan is amended as
follows:
1. The definition of "Normal Retirement" in Article 2 is deleted
and replaced with the following:
Normal Retirement. "Normal Retirement" means with respect to any
-----------------
Benefit Unit, termination of a Participant's Employment for reasons other
than death, (a) on or after his Normal Retirement Eligibility Date, (b) within
one (1) year following a "Change of Control" or an Employer ceasing to be a
Subsidiary, or (c) on such other date (if any) with respect to which the
Committee has
<PAGE> 25
consented that a particular Participant, on a case by case basis, may retire
with a Normal Retirement Benefit without having satisfied (a) or (b), above.
2. A new definition is added to Article 2 to read as follows:
"Change of Control" means a change of control of a nature that
would be required to be reported in response to Item 1(a) of the Current
Report on Form 8-K, as in effect on the date hereof, pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934, or any comparable successor
provision (the "Exchange Act"). Without limiting the foregoing a Change of
Control shall be deemed to have occurred for the purposes of this Agreement,
regardless of the provisions of the Exchange Act, if (i) any "person",
including any "group" of persons, (as such terms are used in Sections 13(d)
or 14(d)(2) of the Exchange Act), is or becomes the beneficial owner
(as determined in accordance with Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of Centerre which, when combined
with all securities of Centerre theretofore directly or indirectly
beneficially owned by such person, represent 20% or more of the combined
voting power of Centerre's then outstanding securities; (ii) at any time
persons who are directors of Centerre at the date hereof, together with
persons becoming directors of Centerre
-2-
<PAGE> 26
subsequent to the date hereof whose election, or nomination for election,
was approved by a vote of at least three-quarters of (or if less, all but
one of) the persons then comprising the Board of Directors of Centerre,
("Continuing Directors") cease for any reason to constitute at least
two-thirds of the directors of Centerre; (iii) Centerre is a party to a
merger or consolidation (other than with a wholly owned subsidiary of
Centerre) in which Centerre is not the surviving parent corporation; (iv)
Centerre is the surviving parent corporation in a merger or consolidation
which results in Continuing Directors prior to such merger or consolidation
ceasing to constitute at least two-thirds of the directors of Centerre.
3. Article 7 is deleted and replaced with the following:
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Board of Directors of the Company may at any
---------
time amend the Plan in whole or in part; provided, however, that no
amendment shall reduce the benefits (including the crediting of interest
pursuant to Section 4.2(a) and (b) hereof and the right to receive payments
in installments or in a lump sum as provided in Section 5 hereof) to which
any Participant is entitled under the Plan with respect to amounts credited
to such
-3-
<PAGE> 27
Participant's Deferral Account prior to such amendment. Written notice of
any amendment shall be given each Employee then participating in the Plan.
7.2 Termination.
-----------
(a) Employer's Right to Terminate. The Board of Directors of
-----------------------------
any Employer may at any time terminate the Plan as to said Employer on
giving Participants not less than ninety (90) days prior written notice
thereof.
(b) Payments Upon Termination. Upon any termination of the
-------------------------
Plan as to an Employer the Participants employed by such Employer will be
deemed to have voluntarily terminated their participation in all Benefit
Units under the Plan as of the date of such termination. Compensation earned
for the Plan Year of such termination and all future Plan Years shall not be
deferred and the Employer will pay each Participant from his Deferral Account
as if such Participant had reached Normal Retirement on the date such
termination is effective.
-4-
<PAGE> 28
IN WITNESS WHEREOF, the foregoing Amendment is adopted on this
16th day of June, 1988 effective January 1, 1988.
- ---- ----
CENTERRE BANCORPORATION
By------------------------------
ATTEST:
- -----------------------------
-5-
<PAGE> 29
EXHIBIT E
THIRD AMENDMENT TO THE
CENTERRE BANCORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
------------------------------------
WHEREAS, Centerre Bancorporation ("Company") previously adopted
the Centerre Bancorporation Executive Deferred Compensation Plan ("Plan")
for the benefit of eligible employees, and;
WHEREAS, the Company retained the right to amend the Plan pursuant
to Article 7 thereof, and;
WHEREAS, the Company desires to amend the Plan effective
January 1, 1986.
NOW THEREFORE, effective January 1, 1986, the Plan is amended as
follows:
1. The definition of "Compensation" in Article 2 is deleted
and the following is substituted in its place:
Compensation. Compensation means the salary rate in effect for a
------------
Participant as of each November 1 (prior to taking into account any
contribution by the Participant to the Centerre Bancorporation Capital
Accumulation Plan) from the Company or a Subsidiary, excluding bonuses,
and other special cash or non-cash compensation, before any reduction
pursuant to this Plan.
<PAGE> 30
IN WITNESS WHEREOF, the foregoing Amendment was executed on the
21st day of September, 1988.
- ---- ---------
CENTERRE BANCORPORATION
By------------------------------
ATTEST:
- -----------------------------
-2-
<PAGE> 31
FOURTH AMENDMENT
----------------
CENTERRE BANCORPORATION
-----------------------
EXECUTIVE DEFERRED COMPENSATION PLAN
------------------------------------
WHEREAS, Centerre Bancorporation, a Missouri Corporation ("Centerre"),
established the Centerre Bancorporation Executive Deferred Compensation
Plan ("Centerre Plan") in 1985 and amended it effective January 1, 1986, 1987,
1988; and
WHEREAS, Centerre merged into Boatmen's Bancshares, Inc., a Missouri
corporation ("the Corporation") on December 9, 1988, and pursuant to such
merger the Corporation assumed liability for all obligations of Centerre,
including obligations under the Centerre Plan; and
WHEREAS, the Corporation desires to preclude further elections to
participate and to discontinue all further deferrals under the Centerre
Plan;
THEREFORE, the Plan is amended so that, immediately after the title
of Section 4.1, "Election to Participate," there shall be added the
following sentence: "This Section 4.1 shall be effective only for elections
to participate and deferrals of compensation prior to December 31, 1988."
IN WITNESS WHEREOF, the foregoing Fourth Amendment is adopted as of
December 13, 1988.
BOATMEN'S BANCSHARES, INC.
By-------------------------------
<PAGE> 1
Exhibit 10(i)
BOATMEN'S DEFERRED COMPENSATION
-------------------------------
PLAN FOR DIRECTORS
------------------
ARTICLE I
---------
Definitions
-----------
Section 1.1. "Additions" means all amounts credited to the Director's
Deferred Compensation Account pursuant to Article IV herein.
Section 1.2. "Beneficiary" means any person (including but not limited to
any trust, estate, fiduciary, corporation, foundation, but excluding the
Director) designated by the Director in a written document delivered to the
Corporation to receive any benefit under this Plan after the death of the
Director all in accordance with the provisions hereof. In the event the
Director fails to designate a beneficiary or if no such designated beneficiary
is living upon the death of the Director or if, for any reason, such
designation shall be legally ineffective, then in any of said events the
amounts which would have been paid to the designated living beneficiary shall
be paid to the estate of the Director.
Section 1.3. "Board of Directors" means the Board of Directors of
Boatmen's Bancshares, Inc.
Section 1.4. "Committee" means the Boatmen's Bancshares, Inc.
Compensation and Stock Option Committee.
Section 1.5. "Compensation" means the retainer and fees payable to a
Director for his services to the Corporation in such
<PAGE> 2
capacity during the Plan Year excluding any amounts paid for services as an
employee of the Corporation.
Section 1.6 "Corporation" means Boatmen's Bancshares, Inc.
Section 1.7. "Deferral Amount" means the Compensation which a Director
elects to defer under the Plan for any Plan Year.
Section 1.8. "Deferred Compensation Account" means a bookkeeping account
maintained by the Corporation for each Director which reflects accumulated
Deferral Amounts of a Director, plus Additions thereto calculated as set forth
in Article IV herein.
Section 1.9. "Director" means a member of the Board of Directors of the
Corporation.
Section 1.10. "Effective Date" means August 8, 1989.
Section 1.11. "Normal Retirement" means termination of a Director's
service to the Corporation in such capacity for reasons other than death.
Section 1.12. "Phantom Shares" means a number, rounded to the nearest
fourth decimal place, obtained by dividing that portion of a Deferral Amount
which would otherwise have been paid to a Director on a particular date or the
dividend-equivalent amount calculated pursuant to Section 4.2 on a particular
dividend payment date, as the case may be, by the closing trade price of the
Corporation's common stock on the National Association of Securities Dealers
Automated Quotation System (NASDAQ) National Market System (NMS) (or, if not
applicable, the
-2-
<PAGE> 3
most appropriate equivalent) on the trading day coinciding with (or, if none,
next preceding) such date.
Section 1.13. "Plan" means the Boatmen's Deferred Compensation Plan for
Directors.
Section 1.14. "Plan Year" means the period commencing on the Effective
Date and ending December 31, 1989, and any twelve-month period commencing
January 1 thereafter.
ARTICLE II
----------
Eligibility
-----------
Section 2.1. A Director is eligible to participate in the Plan if he
completes a Participant Agreement indicating his agreement to the terms of the
Plan, a form of which is attached hereto as Exhibit A.
ARTICLE III
-----------
Deferral of Compensation
------------------------
Section 3.1. A Director shall have the right to elect annually to defer
all of his Compensation for the Plan Year, choosing in doing so whether his
Deferral Amount for that year will be credited to his Deferred Compensation
Account in the form of cash or Phantom Shares; provided, however, that, with
respect to the Plan Year commencing on the Effective Date, such deferral shall
be limited to Compensation payable to the Director after September 1, 1989,
and such Deferral Amount shall be credited in the form of cash.
-3-
<PAGE> 4
Section 3.2. The Director shall notify the Corporation of his election to
defer for any Plan Year by completing an Annual Election Form, a form of which
is attached hereto as Exhibit B.
Section 3.3. To be effective, the Annual Election Form for the Plan Year
commencing August 8, 1989, must be received by the Corporation on or before
September 1, 1989. Thereafter, the Annual Election Form must be received
before the first day of the Plan Year to which the election relates.
Section 3.4. An election to defer for any Plan Year shall be irrevocable.
Section 3.5. The Deferral Amount shall be credited to a Director's
Deferred Compensation Account as a cash amount or as Phantom Shares, depending
upon the form selected for the year in question, in either case as of the date
the Deferral Amount would otherwise have been paid to the Director.
ARTICLE IV
----------
Additions to Deferral Amounts
-----------------------------
Section 4.1. The Corporation on the last day of each month will credit
the Director's Deferred Compensation Account with interest Additions thereon.
Interest Additions shall be calculated by multiplying the cash balance of the
Deferred Compensation Account as of the last day of each month by a rate equal
to one-twelfth of the average of the weekly Moody's Long-Term Aa Corporate
Bond Rates for October of the preceding Plan Year; provided, however, that for
the Plan Year commencing on the
-4-
<PAGE> 5
Effective Date the rate will be equal to one-twelfth of the average of the
weekly Moody's Long-Term Aa Corporate Bond Rates for June 1989.
Section 4.2. The Corporation shall on each dividend payment date for the
Corporation's common stock credit the Director's Deferred Compensation Account
with Phantom Shares based upon the per-share dividend then payable multiplied
by the Phantom Shares in such account as of the record date for the payment of
such dividend.
ARTICLE V
---------
Benefits Resulting From Deferrals
---------------------------------
After August 8, 1989
--------------------
Section 5.1. Upon the Normal Retirement or death, or both, of the
Director, the amount credited to the Director's Deferred Compensation Account
shall be payable to the Director in the manner provided in this Article V.
There shall be included in each such payment a dollar amount calculated by
multiplying the Phantom Shares (or appropriate portion thereof in the case of
an installment payment) in such account by the closing trade price of the
Corporation's common stock on the NASDAQ/NMS (or, if not applicable, the most
appropriate equivalent) on the trading day next preceding the date of such
payment, and the number of Phantom Shares in such account shall be reduced
accordingly.
Section 5.2. At the time of executing his Participation Agreement, a
Director must elect to receive amounts credited to his Deferred Compensation
Account under one of the following benefit payment schedules:
-5-
<PAGE> 6
(a) one lump sum, payable not later than thirty (30) days after the
Director's Normal Retirement; or
(b) a series of substantially equal yearly installments over a five
(5) year period, payable each January following the Director's Normal
Retirement.
Section 5.3. Upon the death of a Director, the amount credited to the
Director's Deferred Compensation Account not yet distributed shall be payable
to the Director's Beneficiary in a lump sum no later than thirty (30) days
after the date the Corporation receives notice of the Director's death.
ARTICLE VI
----------
Benefits Resulting From Deferrals
---------------------------------
Prior to February 14, 1989
--------------------------
Section 6.1. Benefits resulting from deferrals under the Plan prior to
February 14, 1989 will be determined under the provisions of the Plan as of
February 14, 1989, attached hereto as Exhibit C.
ARTICLE VII
-----------
Administration
--------------
Section 7.1. The Plan shall be administered by the Committee. The
Committee shall administer the Plan in accordance with its terms and shall
have all powers necessary to carry out the provisions of the Plan, including
the power, in its sole discretion, to accelerate the payment of benefits under
the Plan to any Director or Beneficiary.
-6-
<PAGE> 7
Section 7.2. The Committee shall, with respect to the general management
of the Plan, have the sole, final and absolute right to reconcile any
inconsistency in the Plan, to interpret and construe the provisions of the
Plan in all particulars in such manner and to such extent as it deems proper
and to take all action and make all decisions and determinations necessary
under the Plan or in connection with its administration, interpretation and
application. Any interpretation or construction placed upon any term or
provision of the Plan by the Committee, any decision of the Committee with
regard to the rights of a Director, former Director or Beneficiary or any
other person, any reconciliation of an inconsistency in the Plan made by the
Committee and any other action, determination or decision whatsoever taken by
the Committee, shall be final, conclusive and binding upon all persons or
parties interested or concerned in the Plan.
ARTICLE VIII
------------
Miscellaneous
-------------
Section 8.1. The Corporation shall maintain a record of each Director's
accumulated Deferral Amounts and Additions thereto by means of a Deferred
Compensation Account.
Section 8.2. Nothing contained in this Plan and no action taken pursuant
to the provisions thereof shall create or be construed to create a trust of
any kind or a fiduciary relationship between the Corporation and the Director,
the Director's Beneficiary or any other person.
-7-
<PAGE> 8
Section 8.3. To the extent that any person acquires the right to receive
payment of benefits from the Corporation under this Plan, such right shall be
no greater than the rights of any unsecured general creditor of the
Corporation.
Section 8.4. Neither the Director, his Beneficiary, heirs, assigns,
trust, estate, nor any other person claiming through or under the Director
shall have any right to commute, encumber or dispose of the right to receive
payments hereunder, all of which payments and the right thereto are expressly
declared to be non-assignable and any such attempt at assignment shall be void
and of no effect.
Section 8.5. No provision of this Plan nor any action taken hereunder
shall be construed as giving the Director any right to be retained by the
Corporation.
Section 8.6. The Corporation shall, to the extent permitted by law, have
the right to deduct from any payments of any kind with respect to the benefit
otherwise due to the Director any Federal, state or local taxes of any kind
required by law to be withheld from such payments.
Section 8.7. The Plan shall be governed and construed in accordance with
the laws of the State of Missouri. In the event any provision of this Plan is
held invalid, void or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.
-8-
<PAGE> 9
ARTICLE IX
----------
Termination and Amendment
-------------------------
Section 9.1. The Board of Directors will have full power and authority to
amend, modify, alter or terminate this Plan in whole or in part; provided,
however, that any such termination, modification or amendment shall not
terminate or diminish any rights or benefits accrued by a Director under this
Plan as of the effective date of any such termination, modification or
amendment.
-9-
<PAGE> 10
EXHIBIT A
BOATMEN'S DEFERRED COMPENSATION PLAN FOR DIRECTORS
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this ------ day of --------------,
19 ----, by and between Boatmen's Bancshares, Inc. ("Corporation"), a Missouri
corporation and ------------------- ("Director").
The Corporation and the Director mutually agree as follows:
1. The Director has received a copy of the Boatmen's Deferred
Compensation Plan for Directors, as adopted and amended effective August 8,
1989, ("Plan") and has read and understands the Plan.
2. By completion of this Agreement and the accompanying Annual Election
Form, the Director agrees to comply with the terms of the Plan in all
respects.
3. All provisions of the Plan are hereby made a part of this Agreement.
4. As indicated on the accompanying Annual Election Form, the Director
elects to defer all of his Compensation payable during the period specified on
the Annual Election Form.
5. For each subsequent Plan Year, the Director shall have the right to
make a similar Annual Election to defer his Compensation.
6. The Director is in no way obligated to make an Annual Election in any
Plan Year and the failure to elect for any Plan
- -
<PAGE> 11
Year will not affect the Director's right to do so in any subsequent Plan
Year.
7. The Director's Annual Election under the Plan in any Plan Year must be
received by the Corporation no later than September 1, 1989, for the Plan Year
commencing August 8, 1989, and no later than the December 31 immediately
preceding any other Plan Year. Any Annual Election received after said date
shall be of no effect for purposes of the Plan.
8. An Annual Election, signed and dated by the Director, shall be
irrevocable.
9. The Director elects to have his benefits under the Plan distributed
under the following benefit payment schedule:
----- single lump sum
----- substantially equal yearly installments over a five (5) year
period.
The Director understands that this election is irrevocable.
10. The Director designates his Beneficiary under the Plan the following:
NAME: ----------------------------------------------------------------
ADDRESS: -------------------------------------------------------------
-------------------------------------------------------------
RELATIONSHIP TO
THE DIRECTOR: --------------------------------------------------------
$P"-2-"
11. The Director has the right to change his Beneficiary at any time by
notifying the Corporation in writing of such change in Beneficiary.
BOATMEN'S BANCSHARES, INC.
By -----------------------------
--------------------------------
Director
-3-
<PAGE> 12
EXHIBIT B
BOATMEN'S DEFERRED COMPENSATION PLAN FOR DIRECTORS
19--- ANNUAL ELECTION FORM
I, --------------------------------, a Director in the Boatmen's Deferred
Compensation Plan for Directors (the "Plan"), hereby elect to defer pursuant
to the terms of the Plan my Compensation for the Plan Year commencing
- -----------------.
I choose
Cash / /
Phantom Shares / /
(check one) for the crediting of such Compensation for such Plan Year.
I understand that to be effective this form must be received by the
Corporation no later than December 31 of the year immediately preceding the
Plan Year for which this election is being made.
I understand too that, once effective, an election cannot be revoked.
- ------------------------------ ------------------------------
Date Director
<PAGE> 13
EXHIBIT C
CENTERRE BANCORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
----------------------------------------
ARTICLE I
PURPOSE
The purpose of this Deferred Compensation Plan for Directors is to
provide a means whereby Centerre Bancorporation may provide for the financial
security of its Directors so that their services may be retained and their
efforts encouraged.
ARTICLE 2
DEFINITIONS
Beneficiary. "Beneficiary" means the person or persons designated under
-----------
Article 6 to receive benefits upon the death of a Participant.
Benefit Deferral Period. "Benefit Deferral Period" means the period of
-----------------------
three (3) consecutive Plan Years (or such lesser number of Plan Years
remaining in a Participant's Term as Director) over which a Participant defers
a portion of his or her Compensation with respect to a Benefit Unit pursuant
to Section 4.1.
Benefit Unit. "Benefit Unit" means a unit enrolled in by a Participant
------------
pursuant to Article 4 providing the benefits described in Article 5.
Committee. "Committee" means the Deferred Compensation Plan Committee
---------
appointed to administer the Plan under Article 3.
- -
<PAGE> 14
Company. "Company" means Centerre Bancorporation, a Missouri corporation.
-------
Compensation. "Compensation" means the annual retainer paid to a Director
------------
by the Company (before any reduction pursuant to this Plan) for his or her
services as a Director, excluding any special payments for service on any
committee of the Board of Directors of the Company, and excluding any amounts
paid for services as an employee of the Company.
Cumulative Deferral Amount. "Cumulative Deferral Amount" means with
--------------------------
respect to each Benefit Unit the total cumulative amount by which a
Participant's Compensation is reduced over the period prescribed in Section
4.1.
Declared Rate. "Declared Rate" means with respect to any Plan Year,
-------------
Moody's Corporate Bond Yield Average - Monthly Average Corporates as published
by Moody's Investor's Service, Inc. (or any successor thereto) for the calendar
month ending two months before the first month in such Plan Year, or, if such
yield is no longer published, a substantially similar average selected by the
Committee.
Deferral Account. "Deferral Account" means the account maintained on the
----------------
books of the Company for each Benefit Unit pursuant to Section 4.2.
Director. "Director" means a member of the Board of Directors of the
--------
Company.
-2-
<PAGE> 15
Enrollment Agreement. "Enrollment Agreement" means the written
--------------------
agreement that shall be entered into between the Company and a Director
pursuant to which the Director becomes a Participant.
Incentive Rate. "Incentive Rate" with respect to any Plan Year is the
--------------
interest rate designated by the Committee to be credited to the Deferral
Accounts in addition to the Declared Rate pursuant to Paragraphs 4.2(a) and
7.2 hereof. The Incentive Rate shall be six percent (6%) unless the Committee
sets a different rate, and any changes in the Incentive Rate shall have only
prospective application. In no event shall the Incentive Rate be less than
three percent (3%).
Normal Retirement. "Normal Retirement" means with respect to any Benefit
-----------------
Unit, termination of a Participant's Service for reasons other than death.
Normal Retirement Benefit. "Normal Retirement Benefit" means the benefit
-------------------------
determined under Section 5.1 with respect to a Benefit Unit.
Participant. "Participant" means a Director who has filed a completed and
-----------
executed Enrollment Agreement with the Committee and is participating in the
Plan in accordance with the provisions of Article 4.
Plan. "Plan" means this Centerre Bancorporation Deferred Compensation
----
Plan For Directors.
-3-
<PAGE> 16
Plan Year. "Plan Year" means the period commencing with the date of the
---------
annual meeting of Company's shareholders and ending with the day immediately
preceding the next annual meeting of the Company's shareholders.
Service. "Service" means service as a Director.
-------
Survivor Benefit. "Survivor Benefit" means the benefit determined under
----------------
Section 5.3(a) with respect to a Benefit Unit.
Term as a Director. "Term as a Director" means each period for which
------------------
a person is elected a Director by the shareholders of the Company.
Termination Benefit. "Termination Benefit" means the benefit determined
-------------------
under Section 5.2 with respect to a Benefit Unit.
ARTICLE 3
ADMINISTRATION OF THE PLAN
A Deferred Compensation Plan Committee shall be appointed by the
Company's Board of Directors to administer the Plan and establish, adopt, or
revise such rules and regulations as it may deem necessary or advisable for
the administration and interpretation of the Plan. Members of the Committee
shall be eligible to participate in the Plan while serving as members of the
Committee, but a member of the Committee shall not vote or act upon any matter
which relates solely to such member's interest in the Plan as a Participant.
The Committee may
-4-
<PAGE> 17
delegate such of its responsibilities to such agents as it deems appropriate,
and the Company shall pay their compensation, if any.
ARTICLE 4
PARTICIPATION
4.1. Election to Participate. Any Director may enroll in a Benefit Unit
-----------------------
under the Plan effective as of the first day of the Plan Year (commencing on
or after May 14, 1986) in which his Term as a Director commenced (or effective
as of May 14, 1986 in the case of Directors in Service on such date) by filing
a completed Enrollment Agreement with the Committee. Such Enrollment Agreement
must be filed prior to the first day of the Plan Year in which his Term as a
Director commenced. Provided that Directors in Service on May 14, 1986 may
file their Enrollment Agreement within 30 days after such date. Pursuant to
said Enrollment Agreement, the Director shall irrevocably designate a dollar
amount by which the aggregate Compensation of such Participant shall be
reduced over the Benefit Deferral Period consisting of the three (3)
consecutive Plan Years (or such lesser number of Plan Years remaining in a
Participant's Term as a Director) beginning with the Plan Year for which the
Participant first files the Enrollment Agreement, provided, however, that:
(a) Discontinuance of Deferral. The Participant's obligation to continue
--------------------------
deferral for the entire Benefit Deferral Period shall terminate upon his
-5-
<PAGE> 18
death. The Committee, in its discretion, may allow a Participant to
discontinue his deferral prior to completion of the Benefit Deferral Period
due to the Participant's termination of Service or otherwise.
(b) Minimum Deferral. The Cumulative Deferral Amount for any Benefit Unit
----------------
shall not be less than One Thousand Two Hundred Dollars ($1,200.00) multiplied
by the number of Plan Years in the Benefit Deferral Period.
(c) Reduction in Compensation. Except as otherwise provided in this
-------------------------
Section 4.1, the Compensation of the Participant for each of the Plan Years in
the Benefit Deferral Period shall be reduced by an amount equal to the
quotient obtained by dividing the Cumulative Deferral Amount by the number of
Plan Years in the Benefit Deferral Period.
For purposes of the Plan, a Benefit Unit shall be deemed to be a Benefit
Unit in which a Participant is enrolled only on and after the first day of the
Benefit Deferral Period with respect to such Benefit Unit.
4.2 Deferral Accounts. The Committee shall establish and maintain a
-----------------
separate Deferral Account for each of a Participant's Benefit Units. The
amount by which a Participant's Compensation is reduced pursuant to Section
4.1 with respect to any Benefit Unit shall be credited by the Company to the
Participant's Deferral Account for such Benefit Unit no later than the first
day of the month following the
-6-
<PAGE> 19
month in which such Compensation would otherwise have been paid. Such Deferral
Account shall be debited by the amount of any payments made by the Company to
the Participant or the Participant's Beneficiary with respect to such Benefit
Unit pursuant to the Plan.
(a) Crediting of Interest - Normal Retirement or Death. Each
--------------------------------------------------------
Deferral Account of a Participant who terminates Service on account of Normal
Retirement or death, shall be credited with interest as of the date such
Deferral Account was established through the date of such termination of
Service at a rate equal to the sum of the Declared Rate, plus the Incentive
Rate, compounded annually, on the balance from month to month in such Deferral
Account. Following such termination of Service the Participant's Deferral
Accounts shall be credited with interest on the balance in such Deferral
Account from month to month at a rate equal to the sum of (i) the average of
the Declared Rate for the five (5) Plan Years ending prior to such termination
of Service, plus (ii) the Incentive Rate, compounded annually. Interest shall
be credited to each Deferral Account as of the last day of each month.
4.3 Statement of Accounts. The Committee shall submit to each
---------------------
Participant, within one hundred twenty (120) days after the close of each Plan
Year, a statement in such form as the Committee deems desirable setting forth
the balance standing to the credit of each Participant in each of his Deferral
Accounts.
-7-
<PAGE> 20
ARTICLE 5
BENEFITS
5.1 Normal Retirement. A Participant who terminates Service on account
-----------------
of Normal Retirement with respect to a Benefit Unit shall be paid a Normal
Retirement Benefit equal to the value, as of the date of Normal Retirement, of
the Participant's Deferral Accounts for such Benefit Unit, plus the interest
that will be credited to such Deferral Account pursuant to Section 4.2.
Payment of such Normal Retirement Benefit shall be made in substantially equal
monthly installments (subject to adjustments on account of the crediting of
interest) for one hundred twenty (120) months beginning with the month
following the date of Normal Retirement. Provided, that a Participant may
instead elect in the Enrollment Agreement for any Benefit Unit to have the
Normal Retirement Benefit for such Benefit Unit paid to him in either a lump
sum or sixty (60) monthly payments. A Participant may also elect in his
Enrollment Agreement for any Benefit Unit to defer making the election as to
the form of payment until a date no later than sixty (60) days preceding his
Normal Retirement.
5.2 Survivor Benefits.
-----------------
(a) The Beneficiary of a Participant who dies while still in Service
shall be paid a Survivor Benefit equal to the value of the Participant's
Deferral Account for each Benefit Unit as of the date of his death, plus the
-8-
<PAGE> 21
interest that will be credited to such Deferral Account pursuant to Section
4.2. Payment of such Survivor Benefit shall be made in substantially equal
monthly installments (subject to adjustments on account of the crediting of
interest) for one hundred twenty (120) months. Provided, that if the aggregate
balance in all of the Deferral Accounts of such Participant as of the date of
his death is less than Twenty-Five Thousand Dollars ($25,000.00), the balance
in the Deferral Account for each Benefit Unit as of such date shall be paid to
the Beneficiary with respect to such Benefit Units in one lump sum.
(b) If a Participant dies after termination of Service but prior to
the payment of all benefits due to him with respect to a Benefit Unit, the
Company will pay to the Participant's Beneficiary the remaining installments
of any such benefit that would have been paid to the Participant had the
Participant survived.
5.3 Taxes. To the extent required by the law in effect at the time
-----
payments are made, the Company shall withhold from payments made hereunder the
taxes, if any, required to be withheld by federal or any state or local
government.
-9-
<PAGE> 22
ARTICLE 6
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any
person or persons as Beneficiary or Beneficiaries to whom payment under the
Plan shall be made in the event of Participant's death prior to complete
distribution to the Participant of the benefits due under the Plan. Each
Beneficiary designation shall become effective only when filed in writing
with the Committee during the Participant's lifetime on a form prescribed by
the Committee.
The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed. The Committee may require that the
spouse of a married Participant domiciled in a community property jurisdiction
join in any designation of Beneficiary or Beneficiaries other than the spouse
in order for such designation to be valid.
If a Participant fails to designate a Beneficiary as provided above, or
if his Beneficiary designation is revoked without execution of a new
designation, or if all designated Beneficiaries predecease the Participant or
die prior to complete distribution of the Participant's benefits, then the
Committee shall direct the distribution of such benefits to the Participant's
estate.
-10-
<PAGE> 23
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Board of Directors of the Company may at any time
---------
amend the Plan in whole or in part; provided, however, that no amendment shall
retroactively decrease the benefits under the Plan payable to any Participant.
No change in the Declared Rate or Incentive Rate shall be deemed to be an
amendment to the Plan. Written notice of any amendment shall be given each
Director then participating in the Plan.
7.2 Payments Upon Termination. Upon the termination of the Plan the
-------------------------
Participants will be deemed to have voluntarily terminated their participation
in all Benefit Units under the Plan as of the date of such termination.
Compensation shall cease to be deferred for the then Plan Year and all future
Plan Years, and the Company will pay each Participant in a lump sum the value
of such Participant's Deferral Accounts, determined as if such Participant had
terminated Service on the date of such termination of the Plan with interest
credited on each such Deferral Account at a rate for purposes of Section
4.2(a) equal to the sum of the Declared Rate plus the Incentive Rate
compounded annually.
ARTICLE 8
MISCELLANEOUS
8.1 Unsecured General Creditor. No Participant or Beneficiary, shall have
--------------------------
any legal or equitable right, interest, or claim in any specific property or
assets of the Company, nor
-11-
<PAGE> 24
shall any Participant or Beneficiary have any rights, claims, or interests in
any life insurance policies, annuity contracts, or the proceeds therefrom
owned or which may be acquired by the Company. The assets of the Company shall
not be held under any trust for the benefit of Participants or Beneficiaries
or held in any way as collateral security for the fulfilling of the
obligations of the Company under the Plan. Any assets, including life
insurance policies, annuity contracts or the proceeds therefrom which the
Company may acquire in anticipation of its obligations under the Plan shall
remain the assets of the Company. The Company's obligation to pay benefits
under the Plan shall be that of an unfunded and unsecured promise of the
Company to pay money in the future.
8.2 Obligations to Company. If a Participant becomes entitled to a
----------------------
distribution of benefits under the Plan, and if at such time the Participant
has outstanding any debt, obligation, or other liability representing an
amount owing to the Company, then the Company may offset such amount so owing
against the amount of benefits otherwise distributable. Such determination
shall be made by the Committee.
8.3 Nonassignability. Neither a Participant nor any other person shall
----------------
have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, or
interest therein, and all rights are expressly declared to be
-12-
<PAGE> 25
unassignable and nontransferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a Participant or
any other person, nor shall any such part be transferable by operation of law
in the event of a Participant's or any other person's bankruptcy or
insolvency.
8.4 Protective Provisions. Each Participant shall cooperate with the
---------------------
Company by furnishing any and all information requested by the Company in
order to facilitate the payment of benefits hereunder, including the taking of
such physical examinations as the Company may deem necessary and the taking of
such other relevant action as may be requested by the Company. If a
Participant refuses so to cooperate, the Company shall have no further
obligation to the Participant under the Plan, other than payment to such
Participant of the cumulative reductions in Compensation theretofore made
pursuant to the Plan. If a Participant commits suicide during the two (2) year
period beginning on the later of (a) the date of adoption of this Plan or (b)
the first day of the first Plan Year of such Participant's participation in
the Plan, or if the Participant makes any material misstatement of information
or nondisclosure of medical history, then no benefits will be payable
hereunder to such Participant or his Beneficiary, other than payment to such
Participant (or his Beneficiary if the Participant has died) of the cumulative
reductions in Compensation theretofore
-13-
<PAGE> 26
made pursuant to the Plan; provided, that in the Company's sole discretion,
benefits may be payable in a reduced amount to compensate the Company for any
loss, cost, damage or expense suffered or incurred by the Company as a result
in any way of such misstatement or nondisclosure.
8.5 Gender, Singular and Plural. All pronouns and any variations thereof
---------------------------
shall be deemed to refer to the masculine, feminine, or neuter, as the
identity of the person or persons may require. As the context may require, the
singular may be read as the plural and the plural as the singular.
8.6 Captions. The captions of the articles, sections, and paragraphs of
--------
this Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.
8.7 Validity. In the event any provision of this Plan is held invalid,
--------
void, or unenforceable, the same shall not affect, in any respect whatsoever,
the validity of any other provision of this Plan.
8.8 Notice. Any notice or filing required or permitted to be given to the
------
Committee under the Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, to the principal office of the
Company, directed to the attention of the Secretary of the Company. Such
notice shall be deemed given as of the date of
-14-
<PAGE> 27
delivery or, if delivery is made by mail, as of the date shown on the postmark
on the receipt for registration or certification.
8.9 Applicable Law. This Plan shall be governed and construed in
--------------
accordance with the laws of the State of Missouri.
IN WITNESS WHEREOF, the Company has executed this Plan instrument by
authority of its Board of Directors this --------- day of ------------------,
1986.
CENTERRE BANCORPORATION
By -------------------------------------
ATTEST:
- ----------------------------------
-15-
<PAGE> 28
AMENDMENT TO THE
CENTERRE BANCORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
----------------------------------------
WHEREAS, Centerre Bancorporation ("Company") previously adopted the
Centerre Bancorporation Deferred Compensation Plan for Directors ("Plan"); and
WHEREAS, the Company retained the right to amend the Plan pursuant to
Article 7 thereof; and
WHEREAS, the Company desires to amend the Plan effective January 1, 1988;
NOW, THEREFORE, effective January 1, 1988, the Plan is amended as
follows:
1. Article 7 is deleted and replaced with the following:
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Board of Directors of the Company may at any time
---------
amend the Plan in whole or in part; provided, however, that no amendment shall
reduce the benefits (including the crediting of interest pursuant to Section
4.2(a) hereof and the right to receive payments in installments or in a lump
sum as provided in Section 5 hereof) to which any Participant is entitled
under the Plan with respect to amounts credited to such Participant's
<PAGE> 29
Deferral Account prior to such amendment. Written notice of any amendment
shall be given each Employee then participating in the Plan.
7.2 Termination.
-----------
(a) Employer's Right to Terminate. The Board of Directors of any
-----------------------------
Employer may at any time terminate the Plan as to said Employer on giving
Participants not less than ninety (90) days prior written notice thereof.
(b) Payments Upon Termination. Upon any termination of the Plan as
-------------------------
to an Employer the Participants employed by such Employer will be deemed to
have voluntarily terminated their participation in all Benefit Units under the
Plan as of the date of such termination. Compensation earned for the Plan Year
of such termination and all future Plan Years shall not be deferred and the
Employer will pay each Participant from his Deferral Account as if such
Participant had reached Normal Retirement on the date such termination is
effective.
-2-
<PAGE> 30
IN WITNESS WHEREOF, the foregoing Amendment is adopted on this 16th
day of June, 1988 effective January 1, 1988. ----
----
CENTERRE BANCORPORATION
By ----------------------------------
ATTEST:
- ---------------------------------
-3-
<PAGE> 31
IN WITNESS WHEREOF, the foregoing Amendment No. 4 is adopted November 14,
1989, effective as of August 8, 1989.
BOATMEN'S BANCSHARES, INC.
By ------------------------------------
<PAGE> 32
AMENDMENT TO THE
CENTERRE BANCORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
----------------------------------------
WHEREAS, Centerre Bancorporation ("Company"), previously adopted
the Centerre Bancorporation Deferred Compensation Plan for Directors ("Plan");
and
WHEREAS, the Company retained the right to amend the Plan pursuant
to Article 7 thereof; and,
WHEREAS, the Company desires to amend the Plan effective
January 1, 1988;
NOW, THEREFORE, effective January 1, 1988, the Plan is amended as
follows:
1. Article 7 is deleted and replaced with the following:
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Board of Directors of the Company may at any
---------
time amend the Plan in whole or in part; provided, however, that no
amendment shall reduce the benefits (including the crediting of interest
pursuant to Section 4.2(a) hereof and the right to receive payments in
installments or in a lump sum as provided in Section 5 hereof) to which
any Participant is entitled under the Plan with respect to amounts credited
to such Participant's
<PAGE> 33
Deferral Account prior to such amendment. Written notice of any amendment
shall be given each Employee then participating in the Plan.
7.2 Termination.
-----------
(a) Employer's Right to Terminate. The Board of Directors of
-----------------------------
any Employer may at any time terminate the Plan as to said Employer on
giving Participants not less than ninety (90) days prior written notice
thereof.
(b) Payments Upon Termination. Upon any termination of the
-------------------------
Plan as to an Employer the Participants employed by such Employer will be
deemed to have voluntarily terminated their participation in all Benefit
Units under the Plan as of the date of such termination. Compensation
earned for the Plan Year of such termination and all future Plan Years
shall not be deferred and the Employer will pay each Participant from
his Deferral Account as if such Participant had reached Normal
Retirement on the date such termination is effective.
-2-
<PAGE> 34
IN WITNESS WHEREOF, the foregoing Amendment is adopted on this
16th day of June, 1988 effective January 1, 1988.
- ---- ----
CENTERRE BANCORPORATION
By /s/
--------------------------
ATTEST:
/s/
-------------------------
-3-
<PAGE> 35
AMENDMENT NO. 2
---------------
CENTERRE BANCORPORATION
-----------------------
DEFERRED COMPENSATION PLAN FOR DIRECTORS
----------------------------------------
WHEREAS, Centerre Bancorporation, a Missouri corporation ("Centerre"),
established the Centerre Bancorporation Deferred Compensation Plan for
Directors ("Centerre Plan") in 1986 and amended it effective January 1, 1988;
and
WHEREAS, Centerre merged into Boatmen's Bancshares, Inc., a Missouri
corporation ("the Corporation"), on December 9, 1988, and pursuant to such
merger the Corporation assumed liability for all obligations of Centerre,
including obligations under the Centerre Plan; and
WHEREAS, the Corporation desires to preclude further elections to
participate and to discontinue all further deferrals under the Centerre Plan;
THEREFORE, the Plan is amended so that, immediately after the title of
Section 4.1, "Election to Participate," there shall be added the following
sentence: "This Section 4.1 shall be effective only for elections to
participate and deferrals of compensation prior to December 9, 1988."
IN WITNESS WHEREOF, the foregoing Amendment No. 2 is adopted as of
February 14, 1989.
BOATMEN'S BANCSHARES, INC.
By /s/
------------------------------
<PAGE> 36
AMENDMENT NO. 3 TO CENTERRE BANCORPORATION DEFERRED
COMPENSATION PLAN FOR DIRECTORS AND ADOPTION BY
BOATMEN'S BANCSHARES, INC. OF CENTERRE BANCORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
WHEREAS, Centerre Bancorporation, a Missouri corporation ("Centerre"),
established the Centerre Bancorporation Deferred Compensation Plan for
Directors ("Centerre Plan") in 1986; and
WHEREAS, Centerre merged into Boatmen's Bancshares, Inc., a Missouri
corporation (the "Corporation"), on December 9, 1988, and pursuant to such
merger the Corporation assumed liability for all obligations of Centerre,
including obligations under the Centerre Plan; and
WHEREAS, the Corporation amended the Centerre Plan, effective February
14, 1989, to preclude further elections to participate and to discontinue all
further deferrals under the Centerre Plan; and
WHEREAS, the Corporation desires to adopt and amend the Centerre Plan,
effective for deferrals on or after August 8, 1989;
THEREFORE, the Corporation does hereby adopt and amend the Centerre Plan,
so that it shall read as follows:
<PAGE> 37
BOATMEN'S DEFERRED COMPENSATION
-------------------------------
PLAN FOR DIRECTORS
------------------
ARTICLE I
---------
Definitions
-----------
Section 1.1 "Additions" means all amounts credited to the Director's
Deferred Compensation Account pursuant to Article IV herein.
Section 1.2. "Beneficiary" means any person (including but not limited to
any trust, estate, fiduciary, corporation, foundation, but excluding the
Director) designated by the Director in a written document delivered to the
Corporation to receive any benefit under this Plan after the death of the
Director all in accordance with the provisions hereof. In the event the
Director fails to designate a beneficiary or if no such designated beneficiary
is living upon the death of the Director or if, for any reason, such
designation shall be legally ineffective, then in any of said events the
amounts which would have been paid to the designated living beneficiary shall
be paid to the estate of the Director.
Section 1.3. "Board of Directors" means the Board of Directors of
Boatmen's Bancshares, Inc.
Section 1.4. "Committee" means the Boatmen's Bancshares, Inc.
Compensation and Stock Option Committee.
Section 1.5. "Compensation" means the retainer and fees earned by a
Director for his services to the Corporation in such
-2-
<PAGE> 38
capacity during the Plan Year excluding any amounts paid for services as an
employee of the Corporation.
Section 1.6. "Deferral Amount" means the Compensation which a Director
elects to defer under the Plan for any Plan Year.
Section 1.7. "Deferred Compensation Account" means a bookkeeping account
maintained by the Corporation for each Director which reflects accumulated
Deferral Amounts of a Director, plus Additions thereto calculated as set forth
in Article IV herein.
Section 1.8. "Director" means a member of the Board of Directors of the
Corporation.
Section 1.9. "Effective Date" means August 8, 1989.
Section 1.10. "Normal Retirement" means termination of a Director's
service to the Corporation in such capacity for reasons other than death.
Section 1.11. "Plan" means the Boatmen's Deferred Compensation Plan for
Directors, formerly the Centerre Bancorporation Deferred Compensation Plan for
Directors.
Section 1.12. "Plan Year" means the period commencing on the Effective
Date and ending December 31, 1989 and any twelve-month period commencing
January 1 thereafter.
ARTICLE II
----------
Eligibility
-----------
Section 2.1 A Director is eligible to participate in the Plan if he
completes a Participant Agreement indicating his agreement to the terms of the
Plan, a form of which is attached hereto as Exhibit A.
-3-
<PAGE> 39
ARTICLE III
-----------
Deferral of Compensation
------------------------
Section 3.1. A Director shall have the right to elect annually to defer
all of his Compensation for the Plan Year. With respect to the Plan Year
commencing on the Effective Date, such deferral shall be limited to
Compensation earned by the Director after September 1, 1989.
Section 3.2. The Director shall notify the Corporation of his election to
defer for any Plan Year by completing an Annual Election Form, a form of which
is attached hereto as Exhibit B.
Section 3.3. To be effective, the Annual Election Form for the Plan Year
commencing August 8, 1989 must be received by the Corporation on or before
September 1, 1989. Thereafter, the Annual Election Form must be received
before the first day of the Plan Year to which the election relates.
Section 3.4. An election to defer for any Plan Year shall be irrevocable.
Section 3.5. The Deferral Amount shall be credited to a Director's
Deferred Compensation Account no later than the first day of the calendar
month following the month in which such Deferral Amount would otherwise have
been paid to the Director.
ARTICLE IV
----------
Additions to Deferral Amounts
-----------------------------
Section 4.1. The Corporation on the last day of each Plan Year will
credit the Director's Deferred Compensation Account
-4-
<PAGE> 40
with Additions thereon; provided, however, that in the year of the final
distribution of benefits to the Director or his Beneficiary under the Plan the
Corporation will credit the Director's Deferred Compensation Account with a
pro rata portion of the Additions accrued for the Plan Year up to the
date of the final distribution. Additions accrued during a Plan Year
shall be calculated by multiplying the balance of the Deferred
Compensation Account as of the last day of the Plan Year or the date of
the final distribution of benefits, if applicable, by a rate equal to
Moody's Long-Term Corporate Bond Rate for the calendar month ending two
months before the beginning of the first month in such Plan Year.
ARTICLE V
---------
Benefits Resulting From Deferrals
---------------------------------
After August 8, 1989
--------------------
Section 5.1. Upon the Normal Retirement of the Director, the amount
credited to the Director's Deferred Compensation Account shall be payable to
the Director in the manner provided in Section 5.2.
Section 5.2. At the time of executing his Participation Agreement, a
Director must elect to receive amounts credited to his Deferred Compensation
Account under one of the following benefit payment schedules:
(a) one lump sum; or
(b) a series of substantially equal monthly installments over a five
(5) year period.
-5-
<PAGE> 41
Payment of benefits under the Plan will commence no later than thirty
(30) days after the date of the Director's Normal Retirement.
Section 5.3. Upon the death of a Director, the amount credited to the
Director's Deferred Compensation Account not yet distributed shall be payable
to the Director's Beneficiary in a lump sum no later than thirty (30) days
after the date the Corporation receives notice of the Director's death.
ARTICLE VI
----------
Benefits Resulting From Deferrals
---------------------------------
Prior to February 14, 1989
--------------------------
Section 6.1. Benefits resulting from deferrals under the Plan prior to
February 14, 1989 will be determined under the provisions of the Plan as of
February 14, 1989, attached hereto as Exhibit C.
ARTICLE VII
-----------
Administration
--------------
Section 7.1. The Plan shall be administered by the Committee. The
Committee shall administer the Plan in accordance with its terms and shall
have all powers necessary to carry out the provisions of the Plan, including
the power, in its sole discretion, to accelerate the payment of benefits under
the Plan to any Director or Beneficiary.
Section 7.2. The Committee shall, with respect to the general management
of the Plan, have the sole, final and absolute right to reconcile any
inconsistency in the Plan, to interpret
-6-
<PAGE> 42
and construe the provisions of the Plan in all particulars in such manner and
to such extent as it deems proper and to take all action and make all
decisions and determinations necessary under the Plan or in connection with
its administration, interpretation and application. Any interpretation or
construction placed upon any term or provision of the Plan by the Committee,
any decision of the Committee with regard to the rights of a Director, former
Director or Beneficiary or any other person, any reconciliation of an
inconsistency in the Plan made by the Committee and any other action,
determination or decision whatsoever taken by the Committee, shall be final,
conclusive and binding upon all persons or parties interested or concerned in
the Plan.
ARTICLE VIII
------------
Miscellaneous
-------------
Section 8.1. The Corporation shall maintain a record of each Director's
accumulated Deferral Amounts and Additions thereto by means of a Deferred
Compensation Account.
Section 8.2. Nothing contained in this Plan and no action taken pursuant
to the provisions thereof shall create or be construed to create a trust of
any kind or a fiduciary relationship between the Corporation and the Director,
the Director's Beneficiary or any other person.
Section 8.3. To the extent that any person acquires the right to receive
payment of benefits from the Corporation under this Plan, such right shall be
no greater than the rights of any unsecured general creditor of the
Corporation.
-7-
<PAGE> 43
Section 8.4. Neither the Director, his Beneficiary, heirs, assigns,
trust, estate, nor any other person claiming through or under the Director
shall have any right to commute, encumber or dispose of the right to receive
payments hereunder, all of which payments and the right thereto are expressly
declared to be nonassignable and any such attempt at assignment shall be void
and of no effect.
Section 8.5. No provision of this Plan nor any action taken hereunder
shall be construed as giving the Director any right to be retained by the
Corporation.
Section 8.6. The Corporation shall, to the extent permitted by law, have
the right to deduct from any payments of any kind with respect to the benefit
otherwise due to the Director any Federal, state or local taxes of any kind
required by law to be withheld from such payments.
Section 8.7. The Plan shall be governed and construed in accordance with
the laws of the State of Missouri. In the event any provision of this Plan is
held invalid, void or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.
ARTICLE IX
----------
Termination and Amendment
-------------------------
Section 9.1. The Board of Directors will have full power and authority to
amend, modify, alter or terminate this Plan in whole or in part; provided,
however, that any such termination,
-8-
<PAGE> 44
modification or amendment shall not terminate or diminish any rights or
benefits accrued by a Director under this Plan as of the effective date of any
such termination, modification or amendment.
-9-
<PAGE> 45
EXHIBIT A
BOATMEN'S DEFERRED COMPENSATION PLAN FOR DIRECTORS
PARTICIPATION AGREEMENT
THIS AGREEMENT, made and entered into this ------ day of --------------,
19----, by and between Boatmen's Bancshares, Inc. ("Corporation"), a Missouri
corporation and -------------------------- ("Director").
The Corporation and the Director mutually agree as follows:
1. The Director has received a copy of the Boatmen's Executive Deferred
Compensation Plan for Directors, as adopted and amended effective August 8,
1989, ("Plan") and has read and understands the Plan.
2. By completion of this Agreement and the accompanying Annual Election
Form, the Director agrees to comply with the terms of the Plan in all
respects.
3. All provisions of the Plan are hereby made a part of this Agreement.
4. As indicated on the accompanying Annual Election Form, the Director
elects to defer all of his Compensation earned during the period specified on
the Annual Election Form.
5. For each subsequent Plan Year, the Director shall have the right to
make a similar Annual Election to defer his Compensation.
6. The Director is in no way obligated to make an Annual Election in any
Plan Year and the failure to elect for any Plan
<PAGE> 46
Year will not affect the Director's right to do so in any subsequent Plan
Year.
7. The Director's Annual Election under the Plan in any Plan Year must be
received by the Corporation no later than September 1, 1989 for the Plan Year
commencing August 8, 1989 and no later than the December 31 immediately
preceding any other Plan Year. Any Annual Election received after said date
shall be of no effect for purposes of the Plan.
8. An Annual Election, signed and dated by the Director, shall be
irrevocable.
9. The Director elects to have his benefits under the Plan distributed
under the following benefit payment schedule:
----- single lump sum
----- substantially equal monthly installments over a five (5) year
period.
The Director understands that this election is irrevocable.
10. The Director designates as his Beneficiary under the Plan the
following:
NAME: ---------------------------------------------------------------
ADDRESS: ------------------------------------------------------------
------------------------------------------------------------
RELATIONSHIP TO
THE DIRECTOR: -------------------------------------------------------
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<PAGE> 47
11. The Director has the right to change his Beneficiary at any time by
notifying the Corporation in writing of such change in Beneficiary.
BOATMEN'S BANCSHARES, INC.
By -----------------------------------
--------------------------------------
Director
-3-
<PAGE> 48
EXHIBIT B
BOATMEN'S DEFERRED COMPENSATION PLAN FOR DIRECTORS
19 --- ANNUAL ELECTION FORM
I, -------------------------------------, a Director in the Boatmen's
Deferred Compensation Plan for Directors (the "Plan"), hereby elect to defer
pursuant to the terms of the Plan my Compensation for the Plan Year commencing
- ---------------------.
I understand that for the Plan Year commencing August 8, 1989, this form
must be received on or before September 1, 1989 to be effective and that such
election relates only to Compensation earned after August 18, 1989. For
subsequent Years, I understand that to be effective this form must be received
by the Corporation no later than December 31 of the year immediately preceding
the Plan Year for which this election is being made.
I understand too that, once effective, an election cannot be revoked.
- --------------------------- --------------------------------------------
Date Director
<PAGE> 49
EXHIBIT C
CENTERRE BANCORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
----------------------------------------
ARTICLE I
PURPOSE
The purpose of this Deferred Compensation Plan For Directors is to
provide a means whereby Centerre Bancorporation may provide for the financial
security of its Directors so that their services may be retained and their
efforts encouraged.
ARTICLE II
DEFINITIONS
Beneficiary. "Beneficiary" means the person or persons designated under
-----------
Article 6 to receive benefits upon the death of a Participant.
Benefit Deferral Period. "Benefit Deferral Period" means the period of
-----------------------
three (3) consecutive Plan Years (or such lesser number of Plan Years
remaining in a Participant's Term as a Director) over which a Participant
defers a portion of his or her Compensation with respect to a Benefit Unit
pursuant to Section 4.1.
Benefit Unit. "Benefit Unit" means a unit enrolled in by a Participant
------------
pursuant to Article 4 providing the benefits described in Article 5.
Committee. "Committee" means the Deferred Compensation Plan Committee
---------
appointed to administer the Plan under Article 3.
<PAGE> 50
Company. "Company" means Centerre Bancorporation, a Missouri corporation.
-------
Compensation. "Compensation" means the annual retainer paid to a
------------
Director by the Company (before any reduction pursuant to this Plan) for his
or her services as a Director, excluding any special payments for service on
any committee of the Board of Directors of the Company, and excluding any
amounts paid for services as an employee of the Company.
Cumulative Deferral Amount. "Cumulative Deferral Amount" means with
--------------------------
with respect to each Benefit Unit the total cumulative amount by which a
Participant's Compensation is reduced over the period prescribed in Section
4.1.
Declared Rate. "Declared Rate" means with respect to any Plan Year,
-------------
Moody's Corporate Bond Yield Average - Monthly Average Corporates as published
by Moody's Investor's Service, Inc. (or any successor thereto) for the
calendar month ending two months before the first month in such Plan Year, or,
if such yield is no longer published, a substantially similar average selected
by the Committee.
Deferral Account. "Deferral Account" means the account maintained on the
----------------
books of the Company for each Benefit Unit pursuant to Section 4.2.
Director. "Director" means a member of the Board of Directors of the
--------
Company.
-2-
<PAGE> 51
Enrollment Agreement. "Enrollment Agreement" means the written
--------------------
agreement that shall be entered into between the Company and a Director
pursuant to which the Director becomes a Participant.
Incentive Rate. "Incentive Rate" with respect to any Plan Year is the
--------------
interest rate designated by the Committee to be credited to the Deferral
Accounts in addition to the Declared Rate pursuant to Paragraphs 4.2(a) and
7.2 hereof. The Incentive Rate shall be six percent (6%) unless the Committee
sets a different rate, and any changes in the Incentive Rate shall have only
prospective application. In no event shall the Incentive Rate be less than
three percent (3%).
Normal Retirement. "Normal Retirement" means with respect to any Benefit
-----------------
Unit, termination of a Participant's Service for reasons other than death.
Normal Retirement Benefit. "Normal Retirement Benefit" means the benefit
-------------------------
determined under Section 5.1 with respect to a Benefit Unit.
Participant. "Participant" means a Director who has filed a completed and
-----------
executed Enrollment Agreement with the Committee and is participating in the
Plan in accordance with the provisions of Article 4.
Plan. "Plan" means this Centerre Bancorporation Deferred Compensation
----
Plan For Directors.
-3-
<PAGE> 52
Plan Year. "Plan Year" means the period commencing with the date of the
---------
annual meeting of Company's shareholders and ending with the day immediately
preceding the next annual meeting of the Company's shareholders.
Service. "Service" means service as a Director.
-------
Survivor Benefit. "Survivor Benefit" means the benefit determined under
----------------
Section 5.3(a) with respect to a Benefit Unit.
Term as a Director. "Term as a Director" means each period for which a
------------------
person is elected a Director by the shareholders of the Company.
Termination Benefit. "Termination Benefit" means the benefit determined
-------------------
under Section 5.2 with respect to a Benefit Unit.
ARTICLE 3
ADMINISTRATION OF THE PLAN
A Deferred Compensation Plan Committee shall be appointed by the
Company's Board of Directors to administer the Plan and establish, adopt, or
revise such rules and regulations as it may deem necessary or advisable for
the administration and interpretation of the Plan. Members of the Committee
shall be eligible to participate in the Plan while serving as members of the
Committee, but a member of the Committee shall not vote or act upon any matter
which relates solely to such member's interest in the Plan as a Participant.
The Committee may
-4-
<PAGE> 53
delegate such of its responsibilities to such agents as it deems appropriate,
and the Company shall pay their compensation, if any.
ARTICLE 4
PARTICIPATION
4.1 Election to Participate. Any Director may enroll in a Benefit Unit
-----------------------
under the Plan effective as of the first day of the Plan Year (commencing on
or after May 14, 1986) in which his Term as a Director commenced (or effective
as of May 14, 1986 in the case of Directors in Service on such date) by filing
a completed Enrollment Agreement with the Committee. Such Enrollment Agreement
must be filed prior to the first day of the Plan Year in which his Term as a
Director commenced. Provided that Directors in Service on May 14, 1986 may
file their Enrollment Agreement within 30 days after such date. Pursuant to
said Enrollment Agreement, the Director shall irrevocably designate a dollar
amount by which the aggregate Compensation of such Participant shall be
reduced over the Benefit Deferral Period consisting of the three (3)
consecutive Plan Years (or such lesser number of Plan Years remaining in a
Participant's Term as a Director) beginning with the Plan Year for which the
Participant first files the Enrollment Agreement, provided, however, that:
(a) Discontinuance of Deferral. The Participant's obligation to
--------------------------
continue deferral for the entire Benefit Deferral Period shall terminate upon
his
-5-
<PAGE> 54
death. The Committee, in its discretion, may allow a Participant to
discontinue his deferral prior to completion of the Benefit Deferral Period
due to completion of the Benefit Deferral Period due to the Participant's
termination of Service or otherwise.
(b) Minimum Deferral. The Cumulative Deferral Amount for any
----------------
Benefit Unit shall not be less than One Thousand Two Hundred Dollars
($1,200.00) multiplied by the number of Plan Years in the Benefit Deferral
Period.
(c) Reduction in Compensation. Except as otherwise provided in this
-------------------------
Section 4.1, the Compensation of the Participant for each of the Plan Years in
the Benefit Deferral Period shall be reduced by an amount equal to the
quotient obtained by dividing the Cumulative Deferral Amount by the number of
Plan Years in the Benefit Deferral Period.
For purposes of the Plan, a Benefit Unit shall be deemed to be a Benefit
Unit in which a Participant is enrolled only on and after the first day of the
Benefit Deferral Period with respect to such Benefit Unit.
4.2. Deferral Accounts. The Committee shall establish and maintain a
-----------------
separate Deferral Account for each of a Participant's Benefit Units. The
amount by which a Participant's Compensation is reduced pursuant to Section
4.1 with respect to any Benefit Unit shall be credited by the Company to the
Participant's Deferral Account for such Benefit Unit no later than the first
day of the month following the
-6-
<PAGE> 55
month in which such Compensation would otherwise have been paid. Such Deferral
Account shall be debited by the amount of any payments made by the Company to
the Participant or the Participant's Beneficiary with respect to such Benefit
Unit pursuant to the Plan.
(a) Crediting of Interest - Normal Retirement or Death. Each
--------------------------------------------------
Deferral Account of a Participant who terminates Service on account of Normal
Retirement or death, shall be credited with interest as of the date such
Deferral Account was established through the date of such termination of
Service at a rate equal to the sum of the Declared Rate, plus the Incentive
Rate, compounded annually, on the balance from month to month in such Deferral
Account. Following such termination of Service the Participant's Deferral
Accounts shall be credited with interest on the balance in such Deferral
Account from month to month at a rate equal to the sum of (I) the average of
the Declared Rate for the five (5) Plan Years ending prior to such termination
of Service, plus (ii) the Incentive Rate, compounded annually. Interest shall
be credited to each Deferral Account as of the last day of each month.
4.3 Statement of Accounts. The Committee shall submit to each
---------------------
Participant, within one hundred twenty (120) days after the close of each Plan
Year, a statement in such form as the Committee deems desirable setting forth
the balance standing to the credit of each Participant in each of his Deferral
Accounts.
-7-
<PAGE> 56
ARTICLE 5
BENEFITS
5.1 Normal Retirement. A Participant who terminates Service on account of
-----------------
Normal Retirement with respect to a Benefit Unit shall be paid a Normal
Retirement Benefit equal to the value, as of the date of Normal Retirement, of
the Participant's Deferral Accounts for such Benefit Unit, plus the interest
that will be credited to such Deferral Account pursuant to Section 4.2.
Payment of such Normal Retirement Benefit shall be made in substantially equal
monthly installments (subject to adjustments on account of the crediting of
interest) for one hundred twenty (120) months beginning with the month
following the date of Normal Retirement. Provided, that a Participant may
instead elect in the Enrollment Agreement for any Benefit Unit to have the
Normal Retirement Benefit for such Benefit Unit paid to him in either a lump
sum or sixty (60) monthly payments. A Participant may also elect in his
Enrollment Agreement for any Benefit Unit to defer making the election as to
the form of payment until a date no later than sixty (60) days preceding his
Normal Retirement.
5.2 Survivor Benefits.
-----------------
(a) The Beneficiary of a Participant who dies while still in Service
shall be paid a Survivor Benefit equal to the value of the Participant's
Deferral Account for each Benefit Unit as of the date of his death, plus the
-8-
<PAGE> 57
interest that will be credited to such Deferral Account pursuant to Section
4.2. Payment of such Survivor Benefit shall be made in substantially equal
monthly installments (subject to adjustments on account of the crediting of
interest) for one hundred twenty (120) months. Provided, that if the aggregate
balance in all of the Deferral Accounts of such Participant as of the date of
his death is less than Twenty-Five Thousand Dollars ($25,000.00), the balance
in the Deferral Account for each Benefit Unit as of such date shall be paid to
the Beneficiary with respect to such Benefit Units in one lump sum.
(b) If a Participant dies after termination of Service but prior to
the payment of all benefits due to him with respect to a Benefit Unit, the
Company will pay to the Participant's Beneficiary the remaining installments
of any such benefit that would have been paid to the Participant had the
Participant survived.
5.3 Taxes. To the extent required by the law in effect at the time
-----
payments are made, the Company shall withhold from payments made hereunder the
taxes, if any, required to be withheld by federal or any state or local
government.
-9-
<PAGE> 58
ARTICLE 6
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any
person or persons as Beneficiary or Beneficiaries to whom payment under the
Plan shall be made in the event of Participant's death prior to complete
distribution to the Participant of the benefits due under the Plan. Each
Beneficiary designation shall become effective only when filed in writing with
the Committee during the Participant's lifetime on a form prescribed by the
Committee.
The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed. The Committee may require that the
spouse of a married Participant domiciled in a community property jurisdiction
join in any designation of Beneficiary or Beneficiaries other than the spouse
in order for such designation to be valid.
If a Participant fails to designate a Beneficiary as provided above, or
if his Beneficiary designation is revoked without execution of a new
designation, or if all designated Beneficiaries predecease the Participant or
die prior to complete distribution of the Participant's benefits, then the
Committee shall direct the distribution of such benefits to the Participant's
estate.
-10-
<PAGE> 59
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Board of Directors of the Company may at any time
---------
amend the Plan in whole or in part; provided, however, that no amendment shall
retroactively decrease the benefits under the Plan payable to any Participant.
No change in the Declared Rate or Incentive Rate shall be deemed to be an
amendment to the Plan. Written notice of any amendment shall be given each
Director then participating in the Plan.
7.2 Payments Upon Termination. Upon the termination of the Plan the
-------------------------
Participants will be deemed to have voluntarily terminated their participation
in all Benefit Units under the Plan as of the date of such termination.
Compensation shall cease to be deferred for the then Plan Year and all future
Plan Years, and the Company will pay each Participant in a lump sum the value
of such Participant's Deferral Accounts, determined as if such Participant had
terminated Service on the date of such termination of the Plan with interest
credited on each such Deferral Account at a rate for purposes of Section
4.2(a) equal to the sum of the Declared Rate plus the Incentive Rate
compounded annually.
ARTICLE 8
MISCELLANEOUS
8.1 Unsecured General Creditor. No Participant or Beneficiary, shall have
--------------------------
any legal or equitable right, interest, or claim in any specific property or
assets of the Company, nor
-11-
<PAGE> 60
shall any Participant or Beneficiary have any rights, claims, or interests in
any life insurance policies, annuity contracts, or the proceeds therefrom
owned or which may be acquired by the Company. The assets of the Company shall
not be held under any trust for the benefit of Participants or Beneficiaries
or held in any way as collateral security for the fulfilling of the
obligations of the Company under the Plan. Any assets, including life
insurance policies, annuity contracts or the proceeds therefrom which the
Company may acquire in anticipation of its obligations under the Plan shall
remain the assets of the Company. The Company's obligation to pay benefits
under the Plan shall be that of an unfunded and unsecured promise of the
Company to pay money in the future.
8.2 Obligations to Company. If a Participant becomes entitled to a
----------------------
distribution of benefits under the Plan, and if at such time the Participant
has outstanding any debt, obligation, or other liability representing an
amount owing to the Company, then the Company may offset such amount so owing
against the amount of benefits otherwise distributable. Such determination
shall be made by the Committee.
8.3 Nonassignability. Neither a Participant nor any other person shall
----------------
have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, or
interest therein, and all rights are expressly declared to be
-12-
<PAGE> 61
unassignable and nontransferable. No part of the amounts payable shall, prior
to actual payment, be subject to seizure or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a Participant or
any other person, nor shall any such part be transferable by operation of law
in the event of a Participant's or any other person's bankruptcy or
insolvency.
8.4 Protective Provisions. Each Participant shall cooperate with the
---------------------
Company by furnishing any and all information requested by the Company in
order to facilitate the payment of benefit hereunder, including the taking of
such physical examinations as the Company may deem necessary and the taking of
such other relevant action as may be requested by the Company. If a Participant
refuses so to cooperate, the Company shall have no further obligation
to the Participant under the Plan, other than payment to such Participant of
the cumulative reductions in Compensation theretofore made pursuant to the
Plan. If a Participant commits suicide during the two (2) year period
beginning on the later or (a) the date of adoption of this Plan or (b) the
first day of the first Plan Year of such Participant's participation in the
Plan, or if the Participant makes any material misstatement of information or
nondisclosure of medical history, then no benefits will be payable hereunder
to such Participant or his Beneficiary, other than payment to such Participant
(or his Beneficiary if the Participant has died) of the cumulative reductions
in Compensation theretofore
-13-
<PAGE> 62
made pursuant to the Plan; provided, that in the Company's sole discretion,
benefits may be payable in a reduced amount to compensate the Company for any
loss, cost, damage or expense suffered or incurred by the Company as a result
in any way of such misstatement or nondisclosure.
8.5 Gender, Singular and Plural. All pronouns and any variations thereof
---------------------------
shall be deemed to refer to the masculine, feminine, or neuter, as the
identity of the person or persons may require. As the context may require, the
singular may be read as the plural and the plural as the singular.
8.6 Captions. The captions of the articles, sections, and paragraphs of
--------
this Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.
8.7 Validity. In the event any provision of the Plan is held invalid,
--------
void, or unenforceable, the same shall not affect, in any respect whatsoever,
the validity of any other provision of this Plan.
8.8 Notice. Any notice or filing required or permitted to be given to
------
the Committee under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Company, directed to the attention of the Secretary of the Company. Such
notice shall be deemed given as of the date of
-14-
<PAGE> 63
delivery or, if delivery is made by mail, as of the date shown on the postmark
on the receipt for registration or certification.
8.9 Applicable Law. This Plan shall be governed and construed in
--------------
accordance with the laws of the State of Missouri.
IN WITNESS WHEREOF, the Company has executed this Plan instrument by
authority of its Board of Directors this --------- day of ------------------,
1986.
CENTERRE BANCORPORATION
By ---------------------------------
ATTEST:
- --------------------------------
-15-
<PAGE> 64
AMENDMENT TO THE
CENTERRE BANCORPORATION
DEFERRED COMPENSATION PLAN FOR DIRECTORS
----------------------------------------
WHEREAS, Centerre Bancorporation ("Company") previously adopted the
Centerre Bancorporation Deferred Compensation Plan for Directors ("Plan"); and
WHEREAS, the Company retained the right to amend the Plan pursuant to
Article 7 thereof; and
WHEREAS, the Company desires to amend the Plan effective January 1, 1988;
NOW, THEREFORE, effective January 1, 1988, the Plan is amended as
follows:
1. Article 7 is deleted and replaced with the following:
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Board of Directors of the Company may at any time
---------
amend the Plan in whole or in part; provided, however, that no amendment shall
reduce the benefits (including the crediting of interest pursuant to Section
4.2(a) hereof and the right to receive payments in installments or in a lump
sum provided in Section 5 hereof) to which any Participant is entitled under
the Plan with respect to amounts credited to such Participant's
<PAGE> 65
Deferral Account prior to such amendment. Written notice of any amendment
shall be given each Employee then participating in the Plan.
7.2 Termination.
-----------
(a) Employer's Right to Terminate. The Board of Directors of any
-----------------------------
Employer may at any time terminate the Plan as to said Employer on giving
Participants not less than ninety (90) days prior written notice thereof.
(b) Payments Upon Termination. Upon any termination of the Plan as
-------------------------
to an Employer the Participants employed by such Employer will be deemed to
have voluntarily terminated their participation in all Benefit Units under the
Plan as of the date of such termination. Compensation earned for the Plan Year
of such termination and all future Plan Years shall not be deferred and the
Employer will pay each Participant from his Deferral Account as if such
Participant had reached Normal Retirement on the date such termination is
effective.
-2-
<PAGE> 66
IN WITNESS WHEREOF, the foregoing Amendment is adopted on this 16th day
----
of June, 1988, effective January 1, 1988.
----
CENTERRE BANCORPORATION
By /s/
---------------------------------
ATTEST:
/s/
- -----------------------------------
-3-
<PAGE> 67
IN WITNESS WHEREOF, the foregoing Amendment No. 3 is adopted effective as
of August 8, 1989.
BOATMEN'S BANCSHARES, INC.
By /s/
-----------------------------------
<PAGE> 68
AMENDMENT NO. 4 TO
BOATMEN'S DEFERRED COMPENSATION
PLAN FOR DIRECTORS
WHEREAS, the Corporation desires to make certain changes in the Boatmen's
Deferred Compensation Plan for Directors (the "Plan");
THEREFORE, the Corporation does hereby amend the Plan so that it shall
read in its entirety as follows:
<PAGE> 1
Exhibit 10(q)
EMPLOYMENT AGREEMENT FOR
GREGORY L. CURL
---------------
BOATMEN'S BANCSHARES, INC.
AUGUST, 1994
<PAGE> 2
Boatmen's Bancshares, Inc.
Employment Agreement For GREGORY L. CURL
-----------------------
This EMPLOYMENT AGREEMENT is made, entered into, and
is effective, contingent upon Compensation Committee
approval and ratification by the Board of Directors, as
of this first day of July, 1994 (the "Effective Date"),
by and between Boatmen's Bancshares, Inc., a Missouri
corporation, (the "Company") and Gregory L. Curl (the
"Executive").
WHEREAS, the Executive is presently employed by the
Company in the capacity of Vice Chairman; and
WHEREAS, the Executive possesses considerable
experience and an intimate knowledge of the business
and affairs of the Company, its policies, methods,
personnel, and operations; and
WHEREAS, the Company recognizes that the Executive's
contributions have been substantial and meritorious
and, as such, the Executive has demonstrated unique
qualifications to act in an executive capacity for the
Company; and
WHEREAS, the Company is desirous of assuring the
continued employment of the Executive in the above
stated capacities, and Executive is desirous of having
such assurance;
NOW THEREFORE, in consideration of the foregoing and
of the mutual covenants and agreements of the parties
set forth in this Agreement, and of other good and
valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
Article 1. Term of Employment
The Company hereby agrees to employ the Executive
and the Executive hereby agrees to continue to serve
the Company, in accordance with the terms and
conditions set forth herein, for an initial period of
three (3) years, commencing as of the Effective Date of
this Agreement, as indicated above; subject, however,
to earlier termination as expressly provided herein.
The initial three (3) year period of employment
automatically shall be extended for one (1) additional
year at the end of the initial three (3) year term, and
then again after each successive year thereafter.
However, either party may terminate this Agreement at
the end of the initial three (3) year period, or at the
end of any successive one (1) year term thereafter, by
giving the other party written notice of intent not to
renew, delivered at least three (3) months prior to the
end of such initial period or successive term.
1
<PAGE> 3
In the event such notice of intent not to renew is
properly delivered, this Agreement, along with all
corresponding rights, duties, and covenants,
automatically shall expire at the end of the initial
period or successive term then in progress.
However, regardless of the above, if at any time
during the initial period of employment, or successive
term, a Change in Control of the Company occurs (as
defined in Article 7 herein), then this Agreement shall
become immediately irrevocable for the longer of: (a)
three (3) years beyond the month in which the effective
date of such Change in Control occurs; or (b) until all
obligations of the Company hereunder have been
fulfilled, and until all benefits provided hereunder
have been paid.
Article 2. Position and Responsibilities
During the term of this Agreement, the Executive
agrees to serve as Vice Chairman of the Company, and as
a member of the Company's Board of Directors if so
elected. In his capacity as Vice Chairman of the
Company, the Executive shall report directly to the
Chairman and Chief Executive Officer of the Company,
and shall maintain the level of duties and
responsibilities as in effect as of the Effective Date,
or such higher level of duties and responsibilities as
he may be assigned during the term of this Agreement.
The Executive shall have the same status, privileges,
and responsibilities normally inherent in such
capacities in financial institutions of similar size
and character.
Article 3. Standard of Care
During the term of this Agreement, the Executive
agrees to devote substantially his full time,
attention, and energies to the Company's business and
shall not be engaged in any other business activity,
whether or not such business activity is pursued for
gain, profit, or other pecuniary advantage. However,
subject to Article 9 herein, the Executive may serve as
a director of other companies so long as such service
is not injurious to the Company. The Executive
covenants, warrants, and represents that he shall:
(a) Devote his full and best efforts to the
fulfillment of his employment obligations; and
(b) Exercise the highest degree of loyalty and the
highest standards of conduct in the
performance of his duties.
This Article 3 shall not be construed as preventing
the Executive from investing assets in such form or
manner as will not require his services in the daily
operations of the affairs of the companies in which
such investments are made.
2
<PAGE> 4
Article 4. Compensation
As remuneration for all services to be rendered by
the Executive during the term of this Agreement, and as
consideration for complying with the covenants herein,
the Company shall pay and provide to the Executive the
following:
4.1. BASE SALARY. The Company shall pay the
Executive a Base Salary in an amount which shall be
established from time to time by the Board of Directors
of the Company or the Board's designee; provided,
however, that such Base Salary shall not be less than
Three Hundred Twenty Thousand Dollars ($320,000.00) per
year. This Base Salary shall be paid to the Executive
in equal bimonthly installments throughout the year,
consistent with the normal payroll practices of the
Company.
The annual Base Salary shall be reviewed at least
annually following the Effective Date of this
Agreement, while this Agreement is in force, to
ascertain whether, in the judgment of the Board or the
Board's designee, such Base Salary should be increased.
If so increased, the Base Salary as stated above shall,
likewise, be increased for all purposes of this
Agreement.
4.2. ANNUAL BONUS. In addition to his Base Salary,
the Executive shall be eligible to participate in the
Company's short-term incentive program, as such program
may exist from time-to-time, at a level commensurate
with the Executive's position with the Company, as
determined at the sole discretion of the Compensation
Committee.
4.3. LONG-TERM INCENTIVES. The Executive shall be
eligible to participate in the Company's Long-Term
Incentive Plan, as such shall be amended or superseded
from time-to-time, at a level commensurate with the
Executive's position, as determined at the sole
discretion of the Compensation Committee.
4.4. RETIREMENT BENEFITS. The Company shall provide
to the Executive participation in all Company qualified
defined benefit and defined contribution retirement
plans, subject to the eligibility and participation
requirements of such plans. The Executive's retirement
benefits shall not be less than those that would be
provided him under the terms of the Boatmen's
Bancshares, Inc. Retirement Plan for Employees and the
Boatmen's Supplemental Retirement Plan in effect as of
the Effective Date or as such benefits shall be
increased, whether or not the benefits under such
programs shall be decreased or eliminated. The
obligations of the Company pursuant to this Section 4.4
shall survive the termination of this Agreement.
4.5. EMPLOYEE BENEFITS. The Company shall provide
to the Executive all benefits to which other executives
and employees of the Company are entitled, as
commensurate with the Executive's position, subject to
the eligibility requirements and other provisions of
such arrangements. Such benefits shall include, but
shall not be limited to, group term life insurance,
comprehensive health and major medical insurance,
dental and life insurance, and short-term and long-term
disability.
3
<PAGE> 5
4.6. PERQUISITES. The Company shall provide to the
Executive, at the Company's cost, all perquisites which
are suitable to the character of Executive's position
with the Company and adequate for the performance of
his duties hereunder.
4.7. RIGHT TO CHANGE PLANS. By reason of Sections
4.5 and 4.6 herein, the Company shall not be obligated
to institute, maintain, or refrain from changing,
amending, or discontinuing any benefit plan or
perquisite, so long as such changes are similarly
applicable to executive employees generally.
Article 5. Expenses
The Company shall pay, or reimburse the Executive,
for all ordinary and necessary expenses, in a
reasonable amount, which the Executive incurs in
performing his duties under this Agreement including,
but not limited to, travel, entertainment, professional
dues and subscriptions, and all dues, fees, and
expenses associated with membership in various
professional, business, and civic associations and
societies in which the Executive's participation is in
the best interest of the Company.
Article 6. Employment Terminations
6.1. TERMINATION DUE TO RETIREMENT OR DEATH. In
the event the Executive's employment is terminated
while this Agreement is in force by reason of
Retirement (as defined under the then established rules
of the Company's tax-qualified retirement plan), or
death, the Executive's benefits shall be determined in
accordance with the Company's retirement, survivor's
benefits, insurance, and other applicable programs of
the Company then in effect; provided, however, that
such benefits shall be no less than those set forth in
Section 4.4 herein. Upon the effective date of such
termination, the Company's obligation under this
Agreement to pay and provide to the Executive the
elements of pay described in Sections 4.1, 4.2, and 4.3
shall immediately expire. However, the Executive shall
receive all other rights and benefits that he is vested
in, pursuant to other plans and programs of the
Company.
6.2. TERMINATION DUE TO DISABILITY. In the event
that the Executive becomes Disabled (as defined below)
during the term of this Agreement and is, therefore,
unable to perform his duties herein for more than one
hundred eighty (180) total calendar days during any
period of twelve (12) consecutive months, or in the
event of the Board's reasonable expectation that the
Executive's Disability will exist for more than a
period of one hundred eighty (180) calendar days, the
Company shall have the right to terminate the
Executive's active employment as provided in this
Agreement. However, the Board shall deliver written
notice to the Executive of the Company's intent to
terminate for Disability at least thirty (30) calendar
days prior to the effective date of such termination.
A termination for Disability shall become effective
upon the end of the thirty (30) day notice period. Upon
such effective date, the Company's obligation to pay
and provide to the Executive the elements of pay
described in Sections 4.1, 4.2, and 4.3 shall
immediately expire. However, the Executive shall
receive all rights and benefits that he is vested in,
pursuant to other plans and programs of the Company.
4
<PAGE> 6
The term "Disability" shall mean, for all purposes
of this Agreement, the incapacity of the Executive, due
to injury, illness, disease, or bodily or mental
infirmity, to engage in the performance of
substantially all of the usual duties of employment
with the Company as contemplated by Article 2 herein,
such Disability to be determined by the Board of
Directors of the Company upon receipt and in reliance
on competent medical advice from one (1) or more
individuals, selected by the Board, who are qualified
to give such professional medical advice.
It is expressly understood that the Disability of
the Executive for a period of one hundred eighty (180)
calendar days or less in the aggregate during any
period of twelve (12) consecutive months, in the
absence of any reasonable expectation that his
Disability will exist for more than such a period of
time, shall not constitute a failure by him to perform
his duties hereunder and shall not be deemed a breach
or default and the Executive shall receive full
compensation for any such period of Disability or for
any other temporary illness or incapacity during the
term of this Agreement.
6.3. VOLUNTARY TERMINATION BY THE EXECUTIVE. The
Executive may terminate this Agreement at any time by
giving the Board of Directors of the Company written
notice of intent to terminate, delivered at least
ninety (90) calendar days prior to the effective date
of such termination.
Upon the effective date of such termination,
following the expiration of the ninety (90) day notice
period, the Company shall pay the Executive his full
Base Salary, at the rate then in effect as provided in
Section 4.1 herein, through the effective date of
termination, plus all other benefits to which the
Executive has a vested right at that time (for this
purpose, the Executive shall not be paid any Bonus with
respect to the fiscal year in which voluntary
termination under this Section 6.3 occurs). In the
event that the terms and provisions of Article 7 herein
do not apply to such termination, the Company and the
Executive thereafter shall have no further obligations
under this Agreement. However, in the event the terms
and provisions of Article 7 herein apply, the payments
and benefits set forth therein shall apply.
6.4. INVOLUNTARY TERMINATION BY THE COMPANY WITHOUT
CAUSE. At all times prior to six (6) full calendar
months before the effective date of a Change in
Control, or at any time more than three (3) years after
the effective date of a Change in Control, the Board
may terminate the Executive's employment, as provided
under this Agreement, at any time, for reasons other
than death, Disability, Retirement, or for Cause, by
notifying the Executive in writing of the Company's
intent to terminate, at least thirty (30) calendar days
prior the effective date of such termination.
Upon the effective date of such termination,
following the expiration of the thirty (30) day notice
period, the Company shall pay to the Executive a lump
sum cash payment equal to the greater of: (a) the Base
Salary then in effect for the remaining term of this
Agreement (assuming no additional extensions of this
Agreement's term beyond that in effect as of the
effective date of termination), together with
5
<PAGE> 7
continuation of health and welfare benefits for the
remaining term of this Agreement; or (b) one (1) full
year of his Base Salary in effect as of the effective
date of termination, plus a one (1) year continuation
of his health and welfare benefits.
Further, the Company shall pay the Executive all
other benefits to which the Executive has a vested
right at the time, according to the provisions of the
governing plan or program. The Company and the
Executive thereafter shall have no further obligations
under this Agreement.
If the Executive's employment is terminated for any
of the reasons set forth in Section 7.1 herein, the
Executive shall be entitled to receive the benefits
provided in Section 7.1 herein in lieu of the benefits
set forth in this Section 6.4.
6.5. TERMINATION FOR CAUSE. Nothing in this
Agreement shall be construed to prevent the Board from
terminating the Executive's employment under this
Agreement for "Cause."
"Cause" shall be defined as conduct of the Executive
which is finally adjudged to be knowingly fraudulent,
deliberately dishonest or willful misconduct. The
Company's Board of Directors, by majority vote, shall
make the determination of whether Cause exists, after
providing the Executive with notice of the reasons the
Board believes Cause may exist, and after giving the
Executive the opportunity to respond to the allegation
that Cause exists.
In the event this Agreement is terminated by the
Board for Cause, the Company shall pay the Executive
his Base Salary through the effective date of the
employment termination and the Executive shall
immediately thereafter forfeit all rights and benefits
(other than vested benefits) he would otherwise have
been entitled to receive under this Agreement. The
Company and the Executive thereafter shall have no
further obligations under this Agreement.
6.6. TERMINATION FOR GOOD REASON. At any time
during the term of this Agreement, the Executive may
terminate this Agreement for Good Reason (as defined
below) by giving the Board of Directors of the Company
thirty (30) calendar days written notice of intent to
terminate, which notice sets forth in reasonable detail
the facts and circumstances claimed to provide a basis
for such termination.
Upon the expiration of the thirty (30) day notice
period, the Good Reason termination shall become
effective, and the Company shall pay and provide to the
Executive the benefits set forth in this Section 6.6
(or, in the event of termination for Good Reason within
the six (6) full calendar month period prior to the
effective date of a Change in Control, or the three (3)
year period following the effective date of a Change in
Control, the benefits set forth in Section 7.1 herein).
6
<PAGE> 8
Good Reason shall mean, without the Executive's
express written consent, the occurrence of any one or
more of the following:
(a) The assignment of the Executive to duties
materially inconsistent with the Executive's
authorities, duties, responsibilities, and
status (including offices, titles, and
reporting requirements) as an officer of the
Company, or a material reduction or alteration
in the nature or status of the Executive's
authorities, duties, or responsibilities from
those in effect during the immediately
preceding fiscal year;
(b) Without the Executive's consent, the Company's
requiring the Executive to be based at a
location which is at least fifty (50) miles
further from the Executive's current primary
residence than is such residence from the
Company's current headquarters, except for
required travel on the Company's business to
an extent substantially consistent with the
Executive's business obligations as of the
Effective Date;
(c) A reduction by the Company in the Executive's
Base Salary as in effect on the Effective
Date, as provided in Section 4.1 herein, or as
the same shall be increased from time to time;
(d) The failure of the Company to continue in
effect any of the Company's short- and/or
long-term incentive compensation plans, or
employee benefit or retirement plans,
policies, practices, or arrangements in which
the Executive participates as of the Effective
Date (for this purpose, a replacement program,
the effect of which continues the Executive's
participation in such program on substantially
the same basis as existed immediately prior to
the effective date of a Change in Control
shall be deemed to be a continuation of the
previous program), or the failure by the
Company to continue the Executive's
participation therein on substantially the
same basis, both in terms of the amount of the
benefits provided and the level of the
Executive's participation, relative to other
executives of the Company; or
(e) The failure of the Company to obtain a
satisfactory agreement from any successor to
the Company to assume and agree to perform
this Agreement, as contemplated in Section
10.1 herein.
Upon a termination of the Executive's employment for
Good Reason at any time other than the six (6) full
calendar month period prior to the effective date of a
Change in Control, or the three (3) year period
following the effective date of a Change in Control,
the Executive shall be entitled to receive the same
payments and benefits as he is entitled to receive
following an involuntary termination of his employment
by the Company without Cause, as specified in Section
6.4 herein. The payment of Base Salary and pro rata
Bonus shall be made to the Executive within thirty (30)
calendar days following the effective date of
employment termination. Upon a termination for Good
Reason within the six (6) full calendar month period
prior to the effective date of a Change in Control, or
within the three (3) year period
7
<PAGE> 9
following the effective date of a Change in Control, the
Executive shall be entitled to receive the payments and
benefits set forth in Section 7.1 herein in lieu of those
set forth in this Section 6.6.
The Executive's right to terminate employment for
Good Reason shall not be affected by the Executive's
incapacity due to physical or mental illness. The
Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason herein.
Article 7. Change in Control
7.1. EMPLOYMENT TERMINATIONS IN CONNECTION WITH A
CHANGE IN CONTROL. In the event of a Qualifying
Termination (as defined below) within six (6) full
calendar months prior to the effective date of a Change
in Control, or within three (3) years following the
effective date of a Change in Control, then in lieu of
all other benefits provided to the Executive under the
provisions of this Agreement, the Company shall pay to
the Executive and provide him with the following
severance benefits:
(a) An amount equal to three (3) times the highest
rate of the Executive's annualized Base Salary
rate in effect at any time up to and including
the effective date of termination;
(b) An amount equal to three (3) times the
Executive's average annual bonus earned over
the three (3) fiscal years prior to the Change
in Control (whether or not deferred);
(c) An amount equal to the Executive's unpaid Base
Salary and accrued vacation pay through the
effective date of termination; and
(d) A continuation of the welfare benefits of
medical insurance, dental insurance, and group
term life insurance for three (3) full years
from the effective date of termination. These
benefits shall be provided to the Executive at
the same premium cost, and at the same
coverage level, as in effect as of the
Executive's effective date of termination.
However, in the event the premium cost and/or
level of coverage shall change for all
employees of the Company, the cost and/or
coverage level, likewise, shall change for the
Executive in a corresponding manner.
The continuation of these welfare benefits shall
be discontinued prior to the end of the three (3)
year period in the event the Executive has
available substantially similar benefits from a
subsequent employer, as determined by the
Company's Board of Directors or the Board's
designee.
8
<PAGE> 10
For purposes of this Article 7, a Qualifying
Termination shall mean any termination of the
Executive's employment OTHER THAN: (1) by the Company
for Cause (as provided in Section 6.5 herein); (2) by
reason of death, Disability (as provided in Section 6.2
herein), or Retirement (as such term is then defined in
the Company's tax qualified defined benefit retirement
plan); or (3) by the Executive without Good Reason (as
provided in Section 6.6 herein, but specifically
excluding voluntary terminations within the period
beginning on the first anniversary of the effective
date of the Change in Control and ending thirty (30)
days after such datei.e., any voluntary termination by
the Executive within such thirty (30) day period shall
result in the Company's obligation to make the payments
and provide the benefits set forth in this Section 7.1
in lieu of any other benefits hereunder).
7.2. DEFINITION OF "CHANGE IN CONTROL". A Change in
Control of the Company shall be deemed to have occurred
as of the first day any one or more of the following
conditions shall have been satisfied:
(a) Any individual, corporation (other than the
Company), partnership, trust, association,
pool, syndicate, or any other entity or any
group of persons acting in concert becomes the
beneficial owner, as that concept is defined
in Rule 13d-3 promulgated by the Securities
and Exchange Commission under the Securities
Exchange Act of 1934, of securities of the
Company possessing twenty percent (20%) or
more of the voting power for the election of
directors of the Company;
(b) There shall be consummated any consolidation,
merger, or other business combination
involving the Company or the securities of the
Company in which holders of voting securities
of the Company immediately prior to such
consummation own, as a group, immediately
after such consummation, voting securities of
the Company (or, if the Company does not
survive such transaction, voting securities of
the corporation surviving such transaction)
having less than fifty percent (50%) of the
total voting power in an election of directors
of the Company (or such other surviving
corporation);
(c) During any period of two (2) consecutive
years, individuals who at the beginning of
such period constitute the directors of the
Company cease for any reason to constitute at
least a majority thereof unless the election,
or the nomination for election by the
Company's shareholders, of each new director
of the Company was approved by a vote of at
least two-thirds (2/3) of the directors of the
Company then still in office who were
directors of the Company at the beginning of
any such period;
(d) Removal by the stockholders of all or any of
the incumbent directors of the Company other
than a removal for Cause; or
9
<PAGE> 11
(e) There shall be consummated any sale, lease,
exchange, or other transfer (in one
transaction or a series of related
transactions) of all, or substantially all, of
the assets of the Company (on a consolidated
basis) to a party which is not controlled by
or under common control with the Company.
7.3. LIMITATION ON CHANGE-IN-CONTROL BENEFITS.
Notwithstanding any other provision of this Agreement,
if any portion of the benefits provided in Section 7.1
herein (the "Benefits") or any other payment under this
Agreement, or under any other agreement with or plan of
the Company (in the aggregate "Total Payments") would
constitute an "excess parachute payment," then the
payments to be made to the Executive under this
Agreement shall be reduced such that the value of the
aggregate Total Payments that the Executive is entitled
to receive shall be one dollar ($1) less than the
maximum amount which the Executive may receive without
becoming subject to the tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the
"Code"), or which the Company may pay without loss of
deduction under Section 280G(a) of the Code.
For purposes of this Agreement, the terms "excess
parachute payment" and "parachute payments" shall have the
meanings assigned to them in Section 280G of the Code, and
such "parachute payments" shall be valued as provided
therein.
Within sixty (60) days following delivery of the
notice of employment termination by the Executive or
the Company pursuant to the terms of this Agreement, or
notice by the Company to the Executive of its belief
that there is a payment or benefit due the Executive
which will result in an "excess parachute payment" as
defined in Section 280G of the Code, the Executive and
the Company, at the Company's expense, shall obtain the
opinion of such legal counsel, which need not be
unqualified, as the Executive may choose, which sets
forth: (i) the amount of the Executive's "annualized
includible compensation for the base period" (as
defined in Code Section 280G(d)(1)); (ii) the present
value of the Total Payments; and (iii) the amount and
present value of any "excess parachute payment." The
opinion of such legal counsel shall be supported by the
opinion of a certified public accounting firm. Such
opinion shall be binding upon the Company and the
Executive.
In the event that such opinion determines that there
would be an "excess parachute payment," the benefits
provided in Section 7.1 herein, or any other payment
determined by such counsel to be includible in Total
Payments shall be reduced or eliminated as specified by
the Executive in writing delivered to the Company
within thirty (30) days of his receipt of such opinion,
or, if the Executive fails to so notify the Company,
then as the Company shall reasonably determine, so that
under the basis of calculations set forth in such
opinion, there will be no "excess parachute payment."
10
<PAGE> 12
The provisions of this Section 7.3, including the
calculations, notices, and opinion provided for herein
shall be based upon the conclusive presumption that:
(i) the compensation and benefits provided for in
Section 7.1 herein; and (ii) any other compensation
earned prior to the effective date of employment
termination by the Executive pursuant to the Company's
compensation programs (if such payments would have been
made in the future in any event, even though the timing
of such payment is triggered by the Change in Control),
are reasonable.
7.4. SUBSEQUENT IMPOSITION OF EXCISE TAX. If,
notwithstanding compliance with the provisions of
Section 7.3 herein, it is ultimately determined by a
court or pursuant to a final determination by the
Internal Revenue Service that any portion of the Total
Payments is considered to be a "parachute payment,"
subject to the excise tax under Section 4999 of the
Code, which was not contemplated to be a "parachute
payment" at the time of payment (so as to accurately
determine whether a limitation should have been applied
to the Total Payments to maximize the net benefit to
the Executive, as provided in Section 7.3 hereof), the
Executive shall be entitled to receive a lump sum cash
payment sufficient to place the Executive in the same
net after-tax position, computed by using the "Special
Tax Rate" as such term is defined below, that the
Executive would have been in had such payment not been
subject to such excise tax, and had the Executive not
incurred any interest charges or penalties with respect
to the imposition of such excise tax. For purposes of
this Agreement, the "Special Tax Rate" shall be the
highest effective Federal and state marginal tax rates
applicable to the Executive in the year in which the
payment contemplated under this Section 7.4 is made.
Article 8. Outplacement Assistance
Following a Qualifying Termination (as defined in
Section 7.1 herein) the Executive shall be reimbursed
by the Company for the costs of all outplacement
services obtained by the Executive within the two (2)
year period after the effective date of termination;
provided, however, that the total reimbursement shall
be limited to an amount equal to fifteen percent (15%)
of the Executive's Base Salary as of the effective date
of termination.
Article 9. Noncompetition
9.1. PROHIBITION ON COMPETITION. Without the prior
written consent of the Company, during the term of this
Agreement, and for the greater of twelve (12) months
following the expiration of this Agreement, or any
other period in which amounts are paid hereunder, the
Executive shall not, as an employee or an officer,
engage directly or indirectly in any business or
enterprise which is "in competition" with the Company
or its successors or assigns. For purposes of this
Agreement, a business or enterprise will be deemed to
be "in competition" if it is engaged in any significant
business activity of the Company or its subsidiaries
within the State of Missouri.
11
<PAGE> 13
However the Executive shall be allowed to purchase
and hold for investment less than three percent (3%) of
the shares of any corporation whose shares are
regularly traded on a national securities exchange or
in the over-the-counter market.
9.2. DISCLOSURE OF INFORMATION. The Executive
recognizes that he has access to and knowledge of
certain confidential and proprietary information of the
Company which is essential to the performance of his
duties under this Agreement. The Executive will not,
during or after the term of his employment by the
Company, in whole or in part, disclose such information
to any person, firm, corporation, association, or other
entity for any reason or purpose whatsoever, nor shall
he make use of any such information for his own
purposes.
9.3. COVENANTS REGARDING OTHER EMPLOYEES. During
the term of this Agreement, and for a period of twenty
four (24) months following the expiration of this
Agreement, the Executive agrees not to attempt to
induce any employee of the Company to terminate his or
her employment with the Company, accept employment with
any competitor of the Company, or to interfere in a
similar manner with the business of the Company.
Article 10. Assignment
10.1. ASSIGNMENT BY COMPANY. This Agreement may and
shall be assigned or transferred to, and shall be
binding upon and shall inure to the benefit of, any
successor of the Company, and any such successor shall
be deemed substituted for all purposes of the "Company"
under the terms of this Agreement. As used in this
Agreement, the term "successor" shall mean any person,
firm, corporation, or business entity which at any
time, whether by merger, purchase, or otherwise,
acquires all or substantially all of the assets or the
business of the Company. Notwithstanding such
assignment, the Company shall remain, with such
successor, jointly and severally liable for all its
obligations hereunder.
Failure of the Company to obtain the agreement of
any successor to be bound by the terms of this
Agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement, and
shall immediately entitle the Executive to compensation
from the Company in the same amount and on the same
terms as the Executive would be entitled in the event
of a termination of employment for Good Reason within
three (3) years after a Change in Control, as provided
in Article 7 herein.
Except as herein provided, this Agreement may not
otherwise be assigned by the Company.
10.2. ASSIGNMENT BY EXECUTIVE. The services to be
provided by the Executive to the Company hereunder are
personal to the Executive, and the Executive's duties
may not be assigned by the Executive; provided, however
that this Agreement shall inure to the benefit of and
be enforceable by the Executive's personal or legal
representatives, executors, and administrators,
successors, heirs, distributees, devisees, and
legatees. If the Executive dies while any amounts
payable to the
12
<PAGE> 14
Executive hereunder remain outstanding, all such amounts,
unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee or, in the
absence of such designee, to the Executive's estate.
Article 11. Dispute Resolution and Notice
11.1. DISPUTE RESOLUTION. The Executive shall have
the right and option to elect to have any good faith
dispute or controversy arising under or in connection
with this Agreement settled by litigation or by
arbitration.
If arbitration is selected, such proceeding shall be
conducted before a panel of three (3) arbitrators
sitting in a location selected by the Executive within
fifty (50) miles from the location of his principal
place of employment, in accordance with the rules of
the American Arbitration Association then in effect.
Judgment may be entered on the award of the arbitrators
in any court having competent jurisdiction.
All expenses of such litigation or arbitration,
including the reasonable fees and expenses of the legal
representative for the Executive, and necessary costs
and disbursements incurred as a result of such dispute
or legal proceeding, and any prejudgment interest,
shall be borne by the Company.
11.2. NOTICE. Any notices, requests, demands, or
other communications provided for by this Agreement
shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the
last address he has filed in writing with the Company
or, in the case of the Company, at its principal
offices.
Article 12. Miscellaneous
12.1. ENTIRE AGREEMENT. This Agreement supersedes
any prior agreements or understandings, oral or
written, between the parties hereto, with respect to
the subject matter hereof, and constitutes the entire
agreement of the parties with respect thereto.
12.2. MODIFICATION. This Agreement shall not be
varied, altered, modified, canceled, changed, or in any
way amended except by mutual agreement of the parties
in a written instrument executed by the parties hereto
or their legal representatives.
12.3. SEVERABILITY. In the event that any provision
or portion of this Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.
12.4. COUNTERPARTS. This Agreement may be executed
in one (1) or more counterparts, each of which shall be
deemed to be an original, but all of which together
will constitute one and the same Agreement.
13
<PAGE> 15
12.5. TAX WITHHOLDING. The Company may withhold
from any benefits payable under this Agreement all
Federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or
ruling.
12.6. BENEFICIARIES. The Executive may designate
one or more persons or entities as the primary and/or
contingent beneficiaries of any amounts to be received
under this Agreement. Such designation must be in the
form of a signed writing acceptable to the Board or the
Board's designee. The Executive may make or change such
designation at any time.
12.7. PAYMENT OBLIGATIONS ABSOLUTE. The Company's
obligation to make the payments and the arrangements
provided for herein shall be absolute and
unconditional, and shall not be affected by any
circumstances, including, without limitation, any
offset, counterclaim, recoupment, defense, or other
right which the Company may have against the Executive
or anyone else. All amounts payable by the Company
hereunder shall be paid without notice or demand. Each
and every payment made hereunder by the Company shall
be final, and the Company shall not seek to recover all
or any part of such payment from the Executive or from
whomsoever may be entitled thereto, for any reasons
whatsoever.
The Executive shall not be obligated to seek other
employment in mitigation of the amounts payable or
arrangements made under any provision of this
Agreement, and the obtaining of any such other
employment shall in no event effect any reduction of
the Company's obligations to make the payments and
arrangements required to be made under this Agreement,
except to the extent provided in Section 7.1(d) herein.
12.8. CONTRACTUAL RIGHTS TO BENEFITS. Subject to
approval by the Company's Compensation Committee and
ratification by the Board of Directors, this Agreement
establishes and vests in the Executive a contractual
right to the benefits to which he is entitled
hereunder. However, nothing herein contained shall
require or be deemed to require, or prohibit or be
deemed to prohibit, the Company to segregate, earmark,
or otherwise set aside any funds or other assets, in
trust or otherwise, to provide for any payments to be
made or required hereunder.
12.9. PAYMENT OF LEGAL FEES. To the extent permitted
by law, the Company shall pay all legal fees, costs of
litigation, prejudgment interest, and other expenses
incurred in good faith by the Executive as a result of
the Company's refusal to provide the benefits to which
the Executive becomes entitled under this Agreement, or
as a result of the Company's contesting the validity,
enforceability, or interpretation of this Agreement, or
as a result of any conflict between the parties
pertaining to this Agreement.
14
<PAGE> 16
Article 13. Governing Law
To the extent not preempted by Federal law, the
provisions of this Agreement shall be construed and
enforced in accordance with the laws of the state of
Missouri.
IN WITNESS WHEREOF, the Executive and the Company
have executed this Agreement, subject to Compensation
Committee approval and ratification by the Board of
Directors, as of the Effective Date.
BOATMEN'S BANCSHARES, INC. EXECUTIVE:
By:----------------------------- -----------------------------
ARTHUR J. FLEISCHER GREGORY L. CURL
15
<PAGE> 1
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
FINANCIAL
COMMENTARY
The historical trends reflected in the restated financial information
presented below are not reflective of anticipated future results.
<TABLE>
Table 1: Summary of Selected Financial Data
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
(IN MILLIONS EXCEPT PER SHARE DATA) 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings
Net interest income $1,023.9 $ 974.5 $871.3 $736.4 $650.2
Fully taxable equivalent (FTE) adjustment<F1> 34.2 35.6 35.9 38.6 41.8
Net interest income (FTE) basis 1,058.1 1,010.1 907.2 775.0 692.0
Provision for loan losses 24.3 60.2 136.6 114.7 119.5
Noninterest income 526.5 500.4 458.5 361.8 302.6
Noninterest expense 984.6 950.4 871.9 752.4 652.0
Net income 355.3 317.4 228.7 171.2 145.0
- ----------------------------------------------------------------------------------------------------------------
Financial Position (at year end)
Total assets $28,927.2 $26,654.0 $24,280.9 $23,002.7 $22,795.1
Securities 8,090.7 8,501.8 7,115.7 6,046.0 5,070.1
Loans 16,480.4 14,825.9 13,110.9 12,316.3 11,924.2
Reserve for loan losses 342.0 341.1 302.0 252.3 228.9
Deposits 22,189.6 20,909.0 19,684.8 18,060.1 18,119.0
Long-term debt 515.1 486.3 393.2 315.7 284.5
Equity 2,200.8 2,133.3 1,861.2 1,680.2 1,463.4
- ----------------------------------------------------------------------------------------------------------------
Share Data
Net income per share $3.40 $3.07 $2.29 $1.77 $1.58
Dividends paid 1.27 1.15 1.09 1.07 1.06
Book value (year end) 21.10 20.49 18.20 16.94 15.84
Tangible book value (year end) 18.69 17.84 16.19 15.09 14.02
Shares outstanding (year end) 104.3 104.1 102.3 99.2 92.4
Average shares outstanding 104.6 103.5 100.0 96.9 91.7
- ----------------------------------------------------------------------------------------------------------------
Selected Financial Ratios
Return on assets 1.29% 1.27% .99% .79% .73%
Return on equity 16.31 15.99 12.95 10.78 10.13
Net interest margin 4.32 4.53 4.37 4.01 3.93
Noninterest income/operating income 33.2 33.1 33.6 31.8 30.4
Efficiency ratio 62.1 62.9 63.8 66.2 65.5
Capital ratios:
Equity to assets 7.61 8.00 7.67 7.30 6.42
Risk-based capital:
Tier I capital 10.47 10.67 10.39 10.10
Total capital 13.83 14.42 13.75 13.17
Tier I leverage ratio 7.16 6.93 6.90 6.58
Nonperforming loans to total loans .76 1.17 1.96 2.54 3.18
Nonperforming assets to total loans and
foreclosed property 1.12 1.90 2.92 3.92 3.93
Loan reserve to nonperforming loans 273.25 195.03 116.72 79.91 59.87
Net charge-offs to average loans .15 .24 .80 .84 .76
================================================================================================================
<FN>
<F1>The fully taxable equivalent adjustments are calculated using the Federal statutory tax rate.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 2
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Table 2: Acquisitions
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Accounting
Date State Assets Price Shares issued method
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Completed
Centerre Bancorporation 12/88 Missouri $ 5.0 billion $467 million stock 28.6 million Pooling
RTC assisted--Community Federal S&L 12/90 Missouri 2.3 billion 27 million cash -- Purchase
First Interstate Bank of Oklahoma, N.A. 8/91 Oklahoma .9 billion 86 million cash -- Purchase
Founders Bancorporation, Inc. 3/92 Oklahoma .3 billion 34 million cash -- Purchase
Superior Federal Bank 3/92 Arkansas .7 billion -- -- Purchase
RTC assisted--Home Federal S&L 3/92 Arkansas .1 billion 1 million cash -- Purchase
First Interstate of Iowa, Inc. 4/92 Iowa 1.2 billion 94 million stock 4.2 million Pooling
FDIC assisted--Jackson Exchange Bank 5/92 Missouri .1 billion 1 million cash -- Purchase
Sunwest Financial Services, Inc. 10/92 New Mexico/Texas 3.4 billion 325 million stock 14.8 million Pooling
Security Bank and
1st Bank of Catoosa in Tulsa 11/92 Oklahoma .2 billion 33 million cash -- Purchase
FDIC assisted--First City-El Paso 3/93 Texas .3 billion 14 million cash -- Purchase
FDIC assisted--Missouri Bridge Bank 4/93 Missouri 1.1 billion 16 million cash -- Purchase
RTC assisted--Cimarron Federal Savings 5/93 Oklahoma .4 billion 13 million cash -- Purchase
FCB Bancshares, Inc. 8/93 Kansas .2 billion 25 million cash -- Purchase
First Amarillo Bancorporation, Inc. 11/93 Texas .8 billion 192 million stock 5.9 million Pooling
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
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets of completed transactions $17.1 billion
====================================================================================================================================
Pending at December 31, 1994
Dalhart Bancshares, Inc. Texas $ .1 billion $ 23 million stock .7 million Pooling
National Mortgage Company Tennessee .2 billion 153 million stock 5.0 million Pooling
Worthen Banking Corporation Arkansas 3.5 billion 595 million stock 17.3 million Pooling
Salem Community Bancorp, Inc. Illinois .1 billion 9 million stock .3 million Purchase
First National Bank in Pampa Texas .2 billion 39 million stock 1.4 million Pooling
West Side Bancshares, Inc. Texas .1 billion 18 million stock .6 million Purchase
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets of pending transactions $ 4.2 billion
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ACQUISITION OVERVIEW
The Corporation's assets have increased from $9.9 billion at December
31, 1987 to $28.9 billion at December 31, 1994, an average annual growth
rate of 17%. During this period the Corporation has pursued a strategy of
expansion within its natural trade territory through a combination of
internal growth and acquisition activity. The acquisition program has
three objectives: geographic diversification, growth in retail market
share, and additional earnings generation capacity. The Corporation has
made several sizable acquisitions establishing dominant market positions
in Missouri and New Mexico, and significant presences in southern
Illinois, western Tennessee, Oklahoma, Arkansas and northern Texas. This
growth has basically occurred in two distinct phases. The first phase
concentrated on intramarket transactions to fully establish the Missouri
cornerstone of the franchise and culminated with the Resolution Trust
Corporation (RTC) assisted acquisition of Community Federal in 1990, a
$2.3 billion thrift institution located in St. Louis. This acquisition
provided the Corporation with a stable and low cost source of deposits and
the opportunity to cross-sell services to a large new customer base at a
low incremental cost. Deposits assumed totaled $2.3 billion and deposit
retention approximated 75%. The Corporation completed another regulatory
assisted transaction in Missouri in 1993 which added approximately $1.1
billion of assets to its Missouri franchise such that total assets in this
state now approximate $18 billion. A more complete description of this
acquisition is provided below.
The second phase of the acquisition program commenced in 1991 by
expanding into markets in nearby states, thereby achieving geographic
diversification on a reasonably synergistic basis. From 1991 through 1993,
acquisitions aggregating $8.5 billion in assets were consummated in
Oklahoma, Arkansas, Iowa, Kansas, New Mexico and Texas. These transactions
significantly changed the composition of the customer base whereby the
Missouri-based banking segment at year end 1994, represents 62% of the
Corporation's banking assets, down from 90% at year-end 1990.
The acquisition program continued into 1994 as eight acquisitions
aggregating $4.3 billion in assets were announced, two of which were
completed in 1994. The six acquisitions pending at year end summarized in
Table 2 are expected to be completed in early 1995 after obtaining all
regulatory and shareholder approvals. The Corporation's operations
currently span nine states, with services delivered from over 400 branch
locations and over 500 off-premise ATM's. A more complete description of
these acquisitions is provided in the commentary below.
The geographic diversification
18
<PAGE> 3
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Table 3: Asset Distribution
- ----------------------------------------------------------
<CAPTION>
December 31, 1994 % of
(in billions) Assets total Locations
- ----------------------------------------------------------
<S> <C> <C> <C>
Missouri $17.9 61.9% 170
New Mexico 3.2 11.1 66
Oklahoma 2.0 6.9 39
Texas 1.6 5.5 20
Iowa 1.2 4.1 33
Illinois 1.0 3.5 20
Arkansas 1.0 3.5 40
Tennessee .8 2.8 19
Kansas .2 .7 3
- ----------------------------------------------------------
Total $28.9 100.0% 410
==========================================================
- ----------------------------------------------------------
</TABLE>
<TABLE>
Table 4: Economic Statistics
- ---------------------------------------------------------------------------------------------------------
<CAPTION> Unemployment
Rates Growth in Building Permits
---------------- Personal Income 1994 Office % increase
1994 1993 1994 vs. 1993 Vacancy Rates<F1> 1994 vs. 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Missouri 4.3% 6.5% 8.9% 12.4% 18.3%
New Mexico 5.9 7.4 7.3 10.1 30.3
Oklahoma 5.4 6.1 5.1 22.9 1.9
Texas 6.0 6.3 6.4 21.0
Iowa 3.2 3.7 11.1 15.1 23.9
Tennessee 3.8 5.3 6.3 15.0 21.6
Illinois 4.2 5.8 6.2 5.6
Arkansas 5.0 5.9 7.9 14.8
Kansas 5.0 5.0 7.4 7.2
- ---------------------------------------------------------------------------------------------------------
National average 5.4% 6.4% 6.3% 15.9% 13.7%
=========================================================================================================
<FN>
<F1> Office vacancy rates in major metropolitan areas where Boatmen's has a presence.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
achieved through the Corporation's acquisition program is summarized in
Table 3. 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 good economic conditions. Certain
economic statistics, such as unemployment rates, growth in real personal
income, office vacancy rates and building permits, are widely used to
determine the economic stability within a given state or region. Table 4 is
provided to illustrate the current economic trend and relative stability
within the Corporation's nine-state operating region.
Ten acquisitions recorded under the purchase method of accounting were
consummated during the last three years; therefore, the results of
operations of these companies are included in the consolidated financial
statements subsequent to the dates of acquisition and must be considered
when reviewing the trended financial information. Pooling acquisitions are
reflected in the financial statements as if the companies had always been
combined. Additionally, because some of the acquisitions were of an
intramarket nature, numerous nonrecurring merger costs were recognized in
such transactions reflecting the geographical market overlap of customer
bases, the conforming of methodologies for determining loan loss reserves,
and the elimination of duplicate functions, facilities, equipment and
systems. Much of the Corporation's emphasis during this period of
expansion has focused primarily on realizing expense economies inherent in
these intramarket acquisitions and improving the loan portfolios of the
acquired companies.
Upon consummation of the pending acquisitions, the Corporation will
recognize nonrecurring merger-related expenses aggregating approximately
$20 million on a pre-tax basis, or $.12 per share on an after-tax basis.
These nonrecurring charges will reflect direct expenses of the mergers
consisting of investment banking fees, other professional fees, severance
and change of control compensation payments, and estimated costs of
closing duplicate branches. In 1993 and 1992, the Corporation recognized
pre-tax merger-related expenses totaling $4.7 million and $51.5 million,
respectively.
Oklahoma Acquisitions
During the period August 1, 1991 through March 31, 1994, the
Corporation completed five acquisitions in Oklahoma, such that total
assets of the Corporation's Oklahoma bank now approximate $1.7 billion
with services provided from 21 locations.
The most recent was the 1994 acquisition of Woodland Bancorp, Inc., 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.
Arkansas Acquisitions
On March 20, 1992, the Corporation established a meaningful presence in
Arkansas with the acquisition of Superior Federal Bank (Superior), the
third largest financial institution in the state. Superior, with total
assets now approximating $1.3 billion, was acquired in a transaction
structured as a voluntary supervisory conversion, wherein the Corporation
contributed $29 million in equity capital in exchange for 100% stock
ownership. Superior is heavily oriented to consumer business, and operates
from 58 locations in two states, 40 of which are located in central and
northwestern Arkansas, which includes Little Rock, Fort Smith, and
Fayetteville, and 18 locations in eastern Oklahoma.
On August 18, 1994, the Corporation announced an agreement to acquire
Worthen Banking Corporation (Worthen), headquartered in Little Rock,
Arkansas, in a transaction to be accounted for as a pooling of interests.
Under terms of the agreement the Corporation will exchange one share of
its common stock for each Worthen share, resulting in the issuance of
approximately 17.3 million shares. Worthen is the second largest banking
organization in Arkansas, with approximately $3.5 billion in assets,
operating 112 retail banking offices throughout Arkansas and six offices
in the Austin, Texas area. The acquisition of Worthen will increase the
Corporation's asset base in Arkansas to approximately $4.4 billion, making
the Corporation the market share leader in Arkansas.
Iowa Acquisition
On April 1, 1992, the Corporation consummated the acquisition of First
Interstate of Iowa, Inc. in exchange for
19
<PAGE> 4
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
4.2 million shares of common stock. The Corporation's subsidiary, Boatmen's
Bancshares of Iowa, Inc. with approximately $1.2 billion in assets, is
headquartered in Des Moines, Iowa and operates 4 banks with 33 offices
throughout the state. Approximately 58% of the banking assets are located
in Des Moines, ranking Boatmen's second in market share in that city.
New Mexico Acquisition
The Corporation established a leading position in New Mexico with the
acquisition of Sunwest Financial Services, Inc. (Sunwest) on October 1,
1992 for approximately 14.8 million shares of common stock. Sunwest, with
approximately $3.7 billion in assets, is headquartered in Albuquerque, New
Mexico and is the largest banking organization in the state, operating 12
banks with 75 offices and 131 off-premise ATMs, including its El Paso,
Texas subsidiary.
Texas Acquisitions
On March 5, 1993, the Corporation, through its subsidiary bank, Sunwest
Bank of El Paso, acquired First City's former bank in El Paso under an
FDIC assisted transaction for $14 million in cash. As a result of this
transaction, the Corporation's El Paso bank has total assets of
approximately $510 million, representing a significant market share in the
El Paso metropolitan area.
On November 30, 1993, the Corporation acquired First Amarillo
Bancorporation, Inc. (Amarillo), in a transaction accounted for as a
pooling of interests. The Corporation exchanged .912 shares of its common
stock for each share of Amarillo, resulting in the issuance of
approximately 5.9 million shares of common stock. Amarillo, with assets at
December 31, 1994, of approximately $1.1 billion, has the leading market
share in the Texas Panhandle.
During 1994, the Corporation entered into agreements to acquire Dalhart
Bancshares, Inc., First National Bank in Pampa, and West Side Bancshares,
Inc. in San Angelo, Texas, with aggregate assets of approximately $450
million. These Texas locations bring significant increased capacity to the
Texas franchise and require the issuance of 2.7 million shares of common
stock.
Also in 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.
Mortgage Banking Acquisition--Tennessee
On May 6, 1994, the Corporation announced an agreement to acquire
National Mortgage Company and certain affiliates (National Mortgage),
headquartered in Memphis, Tennessee, in a transaction to be accounted for
as a pooling of interests. The agreement called for the Corporation to
exchange not more than 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 privately-owned, full-service mortgage banking company which
originates home loans through 10 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 $13.8 billion. When the National Mortgage portfolio is
combined with the Corporation's existing servicing portfolio, Boatmen's
will rank among the 30 largest mortgage servicers in the country.
Missouri Acquisition
On April 23, 1993, the Corporation, through its Kansas City bank,
acquired Missouri Bridge Bank, N.A., under an assisted transaction with
the FDIC. Boatmen's First National Bank of Kansas City acquired $1.1
billion of certain assets and assumed the same amount of deposit
liabilities for a premium of $15.8 million. As a result of this
transaction, the Corporation increased its assets in the Kansas City
metropolitan area to $3.9 billion, further solidifying its leading
position in this market.
Illinois Acquisition
On September 27, 1994, the Corporation announced an agreement to
acquire Salem Community Bancorp, Inc. (Salem) in a stock and cash
transaction. Salem has two locations in South Central Illinois with
approximately $80 million in assets.
[ASSET GROWTH - ASSETS AS ORIGINALLY REPORTED GRAPH]
[EQUITY GROWTH - EQUITY AS ORIGINALLY REPORTED GRAPH]
20
<PAGE> 5
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
EARNINGS OVERVIEW
Net income increased 11.9% in 1994, totaling $355.3 million, compared
to an increase of 38.8% in 1993 when net income totaled $317.4 million. On
a per share basis, net income increased 10.7% to $3.40 per share compared
to an increase of 34.1% in 1993. The earnings increase in both 1994 and
1993 was primarily due to higher net interest income and noninterest
income, as well as a lower provision for loan losses. Net income in 1993
and 1992 was also impacted by after-tax acquisition-related charges
totaling $3.8 million in 1993 and $19.7 million in 1992. These charges
consisted primarily of nonrecurring expenses for investment banking fees,
severance and other compensation-related benefits, abandonment of
equipment and software, and in 1992 also included charges to conform loan
reserve, loan accrual and investment securities policies at Sunwest.
The record earnings in 1994 were reflected in other key performance
ratios such as the return on assets and return on equity. The return on
assets was 1.29% in 1994 compared to 1.27% in 1993 and .99% in 1992. The
return on equity was 16.31%, compared to 15.99% in 1993 and 12.95% in
1992. Net interest income on a fully taxable equivalent basis increased
4.8% in 1994 and 11.3% in 1993. Average earning asset growth of 9.8% led
to the net interest income increase in 1994 and was partially offset by an
anticipated contraction in interest rate spreads. In 1993, the net
interest income increase was primarily due to an improved net interest
margin coupled with moderate earning asset growth. The net interest margin
was 4.32% in 1994 compared to 4.53% in 1993 and 4.37% in 1992.
Noninterest income increased 5.2% in 1994 and 9.1% in 1993. The
increase in 1994 was primarily due to increases in trust fees, service
charges and credit card income, partially offset by declines in investment
banking and mortgage banking revenues. The 1993 increase reflected gains
in all core noninterest income categories. Excluding the impact of
purchase acquisitions, noninterest income increased 2.4% in 1994 and 4.4%
in 1993.
<TABLE>
Table 5: Earnings Per Share Analysis
- -------------------------------------------------
<CAPTION>
Per share '94 vs '93 '93 vs '92
- -------------------------------------------------
<S> <C> <C>
Net income
prior period $3.07 $2.29
- -------------------------------------------------
Net interest income .48 1.04
Provision for loan losses .34 .76
Noninterest income .25 .41
Noninterest expense (.33) (.79)
Income tax expense (.38) (.54)
Impact of additional
shares of common stock (.03) (.10)
- -------------------------------------------------
Net increase .33 .78
- -------------------------------------------------
Net income current
period $3.40 $3.07
=================================================
- -------------------------------------------------
</TABLE>
<TABLE>
Table 6: Earnings by Business Component
- -------------------------------------------------
<CAPTION>
Per share 1994 1993
- -------------------------------------------------
<S> <C> <C>
Commercial and
retail banking
operations
(including
credit card) $3.46 $3.07
Trust services .37 .35
Unallocated
debt service,
administrative
overhead and
nonbank services (.43) (.35)
- -------------------------------------------------
Consolidated
earnings per share $3.40 $3.07
=================================================
- -------------------------------------------------
</TABLE>
Noninterest expense increased 3.6% in 1994 and 9.0% in 1993. Excluding
purchase acquisitions, noninterest expense was held to an increase of 1.6%
in 1994, reflective of initiatives to control costs, compared to a 4.3%
increase in 1993.
Asset quality trends continued to strengthen in 1994. The Corporation
experienced unusually low loan losses in 1994 and 1993, decreases in
nonperforming loans and a decline in criticized loans identified through
the Corporation's internal risk rating system. As a result, the provision
for loan losses decreased 59.6% in 1994 and totaled $24.3 million compared
to $60.2 million in 1993 and $136.6 million in 1992. Net charge-offs as a
percentage of average loans declined to .15% compared to .24% in 1993 and
.80% in 1992. The provision for loan losses and net charge-offs in 1992
were adversely impacted by a special provision of $33.3 million and
charge-offs totaling approximately $28 million to conform Sunwest's loan
reserve methods to the Corporation's policies.
Presented in Table 5 is an income statement analysis expressed on a per
share basis summarizing the changes in earnings per share in 1994 and 1993.
The Corporation has two major business components: commercial and
retail banking (including a credit card operation), and trust services.
The earnings contribution from each component for 1994 and 1993 is
summarized in Tables 6 and 7.
<TABLE>
Table 7: Summary of Business Component Earnings
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Banking Trust Other<F1> Consolidated
--------------------------------------------------------------------------------------------------
(in millions) 1994 1993 % change 1994 1993 % change 1994 1993 1994 1993 % change
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net interest income (FTE) $1,075 $1,026 4.8% $ 7 $ 7 --% $(24) $(23) $1,058 $1,010 4.8%
Provision for loan losses 24 60 (59.6) 24 60 (59.6)
Noninterest income 363 336 8.0 163 157 3.8 1 7 527 500 5.2
Noninterest expense 834 812 2.7 108 100 8.0 43 38 985 950 3.6
Net income $ 362 $ 318 13.8% $ 38 $ 36 5.6% $(45) $(37) $ 355 $ 317 11.9%
=============================================================================================================================
<FN>
<F1>Includes mortgage banking and costs of unallocated overhead, debt service, and intangible amortization.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 6
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
NET INTEREST INCOME AND INTEREST RATE RISK MANAGEMENT
<TABLE>
Table 8: Summary of Net Interest Income
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Quarter
--------------------------------------------------------- % change from
(in millions) First Second Third Fourth Year prior year
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994
Average loans $14,956.3 $15,506.7 $15,911.9 $16,270.9 $15,665.7 11.6%
Average earning assets 23,690.3 24,502.1 24,715.1 25,080.3 24,501.3 9.8
Average core deposits 18,074.3 17,985.0 17,881.4 17,971.7 17,977.5 2.3
Average purchased funds 3,832.1 4,774.0 5,038.6 5,274.1 4,734.5 52.1
Net interest income (FTE) 257.0 265.0 267.3 268.8 1,058.1 4.8
Interest rate spread 3.79% 3.77% 3.72% 3.63% 3.72%
Net interest margin 4.34 4.33 4.33 4.29 4.32
- ----------------------------------------------------------------------------------------------------------------------------
1993
Average loans $13,127.9 $13,958.8 $14,373.7 $14,666.2 $14,036.8 10.1%
Average earning assets 21,306.9 22,080.5 22,680.5 23,190.7 22,320.8 7.6
Average core deposits 16,681.9 17,551.9 17,965.0 18,094.8 17,578.3 8.7
Average purchased funds 2,955.7 2,866.2 3,159.8 3,465.1 3,113.3 (.7)
Net interest income (FTE) 243.1 253.7 257.6 255.7 1,010.1 11.3
Interest rate spread 3.97% 4.02% 3.99% 3.85% 3.96%
Net interest margin 4.56 4.60 4.54 4.41 4.53
- ----------------------------------------------------------------------------------------------------------------------------
1992
Average loans $12,352.0 $12,824.6 $12,819.3 $12,992.9 $12,748.0 7.2%
Average earning assets 20,160.3 20,750.5 20,903.0 21,194.2 20,753.6 7.5
Average core deposits 15,386.4 16,271.4 16,346.3 16,653.1 16,167.8 11.9
Average purchased funds 3,410.9 3,113.6 3,103.4 2,925.0 3,135.7 (12.7)
Net interest income (FTE) 212.6 227.2 231.2 236.2 907.2 17.1
Interest rate spread 3.52% 3.71% 3.78% 3.82% 3.70%
Net interest margin 4.22 4.38 4.42 4.46 4.37
============================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Measured on a fully-taxable equivalent basis, net interest income
increased 4.8% in 1994 and 11.3% in 1993. The increase in 1994 was
primarily due to growth in average earning assets, partially offset by an
anticipated contraction in interest rate spreads. The 1993 increase was
primarily due to wider interest spreads, coupled with a moderate increase
in average earning assets. Average earning assets increased 9.8% in 1994
and 7.6% in 1993 primarily due to internal loan growth and expansion of
the securities portfolio, supplemented by purchase acquisitions.
Loans, the highest yielding earning asset, increased 11.6% in 1994 and
as a percentage of average earning assets were 63.9% in 1994 compared to
62.9% in 1993 and 61.4% in 1992. Held to maturity and available for sale
securities increased 8.8% in 1994, representing 34.4% of average earning
assets, compared to 34.7% in 1993. Much of the increase in the securities
portfolio reflects the redeployment of short-term money market instruments
and funds received from regulatory assisted transactions in 1993, coupled
with a planned expansion of selected components of the portfolio.
As illustrated in Table 8, the contraction in the net interest margin
began in the second half of 1993 and continued into the first quarter of
1994 as historically high prepayment levels impacted yields on the
Corporation's mortgage-related portfolios. The margin stabilized at 4.33%
in the second and third quarters of 1994 and in the fourth quarter was
4.29%. For the full year, the net interest margin was 4.32% compared to
[NET INTEREST MARGIN GRAPH]
[QUARTERLY NET INTEREST MARGIN GRAPH]
22
<PAGE> 7
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Table 9: Rate/Volume Analysis
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(in millions) 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
Change due to Change due to
- -----------------------------------------------------------------------------------------------------------------------------
Total change Volume<F1> Rate<F2> Total change Volume<F1> Rate<F2>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income, fully taxable equivalent basis
Loans $146.5 $130.7 $15.8 $ 31.7 $110.6 $ (78.9)
Federal funds sold and securities
purchased under resale agreements .3 (4.3) 4.6 (36.0) (33.7) (2.3)
Held to maturity securities:
Taxable (202.4) (187.8) (14.6) (17.5) 58.5 (76.0)
Tax-exempt (5.4) (7.1) 1.7 (8.7) (9.0) .3
Available for sale securities 219.6 234.2 (14.6) 29.0 29.0
Trading securities (.1) (.3) .2 (.6) (.6)
Short-term investments 1.4 .6 .8 (.6) (.3) (.3)
------ ------
Total interest income 159.9 160.5 (.6) (2.7) 124.1 (126.8)
- -----------------------------------------------------------------------------------------------------------------------------
Interest expense
Savings accounts (3.2) 1.4 (4.6) (.7) 12.8 (13.5)
Interest-bearing transaction accounts 17.4 9.7 7.7 (20.9) 21.9 (42.8)
Time deposits (8.8) (12.6) 3.8 (79.3) (8.2) (71.1)
Federal funds purchased and other
short-term borrowings 102.0 51.3 50.7 (11.0) 1.7 (12.7)
Long-term debt 4.5 4.8 (.3) 6.3 11.6 (5.3)
------ ------
Total interest expense 111.9 65.8 46.1 (105.6) 46.6 (152.2)
- -----------------------------------------------------------------------------------------------------------------------------
Net interest income, fully taxable
equivalent basis $ 48.0 $ 94.7 $(46.7) $102.9 $ 77.5 $ 25.4
=============================================================================================================================
<FN>
<F1> Based on change in volume applied to prior year rate.
<F2> Based on change in rate applied to current year volume; therefore, effect of change in rate on change in volume has been
attributed to change in rate.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
4.53% in 1993 and 4.37% in 1992. Rising interest rates in 1994 restricted
the net interest margin to some extent due to the Corporation's modest
liability sensitive position; however, this has been partially mitigated
by the retail deposit pricing discipline prevalent throughout the industry
in 1994. In addition, interest rate spreads were adversely affected in
1994 as industry-wide competition resulted in narrower spreads in certain
lending areas. The average yield on earning assets in 1994 was 7.35%, a
decrease of 1 basis point from 1993. During this same period, the average
rate paid on total deposits was unchanged at 3.31%, however, the rate paid
on total interest-bearing liabilities increased by 23 basis points. The
higher funding costs in 1994 reflected an increased use of purchased funds
as loan growth outpaced deposit growth. Purchased funds, which represented
the principal funding source for the loan growth in 1994, increased $1.6
billion or 52.1% compared to a decrease of .7% in 1993. The issuance of
$1.6 billion in bank notes accounted for this increase. These notes were
issued by several of the Corporation's banking subsidiaries, with up to
one year maturities and mainly paying interest indexed to the Federal
funds rate. The rate paid on Federal funds purchased and other short-term
borrowings averaged 4.31% in 1994 compared to 2.98% in 1993.
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 has made a commitment to maintaining the appropriate
technology and expertise to monitor and analyze its interest rate
sensitivity position on an ongoing basis. 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
a gradual, as well as significant immediate, change 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 con-
23
<PAGE> 8
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Table 10: Rate Sensitivity At December 31, 1994
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Interest sensitive within
---------------------------------------------------------------------------------------
0-30 31-90 91-180 181-365 Total One to Over
(in millions) days days days days one year five years five years Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earning assets
Loans $ 6,911 $ 850 $ 939 $ 1,580 $ 10,280 $ 4,626 $ 1,574 $16,480
Securities<F1> 1,105 621 918 978 3,622 3,021 1,448 8,091
Other earning assets 1,158 1,158 1,158
- -----------------------------------------------------------------------------------------------------------------------------
Total earning assets 9,174 1,471 1,857 2,558 15,060 7,647 3,022 25,729
Nonearning assets 3,198 3,198
- -----------------------------------------------------------------------------------------------------------------------------
Total assets $ 9,174 $ 1,471 $ 1,857 $ 2,558 $ 15,060 $ 7,647 $ 6,220 $28,927
=============================================================================================================================
Sources of funds
Noninterest bearing deposits $ 4,590 $ 4,590 $ 4,590
Retail savings and interest
bearing transaction accounts 8,818 8,818 8,818
Time deposits 2,481 1,097 1,306 1,437 6,321 2,440 21 8,782
Federal funds purchased and
other short-term borrowings 3,601 50 3,651 3,651
Long-term debt and capital
lease obligation 35 3 38 31 484 553
Other noninterest bearing sources 2,533 2,533
Effect of interest rate swaps 535 1,435 (39) (48) 1,883 (1,883)
- -----------------------------------------------------------------------------------------------------------------------------
Total sources of funds 20,025 2,582 1,302 1,392 25,301 588 3,038 $28,927
- -----------------------------------------------------------------------------------------------------------------------------
Period gap before adjustments (10,851) (1,111) 555 1,166 (10,241) 7,059 3,182
- -----------------------------------------------------------------------------------------------------------------------------
Adjustments<F2> 9,562 (674) (198) 31 8,721 (6,133) (2,588)
- -----------------------------------------------------------------------------------------------------------------------------
Period gap after adjustments (1,289) (1,785) 357 1,197 (1,520) 926 594
- -----------------------------------------------------------------------------------------------------------------------------
Cumulative gap after adjustments $ (1,289) $(3,074) $(2,717) $(1,520) $ (1,520) $ (594)
=============================================================================================================================
Cumulative gap as a percent
of earning assets (5.0)% (11.9)% (10.6)% (5.9)% (5.9)% (2.3)%
=============================================================================================================================
<FN>
<F1> Includes held to maturity and available for sale securities.
<F2> For internal management purposes, the Corporation's gap position is adjusted to reflect anticipated prepayments on
mortgage-related assets, a shift of a large percentage of the Corporation's administered-rate retail deposit accounts
to the one-to-five year time period to reflect the insensitive nature of these accounts based on the Corporation's
experience, a shift of a large percentage of the Corporation's noninterest bearing demand deposit accounts to the
one-to-five year period to reflect the stable nature of these accounts based on the Corporation's experience
and the elimination of material fluctuations in daily deposit levels and short-term borrowings.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
servative 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 1994 year-end interest rate
sensitivity position, the simulation model indicates that the earnings at
risk exposure over the next 12 months would approximate 4%, assuming a
gradual 200 basis point increase in interest rates, and no active
management of the balance sheet components.
Another means of monitoring interest rate risk is the interest rate
sensitivity analysis appearing in Table 10. This analysis identifies the
repricing characteristics of the balance sheet and resulting gap or
difference between assets and liabilities repricing within and over given
time periods. It should be noted, however, that the traditional gap
analysis can provide an incomplete picture of a financial institution's
interest rate risk position due to its inability to capture the
sensitivity associated with prepayment risk, asymmetric pricing patterns
for administered and retail deposit accounts and noninterest bearing funds
volume.
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, the behavior 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 use of off-balance sheet instruments as
part of the interest rate management process can achieve the same desired
result as on-balance sheet instruments, but also results in reduced
funding/capital requirements, and an improved net interest margin and
return on assets. The contribution of the
24
<PAGE> 9
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
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.
The interest rate swap portfolio is presently used to modify the
interest rate sensitivity of subordinated debt and alter the interest rate
sensitivity of the Corporation's prime-based loan portfolio. 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. The Corporation's prime
based loan portfolio (approximately $5.4 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. Periodic
correlation assessments are performed to ensure that the swap instruments
are effectively 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 were consistent with management's
objective of balancing the interest rate sensitivity of the core bank.
In 1994, the Corporation added new swap transactions with a notional
amount of $1.1 billion and $.6 billion of swaps matured, such that at
December 31, 1994, interest rate swaps totaled $2.3 billion. As summarized
in Table 11, 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 December 31, 1994 was 5.53%
compared to an average rate paid of 6.06%, and the average remaining
maturity of the total portfolio was two years. The variable rate component
of the interest rate swaps is based on LIBOR at December 31, 1994, and
will adjust with future movements in this index. Table 12 provides
information related to weighted average rates paid and received, maturity
profile, and fair values of the major swap programs in place at December
31, 1994 and December 31, 1993. The estimated fair value of the swap
portfolio was a negative $168.5 million at December 31, 1994, based on
discounted cash flow models. In that these swaps are valued using
anticipated forward interest rates at year end, the estimated fair value
is not necessarily indicative of the future net interest potential of the
portfolio over its remaining life.
<TABLE>
Table 11: Interest Rate Swap Portfolio Activity
- -------------------------------------------------------------------------------------------------
<CAPTION>
Receive Pay Basis
(in millions) Fixed Fixed Swaps Total
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notional amount, December 31, 1993 $1,450 $ 31 $300 $1,781
Additions 1,000 50 1,050
Maturities (450) (100) (550)
- -------------------------------------------------------------------------------------------------
Notional amount, December 31, 1994 $2,000 $ 31 $250 $2,281
=================================================================================================
Average remaining maturity (years) 2.2 1.3 1.1 2.0
Weighted average rate received 5.52% 6.09% 5.55% 5.53%
Weighted average rate paid 6.06 8.86 5.72 6.06
=================================================================================================
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Table 12: Interest Rate Swap Portfolio
- --------------------------------------------------------------------------------------
<CAPTION>
Weighted Estimated
Average Rate -------------------
December 31, 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% 6.07% 2.2 $(155.6)
Basis swaps 200 5.46 5.59 1.3 (3.8)
- --------------------------------------------------------------------------------------
Total 2,000 5.58 6.02 2.1 (159.4)
Long-term debt swaps 200 4.87 5.96 1.5 (8.6)
Other 81 5.97 7.24 .9 (.5)
- --------------------------------------------------------------------------------------
Total $2,281 5.53% 6.06% 2.0 $(168.5)
======================================================================================
<CAPTION>
Weighted Estimated
Average Rate -------------------
December 31, 1993 Notional ------------------ Maturity Fair
(in millions) Amount Receive Pay (years) Value
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prime loan swaps:
Receive fixed $1,100 5.55% 3.44% 1.6 $ 6.0
Basis swaps 300 4.35 3.42 .7 1.9
- --------------------------------------------------------------------------------------
Total 1,400 5.29 3.44 1.4 7.9
Long-term debt swaps 200 4.87 3.39 2.5 2.0
Retail CD 150 7.75 3.04 .1 4.6
Other 31 3.48 8.86 2.3 (3.3)
- --------------------------------------------------------------------------------------
Total $1,781 5.42% 3.49% 1.4 $ 11.2
======================================================================================
- --------------------------------------------------------------------------------------
</TABLE>
The swap portfolio increased net interest income by approximately $15
million for 1994, adding 6 basis points to the net interest margin,
compared to approximately $20 million or 10 basis points in 1993. The
results from the simulation model indicate that in a rising
25
<PAGE> 10
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
rate environment the net interest contribution from the swap portfolio will
lessen as the variable component resets upward. Based on interest rates at
December 31, 1994, the swap portfolio will have a negative impact on net
interest income in 1995; however, it is anticipated that this will be
offset by a higher contribution from core banking activities. The
increased contribution from core banking activities will occur as variable
rate assets, such as the hedged prime-based loans, reprice upward, coupled
with an increased contribution from administered rate liabilities, which
are less sensitive to rate movements. Based on interest rates at December
31, 1994, it is anticipated that the swap portfolio will reduce net
interest income by approximately $19 million in 1995.
Approximately 90% of the portfolio is comprised of indexed amortizing
swaps, whereby the maturity distribution could lengthen if interest rates
were to 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 increase from 2 years to
approximately 4 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
December 31, 1994 totaled approximately $325 million. Interest rate risk
associated with this portfolio is controlled by entering into offsetting
positions with third parties.
LIQUIDITY
<TABLE>
Table 13: Earning Assets and Sources of Funds
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
(average balances in millions) 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------
Earning Assets Amount % of total Amount % of total Amount % of total
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Securities<F1> $ 8,417.8 34.4% $ 7,740.5 34.7% $ 6,527.0 31.5%
Money market investments 417.8 1.7 543.5 2.4 1,478.6 7.1
Loans:
Commercial 8,505.9 34.7 7,771.9 34.8 6,871.4 33.1
Retail 7,159.8 29.2 6,264.9 28.1 5,876.6 28.3
- ----------------------------------------------------------------------------------------------------------------
Total earning assets $24,501.3 100.0% $22,320.8 100.0% $20,753.6 100.0%
================================================================================================================
Sources of Funds
- ----------------------------------------------------------------------------------------------------------------
Net investable demand deposits $ 2,754.7 11.3% $ 2,607.6 11.7% $ 2,201.2 10.6%
Retail core deposits:
Savings 2,065.0 8.4 2,014.6 9.0 1,628.2 7.8
Transaction accounts 6,663.9 27.2 6,264.5 28.1 5,556.3 26.8
Time 6,493.9 26.5 6,691.6 30.0 6,782.1 32.7
- ----------------------------------------------------------------------------------------------------------------
Total retail core deposits 15,222.8 62.1 14,970.7 67.1 13,966.6 67.3
- ----------------------------------------------------------------------------------------------------------------
Total core deposits 17,977.5 73.4 17,578.3 78.8 16,167.8 77.9
- ----------------------------------------------------------------------------------------------------------------
Negotiable CD's 917.2 3.7 1,018.6 4.5 1,089.0 5.2
Federal funds purchased and
other short-term borrowings 3,817.3 15.6 2,094.7 9.4 2,046.7 9.9
Capital, net 1,789.3 7.3 1,629.2 7.3 1,450.1 7.0
- ----------------------------------------------------------------------------------------------------------------
Total sources of funds $24,501.3 100.0% $22,320.8 100.0% $20,753.6 100.0%
================================================================================================================
<FN>
<F1>Includes held to maturity and available for sale securities.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Liquidity represents the availability of funding to meet the
obligations to depositors, borrowers, and creditors at a reasonable cost
without adverse consequences. Accordingly, the Corporation's liquidity
position is 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,
bank notes and overnight surplus funds. These funds are acquired when
needed, principally from existing customers within the Corporation's
natural trade territory and access to national money markets.
As shown in Table 13, average core deposits increased approximately
$400 million or 2.3% in 1994 to $18.0 billion, up from $17.6 billion in
1993 when core deposits increased 8.7%. In 1994, average earning asset
growth exceeded core deposit growth by approximately $1.8 billion;
accordingly, the additional earning asset volume has been funded to a
large extent by higher levels of short-term purchased funds. This is in
contrast to 1993 and 1992 when earning asset growth was
26
<PAGE> 11
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
largely funded by the inflow of deposits assumed from regulatory assisted
transactions consummated in those years. In addition, core deposit growth
in 1994 has been impacted, to some extent, by a shift in customer
preference to other investment alternatives. Average core deposits
supported 73.4% of earning assets in 1994, compared to 78.8% in 1993 and
77.9% in 1992. Purchased funds, which increased approximately $1.6 billion
in 1994, supported 19.3% of average earning assets compared to 13.9% in
1993 and 15.1% in 1992. Purchased funds at December 31, 1994, included $1.6
billion of short-term bank notes which were issued by the Corporation's
banking subsidiaries during the second and third quarters of 1994. The
maturity distribution of time deposits $100,000 and over at December 31,
1994 and 1993 is summarized in Table 14.
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 December 31, 1994, the available for
sale portfolio totaled $3.9 billion compared to $5.2 billion at December
31, 1993. These securities may be sold to meet liquidity needs or in
response to significant changes in interest rates or prepayment risks. A
more detailed discussion of the available for sale portfolio is provided
in the Securities Portfolio section of this report.
Parent Company liquidity is maintained through cash flows generated by
dividends and fees collected from subsidiaries, complemented by an active
commercial paper program and availability of credit totaling $100 million
under a revolving credit agreement. Commercial paper borrowings averaged
$50 million in 1994 and $61 million in 1993. Commercial paper proceeds are
generally used to fund the Corporation's mortgage banking operations, with
excess funds invested in short-term instruments. The variety of funding
options and strong cash flow 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 important to liquidity
because it can affect the availability and cost of funds to the
Corporation. The Parent Company's ability to access the capital markets on
a cost effective basis is indicated by its debt ratings, summarized in
Table 15.
[AVERAGE EARNING ASSET MIX GRAPH]
<TABLE>
Table 14: Time Deposits $100,000 and Over
- --------------------------------------------------------------------------------------
<CAPTION>
December 31 (in millions) 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C>
Maturing within three months $ 476.9 $415.9
Maturing after three months but within six months 205.5 166.6
Maturing after six months but within one year 169.1 180.5
Maturing after one year 189.2 193.0
- --------------------------------------------------------------------------------------
Total $1,040.7 $956.0
======================================================================================
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Table 15: Debt Ratings
- --------------------------------------------------------------------------------------------------
<CAPTION>
Standard Thomson
Agency Ratings Moody's & Poor's Bankwatch
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Boatmen's Bancshares, Inc.: B
6-3/4% Subordinated notes due 2003 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 (6 Boatmen's subsidiary banks) A1/P1 A+/A-1
==================================================================================================
- --------------------------------------------------------------------------------------------------
</TABLE>
The Corporation has accessed the capital markets on two occasions over
the last three years resulting in the issuance of $200 million of
subordinated debt. In the fourth quarter of 1992, the Corporation issued
$100 million of 7-5/8% subordinated notes maturing in 2004, and in the
first quarter of 1993, $100 million of 6-3/4% subordinated notes maturing
in 2003 were issued, representing the final tranche under a $200 million
shelf registration. On April 14, 1994, the Corporation filed a shelf
registration statement with the Securities and Exchange Commission
providing for the issuance of up to $500 million of debt, preferred stock
or common stock. This represents the only outstanding shelf filing and
there are no plans to issue securities pursuant to this filing in the near
term.
The Corporation's existing debt position is relatively moderate, and
projected cash flows are adequate to service this debt without additional
financing, given continued profitable operations by the Corporation's
banking subsidiaries. Approximately $38 million of
[FUNDING MIX, 1994 GRAPH]
27
<PAGE> 12
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
debt is scheduled to mature in 1995, most of which consists of senior notes
payable at the Corporation's New Mexico subsidiary. In 1994, Parent Company
net cash provided from operations totaled $218 million which was available
to pay dividends to shareholders and support other financing and investing
activities.
SECURITIES PORTFOLIO
On December 31, 1993, the Corporation adopted Statement of Financial
Accounting Standards No. 115 (SFAS No. 115), "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115 requires entities
to classify debt and equity securities as either held to maturity,
available for sale, or trading securities. Under SFAS No. 115, held to
maturity securities are recorded at amortized cost; whereas available for
sale securities and trading securities are carried at market value. SFAS
No. 115 further requires that unrealized gains and losses on available for
sale securities be reported, net of tax, as a separate component of
stockholders' equity. Upon adoption of SFAS No. 115 in 1993, the
Corporation transferred approximately $5.2 billion of securities to the
available for sale portfolio, resulting in an increase to stockholders'
equity of $42.3 million due to the market value adjustment.
At December 31, 1994, held to maturity securities totaled $4.2 billion
compared to $3.3 billion at December 31, 1993 and consisted of securities
the Corporation has the intent and ability to hold to maturity. These
securities consisted primarily of tax-exempt municipal bonds, seasoned and
intermediate-term pass through mortgage-backed securities, intermediate-
term corporate bonds and collateralized mortgage obligations (CMOs)
possessing stable repayment tranches. The increase of $.9 billion from
year end 1993 was primarily due to purchases of $1.4 billion which were
partially offset by maturities totaling $.5 billion. Purchases of held to
maturity securities in 1994 primarily consisted of Treasury and Agency
notes totaling $.4 billion and mortgage-backed securities aggregating $.9
billion. There were no sales of held to maturity securities in 1994, nor
were there any transfers to or from the available for sale portfolio
during 1994. The Corporation's portfolio of structured agency notes
totaled only $260 million, and none of the securities met the high-risk
definition established by regulatory agencies at December 31, 1994.
The held to maturity securities net market value depreciation at
December 31, 1994 was $226.5 million and included gross unrealized gains
of $28.7 million and gross unrealized losses of $255.2 million. Market
value appreciation at December 31, 1993, totaled $83.3 million, including
gross unrealized gains of $93.9 million and gross unrealized losses of
$10.6 million. The fixed rate component of the held to maturity portfolio
totaled $3.5 billion at December 31, 1994 with an average remaining life
of 3.9 years and an estimated yield to maturity of 6.97%. Adjustable rate
securities totaled approximately $650 million and had an average life of
6.3 years with an expected yield to maturity of 7.07%. Under an
instantaneous parallel yield curve increase of 200 basis points, it is
estimated that the average lives of the fixed and adjustable rate
portfolios would extend to 4.2 years and 7.1 years, respectively, and that
the aggregate unrealized depreciation would increase by $240 million.
<TABLE>
Table 16: Held to Maturity Securities
- --------------------------------------------------------------------------------------
<CAPTION>
Amortized Cost
December 31 (in millions) 1994 1993 1992
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. treasury $ 437.2 $ 231.1 $1,264.0
Federal agencies:
Mortgage-backed securities:
Collateralized mortgage obligations 1,274.5 691.9 1,994.5
Adjustable rate mortgages 537.2 606.8 1,510.5
Fixed rate pass-through 280.2 367.6 399.9
- --------------------------------------------------------------------------------------
Total agency mortgage-backed 2,091.9 1,666.3 3,904.9
Other agencies 471.8 320.5 98.8
- --------------------------------------------------------------------------------------
Total U.S. treasury and agencies 3,000.9 2,217.9 5,267.7
State and municipal 763.3 819.2 891.6
Other securities 439.3 287.7 492.8
- --------------------------------------------------------------------------------------
Total $4,203.5 $3,324.8 $6,652.1
======================================================================================
<CAPTION>
Market Value
December 31 (in millions) 1994 1993 1992
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. treasury $ 415.9 $ 232.4 $1,302.8
Federal agencies:
Mortgage-backed securities:
Collateralized mortgage obligations 1,170.2 687.6 2,014.1
Adjustable rate mortgages 511.3 608.2 1,509.7
Fixed rate pass-through 263.7 376.5 417.7
- --------------------------------------------------------------------------------------
Total agency mortgage-backed 1,945.2 1,672.3 3,941.5
Other agencies 438.0 321.8 111.1
- --------------------------------------------------------------------------------------
Total U.S. treasury and agencies 2,799.1 2,226.5 5,355.4
State and municipal 784.2 893.2 947.6
Other securities 393.7 288.4 496.6
- --------------------------------------------------------------------------------------
Total $3,977.0 $3,408.1 $6,799.6
======================================================================================
- --------------------------------------------------------------------------------------
</TABLE>
Available for sale securities at December 31, 1994, totaled $3.9
billion, a decline of $1.3 billion from year end 1993, primarily due to
scheduled maturities and prepayments, coupled with a net change in
unrealized depreciation of $240 million, which exceeded purchases totaling
$385 million. These securities may be sold to meet liquidity needs or in
response to significant changes in interest rates or prepayment risks and
consisted primarily of adjustable rate mortgages, U.S. Treasury
securities, pass through mortgage-backed securities and short-term CMOs.
Proceeds from the sales of available for sale securities totaled
28
<PAGE> 13
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
$76.9 million in 1994 and included gross realized gains of $6.1 million.
The available for sale securities net depreciation at December 31,
1994, was $171.1 million including gross unrealized gains of $5.6 million
and gross unrealized losses of $176.7 million. At December 31, 1993, the
available for sale portfolio had net unrealized appreciation of $68.7
million, including gross unrealized gains of $85.5 million and gross
unrealized losses of $16.8 million. The depreciation in market value
experienced in 1994 was the result of a rapid increase in interest rates
as exemplified by the yield on two-year Treasury notes which increased 346
basis points, from 4.23% at December 31, 1993, to 7.69% at December 31,
1994. Approximately 55% of the available for sale portfolio is comprised
of adjustable-rate mortgage-backed securities, including floating rate
CMOs, whose coupons are still adjusting up to current market levels due to
the impact of periodic caps. The short-term impact of these caps combined
with a general widening of spreads in the adjustable-rate mortgage sector
have depressed the market value of these adjustable-rate securities and
their unrealized depreciation totaled $108 million, or 63% of the total
$171 million unrealized depreciation in the available for sale portfolio.
The remainder of the portfolio is comprised of relatively short term
Treasuries and CMOtranches. The average lives of the fixed rate and
adjustable-rate available for sale securities approximate 2.6 years and
6.3 years, respectively. Under an instantaneous parallel yield curve
increase of 200 basis points, it is estimated that the average lives of
the fixed and adjustable rate portfolios would extend to 2.9 years and 6.6
years, respectively, and that the aggregate unrealized depreciation would
increase by $193 million.
The amortized cost and market value of the held to maturity and
available for sale securities are presented in Tables 16 and 17, and the
maturity distribution, together with weighted average yields to maturity,
is provided in Table 19.
<TABLE>
Table 17: Available for Sale Securities<F1>
- --------------------------------------------------------------------------------------
<CAPTION>
Amortized Cost
December 31 (in millions) 1994 1993 1992
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. treasury $ 768.2 $1,152.6 $259.3
Federal agencies:
Mortgage-backed securities:
Collateralized mortgage obligations 789.1 1,220.7
Adjustable rate mortgages 2,004.7 2,096.2 190.6
Fixed rate pass-through 169.6 265.3 3.7
- --------------------------------------------------------------------------------------
Total agency mortgage-backed 2,963.4 3,582.2 194.3
Other agencies 42.4 33.8 2.5
- --------------------------------------------------------------------------------------
Total U.S. treasury and agencies 3,774.0 4,768.6 456.1
Equity securities 55.6 22.4
Other securities 228.7 317.3 7.5
- --------------------------------------------------------------------------------------
Total $4,058.3 $5,108.3 $463.6
======================================================================================
<CAPTION>
Market Value
December 31 (in millions) 1994 1993 1992
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. treasury $ 754.9 $1,195.8 $273.7
Federal agencies:
Mortgage-backed securities:
Collateralized mortgage obligations 741.3 1,219.1
Adjustable rate mortgages 1,910.1 2,112.7 190.8
Fixed rate pass-through 168.2 276.5 3.8
- --------------------------------------------------------------------------------------
Total agency mortgage-backed 2,819.6 3,608.3 194.6
Other agencies 41.5 33.8 2.5
- --------------------------------------------------------------------------------------
Total U.S. treasury and agencies 3,616.0 4,837.9 470.8
Equity securities 56.8 25.7
Other securities 214.4 313.4 7.6
- --------------------------------------------------------------------------------------
Total $3,887.2 $5,177.0 $478.4
======================================================================================
<FN>
<F1> Amounts at December 31, 1992 represented debt securities designated as held for
sale prior to adoption of SFAS No. 115.
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Table 18: Mortgage-Backed Securities
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Held to Available % of
December 31, 1994 (in millions) Maturity for Sale Total Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal agency
mortgage-backed securities:
Fixed rate pass through $ 280.2 $ 168.2 $ 448.4 8.2%
Adjustable rate mortgages 537.2 1,910.1 2,447.3 44.7
Agency-backed collateralized
mortgage obligations 1,274.5 741.3 2,015.8 36.8
- ---------------------------------------------------------------------------------------------------
Total Federal agency
mortgage-backed securities: 2,091.9 2,819.6 4,911.5 89.7
Private issue mortgage-backed securities:
Private issue collateralized
mortgage obligations 383.4 118.6 502.0 9.2
Private issue adjustable rate mortgages 62.3 62.3 1.1
- ---------------------------------------------------------------------------------------------------
Total private issue
mortgage-backed securities 383.4 180.9 564.3 10.3
- ---------------------------------------------------------------------------------------------------
Total mortgage-backed securities $2,475.3 $3,000.5 $5,475.8 100.0%
===================================================================================================
- ---------------------------------------------------------------------------------------------------
</TABLE>
For comparison purposes, much of the following discussion will refer to
the held to maturity and available for sale securities in the aggregate,
as the securities portfolio. At December 31, 1994, the securities
portfolio totaled $8.1 bil-
29
<PAGE> 14
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Table 19: Maturity Distribution
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Within After One But After Five But After
One Year Within Five Years Within Ten Years Ten Years
- ---------------------------------------------------------------------------------------------------------------------------------
December 31, 1994 (in millions) Amount Yield Amount Yield Amount Yield Amount Yield
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Held to maturity securities:
U.S. treasury $ 2.9 4.74% $ 399.8 5.29% $ 34.5 5.91%
Federal agencies:
Mortgage-backed securities:
Collateralized mortgage obligations 6.0 6.36 708.4 5.75 443.2 6.03 $ 116.9 5.81%
Adjustable rate mortgages 537.2 7.36
Fixed rate pass-through 31.4 6.50 46.5 8.02 202.3 7.18
- ---------------------------------------------------------------------------------------------------------------------------------
Total mortgage-backed 6.0 6.36 739.8 5.78 489.7 6.22 856.4 7.11
Other agencies 15.6 6.10 441.7 6.14 14.5 7.17
- ---------------------------------------------------------------------------------------------------------------------------------
Total U.S. treasury and agencies 24.5 6.00 1,581.3 5.76 538.7 6.22 856.4 7.11
State and municipal<F1> 49.2 10.67 119.4 10.60 346.6 10.34 248.1 9.67
Other securities 22.4 7.40 283.1 6.58 133.8 6.43
=================================================================================================================================
Available for sale securities:
U.S. treasury $297.2 7.54% $457.7 5.85%
Federal agencies:
Mortgage-backed securities:
Collateralized mortgage obligations 471.4 5.15 $122.7 6.27% $ 147.2 7.19%
Adjustable rate mortgages .6 5.84 1,909.5 7.71
Fixed rate pass-through 15.8 6.66 25.9 7.79 126.5 8.61
- ---------------------------------------------------------------------------------------------------------------------------------
Total mortgage-backed 487.8 5.20 148.6 6.53 2,183.2 7.73
Other agencies 3.7 6.20 37.8 5.05
- ---------------------------------------------------------------------------------------------------------------------------------
Total U.S. treasury and agencies 300.9 7.52 983.3 5.50 148.6 6.53 2,183.2 7.73
Other securities<F2> 3.6 9.04 126.7 6.30 17.8 7.68 66.3 5.90
=================================================================================================================================
<FN>
<F1>Yields on tax-exempt obligations are computed on a tax equivalent basis, using a tax rate of 35%.
<F2>Excludes marketable equity securities, Federal Reserve Bank and Federal Home Loan Bank stock, which have no stated maturities.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
lion compared to $8.5 billion at year end 1993. This decline largely
reflects maturities and prepayments in excess of new purchases, coupled
with a net change in unrealized depreciation on the available for sale
portfolio of approximately $240 million. Based on average balances, the
securities portfolio increased 8.8% in 1994 and 18.6% in 1993. Average
securities represented 34.4% of earning assets in 1994 compared to 34.7% in
1993 and 31.5% in 1992. A predominant share of the securities purchased in
1994 and 1993 consisted of mortgage-backed securities. Purchases of
mortgage-backed securities, including CMOs, totaled $1.3 billion in 1994
and $2.6 billion in 1993. This compared to total purchases for the entire
securities portfolio of $1.8 billion in 1994 and $3.5 billion in 1993. At
December 31, 1994, the mortgage-backed securities portfolio totaled $5.5
billion compared to $5.8 billion at December 31, 1993. Approximately 90% of
this portfolio at December 31, 1994, was comprised of government
agency-backed securities, and the remainder of the portfolio was private
issue mortgage-backed securities with a credit rating of AA or better. The
composition of the mortgage-backed securities portfolio at December 31,
1994 is summarized in Table 18.
The Corporation utilizes mortgage-backed securities (including CMOs) in
conjunction with other fixed income securities, to reduce the natural
asset sensitivity of the balance sheet and as a tool for yield
enhancement. The wide range of structures, maturities and alternative cash
flows available provides the Corporation with a high degree of flexibility
in matching the rate sensitivity of liabilities and managing its overall
interest rate sensitivity position. Prepayment risk represents the degree
to which a security pays down at a faster or slower pace than anticipated,
and is a critical element to consider when purchasing mortgage-backed
securities and CMOs due to uncertainties related to the prepayment of the
underlying mortgages. As a means to manage prepayment risk, each mortgage-
backed security undergoes a thorough analysis prior to purchase and
periodically thereafter to examine the level of potential volatility in
investment performance using a wide range of interest rate scenarios and
prepayment speeds. This ongoing analysis ensures that the mortgage-backed
securities portfolio meets the Corporation's investment strategies and
internal risk guidelines. The Corporation typically purchases CMO
structures that have reasonably predictable cash flow streams. Bank
regulatory agencies also require financial institutions to perform stress
tests on mortgage-backed securities when purchased and during the life of
the security to determine if the security is deemed "high risk" as defined
by the regulatory agencies. By policy, the Corporation does not purchase
"high risk" mortgage-backed securities; however,
30
<PAGE> 15
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
subsequent to purchase, securities may fail the high-risk test due to
movements in interest rates. At December 31, 1994, two securities totaling
$34 million marginally failed the high-risk test. There is no present plan
to sell these securities as they are performing as expected.
The Corporation's banking subsidiaries did not hold obligations of any
individual state or political subdivision for which the aggregate book
value exceeded 10% of stockholders' equity. At December 31, 1994, state
and municipal securities totaled $763.3 million, of which 93.3% were rated
A or better. The Corporation's portfolio at December 31, 1994, is
summarized by quality rating in Table 20.
<TABLE>
Table 20: Ratings of State and Municipal Securities
- ------------------------------------------------------------
<CAPTION>
December 31, 1994 (in millions)
Ratings Book Value Percent of Total
- ------------------------------------------------------------
<S> <C> <C>
Aaa $438.7 57.5%
Aa 115.0 15.1
A 157.8 20.7
Below A rated 7.8 1.0
Not rated 44.0 5.7
- ------------------------------------------------------------
Total $763.3 100.0%
============================================================
- ------------------------------------------------------------
</TABLE>
<TABLE>
NONINTEREST INCOME
Table 21: Summary of Noninterest Income
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% change
--------------------
(in millions) 1994 1993 1992 '94-'93 '93-'92
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Trust fees $156.5 $149.6 $138.0 4.6% 8.4%
Service charges 163.0 153.2 133.6 6.4 14.7
Credit card 69.3 54.4 44.9 27.4 21.2
Investment banking revenues 30.7 35.6 31.8 (13.7) 12.1
Mortgage banking operations 7.7 16.4 10.9 (53.0) 50.5
- -----------------------------------------------------------------------------------------------------------------------------
Core business revenues 427.2 409.2 359.2 4.4 13.9
- -----------------------------------------------------------------------------------------------------------------------------
Securities gains, net 6.2 2.8 31.9 120.9 (91.2)
Other 93.1 88.4 67.4 5.3 31.2
- -----------------------------------------------------------------------------------------------------------------------------
Other revenues 99.3 91.2 99.3 8.9 (8.3)
- -----------------------------------------------------------------------------------------------------------------------------
Total noninterest income $526.5 $500.4 $458.5 5.2% 9.1%
=============================================================================================================================
As % of operating income
(net interest income [FTE] plus noninterest income) 33.2% 33.1% 33.6%
Revenue per full-time equivalent employee (in thousands) $110.6 $108.1 $104.2
=============================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Noninterest income increased 5.2% in 1994 and 9.1% in 1993. The
increase in 1994 was primarily due to growth in trust fees, service
charges and credit card fees, partially offset by declines in investment
banking revenues and mortgage banking operations. The increase in 1993
reflected growth in all core noninterest income categories. Excluding
purchase acquisitions, noninterest income increased 2.4% in 1994 and 4.4%
in 1993. The decline in investment banking revenues and mortgage banking
operations in 1994 was due, in part, to stock market volatility and a
rising interest rate environment. Noninterest income as a percentage of
operating revenues was 33.2% in 1994 compared to 33.1% in 1993 and 33.6%
in 1992 (32.0% in 1992 excluding securities gains at Sunwest). Revenue per
full-time employee increased 2.3% in 1994 and 3.7% in 1993. It is
anticipated that future growth in fee-based business will be enhanced in
1995 with the acquisition of National Mortgage Company, a Tennessee-based
full-service mortgage banking company that presently services mortgage
loans totaling approximately $13.8 billion.
[NONINTEREST INCOME GRAPH]
<TABLE>
Table 22: Trust Fees by Component
- --------------------------------------------------------------------------------------
<CAPTION>
(in millions) 1994 1993 1992
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Personal trust $ 94.7 $ 84.7 $ 80.1
Pension and
institutional 50.7 53.5 48.0
Corporate trust 11.1 11.4 9.9
- --------------------------------------------------------------------------------------
Total $156.5 $149.6 $138.0
======================================================================================
- --------------------------------------------------------------------------------------
</TABLE>
Trust fees increased 4.6% in 1994 and 8.4% in 1993. Excluding
acquisitions, trust fees increased 2.3% in 1994 and 6.5% in 1993,
reflective of growth experienced within the personal and
pension/institutional lines of business, the latter of which was partially
offset in 1994 by narrower spreads on securities lending activity. In
1994, the Corpora-
31
<PAGE> 16
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
tion's trust subsidiary waived a portion of its investment
management fees on its short-term money market investment fund
to ensure the fund provided a competitive yield for investors. If short-
term interest rates rise rapidly in 1995, additional yield maintenance and
fund support may be undertaken. Table 22 summarizes the major components
of trust revenues. Trust assets under management totaled $36.4 billion at
December 31, 1994, including the second quarter acquisition of Eagle
Management and Trust Company, compared to $34.1 billion at December 31,
1993 and $32.8 billion at December 31, 1992.
Service charge income increased 6.4% in 1994 and 14.7% in 1993
reflecting growth through increased penetration of the retail market which
was enhanced by acquisitions. Excluding acquisitions, service charge
income increased 4.5% in 1994 and 9.0% in 1993. Investment banking
revenues decreased 13.7% in 1994 following an increase of 12.1% in 1993 as
recent market conditions have had a negative impact on bond trading and
retail brokerage business.
Credit card income increased 27.4% in 1994 and 21.2% in 1993. 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, which is also reflected in the increase in credit card expense.
Income from mortgage banking operations declined $8.7 million in 1994
after increasing $5.5 million in 1993, reflecting the impact of rising
interest rates which decreased market gains on mortgage loans sold as well
as mortgage loan originations and refinancings.
Securities gains in 1994 totaled $6.2 million compared to $2.8 million
in 1993 and $31.9 million in 1992. Much of the gains recognized in 1994
reflected sales of $13 million of equity securities at the Corporation's
trust subsidiary. Gains recognized in 1992 were primarily attributable to
the sale of $670 million of securities at Sunwest to conform to the
Corporation's investment philosophy. Other noninterest income increased
$4.7 million in 1994 and $21.0 million in 1993, and included income from
segregated assets of $13.0 million and $7.4 million in 1994 and 1993,
respectively. Noninterest income in 1993 also included gains of $3.3
million from the sale of two private label credit card portfolios and
increases in commitment and letter of credit fees.
<TABLE>
NONINTEREST EXPENSE
Table 23: Summary of Noninterest Expense
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
% change
--------------------
(in millions) 1994 1993 1992 '94-'93 '93-'92
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Staff expense $489.5 $466.5 $416.3 4.9% 12.1%
Occupancy 67.2 69.4 64.5 (3.2) 7.7
Equipment 83.1 77.5 68.8 7.2 12.8
FDIC insurance 45.4 44.4 41.6 2.3 6.6
Credit card 42.2 35.2 25.6 19.9 37.8
Printing, postage, paper 38.0 38.0 35.5 -- 7.0
Intangible amortization 33.2 30.6 16.1 8.7 90.2
Professional fees 19.2 20.5 19.4 (6.3) 5.7
Federal Reserve processing charges 9.0 10.0 9.5 (10.0) 5.3
Advertising 30.5 27.8 20.4 9.6 36.2
Communications 20.2 18.2 14.4 11.0 26.4
Foreclosed property costs, net (4.0) (4.8) 26.3 16.3 (118.2)
Other 111.1 117.1 113.5 (5.1) 3.2
- -----------------------------------------------------------------------------------------------------------------------------
Total noninterest expense $984.6 $950.4 $871.9 3.6% 9.0%
=============================================================================================================================
Efficiency ratio (noninterest expense as % of noninterest
income and net interest income [FTE]) 62.1% 62.9% 63.8%
Number of full-time equivalent employees at year end 14,169 14,370 13,409
Staff expense as % of total noninterest expense 49.7% 49.1% 47.7%
=============================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Noninterest expense increased 3.6% in 1994 and 9.0% in 1993. Excluding
the effect of acquisitions, noninterest expense increased 1.6% in 1994 and
4.3% in 1993. These increases were primarily due to increased staff
expense, higher depreciation expense on equipment enhancements, growth in
credit card merchant volume, increased advertising expenditures and
intangible amortization. The expense trend in 1994 reflects successful
efforts to contain noninterest expense growth as evidenced by the
improvement in the efficiency ratio. In 1994, the efficiency ratio
improved to 62.1% compared to 62.9% in 1993 and 63.8% in 1992 as the rate
of revenue growth outpaced the rate of expense increase. Noninterest
expense in 1993 and 1992 included merger-related expenses of $4.7 million
and $18.2 million, respectively, from pooling acquisitions consummated in
those years. Excluding the aforementioned merger-related expenses, the
efficiency ratios were 62.6% in 1993 and 62.5% in 1992.
Staff expense, the largest component of noninterest expense increased
4.9% in 1994 and 12.1% in 1993. Excluding the effect of acquisitions,
staff expense increased 3.4% in 1994 and 8.8% in 1993, reflective of
efforts to control staffing levels in 1994. At December 31,
32
<PAGE> 17
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
1994, the number of full-time equivalent employees declined to 14,169,
compared to 14,370 in 1993 and 13,409 in 1992. The increase in 1993 was
principally due to purchase acquisitions.
Equipment expense increased 7.2% in 1994 and 12.8% in 1993 primarily
due to higher depreciation expense associated with capital expenditures
for upgraded computer systems and software to support trust and retail
business expansion. Occupancy expense decreased 3.2% in 1994 following an
increase of 7.7% in 1993, reflecting higher occupancy charges in 1993
related to accelerated amortization on certain leased facilities.
Advertising expense increased 9.6% in 1994 and 36.2% in 1993 due to
increased promotional activities associated with retail initiatives.
Foreclosed property costs reflected gains on sales of foreclosed
property of approximately $9 million in 1994 and $11 million in 1993,
which more than offset operating expenses and write-downs to other parcels
of foreclosed property. Operating expenses and writedowns to foreclosed
property were below 1993 levels due to improved real estate markets.
Foreclosed property costs in 1992 included writedowns at Sunwest
aggregating $7.0 million to conform to the Corporation's valuation
methods.
Goodwill and core deposit amortization increased 8.7% in 1994 and 90.2%
in 1993, primarily due to the four purchase acquisitions consummated in
1993.
In the first quarter of 1994, the Corporation adopted Statement of
Financial Accounting Standards No. 112 (SFAS No. 112), "Employers'
Accounting for Postemployment Benefits," which requires recognition of the
cost to provide postemployment benefits on an accrual basis. The
Corporation's existing accounting policies were in general compliance with
the requirements of SFAS No. 112. Accordingly, adoption of this standard
had no material impact on the level of postemployment expense.
[NONINTEREST EXPENSE GRAPH]
TAXES
The Corporation's effective tax rate was 34.4% in 1994, 31.6% in 1993
and 28.8% in 1992. The increase in the Corporation's effective tax rate in
1994 resulted from increased state income tax expense and a continued
decline in the amount of tax-exempt income as a percentage of operating
income. The effective tax rate in 1993 reflects the effect of the 1%
Federal tax increase mandated by the Omnibus Budget Reconciliation Act of
1993 which was more than offset by a corresponding increase in the
Corporation's deferred tax asset, including recognition of deferred tax
assets at the Corporation's New Mexico and Amarillo subsidiaries. On a
prospective basis, the effective tax rate should approximate the 1994
effective rate which represented the statutory rate, adjusted for normal
operating items such as tax-exempt interest, goodwill amortization and
other nondeductible expenses.
<TABLE>
LOAN PORTFOLIO
Table 24: Summary of Loan Portfolio
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31 (in millions) 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial $ 7,839.8 $ 7,508.6 $ 6,900.0 $ 6,278.0 $ 5,668.0
Real estate mortgage 3,173.5 2,970.6 2,656.6 2,852.3 3,096.0
Real estate construction 684.6 558.0 416.5 455.5 597.0
Consumer 4,693.3 3,742.8 3,111.6 2,711.3 2,568.3
Lease financing 135.9 95.2 86.8 95.3 97.1
- ----------------------------------------------------------------------------------------------------------------
Total domestic loans 16,527.1 14,875.2 13,171.5 12,392.4 12,026.4
Foreign loans 19.1 18.0 11.9 12.7 10.6
- ----------------------------------------------------------------------------------------------------------------
Total loans, before deduction of
unearned income 16,546.2 14,893.2 13,183.4 12,405.1 12,037.0
Less unearned income 65.8 67.3 72.5 88.8 112.8
- ----------------------------------------------------------------------------------------------------------------
Total loans, net of unearned income $16,480.4 $14,825.9 $13,110.9 $12,316.3 $11,924.2
================================================================================================================
- ----------------------------------------------------------------------------------------------------------------
</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 400
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. The Corporation's
acquisition strategy has placed a major emphasis on geographic
33
<PAGE> 18
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
diversification, and the success of this strategy is evidenced by
the change in the proportion of loans in the Corporation's Missouri-
based operations. At December 31, 1994, Missouri comprised 60% of the loan
portfolio base compared to over 90% at December 31, 1990. 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. Table 25 summarizes the diversification of the loan
portfolio by banking location. In addition, Table 30 summarizes the broad
based improvement in asset quality trends experienced throughout the
Corporation's regions over the last three years. There are no
concentrations of credit to any borrower or industry in excess of 5% of
total loans, and the portfolio is well balanced between wholesale and
consumer lending.
At December 3l, 1994, loans totaled $16.5 billion, an increase of 11.2%
over December 31, 1993. Based on average balances, loans increased 11.6%
in 1994 and 10.1% in 1993, primarily due to loan growth within the
consumer and commercial loan portfolios. The growth experienced in 1994
and 1993 was led by increases in consumer loans of 24.9% and 18.8%,
respectively, coupled with increases in commercial loans of 7.4% and 6.5%,
respectively. Consumer loan growth stepped up over the second half of
1993, largely the result of increased indirect auto loans and credit
cards. The increase in commercial loans reflected middle-market loan
growth, as well as increases in loans to Fortune 1,000 companies. The
portfolio mix has undergone a shift in recent years in that growth in the
consumer portfolio continues to outpace other lending sectors. At December
3l, 1994, consumer loans represented 28.4% of the loan portfolio, compared
to 25.1% at December 31, 1993 and 23.6% at December 31, 1992. At December
31, 1994, the Corporation had unfunded commercial real estate and
construction commitments totaling $339 million. Commercial real estate and
real estate construction loans represented 20.3% of total loans at
December 31, 1994, compared to 20.8% at December 31, 1993 and 19.3% at
December 31, 1992. The balance of the real estate portfolio
[LOAN PORTFOLIO GRAPH]
<TABLE>
Table 25: Loan Portfolio Distribution
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1994 December 31, 1993 December 31, 1992
- ----------------------------------------------------------------------------------------------------------------
% 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 $ 9,811.2 59.5% $ 8,935.4 60.3% $ 7,986.2 60.9%
New Mexico 1,430.2 8.7 1,375.9 9.3 1,414.8 10.8
Oklahoma 1,062.3 6.5 946.9 6.4 841.7 6.4
Texas 804.9 4.9 772.9 5.2 573.9 4.4
Iowa 729.3 4.4 639.8 4.3 597.9 4.6
Tennessee 754.8 4.6 611.8 4.1 528.8 4.0
Illinois 715.4 4.3 613.9 4.1 563.0 4.3
Arkansas 530.5 3.2 396.4 2.7 226.3 1.7
Kansas 114.4 .7 75.6 .5
Credit card 527.4 3.2 457.3 3.1 378.3 2.9
- ----------------------------------------------------------------------------------------------------------------
Total $16,480.4 100.0% $14,825.9 100.0% $13,110.9 100.0%
================================================================================================================
<FN>
<F1>Net of unearned income.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Table 26: Composition of Loan Portfolio
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------
% 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 $ 3,173.5 19.2% $ 2,970.6 20.0% $ 2,656.6 20.2%
Land acquisition 175.0 1.0 168.8 1.1 108.3 .8
Residential construction 234.6 1.4 181.2 1.2 117.9 .9
Commercial construction 275.0 1.7 208.0 1.4 190.3 1.4
Commercial real estate 2,611.0 15.8 2,446.6 16.4 1,984.1 15.1
Mini-perms 75.5 .4 107.2 .7 148.9 1.1
- ----------------------------------------------------------------------------------------------------------------
Total real estate 6,544.6 39.5 6,082.4 40.8 5,206.1 39.5
Commercial loans to
Fortune 1,000 companies
and other large
corporate borrowers 783.4 4.8 683.4 4.6 705.7 5.3
Middle market commercial 3,570.7 21.6 3,430.0 23.1 3,244.1 24.6
Bank stock loans 215.3 1.3 226.4 1.5 238.6 1.8
Agriculture 583.9 3.5 615.0 4.1 578.6 4.4
Consumer:
Home equity 424.6 2.6 363.1 2.4 353.7 2.7
Credit card 527.4 3.2 457.3 3.1 378.3 2.9
Indirect installment 2,446.1 14.8 1,793.4 12.0 1,311.8 9.9
Installment 1,295.2 7.8 1,129.0 7.6 1,067.8 8.1
- ----------------------------------------------------------------------------------------------------------------
Total consumer 4,693.3 28.4 3,742.8 25.1 3,111.6 23.6
Lease financing 135.9 .8 95.2 .7 86.8 .7
Foreign 19.1 .1 18.0 .1 11.9 .1
- ----------------------------------------------------------------------------------------------------------------
Total loans $16,546.2 100.0% $14,893.2 100.0% $13,183.4 100.0%
================================================================================================================
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE> 19
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
is comprised of 1-4 family residential loans which increased 6.8% in 1994,
but as a percentage of the total portfolio, were 19.2% at December 31,
1994, compared to 20.0% at December 31, 1993. The Corporation closely
monitors the composition and quality of the commercial 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. The amount of collateral, if any, obtained for other
loans is based on general industry practice and the creditworthiness of the
borrower.
<TABLE>
Table 27: Commercial and Real Estate Construction Maturity Distribution
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1994 Over 1 Year
(in millions) One Year or Less Through 5 Years Over 5 Years Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial $4,073.6 $2,991.4 $774.8 $7,839.8
Real estate construction 468.7 175.2 40.7 684.6
- -----------------------------------------------------------------------------------------------------------------------------
Total $4,542.3 $3,166.6 $815.5 $8,524.4
=============================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Table 24 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 26.
The commercial and real estate construction loan portfolio maturity
distribution at December 31, 1994, under standard financial reporting
definitions, is summarized in Table 27. Commercial and real estate
construction loans due after one year totaled $4.0 billion of which $1.9
billion have floating or adjustable rates.
<TABLE>
LOAN QUALITY
Table 28: Loan Reserve Allocation
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31
----------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----------------------------------------------------------------------------------------------
Loans Loans Loans Loans Loans
as % of as % of as % of as % of as % of
Loan Total Loan Total Loan Total Loan Total Loan Total
(in millions) Reserve Loans Reserve Loans Reserve Loans Reserve Loans Reserve Loans
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Domestic:
Commercial $195.6 47.7% $194.7 50.3% $172.0 49.4% $142.8 50.6% $129.2 47.1%
Real estate mortgage 40.0 18.8 39.2 20.1 37.9 23.1 30.6 23.0 29.0 25.7
Real estate construction 32.8 4.2 32.1 3.8 29.2 3.2 22.5 3.7 18.0 5.0
Consumer 43.5 28.4 40.6 25.1 35.0 23.6 29.8 21.8 27.7 21.3
Lease financing 1.0 .8 1.0 .6 .6 .6 .5 .8 .6 .8
Not allocated 29.1 33.5 27.3 26.1 24.4
- -----------------------------------------------------------------------------------------------------------------------------
Total domestic 342.0 99.9 341.1 99.9 302.0 99.9 252.3 99.9 228.9 99.9
Foreign .1 .1 .1 .1 .1
- -----------------------------------------------------------------------------------------------------------------------------
Total reserve for loan losses $342.0 100.0% $341.1 100.0% $302.0 100.0% $252.3 100.0% $228.9 100.0%
=============================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The provision for loan losses totaled $24.3 million in 1994,
a decrease of 59.6% from 1993, following a 55.9% decrease in 1993 when the
provision totaled $60.2 million. The provision for loan losses in 1992
totaled $136.6 million and included a special provision of $33.3 million
in that year to conform Sunwest's loan reserve policies to the
Corporation's methods. The decline in the provision for loan losses in
1994 and 1993 reflects continued improvement in asset quality as evidenced
by lower levels of actual loan losses, further declines in nonperforming
assets and a continued downward trend in criticized loans identified
through the Corporation's internal risk rating system.
At December 31, 1994, the reserve for loan losses represented 273.25%
of nonperforming loans compared to 195.03% at December 31, 1993 and
116.72% at December 31, 1992. The loan reserve as a percentage of net
loans was 2.08% at December 31, 1994 compared to 2.30% at the end of 1993
and 1992. Net loan charge-offs declined to $24.3 million, a decrease of
$9.7 million or 28.5% from 1993, reflecting lower losses throughout all
sectors of the portfolio. Net loan charge-offs over the last two years
were at levels well below historical trends and as a percentage of average
net loans dropped to .15% in 1994, compared to .24% in 1993 and .80% in
1992. Net charge-offs in 1992 included charge-offs at Sunwest of
approximately $28 million to conform to the Corporation's loan reserve
methodology. Exclusive of the action taken at Sunwest, the 1992 net loan
35
<PAGE> 20
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
[LOAN LOSS EXPERIENCE GRAPH]
charge-off ratio would have been .59%.
The reserve for loan losses represents the aggregate reserves of the
Corporation's banking subsidiaries. Loans which are determined to be
uncollectible are charged against the reserve and recoveries of loans
which were previously charged off are credited to the reserve. The charge-
off policy of the Corporation's banking subsidiaries varies with respect
to the category of and specific circumstances surrounding each loan under
consideration. The Corporation's general policy with respect to consumer
loans is to charge off all such loans when deemed to be uncollectible or
120 days past due, whichever comes first. With respect to commercial, real
estate, and other loans, charge-offs are made on the basis of management's
ongoing evaluation of nonperforming and criticized loans. In addition,
loans which are classified as "loss" in regulatory examinations are
charged off.
The provision for loan losses is sufficient to provide for current loan
losses and maintain the reserve at an adequate level commensurate with
management's evaluation of the risk inherent in the loan portfolio. In
order to identify potential risks in the loan portfolios of the subsidiary
banks, detailed information is obtained from the following sources:
* All individual loans (other than 1-4 family residential and consumer
loans) have a designated internal risk rating. For those which contain
other than the normal risk of collectibility, the ratings correspond to
the classifications utilized by the regulatory agencies for criticized
loans (Special Mention, Substandard, Doubtful, Loss). Criticized loan
totals and the trend thereof are reviewed monthly for all banking
subsidiaries;
<TABLE>
Table 29: Summary of Reserve for Loan Losses
- ---------------------------------------------------------------------------------------------------
<CAPTION>
(in millions) 1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, beginning of year $341.1 $302.0 $252.3 $228.9 $198.6
Loans charged off:
Domestic:
Commercial (25.3) (32.7) (50.2) (40.4) (46.3)
Real Estate:
Commercial real estate (3.2) (7.5) (35.7) (23.8) (24.3)
Construction (.3) (1.3) (9.8) (15.8) (5.8)
1-4 family residential (3.2) (3.8) (6.7) (5.4) (4.3)
Consumer (34.0) (28.9) (34.6) (42.2) (37.8)
- ---------------------------------------------------------------------------------------------------
Total charge-offs (66.0) (74.2) (137.0) (127.6) (118.5)
- ---------------------------------------------------------------------------------------------------
Recoveries on loans
previously charged off:
Domestic:
Commercial 23.3 20.0 16.8 9.7 11.7
Real estate:
Commercial real estate 4.2 5.8 3.1 2.3 1.1
Construction 1.0 1.6 .7 1.7 .2
1-4 family residential 1.4 1.1 1.0 .7 .7
Consumer 11.8 11.7 12.8 13.2 13.9
Foreign 1.7
- ---------------------------------------------------------------------------------------------------
Total recoveries 41.7 40.2 34.4 27.6 29.3
- ---------------------------------------------------------------------------------------------------
Net charge-offs (24.3) (34.0) (102.6) (100.0) (89.2)
- ---------------------------------------------------------------------------------------------------
Provision for loan losses 24.3 60.2 136.6 114.7 119.5
Reserves of purchased subsidiaries .9 12.9 15.7 8.7
- ---------------------------------------------------------------------------------------------------
Balance, end of year $342.0 $341.1 $302.0 $252.3 $228.9
===================================================================================================
Loan reserve at end of year:
% of net loans at year end 2.08% 2.30% 2.30% 2.05% 1.92%
% of nonperforming loans 273.25 195.03 116.72 79.91 59.87
Multiple of net charge-offs 14.11x 10.04x 2.94x 2.52x 2.57x
Net charge-offs during year:
% of net loans at year end .15% .23% .78% .81% .75%
% of net loans (average) .15 .24 .80 .84 .76
% of reserve at year end 7.09 9.96 33.97 39.62 38.96
===================================================================================================
- ---------------------------------------------------------------------------------------------------
</TABLE>
* Monthly reports prepared by each subsidiary bank's senior management
personnel which contain information on the overall characteristics of the
subsidiary's loan portfolio and analyses of specific loans requiring
special attention, including nonperforming and certain criticized loans;
* Quarterly reviews of selected individual loans and loan concentrations
of the larger banking subsidiaries by senior credit administration
personnel of the Corporation;
* Examination of the loan portfolio by Federal and State regulatory
agencies; and
* Examinations and reviews by the Corporation's independent auditors and
internal loan review personnel.
The data collected from these sources are evaluated with regard to
current national and local economic trends, prior loss history, underlying
collateral values, credit concentrations, industry risk, degree of off-
balance sheet risk, and the opinion of the subsidiary bank and corporate
management. An estimate of potential future loss on specific loans is
developed in conjunction with an overall risk evaluation of the total loan
portfolio. In addition, another key statistical measure used by management
in establishing loan reserves is the reserve coverage of nonperforming
loans. As a matter of gen-
36
<PAGE> 21
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
eral policy, the Corporation's objective is to maintain the loan reserve at
levels above 100% of nonperforming loans, although temporary deviations
from this standard may occur as situations warrant.
Pursuant to this process, it is management's opinion that the aggregate
reserves of the Corporation's banking subsidiaries are currently
sufficient to provide for potential losses in the Corporation's loan
portfolio.
The loan reserve allocation provided in Table 28 is based primarily on
analysis of prior loss experience and present and anticipated volume
levels by individual categories, and on management's evaluation of
prevailing economic conditions as they may affect segments of the
portfolio. Accordingly, since each of these criteria is subject to change,
the allocation of the reserve is not necessarily indicative of the trend
of future loan losses in any particular loan category.
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 114, "Accounting by
Creditors for Impairment of a Loan" and in October 1994, the FASB issued
SFAS No. 118, "Accounting by Creditors for Impairment of a Loan-Income
Recognition and Disclosures." These statements become effective with the
issuance of first quarter 1995 financial statements and will require that
certain impaired loans be measured based on either the present value of
expected future cash flows discounted at the loan's effective rate, the
market price of the loan, or the fair value of the underlying collateral
if the loan is collateral dependent. Adoption of these pronouncements in
1995 is not expected to have a material effect on the Corporation's
reported financial results or asset quality statistics.
NONPERFORMING ASSETS
Management has followed a policy of discontinuing the accrual of
interest on loans when full collectibility of principal or interest on any
loan is doubtful. Nonaccrual loans are reduced by the direct application
of interest receipts to loan principal, for accounting purposes only. If
the principal amount of the loan is well collateralized, interest income
on such loans may be recognized in periods in which payments are received.
Gross interest income that would have been recorded in 1994, if all
nonaccrual and restructured loans at December 31, 1994 had been current in
accordance with original terms, amounted to $9.5 million. Actual interest
recorded was $2.4 million.
[LOAN RESERVE COVERAGE GRAPH]
As illustrated in Table 33, nonperforming assets, which include
nonperforming loans and foreclosed property, declined steadily over the
last three years, such that at December 31, 1994, they were at their
lowest levels in more than 10 years. At December 31, 1994, nonperforming
assets totaled $185.6 million, a decrease of $99.9 million or 35.0% from
December 31, 1993. The steady decline in nonperforming assets reflects
improved economic conditions and the effectiveness of the Corporation's
comprehensive loan administration and workout procedures. As a percent of
total loans and foreclosed property, nonperforming assets declined to
1.12% at December 31, 1994, compared to 1.90% at December 31, 1993, and
2.92% at December 31, 1992. Nonperforming assets as a percentage of total
assets dropped below the 1% level to .64% at December 31, 1994, compared
to 1.07% at December 31, 1993 and 1.60% at December 31, 1992. Table 30
summarizes nonperforming assets by major banking unit/geographic location
and illustrates the broad-based improvement achieved.
<TABLE>
Table 30: Nonperforming Assets by State
- -------------------------------------------------------------------------
<CAPTION>
December 31 (in millions)
Location 1994 1993 1992
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Missouri $103.2 $171.4 $229.9
New Mexico 34.9 53.4 90.0
Oklahoma 11.1 14.3 16.3
Texas 8.2 13.7 22.3
Iowa 5.5 7.2 10.2
Illinois 5.0 7.1 9.8
Arkansas 6.6 4.0 5.9
Tennessee 5.0 6.8 4.1
Kansas 6.1 7.6
- -------------------------------------------------------------------------
Total $185.6 $285.5 $388.5
=========================================================================
- -------------------------------------------------------------------------
</TABLE>
<TABLE>
Table 31: Foreclosed Property
- -------------------------------------------------------------------------
<CAPTION>
December 31 (in millions)
Property Type 1994 1993 1992
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Land $ 19.2 $ 26.4 $ 31.5
Lodging 2.7 37.1 40.6
Office 27.5 26.2 18.3
Warehouse .4 1.7 2.8
Multifamily 2.4 1.0 11.4
Retail .4 1.6 6.8
Residential 2.5 5.0 5.8
Agriculture related 2.4 8.0 5.3
Other 2.9 3.6 7.2
- -------------------------------------------------------------------------
Total $ 60.4 $110.6 $129.7
=========================================================================
- -------------------------------------------------------------------------
</TABLE>
Nonperforming loans represented .76% of total loans at December 31,1994
compared to 1.17% at December 31, 1993 and 1.96% at December 31, 1992. The
decline in nonperforming loans in 1994 was primarily attributable to a
$40.4 million decrease in nonaccrual loans, largely the result of loan
payments and loans returned to accrual status, together with a reduction
in loans migrating to nonaccrual status. Foreclosed property declined
$50.2 million from 1993 which was primarily attributable to the sale of a
luxury hotel in the fourth quarter of 1994.
As part of management's overall portfolio analysis, ongoing credit
quality reviews are performed to evaluate risk
[NONPERFORMING ASSETS GRAPH]
37
<PAGE> 22
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Table 32: Loans Designated as Criticized Loans by Internal Risk Rating System
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Criticized Loans
- ---------------------------------------------------------------------------------------------------
(in millions) Nonperforming Performing Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1992
March 31 $314.3 $743.1 $1,057.4
June 30 285.6 772.1 1,057.7
September 30 285.0 761.0 1,046.0
December 31 258.8 676.5 935.3
- ---------------------------------------------------------------------------------------------------
As % of loans at December 31, 1992 1.96% 5.13% 7.09%
===================================================================================================
1993
March 31 $226.5 $653.6 $880.1
June 30 190.6 610.2 800.8
September 30 187.2 608.2 795.4
December 31 174.9 587.7 762.6
- ---------------------------------------------------------------------------------------------------
As % of loans at December 31, 1993 1.17% 3.95% 5.12%
===================================================================================================
1994
March 31 $143.9 $534.4 $678.3
June 30 143.4 506.1 649.5
September 30 154.9 439.4 594.3
December 31 125.2 441.8 567.0
- ---------------------------------------------------------------------------------------------------
As % of loans at December 31, 1994 .76% 2.67% 3.43%
===================================================================================================
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Table 33: Nonperforming Assets
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31 (in millions) 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nonperforming loans:
Nonaccrual $102.5 $142.9 $218.8 $269.8 $312.7
Restructured 7.1 14.8 22.1 25.6 42.2
Past due 90 days or more 15.6 17.2 17.9 20.3 27.4
- ----------------------------------------------------------------------------------------------------------------
Total nonperforming loans 125.2 174.9 258.8 315.7 382.3
- ----------------------------------------------------------------------------------------------------------------
Foreclosed property 60.4 110.6 129.7 177.7 94.6
- ----------------------------------------------------------------------------------------------------------------
Total nonperforming assets $185.6 $285.5 $388.5 $493.4 $476.9
================================================================================================================
Ratios
- ----------------------------------------------------------------------------------------------------------------
Total nonperforming loans as % of total loans .76% 1.17% 1.96% 2.54% 3.18%
Nonperforming assets as % of total loans
and foreclosed property 1.12 1.90 2.92 3.92 3.93
Nonperforming assets as % of total assets .64 1.07 1.60 2.14 2.09
Loan reserve as % of nonperforming loans 273.25 195.03 116.72 79.91 59.87
================================================================================================================
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
inherent in the portfolio and potential risk that may develop in the
future. A critical element in assessing portfolio risk is the level of
criticized loans. The Corporation's internal risk rating system designates
specific credits as criticized loans, which include all nonperforming loans
and other loans which contain features presenting more than the normal risk
of collectibility. Criticized and classified assets from regulatory
examinations are an integral component of the Corporation's internal risk
rating system. As displayed in Table 32, criticized loans declined to $567
million or 3.43% of loans at December 31, 1994 compared to 5.12% of loans
at December 31, 1993 and 7.09% at December 31, 1992. Management carefully
analyzes changes and trends in both nonperforming and other criticized
loans in assessing the risk characteristics of the loan portfolio. Given
the current risk characteristics of the loan portfolio, the Corporation
does not expect any significant change in criticized loans in the near
term.
38
<PAGE> 23
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
SEGREGATED ASSETS
As part of the regulatory assisted acquisition of Missouri Bridge Bank,
N.A., on April 23, 1993, the Corporation entered into a five year loss-
sharing arrangement with the FDICwith respect to approximately $950
million in multi-family residential, commercial real estate, construction
and commercial 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 FDICwill 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 FDIC80
percent of all recoveries on charged-off loans.
<TABLE>
Table 34: Segregated Assets
- ----------------------------------------------------------------------------------------
<CAPTION>
Principal Allowance Principal
(in millions) balance for losses balance, net
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Segregated assets identified
upon acquisition $312.0 $27.0 $285.0
Charge-offs (52.1) (10.4)
Recoveries 1.8
Transfers to segregated assets 36.5
Payments on segregated assets (29.8)
- ----------------------------------------------------------------------------------------
Balance at December 31, 1993 266.6 18.4 248.2
Charge-offs (14.9) (3.0)
Recoveries 1.3
Transfers to segregated assets 40.9
Payments on segregated assets (98.7)
- ----------------------------------------------------------------------------------------
Balance at December 31, 1994 $193.9 $16.7 $177.2
========================================================================================
- ----------------------------------------------------------------------------------------
</TABLE>
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 risk
characteristics as nonaccrual loans and foreclosed properties. At December
31, 1994, segregated assets, which are classified as other assets for
reporting purposes, totaled $177.2 million, net of a $16.7 million credit
valuation allowance, compared to $248.2 million at December 31, 1993. At
December 31, 1994, segregated assets consisted primarily of $56.3 million
of commercial loans, $17.5 million of industrial revenue bond loans and
$115.5 million of commercial real estate-related loans. All other loans
covered under the loss-sharing arrangement are included in the loan
portfolio and totaled $273.3 million at December 31, 1994, compared to
$450.7 million at December 31, 1993. The decline from December 31, 1993,
was primarily due to scheduled paydowns and maturities. Net charge-offs of
$1.7 million, representing the Corporation's share of losses on the
segregated asset pool, were recognized in 1994. The valuation allowance
represents the Corporation's share of estimated losses upon ultimate
liquidation of the portfolio. The Corporation's primary purpose in
managing a portfolio of this nature is to provide ongoing collection and
control activities on behalf of the FDIC. Accordingly, these assets do not
represent loans made in the ordinary course of business and, due to the
underlying nature of this liquidating asset pool, are excluded from the
Corporation's nonperforming asset statistics. At December 31, 1994, $174.4
million of segregated assets were accorded classification treatment
consistent with nonaccrual reporting, $4.6 million represented foreclosed
property, and the remaining $14.9 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. Income from segregated assets totaled $13.0 million in 1994
compared to $7.4 million in 1993.
A summary of activity regarding segregated assets is provided in
Table 34.
<TABLE>
CAPITAL RESOURCES
Table 35: Capital Structure
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31 (in millions) 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Long-term debt $ 515.1 $ 486.3 $ 393.2 $ 315.7 $ 284.5
Stockholders' equity 2,200.8 2,133.3 1,861.2 1,680.2 1,463.4
- ----------------------------------------------------------------------------------------------------------------
Total capitalization $2,715.9 $2,619.6 $2,254.4 $1,995.9 $1,747.9
================================================================================================================
Tangible equity $1,949.3 $1,858.0 $1,655.3 $1,496.9 $1,295.5
================================================================================================================
Ratios
- ----------------------------------------------------------------------------------------------------------------
Equity/assets 7.61% 8.00% 7.67% 7.30% 6.42%
Tangible equity/assets 6.80 7.04 6.88 6.56 5.73
Long-term debt as % of total capitalization 18.97 18.56 17.44 15.82 16.28
Double leverage 108.43 110.37 110.84 108.78 113.32
Dividends paid for the year (in thousands):
Preferred $ 80 $ 86 $ 88 $ 91 $ 100
Common 132,610 112,129 86,130 80,996 84,976
Total dividends as % of net income 37.3% 35.4% 37.7% 47.4% 58.7%
================================================================================================================
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE> 24
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
[RISK-BASED CAPITAL GRAPH]
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 opportunities arise. The cornerstone of the Corporation's
capital structure is its common equity, totaling $2.2 billion or
approximately 81% of total capitalization at December 31, 1994, an
increase of 3.2% from December 31, 1993. 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.
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 at December 31, 1994 of 10.47% for Tier I and 13.83% for Total
capital substantially exceed the regulatory required minimums. At December
31, 1994, the Corporation's Tier I leverage ratio was 7.16%, well in
excess of the required minimum.
<TABLE>
Table 36: Intangible Assets
- ---------------------------------------------------------------------------------------
<CAPTION>
December 31 (in millions) 1994 1993 1992
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Goodwill--Parent Company $ 89.9 $ 95.3 $100.8
- ---------------------------------------------------------------------------------------
Subsidiaries:
Goodwill 80.6 86.3 65.2
Core deposit premium 73.9 85.3 34.6
Credit card premium 3.0 3.5 1.5
Purchased mortgage servicing rights 4.1 4.9 3.8
- ---------------------------------------------------------------------------------------
Total subsidiaries 161.6 180.0 105.1
- ---------------------------------------------------------------------------------------
Total intangible assets $251.5 $275.3 $205.9
=======================================================================================
- ---------------------------------------------------------------------------------------
</TABLE>
<TABLE>
Table 37: Risk-Based Capital
- --------------------------------------------------------------------------------------
<CAPTION>
(in millions) 1994 1993 1992
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tier I capital:
Stockholders' equity $ 2,200.8 $ 2,133.3 $ 1,861.2
Unrealized net (appreciation) depreciation,
available for sale securities 105.0 (42.3)
- --------------------------------------------------------------------------------------
Stockholders' equity, net 2,305.8 2,091.0 1,861.2
Minority interest .7 .7 1.0
Intangible assets:
Goodwill (170.5) (181.6) (166.0)
Core deposit premium (73.9) (85.3) (34.6)
- --------------------------------------------------------------------------------------
Total Tier I 2,062.1 1,824.8 1,661.6
- --------------------------------------------------------------------------------------
Tier II capital:
Allowable reserve for loan losses 247.5 215.3 199.9
Qualifying long-term debt 415.0 425.2 337.0
- --------------------------------------------------------------------------------------
Total Tier II 662.5 640.5 536.9
- --------------------------------------------------------------------------------------
Total capital $ 2,724.6 $ 2,465.3 $ 2,198.5
======================================================================================
Risk-adjusted assets $19,703.4 $17,098.0 $15,988.4
======================================================================================
Risk-based capital ratios:
Tier I 10.47% 10.67% 10.39%
======================================================================================
Total 13.83% 14.42% 13.75%
======================================================================================
Tier I leverage ratio 7.16% 6.93% 6.90%
======================================================================================
- --------------------------------------------------------------------------------------
</TABLE>
At December 31, 1994, 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 l capital ratio of 6% and a Total
capital ratio of 10%.
40
<PAGE> 25
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
FOURTH QUARTER DATA
Table 38: Summary of Fourth Quarter Earnings
- --------------------------------------------------------------------------------------
<CAPTION>
Fourth Quarter
- --------------------------------------------------------------------------------------
(in millions) 1994 1993 % change
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net interest income $260.2 $246.6 5.5%
Provision for loan losses 4.4 11.9 (62.9)
- --------------------------------------------------------------------------------------
Net interest income after provision for loan losses 255.8 234.7 8.9
Noninterest income 136.0 134.0 1.5
Noninterest expense 252.4 253.8 (.6)
- --------------------------------------------------------------------------------------
Income before income taxes 139.4 114.9 21.3
Income tax expense 47.4 37.8 25.3
- --------------------------------------------------------------------------------------
Net income $ 92.0 $ 77.1 19.3%
======================================================================================
Net income per share $.88 $.75 17.3%
======================================================================================
Dividends declared per share $.34 $.31 9.7%
======================================================================================
- --------------------------------------------------------------------------------------
</TABLE>
Net income for the fourth quarter totaled $92.0 million, an increase of
19.3% over the fourth quarter of 1993. Net income per share was $.88, an
increase of 17.3%. Net income in the fourth quarter of 1993 was impacted
by one-time merger-related charges from the Amarillo pooling acquisition
which totaled $3.8 million (after-tax). Excluding these charges, net
income in the fourth quarter of 1994 increased 13.7% which was consistent
with full year results and reflected higher net interest income and
noninterest income as well as a lower provision for loan losses.
Net interest income increased 5.5% over the fourth quarter of 1993
principally due to an increase in average earning assets, which was
partially offset by an anticipated contraction in interest rate spreads.
Average earning assets increased 8.1%, led by a 10.9% increase in average
loans. The net interest margin was 4.29%, down from 4.41% in the fourth
quarter of 1993.
The provision for loan losses declined to $4.4 million in the fourth
quarter of 1994, compared to $11.9 million a year ago, reflecting
continued improvement in asset quality. Net charge-offs in the fourth
quarter of 1994 totaled $9.4 million, down from $12.5 million in the
fourth quarter of 1993, and as a percentage of average loans dropped to
.23%, from .34% a year ago.
Noninterest income increased $2.0 million, or 1.5%, over the fourth
quarter of 1993, reflecting growth in trust fees and credit card fees,
however, this growth was partially offset by declines in investment
banking and mortgage banking revenues, mainly due to stock market
volatility and a rising interest rate environment.
Noninterest expense totaled $252.4 million, compared to $253.8 million
in the fourth quarter of 1993. Noninterest expense in 1993 included $4.7
million in nonrecurring merger-related expenses from the Amarillo
acquisition. Excluding these expenses, noninterest expense increased 1.3%
in the fourth quarter of 1994.
41
<PAGE> 26
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Quarterly Earnings Trend
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1994
- ---------------------------------------------------------------------------------------------------------------------------
(in thousands) Fourth Quarter Third Quarter Second Quarter First Quarter
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $343,025 $324,218 $308,872 $289,634
Interest on short-term investments 874 919 1,071 560
Interest on Federal funds sold and
securities purchased
under resale agreements 6,790 3,245 1,995 1,593
Interest on held to maturity securities
Taxable 50,025 49,051 45,674 34,125
Tax-exempt 13,338 14,242 13,447 13,744
- ---------------------------------------------------------------------------------------------------------------------------
Total interest on held to maturity securities 63,363 63,293 59,121 47,869
Interest on available for sale securities 61,129 60,438 61,149 65,991
Interest on trading securities 377 381 926 840
- ---------------------------------------------------------------------------------------------------------------------------
Total interest income 475,558 452,494 433,134 406,487
- ---------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits 148,070 134,442 127,611 124,050
Interest on Federal funds purchased and
other short-term borrowings 55,497 47,841 37,908 23,135
Interest on capital lease obligation 944 945 945 945
Interest on long-term debt 10,870 10,651 10,176 9,714
- ---------------------------------------------------------------------------------------------------------------------------
Total interest expense 215,381 193,879 176,640 157,844
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income 260,177 258,615 256,494 248,643
Provision for loan losses 4,400 6,900 7,366 5,640
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for
loan losses 255,777 251,715 249,128 243,003
- ---------------------------------------------------------------------------------------------------------------------------
Noninterest income
Trust fees 40,622 37,974 38,690 39,190
Service charges 41,001 41,286 40,715 40,047
Credit card 20,685 17,690 15,890 15,045
Investment banking revenues 7,135 6,847 8,799 7,926
Securities gains, net 1,409 1,533 705 2,554
Other 25,140 25,348 25,335 24,961
- ---------------------------------------------------------------------------------------------------------------------------
Total noninterest income 135,992 130,678 130,134 129,723
- ---------------------------------------------------------------------------------------------------------------------------
Noninterest expense
Staff 120,229 122,365 123,853 123,097
Net occupancy 16,748 17,071 16,763 16,608
Equipment 20,960 21,274 20,809 20,038
FDIC insurance 11,249 11,246 11,448 11,462
Credit card 12,050 11,016 10,121 9,031
Intangible amortization 8,234 8,359 8,323 8,300
Advertising 9,705 7,610 7,124 6,053
Foreclosed property costs, net (46) (1,233) (1,618) (1,114)
Other 53,231 47,457 47,769 49,050
- ---------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 252,360 245,165 244,592 242,525
- ---------------------------------------------------------------------------------------------------------------------------
Income before income tax expense 139,409 137,228 134,670 130,201
Income tax expense 47,401 47,530 46,628 44,617
- ---------------------------------------------------------------------------------------------------------------------------
Net income $ 92,008 $ 89,698 $ 88,042 $ 85,584
===========================================================================================================================
Net income per share $.88 $.86 $.84 $.82
===========================================================================================================================
Dividends declared per share $.34 $.34 $.31 $.31
===========================================================================================================================
Returns
Return on assets 1.31% 1.30% 1.28% 1.29%
Return on total equity 16.67 16.35 16.30 15.92
===========================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE> 27
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Quarterly Earnings Trend
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1993
- -----------------------------------------------------------------------
Fourth Quarter Third Quarter Second Quarter First Quarter
- -----------------------------------------------------------------------
<C> <C> <C> <C>
$287,592 $287,251 $279,297 $265,662
257 405 509 826
2,380 1,936 3,161 5,884
92,383 96,537 97,569 94,789
13,907 14,366 14,745 15,363
- -----------------------------------------------------------------------
106,290 110,903 112,314 110,152
7,169 7,258 7,360 7,270
1,063 429 493 585
- -----------------------------------------------------------------------
404,751 408,182 403,134 390,379
- -----------------------------------------------------------------------
128,331 133,406 135,096 132,011
19,126 16,014 12,688 14,539
965 964 965 964
9,704 9,542 9,391 8,268
- -----------------------------------------------------------------------
158,126 159,926 158,140 155,782
- -----------------------------------------------------------------------
246,625 248,256 244,994 234,597
11,853 13,040 15,918 19,373
- -----------------------------------------------------------------------
234,772 235,216 229,076 215,224
- -----------------------------------------------------------------------
37,895 38,723 37,952 35,010
41,250 39,173 37,770 35,008
14,934 14,561 13,276 11,618
8,657 9,546 8,895 8,502
1,753 250 736 68
29,481 29,540 25,416 20,345
- -----------------------------------------------------------------------
133,970 131,793 124,045 110,551
- -----------------------------------------------------------------------
119,147 120,336 115,763 111,234
17,140 19,072 16,913 16,304
21,132 19,704 18,589 18,102
11,381 11,232 10,803 10,969
9,981 9,400 8,700 7,124
9,578 8,576 7,366 5,051
8,567 7,862 6,739 4,649
(1,235) 83 (2,048) (1,590)
58,110 52,037 50,080 43,570
- -----------------------------------------------------------------------
253,801 248,302 232,905 215,413
- -----------------------------------------------------------------------
114,941 118,707 120,216 110,362
37,819 37,379 40,493 31,116
- -----------------------------------------------------------------------
$ 77,122 $ 81,328 $ 79,723 $ 79,246
=======================================================================
$.75 $.78 $.77 $.77
=======================================================================
$.31 $.31 $.28 $.28
=======================================================================
1.18% 1.28% 1.29% 1.34%
14.91 16.15 16.26 16.75
=======================================================================
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE> 28
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Quarterly Average Balance Sheet and Net Interest Margin
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(dollars in millions) 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Fourth Quarter Third Quarter Second Quarter
- ------------------------------------------------------------------------------------------------------------------------------------
Income/ Yields/ Income/ Yields/ Income/ Yields/
Assets Balance Expense Rates Balance Expense Rates Balance Expense Rates
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans, net of unearned income $16,270.9 $345.1 8.48% $15,911.9 $325.6 8.19% $15,506.7 $310.4 8.01%
Short-term investments 67.5 .9 5.18 82.7 1.0 4.45 109.0 1.1 3.93
Federal funds sold and securities
purchased under resale agreements 504.1 6.8 5.39 270.2 3.2 4.80 193.7 2.0 4.12
Held to maturity securities:
Taxable 3,424.6 50.0 5.84 3,379.0 49.1 5.81 3,280.0 45.7 5.57
Tax-exempt 788.3 19.9 10.07 777.6 21.5 11.06 790.2 20.4 10.35
- ------------------------------------------------------------------------------------------------------------------------------------
Total held to maturity securities 4,212.9 69.9 6.63 4,156.6 70.6 6.79 4,070.2 66.1 6.50
Available for sale securities 3,998.8 61.1 6.11 4,265.3 60.4 5.67 4,558.3 61.1 5.37
Trading securities 26.1 .4 6.33 28.4 .4 5.61 64.2 1.0 6.03
- ------------------------------------------------------------------------------------------------------------------------------------
Total earning assets 25,080.3 484.2 7.72 24,715.1 461.2 7.46 24,502.1 441.7 7.21
Less reserve for loan losses (348.1) (348.0) (348.6)
Cash and due from banks 1,719.4 1,691.7 1,690.1
All other assets 1,624.4 1,596.7 1,596.6
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $28,076.0 $27,655.5 $27,440.2
====================================================================================================================================
Liabilities and Stockholders' Equity
- ------------------------------------------------------------------------------------------------------------------------------------
Retail savings deposits and interest-
bearing transaction accounts $ 8,703.4 $ 60.4 2.78% $ 8,667.4 $ 55.2 2.55% $ 8,743.5 $ 52.5 2.40%
Time deposits 7,595.1 87.7 4.62 7,366.6 79.2 4.30 7,350.3 75.1 4.09
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 16,298.5 148.1 3.63 16,034.0 134.4 3.35 16,093.8 127.6 3.17
Federal funds purchased and
other short-term borrowings 4,217.5 55.5 5.26 4,159.5 47.8 4.60 3,866.5 37.9 3.92
Capital lease obligation 38.4 .9 9.72 38.7 1.0 9.72 38.9 1.0 9.72
Long-term debt 520.8 10.9 8.35 514.5 10.7 8.28 514.6 10.2 7.91
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 21,075.2 215.4 4.09 20,746.7 193.9 3.74 20,513.8 176.7 3.44
Demand deposits 4,449.2 4,418.3 4,488.8
All other liabilities 343.0 295.2 276.4
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 25,867.4 25,460.2 25,279.0
Redeemable preferred stock 1.1 1.1 1.2
Total stockholders' equity 2,207.5 2,194.2 2,160.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $28,076.0 $27,655.5 $27,440.2
====================================================================================================================================
Interest rate spread 3.63% 3.72% 3.77%
Effect of noninterest-bearing funds .66 .61 .56
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income/margin $268.8 4.29% $267.3 4.33% $265.0 4.33%
====================================================================================================================================
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 $2.1 $1.4 $1.5
Tax-exempt held to maturity securities 6.5 7.3 7.0
Trading securities .1
- ------------------------------------------------------------------------------------------------------------------------------------
Total $8.6 $8.7 $8.6
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE> 29
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
First Quarter Fourth Quarter Third Quarter Second Quarter First Quarter
- -----------------------------------------------------------------------------------------------------------------------------------
Income/ Yields/ Income/ Yields/ Income/ Yields/ Income/ Yields/ Income/ Yields/
Balance Expense Rates Balance Expense Rates Balance Expense Rates Balance Expense Rates Balance Expense Rates
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$14,956.3 $291.0 7.78% $14,666.2 $289.5 7.90% $14,373.7 $288.6 8.03% $13,958.8 $280.8 8.05% $13,127.9 $266.8 8.13%
60.0 .6 3.73 31.2 .2 3.29 48.7 .4 3.33 60.7 .5 3.36 100.4 .8 3.29
193.2 1.6 3.30 297.9 2.4 3.20 245.3 1.9 3.16 407.6 3.2 3.10 776.1 5.9 3.03
2,890.3 34.1 4.72 6,799.5 92.4 5.43 6,652.5 96.5 5.80 6,256.2 97.6 6.24 5,865.4 94.8 6.46
808.4 20.7 10.22 841.0 21.0 10.00 844.5 22.3 10.55 865.0 21.8 10.10 890.7 22.7 10.20
- ----------------------------------------------------------------------------------------------------------------------------------
3,698.7 54.8 5.92 7,640.5 113.4 5.94 7,497.0 118.8 6.34 7,121.2 119.4 6.71 6,756.1 117.5 6.96
4,712.6 66.0 5.60 469.2 7.2 6.11 479.9 7.3 6.05 489.3 7.3 6.02 497.0 7.3 5.85
69.5 .8 4.94 85.7 1.1 5.13 35.9 .5 5.30 42.9 .6 5.03 49.4 .6 5.09
- ----------------------------------------------------------------------------------------------------------------------------------
23,690.3 414.8 7.00 23,190.7 413.8 7.14 22,680.5 417.5 7.36 22,080.5 411.8 7.46 21,306.9 398.9 7.49
(346.0) (344.9) (339.3) (329.2) (310.0)
1,661.2 1,720.4 1,619.6 1,613.5 1,547.3
1,587.0 1,554.5 1,587.5 1,416.6 1,167.4
- ----------------------------------------------------------------------------------------------------------------------------------
$26,592.5 $26,120.7 $25,548.3 $24,781.4 $23,711.6
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
$ 8,803.2 $ 50.1 2.28% $ 8,601.0 $ 51.3 2.38% $ 8,470.3 $ 52.3 2.47% $ 8,226.1 $ 50.9 2.48% $ 7,808.2 $ 49.7 2.55%
7,330.2 74.0 4.04 7,538.8 77.0 4.09 7,827.3 81.1 4.15 7,922.8 84.2 4.25 7,550.9 82.3 4.36
- ----------------------------------------------------------------------------------------------------------------------------------
16,133.4 124.1 3.08 16,139.8 128.3 3.18 16,297.6 133.4 3.27 16,148.9 135.1 3.35 15,359.1 132.0 3.44
3,008.5 23.1 3.08 2,579.6 19.1 2.97 2,148.3 16.0 2.98 1,740.7 12.7 2.92 1,902.0 14.5 3.06
39.1 .9 9.72 39.3 1.0 9.72 39.5 1.0 9.72 39.7 .9 9.72 39.9 1.0 9.72
514.0 9.7 7.56 487.8 9.7 7.96 471.4 9.5 8.10 475.2 9.4 7.90 389.9 8.3 8.48
- ----------------------------------------------------------------------------------------------------------------------------------
19,695.0 157.8 3.21 19,246.5 158.1 3.29 18,956.8 159.9 3.37 18,404.5 158.1 3.44 17,690.9 155.8 3.52
4,425.8 4,560.9 4,298.5 4,142.0 3,923.7
320.7 242.5 277.9 272.1 203.5
- ----------------------------------------------------------------------------------------------------------------------------------
24,441.5 24,049.9 23,533.2 22,818.6 21,818.1
1.2 1.2 1.2 1.2 1.2
2,149.8 2,069.6 2,013.9 1,961.6 1,892.3
- ----------------------------------------------------------------------------------------------------------------------------------
$26,592.5 $26,120.7 $25,548.3 $24,781.4 $23,711.6
==================================================================================================================================
3.79% 3.85% 3.99% 4.02% 3.97%
.55 .56 .55 .58 .59
- ----------------------------------------------------------------------------------------------------------------------------------
$257.0 4.34% $255.7 4.41% $257.6 4.54% $253.7 4.60% $243.1 4.56%
==================================================================================================================================
$1.4 $1.9 $1.4 $1.5 $1.1
6.9 7.1 7.9 7.1 7.4
.1 .1
- ----------------------------------------------------------------------------------------------------------------------------------
$8.3 $9.1 $9.3 $8.7 $8.5
==================================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE> 30
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Earnings Trend
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(in thousands) 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $1,265,749 $1,119,802 $1,089,004
Interest on short-term investments 3,424 1,997 2,648
Interest on Federal funds sold and securities purchased
under resale agreements 13,623 13,361 49,359
Interest on held to maturity securities
Taxable 178,875 381,278 398,782
Tax-exempt 54,771 58,381 65,695
- ------------------------------------------------------------------------------------------------------------------------
Total interest on held to maturity securities 233,646 439,659 464,477
Interest on available for sale securities 248,707 29,057
Interest on trading securities 2,524 2,570 3,312
Interest on receivable due from Resolution Trust Corporation
- ------------------------------------------------------------------------------------------------------------------------
Total interest income 1,767,673 1,606,446 1,608,800
- ------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on savings deposits 50,164 53,431 54,062
Interest on interest-bearing transaction accounts 168,083 150,729 171,582
Interest on time deposits 315,926 324,684 404,011
Interest on Federal funds purchased and other short-term borrowings 164,381 62,367 73,348
Interest on capital lease obligation 3,779 3,858 3,929
Interest on long-term debt 41,411 36,905 30,601
- ------------------------------------------------------------------------------------------------------------------------
Total interest expense 743,744 631,974 737,533
- ------------------------------------------------------------------------------------------------------------------------
Net interest income 1,023,929 974,472 871,267
Provision for loan losses 24,306 60,184 136,626
- ------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 999,623 914,288 734,641
- ------------------------------------------------------------------------------------------------------------------------
Noninterest income
Trust fees 156,476 149,580 137,983
Service charges 163,049 153,201 133,568
Credit card 69,310 54,389 44,866
Investment banking revenues 30,707 35,600 31,753
Securities gains, net 6,201 2,807 31,948
Other 100,784 104,782 78,413
- ------------------------------------------------------------------------------------------------------------------------
Total noninterest income 526,527 500,359 458,531
- ------------------------------------------------------------------------------------------------------------------------
Noninterest expense
Staff 489,544 466,480 416,278
Net occupancy 67,190 69,429 64,477
Equipment 83,081 77,527 68,755
FDIC insurance 45,405 44,385 41,619
Credit card 42,218 35,205 25,552
Other 257,204 257,395 255,247
- ------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 984,642 950,421 871,928
- ------------------------------------------------------------------------------------------------------------------------
Income before income tax expense 541,508 464,226 321,244
Income tax expense 186,176 146,807 92,518
- ------------------------------------------------------------------------------------------------------------------------
Net income $ 355,332 $ 317,419 $ 228,726
========================================================================================================================
Net income per share $3.40 $3.07 $2.29
========================================================================================================================
Dividends declared per share $1.30 $1.18 $1.10
========================================================================================================================
Returns
Return on assets 1.29% 1.27% .99%
Return on equity 16.31 15.99 12.95
Return on common equity 16.31 15.99 12.95
========================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE> 31
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Earnings Trend
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1991 1990 1989 % change 1994 % change 1993 5-year annual compound change 1990-1994
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
$1,172,752 $1,254,815 $1,259,463 13.0% 2.8% 0.1%
7,736 6,249 6,496 71.5 (24.6) (12.0)
78,400 80,311 111,730 2.0 (72.9) (34.4)
372,218 312,369 247,023 (53.1) (4.4) (6.3)
69,677 74,245 70,359 (6.2) (11.1) (4.9)
- ------------------------------------------------------------------------------------------------------------------------------------
441,895 386,614 317,382 (46.9) (5.3) (5.9)
7,812 4,029 3,854 (1.8) (22.4) (8.1)
28,955 5,359
- ------------------------------------------------------------------------------------------------------------------------------------
1,737,550 1,737,377 1,698,925 10.0 (.1) .8
- ------------------------------------------------------------------------------------------------------------------------------------
62,335 48,330 48,325 (6.1) (1.2) .7
214,641 208,649 214,972 11.5 (12.2) (4.8)
573,110 603,598 582,781 (2.7) (19.6) (11.5)
119,787 194,418 195,436 163.6 (15.0) (3.4)
3,994 4,042 4,106 (2.0) (1.8) (1.6)
27,248 28,113 29,421 12.2 20.6 7.1
- ------------------------------------------------------------------------------------------------------------------------------------
1,001,115 1,087,150 1,075,041 17.7 (14.3) (7.1)
- ------------------------------------------------------------------------------------------------------------------------------------
736,435 650,227 623,884 5.1 11.8 10.4
114,658 119,448 93,248 (59.6) (55.9) (23.6)
- ------------------------------------------------------------------------------------------------------------------------------------
621,777 530,779 530,636 9.3 24.5 13.5
- ------------------------------------------------------------------------------------------------------------------------------------
120,806 107,469 106,792 4.6 8.4 7.9
105,816 85,430 76,872 6.4 14.7 16.2
35,945 34,364 32,783 27.4 21.2 16.2
20,892 11,925 9,722 (13.7) 12.1 25.9
3,852 3,221 250 120.9 (91.2) 90.1
74,490 60,167 56,199 (3.8) 33.6 12.4
- ------------------------------------------------------------------------------------------------------------------------------------
361,801 302,576 282,618 5.2 9.1 13.3
- ------------------------------------------------------------------------------------------------------------------------------------
361,628 329,906 315,834 4.9 12.1 9.2
55,041 46,827 45,042 (3.2) 7.7 8.3
59,454 57,487 56,729 7.2 12.8 7.9
35,640 17,371 11,218 2.3 6.6 32.3
17,129 16,412 16,385 19.9 37.8 20.8
223,475 183,959 160,218 (.1) .8 9.9
- ------------------------------------------------------------------------------------------------------------------------------------
752,367 651,962 605,426 3.6 9.0 10.2
- ------------------------------------------------------------------------------------------------------------------------------------
231,211 181,393 207,828 16.6 44.5 21.1
60,013 36,363 43,695 26.8 58.7 33.6
- ------------------------------------------------------------------------------------------------------------------------------------
$ 171,198 $ 145,030 $ 164,133 11.9% 38.8% 16.7%
====================================================================================================================================
$1.77 $1.58 $1.81 10.7% 34.1% 13.4%
====================================================================================================================================
$1.07 $1.06 $1.03 10.2% 7.3% 4.8%
====================================================================================================================================
.79% .73% .86%
10.78 10.13 11.98
10.78 10.13 12.06
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE> 32
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Average Balance Sheet and Net Interest Margin
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(dollars in millions) 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
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 $15,665.7 $1,272.2 8.12% $14,036.8 $1,125.7 8.02% $12,748.0 $1,094.0 8.58%
Short-term investments 79.8 3.4 4.29 60.0 2.0 3.33 69.5 2.6 3.81
Federal funds sold and securities
purchased under resale agreements 291.1 13.6 4.68 429.9 13.4 3.11 1,354.7 49.4 3.64
Held to maturity securities:
Taxable 3,245.3 178.9 5.51 6,396.7 381.3 5.96 5,579.1 398.8 7.15
Tax-exempt 791.1 82.5 10.42 860.1 87.8 10.21 947.9 96.5 10.18
- ------------------------------------------------------------------------------------------------------------------------------------
Total held to maturity securities 4,036.4 261.4 6.47 7,256.8 469.1 6.46 6,527.0 495.3 7.59
Available for sale securities 4,381.4 248.7 5.68 483.7 29.0 6.01
Trading securities 46.9 2.6 5.63 53.6 2.8 5.12 54.4 3.4 6.27
Receivable due from
Resolution Trust Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Total earning assets 24,501.3 1,801.9 7.35 22,320.8 1,642.0 7.36 20,753.6 1,644.7 7.92
Less reserve for loan losses (347.7) (331.0) (281.6)
Cash and due from banks 1,690.8 1,625.7 1,497.7
Property and equipment 517.8 443.2 417.9
All other assets 1,083.5 910.1 738.1
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $27,445.7 $24,968.8 $23,125.7
====================================================================================================================================
Liabilities and Stockholders' Equity
- ------------------------------------------------------------------------------------------------------------------------------------
Savings deposits $ 2,065.0 $ 50.2 2.43% $ 2,014.6 $ 53.4 2.65% $ 1,628.2 $ 54.1 3.32%
Interest-bearing transaction accounts 6,663.9 168.1 2.52 6,264.5 150.7 2.41 5,556.3 171.6 3.09
Time deposits 7,411.1 315.9 4.26 7,710.2 324.7 4.21 7,871.1 404.0 5.13
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 16,140.0 534.2 3.31 15,989.3 528.8 3.31 15,055.6 629.7 4.18
Federal funds purchased and
other short-term borrowings 3,817.3 164.4 4.31 2,094.7 62.3 2.98 2,046.7 73.3 3.58
Capital lease obligation 38.8 3.8 9.72 39.6 3.9 9.72 40.4 3.9 9.72
Long-term debt 516.0 41.4 8.03 456.4 36.9 8.09 331.3 30.6 9.24
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 20,512.1 743.8 3.63 18,580.0 631.9 3.40 17,474.0 737.5 4.22
Demand deposits 4,445.5 4,233.2 3,698.9
All other liabilities 308.9 169.5 185.5
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 25,266.5 22,982.7 21,358.4
Redeemable preferred stock 1.1 1.2 1.3
Total stockholders' equity 2,178.1 1,984.9 1,766.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $27,445.7 $24,968.8 $23,125.7
====================================================================================================================================
Interest rate spread 3.72% 3.96% 3.70%
Effect of noninterest-bearing funds .60 .57 .67
- ------------------------------------------------------------------------------------------------------------------------------------
Net interest income/margin $1,058.1 4.32% $1,010.1 4.53% $ 907.2 4.37%
====================================================================================================================================
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 $ 6.4 $ 5.9 $ 5.0
Tax-exempt held to maturity securities 27.7 29.5 30.8
Trading securities .1 .2 .1
- ------------------------------------------------------------------------------------------------------------------------------------
Total $34.2 $35.6 $35.9
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE> 33
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Average Balance Sheet and Net Interest Margin
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1991 1990 1989 % change in average balances
- ------------------------------------------------------------------------------------------------------------------------------------
Five-year annual
Income/ Yields/ Income/ Yields/ Income/ Yields/ compound
Balance Expense Rates Balance Expense Rates Balance Expense Rates 1994 1993 1990-1994
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$11,888.2 $1,179.5 9.92% $11,706.4 $1,263.8 10.80% $11,462.6 $1,273.0 11.11% 11.6% 10.1% 6.4%
109.1 7.7 7.09 72.9 6.3 8.57 70.9 6.5 9.16 33.0 (13.7) 2.4
1,359.2 78.4 5.77 982.8 80.3 8.17 1,212.8 111.7 9.21 (32.3) (68.3) (24.8)
4,492.3 372.2 8.29 3,669.6 312.4 8.51 3,012.4 247.0 8.20 (49.3) 14.7 1.5
992.4 101.3 10.21 1,055.0 106.9 10.14 1,002.8 103.7 10.34 (8.0) (9.3) (4.6)
- ------------------------------------------------------------------------------------------------------------------------------------
5,484.7 473.5 8.63 4,724.6 419.3 8.88 4,015.2 350.7 8.73 (44.4) 11.2 .1
110.5 8.0 7.25 46.4 4.1 8.90 43.7 4.0 9.28 (12.5) (1.5) 1.4
357.9 29.0 8.09 67.1 5.4 7.99
- ------------------------------------------------------------------------------------------------------------------------------------
19,309.6 1,776.1 9.20 17,600.2 1,779.2 10.11 16,805.2 1,745.9 10.39 9.8 7.6 7.8
(243.9) (221.8) (227.2) 5.0 17.5 8.9
1,412.9 1,401.8 1,522.0 4.0 8.5 2.1
386.1 369.2 362.6 16.8 6.1 7.4
702.7 582.9 587.6 19.1 23.3 13.0
- ------------------------------------------------------------------------------------------------------------------------------------
$21,567.4 $19,732.3 $19,050.2 9.9% 8.0% 7.6%
====================================================================================================================================
$ 1,283.0 $ 62.3 4.86% $ 967.9 $ 48.3 4.99% $ 969.9 $ 48.3 4.98% 2.5% 23.7% 16.3%
4,455.4 214.6 4.82 3,752.7 208.7 5.56 3,716.6 215.0 5.78 6.4 12.7 17.4
8,444.8 573.2 6.79 7,581.1 603.6 7.96 7,057.2 582.8 8.26 (3.9) (2.0) 1.0
- ------------------------------------------------------------------------------------------------------------------------------------
14,183.2 850.1 5.99 12,301.7 860.6 7.00 11,743.7 846.1 7.20 .9 6.2 6.6
2,125.0 119.8 5.64 2,469.9 194.4 7.87 2,211.4 195.4 8.84 82.2 2.3 11.5
41.0 4.0 9.72 41.7 4.1 9.72 42.2 4.1 9.72 (2.0) (2.0) (1.7)
280.7 27.2 9.71 288.1 28.1 9.76 292.9 29.4 10.04 13.1 37.8 12.0
- ------------------------------------------------------------------------------------------------------------------------------------
16,629.9 1,001.1 6.02 15,101.4 1,087.2 7.20 14,290.2 1,075.0 7.52 10.4 6.3 7.5
3,150.9 2,985.1 3,159.7 5.0 14.4 7.1
197.6 213.0 228.4 82.2 (8.6) 6.2
- ------------------------------------------------------------------------------------------------------------------------------------
19,978.4 18,299.5 17,678.3 9.9 7.6 7.4
1.3 1.4 1.7 (8.3) (7.7) (8.3)
1,587.7 1,431.4 1,370.2 9.7 12.4 9.7
- ------------------------------------------------------------------------------------------------------------------------------------
$21,567.4 $19,732.3 $19,050.2 9.9% 8.0% 7.6%
====================================================================================================================================
3.18% 2.91% 2.87%
.83 1.02 1.12
- ------------------------------------------------------------------------------------------------------------------------------------
$ 775.0 4.01% $ 692.0 3.93% $ 670.9 3.99%
====================================================================================================================================
$ 6.8 $ 9.0 $13.5
31.6 32.7 33.3
.2 .1 .2
- ------------------------------------------------------------------------------------------------------------------------------------
$38.6 $41.8 $47.0
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE> 34
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Balance Sheet
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31 (dollars in thousands) 1994 1993
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and due from banks $ 1,885,484 $ 1,608,051
Short-term investments 43,704 24,748
Securities:
Held to maturity (market value $3,977,018 and $3,408,119, respectively) 4,203,507 3,324,847
Available for sale (amortized cost $4,058,269 and $5,108,291, respectively) 3,887,217 5,176,966
Trading 31,674 48,081
Federal funds sold and securities purchased under resale agreements 1,082,110 407,672
Loans (net of unearned income of $65,751, and $67,338, respectively) 16,480,437 14,825,922
Less reserve for loan losses 342,030 341,099
- --------------------------------------------------------------------------------------------------------------
Loans, net 16,138,407 14,484,823
- --------------------------------------------------------------------------------------------------------------
Property and equipment 524,812 480,586
Other assets 1,130,303 1,098,275
- --------------------------------------------------------------------------------------------------------------
Total assets $28,927,218 $26,654,049
==============================================================================================================
Liabilities and Stockholders' Equity
Liabilities:
Demand deposits $ 4,589,782 $ 4,769,947
Retail savings deposits and interest-bearing transaction accounts 8,818,248 8,773,058
Time deposits 8,781,532 7,365,997
- --------------------------------------------------------------------------------------------------------------
Total deposits 22,189,562 20,909,002
- --------------------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold under repurchase agreements 1,888,970 1,996,022
Short-term borrowings 1,761,701 815,971
Capital lease obligation 38,359 39,224
Long-term debt 515,083 486,253
Other liabilities 331,570 273,168
- --------------------------------------------------------------------------------------------------------------
Total liabilities 26,725,245 24,519,640
- --------------------------------------------------------------------------------------------------------------
Redeemable preferred stock 1,142 1,155
- --------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Common stock ($1 par value; 150,000,000 shares authorized;
104,830,742 and 104,125,546 shares issued, respectively) 104,831 104,126
Surplus 796,158 786,840
Retained earnings 1,419,367 1,200,036
Treasury stock (508,698 shares at cost) (14,516)
Unrealized net appreciation (depreciation), available for sale securities (105,009) 42,252
- --------------------------------------------------------------------------------------------------------------
Total stockholders' equity 2,200,831 2,133,254
- --------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $28,927,218 $26,654,049
==============================================================================================================
- --------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
</TABLE>
50
<PAGE> 35
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Statement of Income
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Year ended December 31 (in thousands) 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $1,265,749 $1,119,802 $1,089,004
Interest on short-term investments 3,424 1,997 2,648
Interest on Federal funds sold and securities purchased
under resale agreements 13,623 13,361 49,359
Interest on held to maturity securities
Taxable 178,875 381,278 398,782
Tax-exempt 54,771 58,381 65,695
- ---------------------------------------------------------------------------------------------------------------------------
Total interest on held to maturity securities 233,646 439,659 464,477
Interest on available for sale securities 248,707 29,057
Interest on trading securities 2,524 2,570 3,312
- ---------------------------------------------------------------------------------------------------------------------------
Total interest income 1,767,673 1,606,446 1,608,800
- ---------------------------------------------------------------------------------------------------------------------------
Interest expense
Interest on deposits 534,173 528,844 629,655
Interest on Federal funds purchased and other short-term borrowings 164,381 62,367 73,348
Interest on capital lease obligation 3,779 3,858 3,929
Interest on long-term debt 41,411 36,905 30,601
- ---------------------------------------------------------------------------------------------------------------------------
Total interest expense 743,744 631,974 737,533
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income 1,023,929 974,472 871,267
Provision for loan losses 24,306 60,184 136,626
- ---------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 999,623 914,288 734,641
- ---------------------------------------------------------------------------------------------------------------------------
Noninterest income
Trust fees 156,476 149,580 137,983
Service charges 163,049 153,201 133,568
Credit card 69,310 54,389 44,866
Investment banking revenues 30,707 35,600 31,753
Securities gains, net 6,201 2,807 31,948
Other 100,784 104,782 78,413
- ---------------------------------------------------------------------------------------------------------------------------
Total noninterest income 526,527 500,359 458,531
- ---------------------------------------------------------------------------------------------------------------------------
Noninterest expense
Staff 489,544 466,480 416,278
Net occupancy 67,190 69,429 64,477
Equipment 83,081 77,527 68,755
FDIC insurance 45,405 44,385 41,619
Credit card 42,218 35,205 25,552
Intangible amortization 33,216 30,571 16,076
Advertising 30,492 27,817 20,424
Foreclosed property costs, net (4,011) (4,790) 26,338
Other 197,507 203,797 192,409
- ---------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 984,642 950,421 871,928
- ---------------------------------------------------------------------------------------------------------------------------
Income before income tax expense 541,508 464,226 321,244
Income tax expense 186,176 146,807 92,518
- ---------------------------------------------------------------------------------------------------------------------------
Net income $ 355,332 $ 317,419 $ 228,726
===========================================================================================================================
Net income per share $3.40 $3.07 $2.29
===========================================================================================================================
Dividends declared per share $1.30 $1.18 $1.10
===========================================================================================================================
- ---------------------------------------------------------------------------------------------------------------------------
See accompanying notes to the consolidated financial statements.
</TABLE>
51
<PAGE> 36
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
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>
December 31, 1991 49,585 $ 49,585 $766,417 $ 864,174 -- -- -- $1,680,176
Net income -- -- -- 228,726 -- -- -- 228,726
Cash dividends declared:
Common ($1.10 per share)<F1> -- -- -- (92,032) -- -- -- (92,032)
Redeemable preferred -- -- -- (88) -- -- -- (88)
By pooled company
prior to merger--common -- -- -- (616) -- -- -- (616)
Issuance of common stock from
public offering--pooled company 629 629 15,133 -- -- -- -- 15,762
Common stock issued pursuant to
various employee and shareholder
stock issuance plans 390 390 14,403 -- -- -- -- 14,793
Common stock issued upon conversion
of convertible subordinated
debentures 532 532 14,338 -- -- -- -- 14,870
Other, net (5) (5) (368) 2 -- -- -- (371)
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1992 51,131 51,131 809,923 1,000,166 -- -- -- 1,861,220
Net income -- -- -- 317,419 -- -- -- 317,419
Cash dividends declared:
Common ($1.18 per share)<F1> -- -- -- (117,334) -- -- -- (117,334)
Redeemable preferred -- -- -- (85) -- -- -- (85)
Acquisition of treasury stock -- -- -- -- (52) (3,102) -- (3,102)
Common stock issued pursuant to
various employee and shareholder
stock issuance plans 641 641 15,992 -- 52 3,102 -- 19,735
Common stock issued upon conversion
of convertible subordinated
debentures 487 487 12,817 -- -- -- -- 13,304
Common stock issued upon
2-for-1 stock split 51,867 51,867 (51,867) -- -- -- -- --
Adjustment of available for sale
securities to market value -- -- -- -- -- -- 42,252 42,252
Other, net -- -- (25) (130) -- -- -- (155)
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1993 104,126 104,126 786,840 1,200,036 -- -- 42,252 2,133,254
Net income -- -- -- 355,332 -- -- -- 355,332
Cash dividends declared:
Common ($1.30 per share) -- -- -- (135,920) -- -- -- (135,920)
Redeemable preferred -- -- -- (80) -- -- -- (80)
Acquisition of treasury stock -- -- -- -- (538) (15,406) -- (15,406)
Common stock issued pursuant to
various employee and shareholder
stock issuance plans 275 275 3,365 -- 29 890 -- 4,530
Common stock issued upon acquisition
of subsidiary 411 411 5,700 -- -- -- -- 6,111
Common stock issued upon conversion
of convertible subordinated debt 19 19 280 -- -- -- -- 299
Adjustment of available for sale
securities to market value -- -- -- -- -- -- (147,261) (147,261)
Other, net -- -- (27) (1) -- -- -- (28)
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1994 104,831 $104,831 $796,158 $1,419,367 (509) $(14,516) $(105,009) $2,200,831
===================================================================================================================================
<FN>
<F1> Amounts adjusted for the two-for-one stock split which was declared on August 10, 1993 and paid on October 1, 1993.
See accompanying notes to the consolidated financial statements.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE> 37
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Consolidated Statement of Cash Flows
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Year ended December 31 (in thousands) 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities:
Net income $ 355,332 $ 317,419 $ 228,726
Adjustments to reconcile net income to net cash provided by operating
activities:
Provision for loan losses 24,306 60,184 136,626
Depreciation, amortization and accretion 131,824 106,298 77,062
Increase (decrease) in deferred loan fees (1,080) (767) 2,954
Realized securities gains (6,201) (2,807) (31,948)
Net (increase) decrease in trading securities 16,407 (9,567) 94,073
(Increase) decrease in interest receivable (16,636) 3,795 37,747
Increase (decrease) in interest payable 14,289 (11,863) (29,586)
Increase (decrease) in tax liability (1,626) 11,955 (27,029)
Net (gain) loss on sales and writedowns of foreclosed property (5,860) (5,656) 32,237
Other, net 38,972 (30,882) (5,386)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 549,727 438,109 515,476
- --------------------------------------------------------------------------------------------------------------
Investing Activities:
Net (increase) decrease in Federal funds sold and
securities purchased under resale agreements (669,993) 874,246 622,785
Net increase in loans (1,666,043) (816,616) (293,695)
Proceeds from the maturity of held to maturity securities 517,501 2,278,249 1,747,629
Proceeds from the sales of held to maturity securities 43,417 755,394
Purchases of held to maturity securities (1,377,993) (3,455,044) (3,267,629)
Proceeds from the maturity of available for sale securities 1,340,805 23,020
Proceeds from the sales of available for sale securities 76,860 154,869
Purchases of available for sale securities (385,372) (61,199)
Net increase (decrease) in short-term investments (18,956) 119,916 14,472
Increase in property and equipment (108,606) (101,932) (59,487)
Proceeds from the sale of foreclosed property 71,992 80,275 88,910
Net cash received from purchase acquisitions 444,540 120,198
- --------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities (2,219,805) (571,128) (116,554)
- --------------------------------------------------------------------------------------------------------------
Financing Activities:
Net increase (decrease) in Federal funds purchased and
securities sold under repurchase agreements (107,052) 323,464 (89,420)
Net increase (decrease) in deposits 1,224,136 (780,182) 228,169
Net increase (decrease) in short-term borrowings 945,730 417,140 (552,503)
Payments on long-term debt (1,209) (18,190) (10,221)
Proceeds from the issuance of long-term debt 30,350 124,281 99,148
Payments on capital lease obligation (865) (788) (716)
Decrease in redeemable preferred stock (13) (93) (19)
Cash dividends paid (132,690) (112,216) (86,218)
Issuance of common stock from public stock offerings 15,762
Common stock issued pursuant to various employee and
shareholder stock issuance plans 4,530 19,735 14,793
Acquisition of treasury stock (15,406) (3,102)
- --------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 1,947,511 (29,951) (381,225)
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and due from banks 277,433 (162,970) 17,697
Cash and due from banks at beginning of year 1,608,051 1,771,021 1,753,324
- --------------------------------------------------------------------------------------------------------------
Cash and due from banks at end of year $1,885,484 $1,608,051 $1,771,021
==============================================================================================================
See accompanying notes to the consolidated financial statements.
For the years ended December 31, 1994, 1993 and 1992, interest paid
totaled $729,455, $643,837 and $766,739, respectively. Income taxes paid
totaled $189,342 in 1994, $152,579 in 1993 and $118,075 in 1992.
Additional common stock was issued upon the conversion of $311 of the
Corporation's convertible subordinated debt for the year ended December
31, 1994, $13,748 for the year ended December 31, 1993, and $15,425 for
the year ended December 31, 1992. Investment securities and debt
securities held for sale transferred to available for sale securities
totaled approximately $5.2 billion in 1993. Investment securities
transferred to debt securities held for sale totaled approximately $515
million in 1992. Loans transferred to foreclosed property totaled $17
million in 1994, $22 million in 1993, and $67 million in 1992. In 1993,
assets and liabilities of purchased subsidiaries at dates of acquisition
included investment securities of $160 million, loans of $954 million,
cash of $483 million, other assets of $465 million, deposits of $2.0
billion and other liabilities of $20 million. In 1992, assets and
liabilities of purchased subsidiaries at dates of acquisition included
investment securities of $439.5 million, loans of $670.7 million, cash of
$223.0 million, other assets of $201.5 million, deposits of $1.4 billion
and other liabilities of $22.5 million.
- --------------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE> 38
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(amounts in thousands except per share data and when otherwise indicated)
1 SUMMARY OF PRINCIPAL ACCOUNTING POLICIES
The accounting and reporting policies of the Corporation and its
subsidiaries conform to generally accepted accounting principles. The
following is a description of the more significant of those policies.
Basis of Presentation The consolidated financial statements include the
accounts of the Corporation and its subsidiaries after elimination of all
material intercompany balances and transactions. Certain amounts for 1993
and 1992 were reclassified to conform with statement presentation for
1994. The reclassifications have no effect on stockholders' equity or net
income as previously reported. Prior period financial statements are also
restated to include the accounts of companies which are acquired and
accounted for as poolings of interests. Results of operations of companies
which are acquired and subject to purchase accounting are included from
the dates of acquisition. In accordance with the purchase method of
accounting, the assets and liabilities of purchased companies are stated
at estimated fair values at the date of acquisition, and the excess of
cost over fair value of net assets acquired is being amortized on a
straight-line basis over periods benefitted.
Held to Maturity Securities These securities are purchased with the
original intent to hold to maturity and events which may be reasonably
anticipated are considered when determining the Corporation's intent and
ability to hold to maturity. Securities meeting such criteria at date of
purchase and as of the balance sheet date are carried at cost, adjusted
for amortization of premiums and accretion of discounts. Gains or losses
on the disposition of held to maturity securities, if any, are based on
the adjusted book value of the specific security.
Available for Sale Securities Debt and equity securities to be held for
indefinite periods of time and not intended to be held to maturity are
classified as available for sale and carried at market value with net
unrealized gains and losses, net of tax, reflected as a component of
stockholders' equity until realized. Securities held for indefinite
periods of time include securities that may be sold to meet liquidity
needs or in response to significant changes in interest rates or
prepayment risks as part of the Corporation's overall asset/liability
management strategy.
Trading Securities Trading securities, which primarily consist of debt
securities, are held for resale within a short period of time and are
stated at market value. These securities are held in inventory for sale to
institutional and retail customers. Investment banking revenues, a
component of noninterest income, include the net realized gain or loss and
market value adjustments of the trading securities and commissions on bond
dealer and retail brokerage operations.
Interest and Fees on Loans Interest on loans is accrued based upon the
principal amount outstanding. It is the Corporation's policy to
discontinue the accrual of interest when full collectibility of principal
or interest on any loan is doubtful. Interest income on such loans is
subsequently recognized only in the period in which payments are received,
and such payments are applied to reduce principal when loans are unsecured
or collateral values are deficient. Nonrefundable loan fees are deferred
and recognized as income over the life of the loan as an adjustment of the
yield. Direct costs associated with originating loans are deferred and
amortized as a yield adjustment over the life of the loan. Commitment fees
are deferred and recognized as noninterest income over the commitment
period.
Reserve for Loan Losses The reserve represents provisions charged to
expense less net loan charge-offs. The provision is based upon economic
conditions, historical loss and collection experience, risk
characteristics of the portfolio, underlying collateral values, credit
concentrations, industry risk, degree of off-balance sheet risk and other
factors which, in management's judgment, deserve current recognition.
The charge-off policy of the Corporation's banking subsidiaries varies
with respect to the category of, and specific circumstances surrounding,
each loan under consideration. The Corporation's policy with respect to
consumer loans is generally to charge off all such loans when deemed to be
uncollectible or 120 days past due, whichever comes first. With respect to
commercial, real estate, and other loans, charge-offs are made on the
basis of management's ongoing evaluation of nonperforming and criticized
loans.
Foreclosed Property The maximum carrying value for real estate acquired
through foreclosure is the lower of the recorded investment in the loan
for which the property previously served as collateral or the current
appraised value of the foreclosed property, net of the estimated selling
costs. Any writedowns required prior to actual foreclosure are charged to
the reserve for loan losses. Subsequent to foreclosure, losses on the
periodic revaluation of the property are charged to current period
earnings as noninterest expense. Gains and losses resulting from the sale
of foreclosed property are recognized in current period earnings. Costs of
maintaining and operating foreclosed property are expensed as incurred and
revenues related to foreclosed property are recorded as an offset to
operating expense. Expenditures to complete or improve foreclosed
properties are capitalized if the expenditures are expected to be
recovered upon ultimate sale of the property.
Segregated Assets Segregated assets represent loans acquired in an
FDIC assisted transaction that are covered under a loss sharing arrangement
with the FDIC and possess more than the normal risk of collectibility.
These assets consist of loans that at acquisition were or have since
become classified as nonperforming loans or foreclosed property and are
segregated from other performing assets covered under the loss sharing
arrangement.
The Corporation's primary purpose in managing a portfolio of this
nature is to provide ongoing collection and control activities on behalf
of the FDIC. Accordingly, these assets do not represent loans made in the
ordinary course of business and, due to the underlying nature of this
liquidating asset pool, are excluded from the Corporation's nonperforming
asset statistics. Income from the segregated asset pool is generally
recognized on a cash basis as a component of noninterest income. If
collection of the unguaranteed portion of the segregated asset is
doubtful, income
54
<PAGE> 39
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
payments are applied to reduce the principal balance to the extent of the
government guarantee.
Interest Rate Swaps Interest rate swap transactions are utilized as
hedges as part of the Corporation's overall asset/liability management
strategy. Although the notional amounts of these transactions are not
reflected in the financial statements, the interest differentials are
recognized on an accrual basis over the terms of the agreements as an
adjustment to interest income or interest expense of the related asset or
liability. Interest rate swaps entered into for trading purposes on the
behalf of customers are accounted for on a mark to market basis.
Accordingly, realized and unrealized gains and losses associated with this
activity are reflected as investment banking revenues, a component of
noninterest income.
Foreign Exchange Contracts The Corporation's banking subsidiaries trade
foreign currencies on behalf of their customers and for their own account
and, by policy, do not maintain significant open positions. Foreign
exchange contracts are valued at the current prevailing rates of exchange
and any profit or loss resulting from such valuation is included in
current operations as a component of investment banking revenues.
Property and Equipment Property and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization
are recognized principally by the straight-line method applied over the
estimated useful lives of the assets, which are 10 to 50 years for
buildings, 2 to 50 years for leasehold improvements, and 3 to 25 years for
fixtures and equipment.
Intangible Assets Goodwill arising from acquisitions consummated
subsequent to 1985 is being amortized on a straight-line basis over the
periods benefitted, ranging from 4-15 years. For acquisitions consummated
in 1983 and 1985, goodwill is being amortized on a straight-line basis
over 25 years, and goodwill related to acquisitions prior to 1983 is being
amortized on a straight-line basis over 40 years. Core deposit intangibles
and credit card premiums are amortized over their useful economic lives on
an accelerated basis, not to exceed 10 years. Mortgage servicing rights
are amortized over the estimated life of the related loan servicing pool.
Income Taxes The Corporation accounts for income taxes under the asset
and liability method as required by Financial Accounting Standards No.
109, "Accounting for Income Taxes".
Income tax expense is reported as the total of current income taxes
payable and the net change in deferred income taxes provided for temporary
differences. Deferred income taxes reflect the net tax effects of
temporary differences between the carrying values of assets and
liabilities for financial reporting purposes and the values used for
income tax purposes. Deferred income taxes are recorded at the statutory
Federal and state tax rates in effect at the time that the temporary
differences are expected to reverse.
The Corporation files a consolidated Federal income tax return which
includes all its subsidiaries except for the life insurance company.
Income tax expense is allocated among the parent company and its
subsidiaries as if each had filed a separate tax return.
Net Income Per Share Net income per share is calculated by dividing net
income (after deducting dividends on redeemable preferred stock) by the
weighted average number of common shares outstanding. Common stock
equivalents have no material dilutive effect.
<TABLE>
The net income per share calculation for 1994, 1993 and 1992 is
summarized as follows:
==============================================================================================================
<CAPTION>
(in thousands except share data) 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $355,332 $317,419 $228,726
Less preferred dividends declared 80 85 88
- --------------------------------------------------------------------------------------------------------------
Net income available to
common shareholders $355,252 $317,334 $228,638
==============================================================================================================
Average shares outstanding 104,630,542 103,489,599 100,017,099
- --------------------------------------------------------------------------------------------------------------
Net income per share $3.40 $3.07 $2.29
==============================================================================================================
</TABLE>
2 CHANGES IN ACCOUNTING POLICIES
In 1994, the Corporation adopted Financial Accounting Standards No. 112
(SFAS No. 112), "Employers' Accounting for Postemployment Benefits." SFAS
No. 112 requires recognition of the cost to provide postemployment
benefits on an accrual basis. The Corporation's existing accounting
policies were in general compliance with the requirements of SFAS No. 112.
Accordingly, adoption of this standard had no material impact on the level
of postemployment expense.
On December 31, 1993, the Corporation adopted Financial Accounting
Standards No. 115 (SFAS No. 115), "Accounting for Certain Investments in
Debt and Equity Securities." SFAS No. 115 requires entities to classify
debt and equity securities as either held to maturity, available for sale
or trading securities. Under SFAS No. 115, held to maturity securities are
recorded at amortized cost; whereas available for sale securities and
trading securities are carried at market value. SFAS No. 115 further
requires that unrealized gains and losses on available for sale securities
be reported, net of tax, as a separate component of stockholders' equity.
Upon adoption of SFAS No. 115, the Corporation transferred approximately
$5.2 billion of debt and equity securities to the available for sale
portfolio, resulting in an increase to stockholders' equity of $42.3
million. Adoption of SFAS No. 115 had no effect on 1993 earnings.
3 ACQUISITIONS
Purchase Acquisitions Results of operations of companies which are
acquired and subject to purchase accounting treatment are included from
dates of acquisition. Pro forma condensed results of operations as if the
purchase acquisitions were consummated as of the beginning of the period
have been omitted due to the immaterial effect on operations. Goodwill
arising from the 1994 acquisition totaled $2.3 million. Goodwill and core
deposit intangibles arising from 1993 acquisitions totaled $43.6 million
and $49.1 million, respectively. Goodwill and core deposit intangibles
arising from 1992 acquisitions totaled $24.6 million and $9.2 million,
respectively. Core deposit intangibles in each of the purchase
acquisitions summarized below are being amortized on an accelerated basis,
not to exceed 10 years. Goodwill is being amortized on a straight-line
basis over periods ranging from 4-15 years.
55
<PAGE> 40
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Other information regarding purchase acquisitions is summarized as
follows:
===================================================================================================
<CAPTION>
Core
Acquired Company Acquisition Purchase Deposit
(amounts in millions) Date Price Assets Goodwill Intangible
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Eagle Management and
Trust Company 5/6/94 $ 3.4 $ 3.8 $ 2.3
===================================================================================================
1993
First City-El Paso
(FDIC assisted) 3/5/93 $ 14.0 $ 340.0 $ 9.6 $13.7
Missouri Bridge Bank
(FDIC assisted) 4/23/93 15.8 1,100.0 18.9 20.0
Cimarron Federal Savings
(RTC assisted) 5/26/93 13.1 430.0 13.1
FCB Bancshares, Inc. 8/2/93 25.0 185.0 15.1 2.3
- ---------------------------------------------------------------------------------------------------
Total $ 67.9 $2,055.0 $43.6 $49.1
===================================================================================================
1992
Founders
Bancorporation, Inc. 3/2/92 $ 34.0 $ 330.0 $15.3 $ 3.5
Superior Federal Bank
(RTC assisted) 3/20/92 700.0
Home Federal S&L
(RTC assisted) 3/27/92 1.3 120.0 1.3
Jackson Exchange Bank
(FDIC assisted) 5/7/92 1.4 120.0 1.4
Security Bank and
First Bank of
Catoosa in Tulsa 11/2/92 33.0 240.0 9.3 3.0
- ---------------------------------------------------------------------------------------------------
Total $ 69.7 $1,510.0 $24.6 $ 9.2
===================================================================================================
</TABLE>
Pooling Acquisitions When material, results of operations of companies
which are acquired and subject to pooling of interests accounting are
reflected on a combined basis from the earliest period presented.
On March 31, 1994, the Corporation consummated the acquisition of
Woodland Bancorp, Inc. (Woodland), resulting in the issuance of
approximately .4 million shares of common stock. Woodland, a retail
banking organization with assets of approximately $65 million, is located
in Tulsa, Oklahoma and was merged into the Corporation's Oklahoma bank.
The results of operations of Woodland, which qualified as a pooling of
interests, are not included in the consolidated financial statements prior
to January 1, 1994, due to the immaterial effect on the Corporation's
financial results.
On November 30, 1993, the Corporation consummated the acquisition of
First Amarillo Bancorporation, Inc. (Amarillo), resulting in the issuance
of approximately 5.9 million shares of common stock. Amarillo,
subsequently renamed Boatmen's Texas, Inc., with approximately $1.1
billion in assets, is headquartered in Amarillo, Texas. Nonrecurring
merger expenses related to this acquisition totaled $4.7 million and were
comprised primarily of investment banking fees, compensation-related
expense and abandonment of equipment and software. On an after-tax basis,
merger-related expenses from this acquisition totaled $3.8 million or $.04
per share and were recognized in the fourth quarter of 1993.
On April 1, 1992, the Corporation consummated the acquisition of First
Interstate of Iowa, Inc., (Iowa), resulting in the issuance of
approximately 4.2 million shares of common stock. First Interstate of
Iowa, Inc., subsequently renamed Boatmen's Bancshares of Iowa, Inc., with
approximately $1.2 billion in assets, is headquartered in Des Moines,
Iowa. Nonrecurring merger expenses related to the acquisition totaled $7.1
million and were recorded in the fourth quarter of 1991.
On October 1, 1992, the Corporation consummated the acquisition of
Sunwest Financial Services, Inc. (Sunwest), resulting in the issuance of
approximately 14.8 million shares of common stock. Sunwest, subsequently
renamed Boatmen's Sunwest, Inc., with approximately $3.7 billion in
assets, is headquartered in Albuquerque, New Mexico and is the largest
banking organization in that state. In the fourth quarter of 1992, the
Corporation recorded nonrecurring charges to conform Sunwest's loan,
accrual and reserve policies to the Corporation's policies which required
additions to the reserve for loan losses and write-downs of foreclosed
property. In addition, nonrecurring merger-related expenses were
recognized, such as investment banking fees, severance benefits, and
abandonment of equipment and software. Also in 1992, Sunwest realigned its
investment portfolio to conform to the Corporation's investment philosophy
by selling approximately $670 million of U.S. government securities and
reinvesting the proceeds in mortgage-backed securities. Gains of
approximately $24.3 million were recognized from this realignment.
Pending Acquisitions The Corporation currently is in the process of
completing six acquisitions aggregating $4.2 billion in assets.
Information related to these acquisitions is summarized below.
On May 6, 1994, the Corporation announced an agreement to acquire
National Mortgage Company and certain affiliates (National Mortgage), in a
transaction to be accounted for as a pooling of interests. Under terms of
the agreement, the Corporation will exchange not more than 5.0 million
shares of common stock for all of the stock of National Mortgage. National
Mortgage, headquartered in Memphis, Tennessee, is a full-service mortgage
banking company and presently services mortgage loans totaling
approximately $13.8 billion. This acquisition is expected to be completed
early in the first quarter of 1995.
On May 19, 1994, the Corporation announced a definitive agreement to
acquire Dalhart Bancshares, Inc. (Dalhart) in a transaction to be
accounted for as a pooling of interests. Each share of Dalhart will be
exchanged for 6.36 shares of the Corporation's common stock resulting in
the issuance of approximately .7 million shares. Dalhart, with assets of
approximately $140 million, is located in north Texas and will be merged
into the Corporation's Amarillo subsidiary. This acquisition is expected
to be completed early in the first quarter of 1995.
On August 18, 1994, the Corporation announced an agreement to acquire
Worthen Banking Corporation (Worthen), headquartered in Little Rock,
Arkansas, in a transaction to be accounted for as a pooling of interests.
Under terms of the agreement, the Corporation will exchange one share of
its common stock for each Worthen share, resulting in the issuance of
approximately 17.3 million shares. Worthen is the second largest banking
organization in Arkansas, with approximately $3.5 billion in assets,
operating 112 retail banking offices throughout Arkansas and six offices
in the Austin, Texas area. This acquisition is subject to approval by
Worthen shareholders and is expected to be completed in the first quarter
of 1995.
56
<PAGE> 41
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
On September 27, 1994, the Corporation announced an agreement to
acquire Salem Community Bancorp, Inc. (Salem), in a stock and cash
transaction which will be accounted for as a purchase. Salem has two
locations with approximately $80 million in assets. This transaction,
which is subject to regulatory approval, is expected to be completed in
the first quarter of 1995.
On November 15, 1994, the Corporation announced a definitive agreement
to acquire First National Bank in Pampa (Pampa) in a transaction to be
accounted for as a pooling of interests. Under terms of the agreement, the
Corporation will exchange approximately 1.35 million shares of common
stock for all of the outstanding shares of Pampa, which has approximately
$168 million in assets and will be merged into the Corporation's Amarillo
subsidiary. This transaction, which is subject to regulatory approval, is
expected to be completed in the second quarter of 1995.
On November 15, 1994, the Corporation announced a definitive agreement
to acquire West Side Bancshares, Inc. (West Side), a one bank holding
company located in San Angelo, Texas, in a stock transaction to be
accounted for as a purchase. The acquisition of West Side, with assets of
approximately $142 million, will result in the issuance of approximately
600,000 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 first quarter of 1995. Upon consummation,
West Side will be merged into the Corporation's Amarillo subsidiary.
4 HELD TO MATURITY SECURITIES
<TABLE>
The amortized cost and approximate market value of held to maturity
securities are summarized as follows:
==========================================================================================================
<CAPTION>
Unrealized
December 31, 1994 Amortized ----------------------- Market
(in thousands) Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. treasury $ 437,253 $ 22 $ (21,399) $ 415,876
Federal agencies:
Mortgage-backed:
Collateralized mortgage
obligations 1,274,516 (104,317) 1,170,199
Adjustable rate mortgages 537,225 54 (25,987) 511,292
Fixed rate pass-through 280,191 507 (17,007) 263,691
- ----------------------------------------------------------------------------------------------------------
Total mortgage-backed 2,091,932 561 (147,311) 1,945,182
Other agencies 471,751 4 (33,752) 438,003
- ----------------------------------------------------------------------------------------------------------
Total U.S. treasury
and agencies 3,000,936 587 (202,462) 2,799,061
State and municipal 763,286 28,064 (7,113) 784,237
Other debt securities 439,285 19 (45,584) 393,720
- ----------------------------------------------------------------------------------------------------------
Total held to maturity
securities $4,203,507 $28,670 $(255,159) $3,977,018
==========================================================================================================
==========================================================================================================
<CAPTION>
Unrealized
December 31, 1993 Amortized ----------------------- Market
(in thousands) Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. treasury $ 231,064 $ 1,791 $ (434) $ 232,421
Federal agencies:
Mortgage-backed:
Collateralized mortgage
obligations 691,918 1,631 (5,953) 687,596
Adjustable rate mortgages 606,831 3,590 (2,183) 608,238
Fixed rate pass-through 367,548 9,037 (84) 376,501
- ----------------------------------------------------------------------------------------------------------
Total mortgage-backed 1,666,297 14,258 (8,220) 1,672,335
Other agencies 320,501 1,602 (293) 321,810
- ----------------------------------------------------------------------------------------------------------
Total U.S. treasury
and agencies 2,217,862 17,651 (8,947) 2,226,566
State and municipal 819,206 74,210 (200) 893,216
Other debt securities 258,407 1,998 (1,440) 258,965
- ----------------------------------------------------------------------------------------------------------
Total debt securities 3,295,475 93,859 (10,587) 3,378,747
Other securities 29,372 29,372
- ----------------------------------------------------------------------------------------------------------
Total held to maturity
securities $3,324,847 $93,859 $(10,587) $3,408,119
==========================================================================================================
</TABLE>
<TABLE>
The maturity distribution of held to maturity securities at December
31, 1994 is summarized as follows:
=========================================================================
<CAPTION>
(in thousands) Amortized Cost Market Value
- -------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 80,412 $ 79,984
Due after one year through five years 984,172 933,557
Due after five years through ten years 415,386 429,980
Due after ten years 248,127 249,321
Mortgage-backed securities 2,475,410 2,284,176
- -------------------------------------------------------------------------
Total held to maturity securities $4,203,507 $3,977,018
=========================================================================
</TABLE>
Held to maturity securities at December 31, 1994 include mortgage-
backed government guaranteed agency securities of $2.1 billion and private
issue mortgage-backed securities totalling $.4 billion.
<TABLE>
Sales and redemptions of held to maturity securities resulted in
realized gains and losses as follows:
=========================================================================================
<CAPTION>
Year ended December 31 (in thousands) 1994 1993 1992
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities:
Realized gains $122 $ 629 $25,081
Realized losses (3) (140)
- -----------------------------------------------------------------------------------------
Net realized gains $122 $ 626 $24,941
=========================================================================================
Equity securities:
Realized gains $3,483 $ 800
Realized losses (1,302) (200)
- -----------------------------------------------------------------------------------------
Net realized gains (losses) $ -- $2,181 $ 600
=========================================================================================
</TABLE>
There were no sales of held to maturity securities in 1994. The gains
in 1994 represent premiums received on called securities.
57
<PAGE> 42
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
5 AVAILABLE FOR SALE SECURITIES
<TABLE>
The amortized cost and approximate market value of available for sale
securities are summarized as follows:
==========================================================================================================
<CAPTION>
Unrealized
December 31, 1994 Amortized ----------------------- Market
(in thousands) Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. treasury $ 768,210 $1,703 $ (14,982) $754,931
Federal agencies:
Mortgage-backed:
Collateralized mortgage
obligations 789,079 75 (47,807) 741,347
Adjustable rate mortgages 2,004,680 177 (94,798) 1,910,059
Fixed rate pass-through 169,657 2,397 (3,888) 168,166
- ----------------------------------------------------------------------------------------------------------
Total mortgage-backed 2,963,416 2,649 (146,493) 2,819,572
Other agencies 42,356 (816) 41,540
- ----------------------------------------------------------------------------------------------------------
Total U.S. treasury
and agencies 3,773,982 4,352 (162,291) 3,616,043
Other debt securities 228,678 71 (14,393) 214,356
- ----------------------------------------------------------------------------------------------------------
Total debt securities 4,002,660 4,423 (176,684) 3,830,399
Equity securities 55,609 1,209 56,818
- ----------------------------------------------------------------------------------------------------------
Total available for sale
securities $4,058,269 $5,632 $(176,684) $3,887,217
==========================================================================================================
<CAPTION>
Unrealized
December 31, 1993 Amortized ----------------------- Market
(in thousands) Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. treasury $1,152,605 $43,310 $ (62) $1,195,853
Federal agencies:
Mortgage-backed:
Collateralized mortgage
obligations 1,220,691 5,520 (7,137) 1,219,074
Adjustable rate mortgages 2,096,227 19,865 (3,459) 2,112,633
Fixed rate pass-through 265,293 11,455 (209) 276,539
- ----------------------------------------------------------------------------------------------------------
Total mortgage-backed 3,582,211 36,840 (10,805) 3,608,246
Other agencies 33,829 1 (45) 33,785
- ----------------------------------------------------------------------------------------------------------
Total U.S. treasury
and agencies 4,768,645 80,151 (10,912) 4,837,884
Other debt securities 317,258 668 (4,557) 313,369
- ----------------------------------------------------------------------------------------------------------
Total debt securities 5,085,903 80,819 (15,469) 5,151,253
Equity securities 22,388 4,716 (1,391) 25,713
- ----------------------------------------------------------------------------------------------------------
Total available for sale
securities $5,108,291 $85,535 $(16,860) $5,176,966
==========================================================================================================
</TABLE>
<TABLE>
The maturity distribution of available for sale securities at December
31, 1994 is summarized as follows:
=========================================================================
<CAPTION>
(in thousands) Amortized Cost Market Value
- -------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 303,426 $ 304,515
Due after one year through five years 523,794 508,635
Due after five years through ten years 12,776 12,797
Due after ten years 4,024 4,029
Mortgage-backed securities 3,158,640 3,000,423
- -------------------------------------------------------------------------
Total debt securities 4,002,660 3,830,399
Equity securities 55,609 56,818
- -------------------------------------------------------------------------
Total available for sale securities $4,058,269 $3,887,217
=========================================================================
</TABLE>
Available for sale securities at December 31, 1994 include mortgage-
backed government guaranteed agency securities of $2.8 billion and private
issue mortgage-backed securities totalling $.2 billion.
Sales and redemptions of available for sale securities in 1994 resulted
in gross realized gains of $6.1 million, including $3.5 million from the
sales of equity securities. There were no sales of available for sale
securities in 1993.
Held to maturity and available for sale securities with book values
totaling $4,103,658 and $3,678,510 at December 31, 1994 and 1993,
respectively, were pledged to secure public deposits, trust deposits, and
for other purposes required by law.
6 LOANS
<TABLE>
A summary of loan categories is as follows:
====================================================================================
<CAPTION>
December 31 (in thousands) 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
Domestic:
Commercial $ 7,839,658 $ 7,508,671
Real estate-mortgage 3,173,553 2,970,550
Real estate-construction 684,632 557,977
Consumer 4,693,340 3,742,766
Lease financing 135,921 95,209
- ------------------------------------------------------------------------------------
Total domestic 16,527,104 14,875,173
Foreign loans 19,084 18,087
- ------------------------------------------------------------------------------------
Total loans 16,546,188 14,893,260
Less unearned income 65,751 67,338
- ------------------------------------------------------------------------------------
Total loans, net $16,480,437 $14,825,922
====================================================================================
</TABLE>
<TABLE>
Nonperforming assets, consisting of nonperforming loans and foreclosed
property, are summarized as follows:
====================================================================================
<CAPTION>
December 31 (in thousands) 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
Nonaccrual $102,521 $142,853
Restructured 7,090 14,807
Past due 90 days or more 15,559 17,238
- ------------------------------------------------------------------------------------
Total nonperforming loans 125,170 174,898
Foreclosed property 60,393 110,639
- ------------------------------------------------------------------------------------
Total nonperforming assets $185,563 $285,537
====================================================================================
</TABLE>
Gross interest income which would have been recorded, if all nonaccrual
and restructured loans at year end had been current in accordance with
original terms, amounted to $9.5 million in 1994 and $12.4 million in
1993. Actual interest recorded amounted to $2.4 million in 1994 and $2.9
million in 1993.
Following is a summary of activity for 1994 regarding loans extended to
directors and executive officers of the Corporation and its largest
subsidiaries or to enterprises in which said individuals had beneficial
interests. Such loans were made in the normal course of business on
substantially the same terms, including interest rates and collateral, as
those prevailing at the same time for comparable transactions with other
persons.
<TABLE>
=================================================================================
<CAPTION>
(in thousands)
- ---------------------------------------------------------------------------------
Outstanding Net change from changes Outstanding
at 12/31/93 Additions Repayments in director status at 12/31/94
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$200,187 $98,951 $(108,675) $273 $190,736
=================================================================================
</TABLE>
<TABLE>
The following summarizes activity in the reserve for loan losses:
=================================================================================
<CAPTION>
December 31 (in thousands) 1994 1993 1992
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $341,099 $302,021 $252,283
Loans charged off (65,941) (74,202) (137,041)
Recoveries on loans
previously charged off 41,693 40,239 34,446
- ---------------------------------------------------------------------------------
Net charge-offs (24,248) (33,963) (102,595)
Provision for loan losses 24,306 60,184 136,626
Reserves of purchased subsidiaries 873 12,857 15,707
- ---------------------------------------------------------------------------------
Balance, end of year $342,030 $341,099 $302,021
=================================================================================
</TABLE>
In May, 1993, the Financial Accounting Standards Board (FASB)issued
Statement of Financial Accounting Standards No. 114 (SFAS No. 114),
"Accounting by Creditors for Impairment of a
58
<PAGE> 43
Loan" and in October 1994, the FASB issued SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan-Income Recognition and Disclosures."
These statements will require that certain impaired loans be measured based
on either the present value of expected future cash flows discounted at the
loan's effective rate, the market price of the loan, or fair value of the
underlying collateral if the loan is collateral dependent. Adoption of
these pronouncements in 1995 is not expected to have a material effect on
the Corporation's financial results or asset quality statistics.
7 PROPERTY AND EQUIPMENT
<TABLE>
Property and equipment are summarized as follows:
====================================================================================
<CAPTION>
December 31 (in thousands) 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 68,644 $ 66,307
Buildings 328,505 284,028
Building under capital lease 45,053 45,053
Furniture, fixtures and equipment 441,899 417,438
Leasehold improvements 83,215 82,773
Construction in progress 26,082 12,071
- ------------------------------------------------------------------------------------
Total 993,398 907,670
Less accumulated depreciation/amortization 468,586 427,084
- ------------------------------------------------------------------------------------
Net property and equipment $524,812 $480,586
====================================================================================
</TABLE>
Depreciation and amortization charged to expense in 1994, 1993 and 1992
amounted to $65,974, $58,268, and $50,612, respectively.
At December 31, 1994, the Corporation was obligated under long-term
leases, principally related to the use of land, buildings, and equipment
in banking operations. The following table summarizes future minimum
rental payments required under leases which have initial or remaining
noncancellable lease terms in excess of one year.
<TABLE>
====================================================================================
<CAPTION>
(in thousands)
- ------------------------------------------------------------------------------------
Period Capital lease Operating leases
- ------------------------------------------------------------------------------------
<S> <C> <C>
1995 $ 4,559 $ 20,710
1996 4,559 18,709
1997 4,559 13,144
1998 4,559 10,828
1999 4,559 9,906
After 1999 54,698 54,115
- ------------------------------------------------------------------------------------
Total minimum lease payments 77,493 $127,412
========
Less amount representing interest 39,134
- ----------------------------------------------------------
Present value of minimum lease payments $38,359
==========================================================
</TABLE>
Lease provisions that would cause rentals to vary from those reflected
above are not material. Property taxes, insurance, and maintenance expense
related to property under lease are principally paid by the Corporation.
Total rental expense for all operating leases amounted to $27,825, $33,899
and $33,275 in 1994, 1993, and 1992, respectively.
8 INTANGIBLE ASSETS
<TABLE>
Intangible assets, net of accumulated amortization are summarized as follows:
====================================================================================
<CAPTION>
December 31 (in thousands) 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
Goodwill $170,503 $181,638
Core deposit premium 73,948 85,300
Credit card premium 2,980 3,542
Purchased mortgage servicing rights 4,067 4,858
- ------------------------------------------------------------------------------------
Total intangible assets, net $251,498 $275,338
====================================================================================
</TABLE>
Goodwill and core deposit premium amortization charged to expense in 1994,
1993, and 1992 amounted to $33,216, $30,571, and $16,076, respectively.
9 SEGREGATED ASSETS
Included in other assets at December 31, 1994 are segregated assets
totaling $177.2 million net of a valuation allowance of $16.7 million. As
part of the regulatory assisted acquisition of Missouri Bridge Bank, N.A.
(Bridge Bank), on April 23, 1993, the Corporation entered into a five-year
loss-sharing arrangement with the FDIC with respect to approximately $950
million in multi-family residential, commercial real estate, construction
and commercial loans. During the five-year period, the FDIC will reimburse
the Corporation for 80 percent of the first $92.0 million of net charge-
offs on these loans, after which the FDIC will increase its reimbursement
coverage to 95 percent of additional charge-offs. During this period and
for two years thereafter, the Corporation is obligated to pay the FDIC 80
percent of all recoveries on charged off loans.
Segregated assets are those loans acquired from the Bridge Bank and
covered under the loss sharing arrangement with the FDIC that possess more
than the normal risk of collectibility. These assets consist of loans that
at acquisition were or have since become classified as nonperforming loans
or foreclosed property.
The Corporation's primary purpose in managing a portfolio of this
nature is to provide ongoing collection and control activities on behalf
of the FDIC. Accordingly, these assets do not represent loans made in the
ordinary course of business and, due to the underlying nature of this
liquidating asset pool, are excluded from the Corporation's nonperforming
asset statistics.
A summary of activity regarding the segregated asset pool for the years
ended December 31, 1994 and 1993 is provided below.
<TABLE>
================================================================================================================
Principal Allowance Principal
(in millions) balance for losses balance, net
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Segregated assets identified
upon acquisition $312.0 $27.0 $285.0
Charge-offs (52.1) (10.4)
Recoveries 1.8
Transfers to segregated assets 36.5
Payments on segregated assets (29.8)
- ----------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 266.6 18.4 248.2
Charge-offs (14.9) (3.0)
Recoveries 1.3
Transfers to segregated assets 40.9
Payments on segregated assets (98.7)
- ----------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 $193.9 $16.7 $177.2
================================================================================================================
</TABLE>
10 DEPOSITS
<TABLE>
Deposits are summarized as follows:
====================================================================================
<CAPTION>
December 31 (in thousands) 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
Demand deposits $ 4,589,782 $ 4,769,947
Savings deposits 1,807,804 2,118,390
Interest-bearing transaction accounts 7,010,444 6,654,668
Time deposits $100,000 and over 1,040,688 955,988
Retail time deposits 7,740,844 6,410,009
- ------------------------------------------------------------------------------------
Total deposits $22,189,562 $20,909,002
====================================================================================
</TABLE>
59
<PAGE> 44
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
11 FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER
REPURCHASE AGREEMENTS
<TABLE>
Federal funds purchased and securities sold under repurchase agreements
generally represent borrowings with overnight maturities. Information
relating to these borrowings is summarized as follows:
==============================================================================================================
<CAPTION>
(in thousands) 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance:
Average $2,737,607 $1,759,173 $1,681,938
Year end 1,888,970 1,996,022 1,664,025
Maximum month-end
balance during year 3,718,105 2,560,448 2,493,120
==============================================================================================================
Interest rate:
Average 4.09% 2.83% 3.41%
==============================================================================================================
Year end 5.54% 2.61% 2.62%
==============================================================================================================
</TABLE>
12 SHORT-TERM BORROWINGS
<TABLE>
Short-term borrowings are summarized as follows:
====================================================================================
<CAPTION>
December 31 (in thousands) 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
Short-term bank notes $1,550,000 $ --
Commercial paper 43,531 49,635
Other 168,170 766,336
- ------------------------------------------------------------------------------------
Total $1,761,701 $815,971
====================================================================================
</TABLE>
Commercial paper is issued by the parent company in maturities not to
exceed nine months. The short-term bank notes are floating-rate
instruments issued by the Corporation's banking subsidiaries with
maturities of less than one year. Other short-term funds consisted
principally of treasury, tax and loan accounts. At December 31, 1994, the
parent company had available additional credit totaling $100 million under
a revolving credit agreement, all of which was unused. The revolving
credit agreement is a three year facility extending to September, 1997.
13 LONG-TERM DEBT
<TABLE>
Long-term debt is summarized as follows:
====================================================================================
December 31 (in thousands) 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
Parent Company:
7-5/8% notes due 2004 $100,000 $100,000
6-3/4% notes due 2003 100,000 100,000
8-5/8% notes due 2003 50,000 50,000
9-1/4% notes due 2001 150,000 150,000
6-1/4% convertible subordinated
debentures due 2011 904 1,215
12% note due 1998 25,000 25,000
- ------------------------------------------------------------------------------------
Total Parent Company 425,904 426,215
- ------------------------------------------------------------------------------------
Subsidiaries:
9-7/8% senior notes payable April 15, 1995 35,000 35,000
Federal Home Loan Bank notes
due through 1999 26,500 25,000
6.55% mortgage note due through 2009 27,679
Other 38
- ------------------------------------------------------------------------------------
Total subsidiaries 89,179 60,038
- ------------------------------------------------------------------------------------
Total long-term debt $515,083 $486,253
====================================================================================
</TABLE>
The 7-5/8% subordinated notes mature on October 1, 2004, the 6-3/4%
subordinated notes mature on March 15, 2003, the 8-5/8% subordinated notes
mature on November 15, 2003, and the 9-1/4% subordinated notes mature on
November 1, 2001. These notes are not redeemable by the holders or the
Corporation prior to maturity.
The 6-1/4% convertible subordinated debentures are redeemable at the
option of the holder without payment of premium by the Corporation.
Redemption rights are subject to an annual noncumulative principal
limitation of $25 thousand per holder and $1.2 million in the aggregate.
Prepayments in whole or in part may be made at the option of the
Corporation with payment of premium. The debentures are convertible into
common stock of the Corporation at a conversion price of $16.71 per share
adjusted for the two-for-one stock split on August 10, 1993, subject to
adjustments under certain circumstances. During 1994, 1993 and 1992, $.3
million, $.2 million and $2.5 million of the debentures were converted
into 18,598, 7,650 and 74,270 shares of common stock, respectively.
The 12% note is due in 1998 and may not be prepaid at the option of the
Corporation.
The 9-7/8% senior notes are due April 15, 1995.
Federal Home Loan Bank notes totaling $25 million mature in 1997 and
1998 with interest rates ranging from 4.9% to 5.2%. The notes may be
prepaid at the option of the Corporation with payment of premium. A $1.5
million Federal Home Loan bank advance at a rate of 6.987% matures in 1999
with semi-annual principal payments of $150 thousand.
The 6.55% mortgage note payable matures in 2009. Monthly principal and
interest payments of $252 thousand are required on the note until paid.
The Corporation may prepay the note without payment of premium. Proceeds
from this note were used to purchase the building occupied by the
Corporation's trust subsidiary.
Several of the note agreements contain various financial covenants
pertaining to minimum levels of net worth, limitations on additional
indebtedness, and limitations on repurchases of common stock and dividend
payments. The Corporation was in compliance with all such covenants at
December 31, 1994.
Obligations of the parent company included above are unsecured, and to
a large extent are subordinated in right of payment to any other
indebtedness of the Corporation. The indebtedness of the banking
subsidiaries is subordinated to rights of depositors.
<TABLE>
Scheduled principal payments on total long-term debt in each of the
five years subsequent to December 31, 1994 are as follows:
==========================================================
<CAPTION>
(in thousands)
- ----------------------------------------------------------
Year Parent Company Consolidated
- ----------------------------------------------------------
<S> <C> <C>
1995 $ 904 $37,453
1996 1,634
1997 11,724
1998 25,000 41,820
1999 1,922
==========================================================
</TABLE>
14 PREFERRED STOCK
At December 31, 1994, there were outstanding 11,421 shares of 7%
Cumulative Redeemable Preferred Stock, Series B, $100 per share stated
value. Dividends are payable quarterly. The stock is redeemable at the
stated value at the option of the holders and has equal voting rights with
each share of common stock.
60
<PAGE> 45
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
15 COMMON STOCK
On August 10, 1993, the Corporation declared a two-for-one stock split,
which was effected as a 100% stock dividend to stockholders of record on
August 31, 1993 and paid on October 1, 1993. The Corporation maintains
various stock option plans which provide for the issuance of stock to
certain key employees of the Corporation. Under certain plans, stock
appreciation rights may be granted. The option price under these plans is
equivalent to the fair market value of the common stock at the date of
grant.
<TABLE>
The following table summarizes the status of the various plans.
=========================================================================================================
<CAPTION>
1994 1993
- ---------------------------------------------------------------------------------------------------------
Shares Price Per Share Shares Price Per Share
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options granted 696,450 $27.75 to $31.63 632,000 $27.00
Options
exercised 318,983 5.76 to 27.75 434,377 3.29 to 22.81
Stock
appreciation
rights
exercised 29,030 15.63 to 27.75 99,966 15.63 to 22.81
Options lapsed 29,707 5.76 to 27.75 58,544 9.39 to 27.00
Options
outstanding 3,299,536 5.76 to 27.75 2,980,806 5.76 to 27.63
Options
exercisable 1,844,956 5.76 to 27.63 1,280,034 5.76 to 27.63
=========================================================================================================
</TABLE>
The Corporation has other common stock related plans which are
summarized below.
1990 Stock Purchase Plan for Employees This Plan provides eligible
employees of the Corporation and its subsidiaries with the opportunity
to purchase, at market value, with the Corporation providing a one-third
matching contribution, common stock of the Corporation through regular
payroll deductions. The aggregate number of shares issuable under this
Plan is limited to 2,000,000 shares, and as of December 31, 1994,
approximately 5,800 employees were participating in the Plan.
Dividend Reinvestment and Stock Purchase Plan 1,600,000 shares of the
Corporation's common stock have been reserved for sale, at market value,
pursuant to this plan, to holders of record of shares of common stock
who elect to use quarterly dividends or optional cash contributions to
purchase additional shares.
Thrift Incentive 401(k) Plan This is a savings plan for the benefit of
employees of the Corporation and its subsidiaries. Participation by
eligible employees is voluntary, and participants may contribute at
least 2% and up to 12% of their salary, up to certain limits, by regular
payroll deductions. All participants' contributions are invested by the
trustee, as directed by the participant, in various investment funds,
one of which consists solely of the Corporation's common stock. The
Corporation matches, in full, up to 3% of the contribution made by the
employee which is invested in a separate fund consisting solely of the
Corporation's common stock.
Shareholder Rights Plan In 1990, the Board of Directors of the
Corporation declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock. The Rights trade
automatically with shares of common stock and become exercisable only
under certain circumstances. The Rights are designed to protect the
interests of the Corporation and its shareholders against coercive
takeover tactics. The purpose of the Rights is to encourage potential
acquirers to negotiate with the Corporation's Board of Directors prior
to attempting a takeover and to give the Board leverage in negotiating
on behalf of all shareholders the terms of any proposed takeover.
16 RETIREMENT BENEFITS
Substantially all employees of the Corporation and its subsidiaries are
covered by the Boatmen's Bancshares, Inc. Retirement Plan for Employees,
a noncontributory defined benefit plan. Pension benefits are based upon
the employee's length of service and compensation during the final years
of employment. Normal service costs are funded currently using the
projected unit credit method.
Contributions to the Plan totaled $5.1 million in 1994, $11.8 million
in 1993, and $12.3 million in 1992.
<TABLE>
Net pension expense for 1994, 1993 and 1992 was comprised of the
following:
=================================================================================================
<CAPTION>
Year ended December 31 (in thousands) 1994 1993 1992
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $13,445 $11,800 $11,177
Interest cost on projected
benefit obligation 17,765 16,082 14,510
(Return) loss on plan assets 603 (29,842) (16,072)
Net amortization and deferral (22,152) 10,704 (725)
- -------------------------------------------------------------------------------------------------
Net pension expense $ 9,661 $ 8,744 $ 8,890
=================================================================================================
</TABLE>
<TABLE>
The following table sets forth the retirement plan's funded status and
amounts recognized in the Corporation's consolidated financial statements:
=================================================================================
<CAPTION>
December 31 (in thousands) 1994 1993
- ---------------------------------------------------------------------------------
<S> <C> <C>
Plan assets at fair value, primarily listed
stocks and bonds $239,539 $245,389
- ---------------------------------------------------------------------------------
Actuarial present value of benefit obligation:
Vested benefits 162,398 169,278
Non-vested benefits 9,280 10,263
- ---------------------------------------------------------------------------------
Accumulated benefit obligation 171,678 179,541
Effect of projected future salary increases 45,637 45,748
- ---------------------------------------------------------------------------------
Projected benefit obligation 217,315 225,289
- ---------------------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation $ 22,224 $ 20,100
=================================================================================
Comprised of:
Unrecognized net asset being amortized
over 17 years $ 13,926 $ 15,916
Unrecognized net gain from past
experience different from that assumed
and effects of changes in assumptions 8,964 1,924
Unrecognized prior service loss (142) (1,773)
Prepaid pension cost (liability) (524) 4,033
- ---------------------------------------------------------------------------------
$ 22,224 $ 20,100
=================================================================================
</TABLE>
61
<PAGE> 46
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Assumptions used in computing pension expense were:
==============================================================================
<CAPTION>
1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average discount rate 7 1/2% 7 3/4-8% 7-9 %
Rate of increase in future
compensation levels 5 % 4-5 1/2% 4-6 1/2%
Expected long-term rate of
return on assets 8 3/4% 8-8 3/4% 7-9 %
==============================================================================
</TABLE>
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 8.50% and 5.50%, respectively, at
December 31, 1994 and 7.50% and 5.00% respectively, at December 31, 1993.
The Corporation provides postemployment life and contributory medical
benefits to retired employees. The liability for such benefits is unfunded
and accounted for in accordance with Statement of Financial Accounting
Standards No. 106, "Employer's Accounting for Postretirement Benefits
Other Than Pensions". Under this standard, costs of retiree benefits other
than pensions are accrued in a manner similar to actual pension costs.
<TABLE>
The following table presents the status of the plans:
=========================================================================
<CAPTION>
December 31 (in thousands) 1994 1993
- -------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $38,443 $32,540
Fully eligible active plan participants 12,072 10,557
Other active plan participants 17,046 16,529
- -------------------------------------------------------------------------
Total accumulated postretirement
benefit obligation 67,561 59,626
- -------------------------------------------------------------------------
Unrecognized net gain 10,831 6,575
Unrecognized transition obligation 40,724 43,120
- -------------------------------------------------------------------------
Accrued postretirement
benefit cost $16,006 $ 9,931
=========================================================================
</TABLE>
<TABLE>
Net postretirement benefit cost included the following components:
=========================================================================================
<CAPTION>
Year ended December 31 (in thousands) 1994 1993 1992
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $1,448 $1,238 $1,195
Interest cost 4,823 4,586 4,063
Amortization of transition
obligation over 20 years 2,966 2,396 2,395
- -----------------------------------------------------------------------------------------
Net postretirement benefit cost $9,237 $8,220 $7,653
=========================================================================================
</TABLE>
The weighted-average annual assumed rate of increase in the per capita
cost of covered benefits for the medical plan is 9.50% for 1995 (compared
to 10.50% assumed for 1994) and is assumed to decrease gradually to 5.00%
in 2003 and remain at that level thereafter. The health care cost trend
rate assumption has a significant effect on the amounts reported. For
example, increasing the assumed health care trend rates by one percentage
point in each year would increase the accumulated postretirement benefit
obligation for the medical plan as of December 31, 1994 by $5.8 million,
and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for 1994 by $.7 million. The
weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 8.50% at December 31, 1994 and 7.50%
at December 31, 1993.
17 INCOME TAXES
<TABLE>
Income tax expense is summarized as follows:
=========================================================================================
<CAPTION>
Year ended December 31 (in thousands) 1994 1993 1992
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $158,896 $149,270 $105,822
State 26,925 25,156 14,563
- -----------------------------------------------------------------------------------------
Total current 185,821 174,426 120,385
- -----------------------------------------------------------------------------------------
Deferred:
Federal 2,275 (19,157) (21,031)
State (1,920) (8,462) (6,836)
- -----------------------------------------------------------------------------------------
Total deferred 355 (27,619) (27,867)
- -----------------------------------------------------------------------------------------
Income tax expense $186,176 $146,807 $ 92,518
=========================================================================================
</TABLE>
<TABLE>
A reconciliation of the statutory Federal income tax rate with the
effective tax rate is as follows:
=========================================================================================
<CAPTION>
Percent of pre-tax income
Year ended December 31 (in thousands) 1994 1993 1992
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 34.0%
Tax-exempt securities interest
and other income (4.3) (5.1) (7.5)
Deferred taxes at applicable rates (1.1) (1.7)
State taxes, net of Federal benefit 3.0 2.3 2.7
Other, net .7 .5 1.3
- -----------------------------------------------------------------------------------------
Effective rate 34.4% 31.6% 28.8%
=========================================================================================
</TABLE>
<TABLE>
The Corporation's deferred tax asset account was comprised of the
following:
=========================================================================
<CAPTION>
Year ended December 31 (in thousands) 1994 1993
- -------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Lease financing $(25,859) $(16,413)
Net unrealized gain on
securities available for sale (26,525)
Depreciation (22,018) (20,108)
Other (30,149) (27,847)
- -------------------------------------------------------------------------
Total deferred tax liabilities (78,026) (90,893)
- -------------------------------------------------------------------------
Deferred tax assets:
Net unrealized loss on
securities available for sale 66,067
Provision for loan loss 139,947 130,509
Other real estate owned losses 13,404 15,622
Other 39,063 32,980
- -------------------------------------------------------------------------
Total deferred tax assets 258,481 179,111
- -------------------------------------------------------------------------
Net deferred tax asset $180,455 $ 88,218
=========================================================================
</TABLE>
18 RESERVES ON DEPOSITS
Required reserves on deposits, included in the caption "Cash and due
from banks," were $516,528 and $546,420 at December 31, 1994 and 1993,
respectively.
19 FAIR VALUE OF FINANCIAL INSTRUMENTS
The reported fair values of financial instruments are based on a
variety of factors. Where possible, fair values represent quoted market
prices for identical or comparable instruments. In other
62
<PAGE> 47
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
cases, fair values have been estimated based on assumptions concerning the
amount and timing of estimated future cash flows and assumed discount rates
reflecting varying degrees of risk. Intangible values assigned to customer
relationships are not reflected in the reported fair values. Accordingly,
the fair values may not represent actual values of the financial
instruments that could have been realized as of year end or that will be
realized in the future.
The carrying amounts reported in the balance sheet for cash and due
from banks, short-term investments, Federal funds sold and securities
purchased under resale agreements approximate fair value.
Fair values for held to maturity securities, available for sale
securities, and trading securities are based on quoted market prices or
dealer quotes. If quoted prices are not available for the specific
security, fair values are based on quoted market prices of comparable
instruments.
The fair values of 1-4 family residential loans, home equity and other
homogeneous categories of consumer loans are estimated using quoted market
prices for similar traded loans or securities backed by such loans,
adjusted for differences between the quoted instruments and the instrument
being valued. The fair values for other loans are estimated using a
discounted cash flow analysis, based on interest rates currently offered
for loans with similar terms to borrowers of similar credit quality or in
some situations, due to the variable rate nature of the instrument,
carrying value and fair value are considered one and the same.
Fair values for nonperforming loans are estimated using assumptions
regarding current assessments of collectibility and historical loss
experience.
By definition fair values of deposits with no stated maturities, such
as demand deposits, savings and NOW accounts and money market deposit
accounts, are equal to the amounts payable on demand at the reporting
date. The fair values of all other fixed rate deposits are based on
discounted cash flows using rates currently offered for deposits of
similar remaining maturities. The carrying amounts of variable rate
deposits approximate fair value at the reporting date.
The carrying amounts of Federal funds purchased and other short-term
borrowings approximate their fair values as of the reporting date.
The fair value of long-term debt is based on quoted market prices for
similar issues, or current rates offered to the Corporation for debt of
the same remaining maturity.
The fair values of interest rate swaps and foreign exchange contracts
are estimated using dealer quotes. These values represent the costs to
replace all outstanding contracts at current market rates, taking into
consideration the current credit worthiness of the counterparties. The
fair values of loan commitments, commercial letters of credit and standby
letters of credit are determined using estimated fees currently charged to
enter into similar agreements. The fair value of loan commitments totaled
approximately $1.1 million and $.8 million at December 31, 1994 and 1993,
respectively. The fair value of commercial and standby letters of credit
totaled approximately $1.3 million and $1.7 million at December 31, 1994
and 1993, respectively.
<TABLE>
The estimated fair values of the Corporation's financial instruments were
as follows:
======================================================================================
<CAPTION>
December 31, 1994 (in millions) Carrying amount Fair value
- --------------------------------------------------------------------------------------
<S> <C> <C>
Financial assets:
Cash and due from banks and
short-term investments $ 3,011.3 $ 3,011.3
Held to maturity securities 4,203.5 3,977.0
Available for sale securities 3,887.2 3,887.2
Trading securities 31.7 31.7
Loans 16,138.4 16,017.6
Financial liabilities:
Deposits 22,189.6 22,186.3
Short-term borrowings 3,650.7 3,650.7
Long-term debt 515.1 498.5
Off-balance sheet financial instruments:
Interest rate swaps:
Asset/liability management (.5) (168.5)
Customer swaps held in trading portfolio .4 .4
Foreign exchange contracts held in
trading portfolio 2.2 2.2
======================================================================================
<CAPTION>
December 31, 1993 (in millions) Carrying amount Fair value
- --------------------------------------------------------------------------------------
<S> <C> <C>
Financial assets:
Cash and due from banks and
short-term investments $ 2,040.5 $ 2,040.5
Held to maturity securities 3,324.8 3,408.1
Available for sale securities 5,177.0 5,177.0
Trading securities 48.1 48.1
Loans 14,484.8 14,755.1
Financial liabilities:
Deposits 20,909.0 20,974.2
Short-term borrowings 2,812.0 2,812.0
Long-term debt 486.3 542.8
Off-balance sheet financial instruments:
Interest rate swaps:
Asset/liability management 9.1 11.2
Customer swaps held in trading portfolio .7 .7
Foreign exchange contracts held in
trading portfolio 1.9 1.9
======================================================================================
</TABLE>
20 FINANCIAL INSTRUMENTS
WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Corporation utilizes a variety of
off-balance sheet financial instruments to service the financial needs of
customers and to manage the Corporation's overall asset/liability
position. This activity includes commitments to extend credit, standby and
commercial letters of credit, securities lending, interest rate swaps and
foreign exchange contracts. Each of these instruments involve varying
degrees of risk. As such, the contract or notional amounts of these
instruments may or may not be an appropriate indicator of the credit or
market risk associated with these instruments.
Generally accepted accounting principles recognize these instruments as
contingent obligations or off-balance sheet items and accordingly, the
contract or notional amounts are not reflected in the consolidated
financial statements.
A summary of the Corporation's off-balance sheet financial instruments
at December 31, 1994 and 1993 is presented as follows.
63
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BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
===================================================================================================
<CAPTION>
Financial instruments held for other than trading purposes
whose credit risk is represented by contract amounts
- ---------------------------------------------------------------------------------------------------
December 31 (in millions) 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Commitments to extend credit $ 7,667.8 $ 6,004.1
Standby letters of credit 876.8 776.0
Commercial letters of credit 143.7 130.1
Securities lent 2,968.2 3,439.8
- ---------------------------------------------------------------------------------------------------
Total $11,656.5 $10,350.0
===================================================================================================
<CAPTION>
Financial instruments whose credit risk is represented by
other than notional or contract amounts
- ---------------------------------------------------------------------------------------------------
December 31 (in millions) 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign exchange contracts held in trading portfolio:
Commitments to purchase $ 548.7 $ 574.7
Commitments to sell 595.3 544.5
Interest rate swaps:
Asset/liability management 2,280.6 1,780.6
Customer swaps held in trading portfolio 324.6 323.6
- ---------------------------------------------------------------------------------------------------
Total $3,749.2 $3,223.4
===================================================================================================
</TABLE>
A loan commitment represents a contractual agreement to lend up to a
specified amount, over a stated period of time as long as there is no
violation of any condition established in the contract, and generally
requires the payment of a fee. Standby letters of credit are issued to
improve a customer's credit standing with third parties, whereby the
Corporation agrees to honor a financial commitment by issuing a guarantee
to third parties in the event the Corporation's customer fails to perform.
Since loan commitment amounts generally exceed actual funding requirements
and virtually all of the standby letters of credit are expected to expire
unfunded, the total commitment amounts do not represent future cash
requirements. The Corporation's exposure to credit loss from loan
commitments, standby letters of credit and commercial letters of credit is
measured by the contract amount of these instruments. This credit risk is
minimized by subjecting these off-balance sheet instruments to the same
credit policies and underwriting standards used when making loans. The
Corporation evaluates each customer's credit worthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary, is based on
such evaluations. Acceptable collateral includes cash or cash equivalents,
marketable securities, deeds of trust, receivables, inventory, fixed
assets and financial guarantees. Interest rates, in the event funding of
the aforementioned commitments are required, are predominantly based on
floating rates or prevailing market rates at the time such commitments are
funded. Substantially all of these commitments expire in 1-2 years unless
renewed by the Corporation. Commercial letters of credit are short-term
commitments issued for trade purposes, primarily to finance the movement
of goods between a buyer and seller dealing in international markets.
The Corporation, through its trust subsidiary, is involved in off-
balance sheet securities lending. In this capacity, the Corporation,
acting as agent, lends securities on behalf of its customers to third
party borrowers. The Corporation indemnifies its customers against losses
in the event of counterparty default, and minimizes this risk through
collateral requirements and limiting transactions to pre-approved
borrowers. Collateral policies require each borrower to initially deliver
cash or securities exceeding 102% of the market value of the securities
lent. Additional collateral is required through the term of the lending
agreement to ensure that the value of collateral exceeds the market value
of the securities lent. Interest rate risk associated with securities
lending activities arises from rate movements affecting the spread between
the rebate rate paid to the borrower on the collateral and the rate earned
on that collateral. This risk is controlled through policies that limit
the level of interest rate risk which can be undertaken.
The Corporation enters into interest rate swap transactions primarily
as part of its asset/liability management strategy to manage interest-rate
risk. These transactions involve the exchange of interest payments based
on a notional amount. The notional amounts of interest rate swaps express
the volume of transactions and are not an appropriate indicator of the
off-balance sheet market risk or credit risk. The credit risk associated
with interest rate swaps arises from the counterparties' failure to meet
the terms of the agreements and is limited to the fair value of contracts
in a gain (favorable) position. The Corporation manages this risk by
maintaining a well-diversified portfolio of highly-rated counterparties in
addition to imposing limits as to types, amounts and degree of risk the
portfolio can undertake. The limits are approved by senior management and
positions are monitored to ensure compliance with such limits. The credit
risk exposure at December 31, 1994 is minimal as virtually all contracts
were in an unfavorable position.
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, the behavior 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 banking activities. The Corporation's
interest rate risk exposure is 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. The interest rate swap portfolio is presently used to
modify the interest rate sensitivity of subordinated debt and alter the
interest rate sensitivity of the Corporation's prime-based loan portfolio.
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. The
Corporation's prime based loan portfolio (approximately $5.4 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 off-balance sheet instruments 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 of the prime-based loan and bank note portfolios.
The interest rate swap programs were consistent with management's
objective of balancing the interest rate sensitivity of the core bank.
64
<PAGE> 49
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
Interest income and expense on interest rate swaps used to manage the
Corporation's overall interest rate sensitivity position is recorded on an
accrual basis as an adjustment to the yield of the related asset or
liability over the periods covered by the contracts. In 1994, the swap
portfolio increased net interest income by approximately $15 million,
adding 6 basis points to the net interest margin, compared to
approximately $20 million or 10 basis points in 1993. As summarized in the
following table, 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 December 31, 1994 was 5.53%
compared to an average rate paid of 6.06%, and the average remaining
maturity of the portfolio was 2 years. The variable rate component of the
interest rate swaps is based on LIBOR at December 31, 1994, and will
adjust with future movements in this index. Approximately 90% of the
portfolio is comprised of indexed amortizing swaps that reset in step with
movements in LIBOR; whereby, the maturity distribution could modestly
lengthen if interest rates were to increase from year end levels. The
average maturity distribution of the portfolio would increase from two
years to approximately four years if interest rates were to increase 200
basis points from year end 1994, and under no situation will the maturity
of any contract extend beyond 2001.
A summary of the interest rate swap activity for the years ended
December 31, 1994 and December 31, 1993 is provided below.
<TABLE>
==========================================================================================================================
<CAPTION>
Asset/Liability Management Swaps Receive Pay Basis
(in millions) Fixed Fixed Swaps Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Notional amount,
December 31, 1992 $ 650 $46 $350 $1,046
Additions 1,000 150 1,150
Maturities (200) (15) (200) (415)
- --------------------------------------------------------------------------------------------------------------------------
Notional amount,
December 31, 1993 1,450 31 300 1,781
Additions 1,000 50 1,050
Maturities (450) (100) (550)
- --------------------------------------------------------------------------------------------------------------------------
Notional amount,
December 31, 1994 $2,000 $31 $250 $2,281
==========================================================================================================================
At December 31, 1994:
Average remaining
maturity (years) 2.2 1.3 1.1 2.0
Weighted average rate received 5.52% 6.09% 5.55% 5.53%
Weighted average rate paid 6.06 8.86 5.72 6.06
==========================================================================================================================
</TABLE>
Summarized below is the unrealized gain (loss) of the swap portfolio at
December 31, 1994 and 1993.
<TABLE>
==========================================================================================================================
<CAPTION>
December 31, 1994 December 31, 1993
- --------------------------------------------------------------------------------------------------------------------------
Asset/Liability Management Swaps Notional Unrealized Notional Unrealized
(in millions) Amount Gain (loss) Amount Gain (loss)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prime Loan Swaps:
Receive fixed $1,800 $(155.6) $1,100 $ 6.0
Basis swaps 200 (3.8) 300 1.9
- --------------------------------------------------------------------------------------------------------------------------
Total prime loan swaps 2,000 (159.4) 1,400 7.9
Long-term debt swaps 200 (8.6) 200 2.0
Retail CD 150 4.6
Other 81 (.5) 31 (3.3)
- --------------------------------------------------------------------------------------------------------------------------
Total $2,281 $(168.5) $1,781 $11.2
==========================================================================================================================
</TABLE>
The Corporation has not terminated any of its interest rate swap
positions. Accordingly, there have been no deferred gains/losses
associated with this activity.
While the Corporation is primarily an end-user of derivative
instruments, it does act as an intermediary to meet the financial needs of
its customers. In this capacity, the Corporation executes foreign exchange
transactions and interest rate swaps to provide customers with capital
markets products to meet their financial objectives. All positions are
reported at fair value and changes in fair values are reflected in
investment banking revenues as they occur. The notional amount of the
customer swap portfolio at December 31, 1994 totaled approximately $325
million. Interest rate risk associated with these portfolios is controlled
by entering into offsetting positions with third parties. Credit risk
associated with this activity is minimized by limiting transactions to
highly rated counterparties and through collateral agreements. Collateral
is required to be delivered when the credit risk exceeds acceptable
thresholds, for certain counterparties. Collateral thresholds are
established based on the creditworthiness of the counterparty and are
bilateral. Acceptable collateral includes U.S. Treasury and Federal agency
securities. Foreign exchange activity, which is marked to market based on
prevailing rates of exchange, can expose the Corporation to market risk,
particularly when open positions exist, and, to a lesser extent, credit
risk associated with counterparties and their ability to meet the terms of
the foreign exchange contracts. The Corporation minimizes market risk
associated with foreign exchange activity by establishing limits which
prohibit traders from maintaining significant open positions on a daily
basis. The Corporation's exposure to credit risk on foreign exchange
contracts and customer swap contracts is measured as the cost of replacing
the contract in the event of default by the counterparty which is limited
to the market value of all contracts in a gain position. The Corporation
controls this credit risk by maintaining a well diversified portfolio of
highly rated counterparties and imposing counterparty limits and
collateral protection which is monitored by a credit committee for
compliance. In addition, counterparty credit risk for all derivative
activity is managed by subjecting these transactions to credit policies
and underwriting standards consistent with that used when making
commitments to extend credit. At December 31, 1994, the Corporation's
credit exposure from customer interest rate and foreign exchange contracts
totaled $4.7 million and $18.6 million, respectively. The following
summarizes the fair value at December 31, 1994 and the average fair value
for the year for derivatives held or issued for trading purposes.
<TABLE>
======================================================================================
<CAPTION>
Derivatives Held or Issued for Trading Purposes
(in millions) Fair Value Average Fair Value
- --------------------------------------------------------------------------------------
<S> <C> <C>
Interest-rate swap contracts:
Assets $ 4.7 $ 4.1
Liabilities (4.3) (3.6)
Foreign exchange contracts:
Assets 18.6 19.0
Liabilities (16.4) (16.9)
======================================================================================
</TABLE>
Net trading gains recognized in earnings on interest rate contracts
outstanding totaled $.2 million in 1994, $.8 million in 1993 and $.4
million in 1992. Net trading gains from foreign exchange contracts totaled
$5.9 million in 1994, $5.4 million in 1993 and $4.9 million in 1992.
21 PARENT COMPANY CONDENSED
FINANCIAL STATEMENTS
Following are the condensed financial statements of Boatmen's
Bancshares, Inc. (Parent Company only) for the periods indicated:
65
<PAGE> 50
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
<TABLE>
Balance Sheet
====================================================================================
<CAPTION>
December 31 (in thousands) 1994 1993
- ------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash $ 33 $ 386
Short-term investments 4,063 16,403
Investment in subsidiaries:
Banks and bank holding companies 2,080,644 2,066,584
Nonbanks 215,851 192,540
- ------------------------------------------------------------------------------------
Total investment in subsidiaries 2,296,495 2,259,124
- ------------------------------------------------------------------------------------
Advances to subsidiaries:
Bank 286,239 159,807
Nonbanks 38,466 109,995
- ------------------------------------------------------------------------------------
Total advances to subsidiaries 324,705 269,802
- ------------------------------------------------------------------------------------
Goodwill 89,874 95,334
Other assets 47,819 48,410
- ------------------------------------------------------------------------------------
Total assets $2,762,989 $2,689,459
====================================================================================
Liabilities:
Accounts payable and accrued liabilities $ 56,025 $ 46,955
Dividends payable 35,556 32,245
Short-term borrowings 43,531 49,635
Long-term debt 425,904 426,215
- ------------------------------------------------------------------------------------
Total liabilities 561,016 555,050
- ------------------------------------------------------------------------------------
Redeemable preferred stock 1,142 1,155
- ------------------------------------------------------------------------------------
Stockholders' equity:
Common stock 104,831 104,126
Surplus 796,158 786,840
Unrealized net appreciation (depreciation),
available for sale securities (105,009) 42,252
Retained earnings 1,419,367 1,200,036
Treasury stock (14,516)
- ------------------------------------------------------------------------------------
Total stockholders' equity 2,200,831 2,133,254
- ------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $2,762,989 $2,689,459
====================================================================================
</TABLE>
<TABLE>
Statement of Income
==============================================================================================================
<CAPTION>
Year ended December 31 (in thousands) 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Dividends from subsidiaries:
Banks and bank holding companies $219,676 $216,425 $142,525
Nonbanks 26,019 23,855 16,132
- --------------------------------------------------------------------------------------------------------------
Total dividends from subsidiaries 245,695 240,280 158,657
- --------------------------------------------------------------------------------------------------------------
Fees from subsidiaries 15,177 33,316 26,199
Interest on short-term investments 829 988 1,263
Interest on advances to subsidiaries 11,545 6,713 3,436
Other 760 791 397
- --------------------------------------------------------------------------------------------------------------
Total income 274,006 282,088 189,952
- --------------------------------------------------------------------------------------------------------------
Expense:
Interest expense 35,924 32,062 23,853
Staff expense 29,691 31,120 20,172
Other 23,971 30,139 26,073
- --------------------------------------------------------------------------------------------------------------
Total expense 89,586 93,321 70,098
- --------------------------------------------------------------------------------------------------------------
Income before income tax benefit
and equity in undistributed
income of subsidiaries 184,420 188,767 119,854
Income tax benefit 18,465 14,932 10,290
- --------------------------------------------------------------------------------------------------------------
Income before equity in undistributed
income of subsidiaries 202,885 203,699 130,144
Equity in undistributed income
of subsidiaries 152,447 113,720 98,582
- --------------------------------------------------------------------------------------------------------------
Net income $355,332 $317,419 $228,726
==============================================================================================================
</TABLE>
Retained earnings include $1,225,438 and $1,072,991 of equity in
undistributed income of subsidiaries at year-end 1994 and 1993,
respectively.
Annual dividend distributions to the Corporation from its banking
subsidiaries are subject to certain limitations by applicable banking
regulatory authorities. In the aggregate, the statutory maximum available
dividends which may be paid to the Corporation without prior regulatory
approval is $536,229, resulting in $1,754,923 or 76.6% of the total equity
of the subsidiaries being potentially restricted as of December 31, 1994.
<TABLE>
Statement of Cash Flows
==============================================================================================================
<CAPTION>
Year ended December 31 (in thousands) 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $355,332 $317,419 $228,726
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 4,435 4,127 4,235
Equity in undistributed income
of subsidiaries (152,447) (113,720) (98,582)
Loss on sale of assets 30 237 174
Increase (decrease) in taxes
payable (3,435) 105 (3,332)
Other, net 14,452 (6,796) 17,426
- --------------------------------------------------------------------------------------------------------------
Net cash provided by
operating activities 218,367 201,372 148,647
- --------------------------------------------------------------------------------------------------------------
Cash flows from investment activities:
Proceeds from sales of equity securities 5,905
Purchase of net assets and increase in
investment in subsidiaries (26,524) (125,364) (112,102)
Net change in advances to subsidiaries (54,903) (141,054) (82,127)
Net change in short-term investments 12,340 78,597 (5,500)
Net change in property and equipment 50 (3,595) (305)
- --------------------------------------------------------------------------------------------------------------
Net cash used for
investing activities (69,037) (191,416) (194,129)
- --------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net change in short-term borrowings (6,103) (6,390) 24,571
Repayments of long-term debt (1) (5,003) (4,140)
Proceeds from issuance of
long-term debt 99,281 99,148
Cash dividends paid (132,690) (112,216) (85,602)
Common stock issued pursuant to
various employee and shareholder
stock issuance plans 4,530 16,993 12,030
Acquisition of treasury stock (15,406) (3,102)
Decrease in redeemable preferred stock (13) (93) (19)
- --------------------------------------------------------------------------------------------------------------
Net cash provided by (used for)
financing activities (149,683) (10,530) 45,988
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash (353) (574) 506
Cash at beginning of year 386 960 454
- --------------------------------------------------------------------------------------------------------------
Cash at end of year $ 33 $ 386 $ 960
==============================================================================================================
</TABLE>
22 LEGAL PROCEEDINGS
Various claims and lawsuits, incidental to the ordinary course of
business, are pending against the Corporation and its subsidiaries. In the
opinion of management, after consultation with legal counsel, resolution
of these matters is not expected to have a material effect on the
consolidated financial statements.
66
<PAGE> 51
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
STATEMENT BY MANAGEMENT
Boatmen's Bancshares, Inc.
The accompanying financial statements and the related financial
information in this Annual Report were prepared by the management of
Boatmen's Bancshares, Inc. in accordance with generally accepted
accounting principles and where appropriate reflect management's best
estimates and judgment. Management is responsible for the integrity,
objectivity, consistency and fair presentation of the financial statements
and all financial information contained in this Annual Report.
The independent auditors, whose report is contained herein, are
responsible for auditing the Corporation's financial statements in
accordance with generally accepted auditing standards.
In order to fulfill its responsibility, management relies in part on a
system of internal accounting control which has been designed to safeguard
the Corporation's assets from material loss or misuse and ensure that
transactions are properly authorized and recorded in its financial
records. An extensive internal auditing program monitors compliance with
established procedures and controls to provide assurance that the system
of internal accounting control is functioning in a proper manner. There
are limits inherent in all systems of internal control based on the
recognition that the cost of such systems should not exceed the benefits
to be derived. Management believes the Corporation's system of internal
accounting control provides reasonable assurance that the Corporation's
assets are safeguarded and that its financial records are reliable.
The Corporation's internal auditor and independent auditors have direct
access to the Audit Committee of the Board of Directors. This committee,
which is composed entirely of outside directors, meets periodically with
management, the internal auditor, and the independent auditors to ensure
the financial accounting and audit process is properly conducted.
Andrew B. Craig, III
Chairman of the Board
and Chief Executive Officer
James W. Kienker
Executive Vice President
and Chief Financial Officer
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Boatmen's Bancshares, Inc.
We have audited the accompanying consolidated balance sheet of Boatmen's
Bancshares, Inc. as of December 31, 1994 and 1993, and the related
consolidated statements of income, changes in stockholders' equity and
cash flows for each of the three years in the period ended December 31,
1994. These financial statements are the responsibility of the management
of Boatmen's Bancshares, Inc. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Boatmen's Bancshares, Inc. at December 31, 1994 and 1993, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, in
1993, Boatmen's Bancshares, Inc. changed its method of accounting for debt
and equity securities.
/s/ Ernst & Young LLP
St. Louis, Missouri
January 19, 1995
67
<PAGE> 52
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
DIRECTORS
Richard L. Battram
Vice Chairman
The May Department Stores Company
B. A. Bridgewater, Jr.
Chairman, President
and Chief Executive Officer
Brown Group, Inc.
William E. Cornelius
Retired Chairman and
Chief Executive Officer
Union Electric Company
Andrew B. Craig, III
Chairman of the Board
and Chief Executive Officer
Boatmen's Bancshares, Inc.
Ilus W. Davis
Chairman of
Kansas City Office
Armstrong, Teasdale, Schlafly & Davis
John E. Hayes, Jr.
Chairman of the Board,
President and
Chief Executive Officer
Western Resources, Inc.
Samuel B. Hayes, III
President
Boatmen's Bancshares, Inc.
Lee M. Liberman
Chairman Emeritus
Laclede Gas Company
John Peters MacCarthy
Vice Chairman
Boatmen's Bancshares, Inc.
William E. Maritz
Chairman of the Board and
Chief Executive Officer
Maritz Inc.
Andrew E. Newman
Chairman of the Board
Edison Brothers Stores, Inc.
Jerry E. Ritter
Executive Vice President,
Chief Financial and
Administrative Officer
Anheuser-Busch
Companies, Inc.
William P. Stiritz
Chairman and
Chief Executive Officer
Ralston Purina Company
A. E. Suter
Senior Vice Chairman and
Chief Operating Officer
Emerson Electric Co.
Dwight D. Sutherland
Partner
Sutherland Lumber Company
Theodore C. Wetterau
Retired Chairman and
Chief Executive Officer
Wetterau Incorporated
PRINCIPAL OFFICERS
Andrew B. Craig, III
Chairman of the Board
and Chief Executive Officer
Samuel B. Hayes, III
President
Gregory L. Curl
Vice Chairman
John Peters MacCarthy
Vice Chairman
John M. Brennan
Executive Vice President
Loan Administration
J. Robert Brubaker
Executive Vice President and
Senior Operations Officer
Alfred S. Dominick, Jr.
Executive Vice President
Retail Banking
James W. Kienker
Executive Vice President
and Chief Financial Officer
Phillip E. Peters
Executive Vice President and
Chief Investment Officer
David L. Ahner
Senior Vice President
Corporate Real Estate
Larry D. Bayliss
Senior Vice President
Advertising and
Public Relations
William K. Carson
Senior Vice President
and Chairman, Boatmen's
National Mortgage, Inc.
Jacquelyn L. Dezort
Senior Vice President
and Auditor
Forrest S. FitzRoy
Senior Vice President
and General Counsel
Arthur J. Fleischer
Senior Vice President
Human Resources
John W. Fricke
Senior Vice President
Community Banks
Robert W. Godwin
Senior Vice President
Taxation
Leo G. Haas
Senior Vice President
A. Laverne Howard
Senior Vice President
Director--Operations
Michael E. Jennings
Senior Vice President
W. Bruce Phelps
Senior Vice President
and Controller
Gary S. Pratte
Senior Vice President
Loan Administration
Raymond E. Senuk
Senior Vice President
Chief Information Officer
R. Patrick Shannon
Senior Vice President
Loan Review
Marvin W. Smith
Senior Vice President
Operations Administration
H. Chandler Taylor
Senior Vice President
Loan Administration
68
<PAGE> 53
BOATMEN'S BANCSHARES, INC. 1994 ANNUAL REPORT
- -------------------------------------------------------------------------------
Market Information
The Corporation's common stock is traded on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") National Market
("NM") under the symbol "BOAT." Options on the Corporation's common stock
are traded on the Chicago Board Options Exchange ("CBOE") under the symbol
"BTQ." The following table sets forth the high, low and closing trade
prices of the common stock for each quarterly period during 1994 and 1993
as reported by the National Association of Securities Dealers, Inc.
("NASD"):
<TABLE>
Common Stock Share Data
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
High Low Close Book Value Market/Book Dividends Declared
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994
Fourth $31.50 $26.13 $27.13 $21.10 129% $.34
Third 34.88 30.13 31.06 21.06 147 .34
Second 35.00 28.88 31.50 20.75 152 .31
First 30.50 26.75 29.63 20.59 144 .31
- -----------------------------------------------------------------------------------------------------------------------------
1993
Fourth $33.50 $27.50 $29.88 $20.49 146% $.31
Third 32.38 29.19 32.19 19.66 164 .31
Second 32.50 27.25 30.19 19.18 157 .28
First 30.50 26.88 30.50 18.67 163 .28
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
At February 14, 1995, there were approximately 29,695 holders of record
of the Corporation's common stock and the closing price on that day was
$30.38.
Trading Volume
The number of shares of the Corporation's common stock traded during
the fourth quarter of 1994 and full year 1994 as reported
by NASD were 19,343,106 and 81,773,625, respectively.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Standard Thomson
Agency Ratings Moody's & Poor's Bankwatch
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Boatmen's Bancshares, Inc.: B
6-3/4% Subordinated notes due 2003 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
(6 Boatmen's subsidiary banks) A1/P1 A+/A-1
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Corporate Headquarters
One Boatmen's Plaza
800 Market Street
St. Louis, MO 63101
Transfer Agent
Boatmen's Trust Company
510 Locust Street
St. Louis, MO 63101
(314) 466-1357 or (800) 456-9852
Investor Relations Contact
Kevin R. Stitt
Director of Investor Relations
(314) 466-7662
(314) 466-7333 (FAX)
A Dividend Reinvestment and Stock Purchase Plan is
available to shareholders of the Corporation. The key features of this
Plan are:
* Dividends on common stock may be automatically reinvested;
* Option to invest up to $10,000 cash per quarter;
* No brokerage commissions or service charges on
reinvested dividends or cash investments.
A Direct Deposit of Dividends program is also available to shareholders
of the Corporation. This program, which is offered at no charge, provides
for the deposit of quarterly dividends directly to a checking or savings
account.
Please direct inquiries regarding these programs and requests for the
Reinvestment Plan Prospectus and Direct Deposit Authorization Form to:
Boatmen's Trust Company
P.O. Box 14768
St. Louis, MO 63178
(314) 466-1357 or (800) 456-9852
The Corporation's Bylaws require that notice of shareholder nominations
for directors and proposals of business to be transacted at the
Corporation's Annual Meeting of Shareholders must be received by the
Secretary of the Corporation not less than 75 days prior to the date of
the meeting.
The Corporation's annual meeting will be held on April 25, 1995 at
10:00 a.m. at the Corporate Headquarters, One Boatmen's Plaza, St. Louis,
Missouri.
69
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE CORPORATION
<TABLE>
Following is a list of subsidiaries of the Corporation as of December
31, 1994.
<CAPTION>
STATE OR OTHER
JURISDICTION OF
SUBSIDIARY INCORPORATION
---------- ---------------
<S> <C>
Boatmen's National Bank of Belleville................................................... United States
Boatmen's First National Bank of Kansas City............................................ United States
Boatmen's Bank of Southern Missouri..................................................... Missouri
The Boatmen's National Bank of St. Louis................................................ United States
Boatmen's Mortgage Corporation.......................................................... Missouri
Boatmen's National Bank of Boonville.................................................... United States
Boatmen's Bank of Butler................................................................ Missouri
Boatmen's National Bank of Cape Girardeau............................................... United States
Boatmen's National Bank of Central Illinois............................................. United States
Boatmen's National Bank of Charleston................................................... United States
Boatmen's Credit Card Bank.............................................................. New Mexico
Boatmen's Bank of Franklin County....................................................... Illinois
Boatmen's Bank of Kennett............................................................... Missouri
Boatmen's National Bank of Lebanon...................................................... United States
Boatmen's Bank of Marshall.............................................................. Missouri
Boatmen's Bank of Mid-Missouri.......................................................... Missouri
Boatmen's Bank of South Central Illinois................................................ Illinois
Boatmen's Bank of Nevada................................................................ Missouri
Boatmen's First National Bank of Oklahoma............................................... United States
Boatmen's Bank of Pulaski County........................................................ Missouri
Boatmen's Bank of Quincy................................................................ Illinois
Boatmen's River Valley Bank............................................................. Missouri
Boatmen's Bank of Rolla................................................................. Missouri
Boatmen's Bank of Southwest Missouri................................................... Missouri
Boatmen's Bank of Tennessee............................................................. Tennessee
Boatmen's Bank of Troy.................................................................. Missouri
Boatmen's Bank of Vandalia.............................................................. Missouri
Boatmen's First National Bank of West Plains............................................ United States
Superior Federal Bank, F.S.B. .......................................................... United States
Boatmen's Bancshares of Iowa, Inc. ..................................................... Iowa
Boatmen's Bank Iowa, N.A. .............................................................. United States
Boatmen's Bank of Fort Dodge ........................................................... Iowa
Boatmen's Bank of North Iowa ........................................................... Iowa
Boatmen's National Bank of Northwest Iowa .............................................. United States
Boatmen's Building Corporation of Iowa, Inc. ........................................... Iowa
FKF, Inc. .............................................................................. Iowa
Boatmen's Kansas, Inc. ................................................................. Kansas
Boatmen's Bank of Kansas ............................................................... Kansas
Boatmen's Texas, Inc. .................................................................. Missouri
Boatmen's First National Bank of Amarillo .............................................. United States
Eighth and Taylor Corp. ................................................................ Texas
Boatmen's Oklahoma, Inc. ............................................................... Missouri
Boatmen's Sunwest, Inc. ................................................................ New Mexico
Sunwest Bank of Albuquerque, N.A. ...................................................... United States
Sunwest Bank of Clovis, N.A. ........................................................... United States
Sunwest Bank of Farmington ............................................................. New Mexico
Sunwest Bank of Gallup ................................................................. New Mexico
<PAGE> 2
<CAPTION>
STATE OR OTHER
JURISDICTION OF
SUBSIDIARY INCORPORATION
---------- ---------------
<S> <C>
Sunwest Bank of Grant County ........................................................... New Mexico
Sunwest Bank of Hobbs, N.A. ............................................................ United States
Sunwest Bank of Las Cruces, N.A. ....................................................... United States
Sunwest Bank of Raton, N.A. ............................................................ United States
Sunwest Bank of Rio Arriba, N.A. ....................................................... United States
Sunwest Bank of Roswell, N.A. .......................................................... United States
Sunwest Bank of Santa Fe ............................................................... New Mexico
Sunwest Bank of El Paso ................................................................ Texas
Security Bancshares, Inc. .............................................................. Oklahoma
Catoosa Bancshares, Inc. ............................................................... Oklahoma
Founders Bancorporation, Inc. .......................................................... Oklahoma
Boatmen's Insurance Agency, Inc. ....................................................... Missouri
Boatmen's Life Insurance Company........................................................ Missouri
Boatmen's Trust Company................................................................. Missouri
Boatmen's Trust Company of Texas........................................................ Texas
Boatmen's Trust Company of Illinois..................................................... Illinois
Boatmen's Trust Company of Oklahoma..................................................... Oklahoma
Boatmen's Community Development Corporation............................................. Missouri
Boatmen's Service Company, Inc. ........................................................ Missouri
</TABLE>
The Corporation's subsidiaries do business only under their names as
listed above.
The Corporation's indirect subsidiaries not listed, if considered in
the aggregate as a single subsidiary, would not constitute a
significant subsidiary at December 31, 1994.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report
(Form 10-K) of Boatmen's Bancshares, Inc. of our report dated January
19, 1995 included in the 1994 Annual Report to Shareholders of
Boatmen's Bancshares, Inc.
We also consent to the incorporation by reference into each
registration statement listed below of our report dated January 19,
1995 with respect to the consolidated financial statements of Boatmen's
Bancshares, Inc. incorporated herein by reference in the Annual Report
(Form 10-K) for the year ended December 31, 1994.
<TABLE>
<CAPTION>
FORM NO.
---- ---
<C> <C> <S>
S-3 33-50525 Dividend Reinvestment and Stock Purchase Plan
S-8 33-15714 1987 Non-Qualified Stock Option Plan
S-8 33-15715 Amended 1981 Incentive Stock Option Plan
S-8 33-25945 Centerre Bancorporation 1983 Incentive Stock Option Plan
Centerre Bancorporation 1980 Stock Option Plan
S-8 33-25946 Centerre Bancorporation 1987 Stock Incentive Plan
S-8 33-50451 1990 Stock Purchase Plan for Employees
S-8 33-37862 Thrift Incentive 401(k) Plan
S-8 33-44546 1991 Incentive Stock Option Plan
S-8 33-46730 First Interstate of Iowa, Inc.
S-8 33-55186 Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan
S-8 33-55110 Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan
S-8 33-51635 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 1)
S-8 33-51637 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 2)
</TABLE>
ERNST & YOUNG LLP
St. Louis, Missouri
March 15, 1995
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,885,484
<INT-BEARING-DEPOSITS> 43,704
<FED-FUNDS-SOLD> 1,082,110
<TRADING-ASSETS> 31,674
<INVESTMENTS-HELD-FOR-SALE> 3,887,217
<INVESTMENTS-CARRYING> 4,203,507
<INVESTMENTS-MARKET> 3,977,018
<LOANS> 16,480,437
<ALLOWANCE> 342,030
<TOTAL-ASSETS> 28,927,218
<DEPOSITS> 22,189,562
<SHORT-TERM> 3,650,671
<LIABILITIES-OTHER> 369,929
<LONG-TERM> 515,083
1,142
0
<COMMON> 104,831
<OTHER-SE> 2,096,000
<TOTAL-LIABILITIES-AND-EQUITY> 28,927,218
<INTEREST-LOAN> 1,265,749
<INTEREST-INVEST> 482,353
<INTEREST-OTHER> 19,571
<INTEREST-TOTAL> 1,767,673
<INTEREST-DEPOSIT> 534,173
<INTEREST-EXPENSE> 743,744
<INTEREST-INCOME-NET> 1,023,929
<LOAN-LOSSES> 24,306
<SECURITIES-GAINS> 6,201
<EXPENSE-OTHER> 984,642
<INCOME-PRETAX> 541,508
<INCOME-PRE-EXTRAORDINARY> 355,332
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 355,332
<EPS-PRIMARY> 3.40
<EPS-DILUTED> 3.40
<YIELD-ACTUAL> 4.32
<LOANS-NON> 102,521
<LOANS-PAST> 15,559
<LOANS-TROUBLED> 7,090
<LOANS-PROBLEM> 441,800
<ALLOWANCE-OPEN> 341,099
<CHARGE-OFFS> 65,941
<RECOVERIES> 41,693
<ALLOWANCE-CLOSE> 342,030
<ALLOWANCE-DOMESTIC> 312,930
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 29,100
</TABLE>
