<PAGE> 1
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) March 29, 1996
(January 31, 1996)
BOATMEN'S BANCSHARES, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Missouri 1-3750 43-0672260
- ---------------------------- ---------------- -------------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) 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
--------------
- -------------------------------------------------------------------------------
<PAGE> 2
ITEM 5. OTHER EVENTS
- --------------------
As previously reported by Boatmens Bancshares, Inc. ("The
Registrant") on its Current Report on Form 8-K, dated February 2, 1996,
the Registrant completed its acquisition of Fourth Financial
Corporation, a Kansas corporation ("Fourth Financial") on January 31,
1996, by means of the merger (the "Merger") of Fourth Financial with
and into a wholly-owned subsidiary of the Registrant. Under terms of
the Merger, (i) each issued and outstanding share of common stock, par
value $5 per share, of Fourth Financial was converted into one share of
common stock, par value $1 per share, of the Registrant (approximately
28.5 million shares in the aggregate), and (ii) each issued and
outstanding Depositary Share of Fourth Financial, representing 1/16
interest in a share of Class A 7% Cumulative Convertible Preferred
Stock of Fourth Financial, was converted into one Depositary Share of
the Registrant, representing a 1/16 interest in a share of 7%
Cumulative Convertible Preferred Stock, Series A, of the Registrant
(approximately 3.96 million Depositary Shares in the aggregate). No
shares of Fourth Financial common stock were owned by the Corporation
prior to the Merger. The Merger was accounted for as a "pooling of
interests" for accounting and financial reporting purposes.
In accordance with Item 7. of Form 8-K, the Registrant has
submitted herewith audited financial statements of Fourth Financial.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- -----------------------------------------
(a) Financial Statements of Business Acquired
-----------------------------------------
The following financial statements of Fourth Financial are
submitted herewith:
1. Report of Independent Auditors.
2. Consolidated Statements of Condition as of December 31, 1995 and 1994.
3. Consolidated Statements of Income for the Years Ended
December 31, 1995, 1994 and 1993.
4. Consolidated Statements of Changes in Stockholders' Equity
for the Years Ended December 31, 1995, 1994 and 1993.
5. Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993.
6. Notes to Consolidated Financial Statements.
(b) Pro Forma Financial Information
-------------------------------
The following unaudited pro forma financial statements are submitted
herewith:
1. Pro Forma Combined Balance Sheet as of December 31, 1995.
2. Pro Forma Combined Statements of Income for the years ended
December 31, 1995, 1994, and 1993, and notes thereto.
3. Pro Forma Consolidated Quarterly Earnings Trend for the year ended
December 31, 1995.
4. Pro Forma Consolidated Quarterly Balance Sheets for each 1995
quarter ended period.
<PAGE> 3
(c) Exhibits
--------
The following exhibits are included with this Report:
Exhibit 99 (a) Audited Financial Statements of Fourth
Financial Corporation and Report of
Independent Auditors.
Exhibit 99 (b) Pro Forma Financial Data
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned hereunto duly authorized.
BOATMEN'S BANCSHARES, INC.
--------------------------
(Registrant)
By /s/ JAMES W. KIENKER
---------------------------
James W. Kienker
Executive Vice President and
Chief Financial Officer
Dated: March 29, 1996
<PAGE> 1
<TABLE>
FOURTH FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
<CAPTION>
December 31,
-------------------------
1995 1994
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Assets:
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 436,104 $ 438,930
Interest-bearing deposits in other financial institutions . . . . . . . . . . . . 926 499
Federal funds sold and securities purchased under agreements to resell . . . . . 125,975 8,470
Securities:
Held-to-maturity (market value-$8,387 and $1,847,767, respectively) . . . . . . 8,383 1,958,190
Available-for-sale (at market value). . . . . . . . . . . . . . . . . . . . . . 2,233,836 943,970
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,521 53,677
Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 920 719
Loans and leases:
Total loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,287,831 4,062,051
Allowance for credit losses . . . . . . . . . . . . . . . . . . . . . . . . . . (69,576) (72,867)
---------- ----------
Net loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,218,255 3,989,184
Bank premises and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . 162,557 158,885
Income receivable and other assets . . . . . . . . . . . . . . . . . . . . . . . 111,431 166,309
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,093 95,606
---------- ----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,438,001 $7,814,439
========== ==========
Liabilities And Stockholders' Equity:
Deposits:
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,033,024 $1,049,118
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,013,070 4,675,478
---------- ----------
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,046,094 5,724,596
Federal funds purchased and securities sold under agreements to repurchase . . . 541,768 933,706
Federal Home Loan Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . 93,498 441,097
Other borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,500 43,001
Accrued interest, taxes, and other liabilities . . . . . . . . . . . . . . . . . 61,004 58,976
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 7,762
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,764,030 7,209,138
---------- ----------
Stockholders' Equity:
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,324 100,000
Common stock, par value $5 per share
Authorized: 50,000,000 shares
Issued: 28,144,251 and 27,566,225 shares . . . . . . . . . . . . . . . . . . 140,721 137,831
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119,148 107,576
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312,397 294,532
Treasury stock at cost (355,466 shares at December 31, 1994). . . . . . . . . . -- (10,018)
Stock option loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,444) (1,894)
---------- ----------
Stockholders' equity before net unrealized gains (losses) on
available-for-sale securities. . . . . . . . . . . . . . . . . . . . . . . . 668,146 628,027
Net unrealized gains (losses) on available-for-sale securities. . . . . . . . . 5,825 (22,726)
---------- ----------
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . 673,971 605,301
---------- ----------
Total liabilities and stockholders' equity. . . . . . . . . . . . . . . . . . $7,438,001 $7,814,439
========== ==========
The accompanying notes are an integral part of the financial statements.
</TABLE>
1
<PAGE> 2
<TABLE>
FOURTH FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Interest Income:
Interest and fees on loans and leases . . . . . . . . . . . . . . . . . $395,223 $309,224 $266,984
Interest on short-term investments . . . . . . . . . . . . . . . . . . . 6,441 1,008 2,181
Interest and dividends on investment securities:
Taxable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,259 162,216 160,631
Tax-preferred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,525 16,712 19,534
Interest and dividends on trading securities . . . . . . . . . . . . . . 93 104 135
-------- -------- --------
Total interest income. . . . . . . . . . . . . . . . . . . . . . . . 552,541 489,264 449,465
-------- -------- --------
Interest Expense:
Interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 228,202 159,379 159,802
Interest on borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 47,270 48,036 19,151
Interest on long-term debt . . . . . . . . . . . . . . . . . . . . . . . 137 1,194 2,451
-------- -------- --------
Total interest expense . . . . . . . . . . . . . . . . . . . . . . . 275,609 208,609 181,404
-------- -------- --------
Net Interest Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . 276,932 280,655 268,061
Provision for credit losses. . . . . . . . . . . . . . . . . . . . . . . 13,068 836 7,037
-------- -------- --------
Net Interest Income After Provision For Credit Losses. . . . . . . . . . . 263,864 279,819 261,024
-------- -------- --------
Noninterest Income:
Trust fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,057 21,145 18,690
Service charges on deposit accounts. . . . . . . . . . . . . . . . . . . 40,761 38,693 33,983
Bank card fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,460 14,190 10,409
Investment securities gains (losses) . . . . . . . . . . . . . . . . . . (21,759) 3,632 1,555
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,269 20,854 22,398
-------- -------- --------
Total noninterest income . . . . . . . . . . . . . . . . . . . . . . 84,788 98,514 87,035
-------- -------- --------
Noninterest Expense:
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . 128,618 127,894 118,828
Furniture and equipment. . . . . . . . . . . . . . . . . . . . . . . . . 22,260 22,815 23,804
Net occupancy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,592 17,924 16,940
FDIC insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,091 12,776 13,295
Advertising and public relations . . . . . . . . . . . . . . . . . . . . 8,711 9,514 8,598
Bank card . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,349 3,273 3,294
Amortization of intangible assets. . . . . . . . . . . . . . . . . . . . 10,737 10,154 12,549
Merger and integration costs . . . . . . . . . . . . . . . . . . . . . . 28 3,587 7,634
Net costs of operation of other real estate and nonperforming assets . . 1,129 (956) 3,461
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,868 47,362 49,149
-------- -------- --------
Total noninterest expense. . . . . . . . . . . . . . . . . . . . . . 252,383 254,343 257,552
-------- -------- --------
Income Before Income Taxes and Cumulative
Effect of a Change in Accounting Principle . . . . . . . . . . . . . . . 96,269 123,990 90,507
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,093 40,866 22,980
-------- -------- --------
Income Before Cumulative Effect of a Change in Accounting Principle. . . . 61,176 83,124 67,527
Cumulative effect of a change in accounting for income taxes . . . . . . -- -- 10,582
-------- -------- --------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61,176 $ 83,124 $ 78,109
======== ======== ========
Net Income Applicable to Common and Common-Equivalent Shares . . . . . . . $ 54,108 $ 76,124 $ 71,109
======== ======== ========
Primary Earnings Per Common Share:
Income applicable to common and common-equivalent shares before
cumulative effect of a change in accounting principle. . . . . . . . . $1.96 $2.80 $2.27
Cumulative effect of a change in accounting for income taxes . . . . . . -- -- .40
----- ----- -----
Net income applicable to common and common-equivalent shares . . . . . . $1.96 $2.80 $2.67
===== ===== =====
Fully Diluted Earnings Per Common Share:
Income before cumulative effect
of a change in accounting principle. . . . . . . . . . . . . . . . . . $1.96 $2.71 $2.20
Cumulative effect of a change in accounting for income taxes . . . . . . -- -- .35
----- ----- -----
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.96 $2.71 $2.55
===== ===== =====
Dividends Per Common Share . . . . . . . . . . . . . . . . . . . . . . . . $1.31 $1.04 $ .98
===== ===== =====
The accompanying notes are an integral part of the financial statements.
</TABLE>
2
<PAGE> 3
<TABLE>
FOURTH FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>
PREFERRED STOCK COMMON STOCK TREASURY STOCK
--------------- -------------- -------------- STOCK NET UNREALIZED
CAPITAL RETAINED OPTION GAINS (LOSSES)
SHARES AMOUNT SHARES AMOUNT SURPLUS EARNINGS SHARES AMOUNT LOANS ON SECURITIES Total
------ ------ ------ ------ ------- -------- ------ ------ ----- ------------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992
As previously reported. . 1,222 $103,641 25,809 $129,045 $101,914 $199,880 -- $ -- $(1,069) $ -- $533,411
Adjustment for pooling
of interests . . . . . . -- -- 315 1,575 375 750 -- -- -- -- 2,700
----- -------- ------ -------- -------- -------- ---- ------- ------- ------- --------
Adjusted balance. . . . 1,222 103,641 26,124 130,620 102,289 200,630 -- -- (1,069) -- 536,111
Net income. . . . . . . . -- -- -- -- -- 78,109 -- -- -- -- 78,109
Cash dividends:
Preferred stock . . . . -- -- -- -- -- (7,000) -- -- -- -- (7,000)
Common stock. . . . . . -- -- -- -- -- (22,705) -- -- -- -- (22,705)
Pooled companies. . . . -- -- -- -- -- (2,657) -- -- -- -- (2,657)
Purchase of common stock
for treasury . . . . . . -- -- -- -- -- -- (112) (3,245) -- -- (3,245)
Issuance of common stock:
Stock option plans . . . -- -- 199 993 2,414 -- -- -- -- -- 3,407
Acquisition. . . . . . . -- -- 109 544 2,555 -- -- -- -- -- 3,099
Net change in stock
option loans . . . . . . -- -- -- -- -- -- -- -- (726) -- (726)
Capital transactions of
pooled companies . . . . (972) (3,641) 1,049 5,248 (781) -- -- -- -- -- 826
Adjustment for unrealized
gains on available-for-
sale securities. . . . . -- -- -- -- -- -- -- -- -- 25,148 25,148
----- -------- ------ -------- -------- -------- ---- ------- ------- ------- --------
Balance, December 31,
1993 . . . . . . . . . . . 250 100,000 27,481 137,405 106,477 246,377 (112) (3,245) (1,795) 25,148 610,367
Net income. . . . . . . . -- -- -- -- -- 83,124 -- -- -- -- 83,124
Cash dividends:
Preferred stock . . . . -- -- -- -- -- (7,000) -- -- -- -- (7,000)
Common stock . . . . . -- -- -- -- -- (27,662) -- -- -- -- (27,662)
Pooled company. . . . . -- -- -- -- -- (307) -- -- -- -- (307)
Purchase of common stock
for treasury . . . . . . -- -- -- -- -- -- (355) (10,018) -- -- (10,018)
Issuance of common stock:
Stock option plans. . . -- -- 81 407 968 -- 40 1,169 -- -- 2,544
Acquisition . . . . . . -- -- -- -- 41 -- 70 2,041 -- -- 2,082
Directors deferred
fee plan . . . . . . . -- -- 4 19 90 -- 2 35 -- -- 144
Net change in stock
option loans . . . . . . -- -- -- -- -- -- -- -- (99) -- (99)
Adoption of Financial
Accounting Standard
No. 115 by pooled
companies. . . . . . . . -- -- -- -- -- -- -- -- -- (484) (484)
Net change in unrealized
gains (losses) on
available-for-sale
securities . . . . . . . -- -- -- -- -- -- -- -- -- (47,390) (47,390)
----- -------- ------ -------- -------- -------- ---- ------- ------- ------- --------
Balance, December 31,
1994 . . . . . . . . . . . 250 100,000 27,566 137,831 107,576 294,532 (355) (10,018) (1,894) (22,726) 605,301
Net income. . . . . . . . -- -- -- -- -- 61,176 -- -- -- -- 61,176
Cash dividends:
Preferred stock . . . . -- -- -- -- -- (6,970) -- -- -- -- (6,970)
Common stock . . . . . -- -- -- -- -- (36,243) -- -- -- -- (36,243)
Purchase and retirement
of preferred stock . . . (1) (500) -- -- 15 (98) -- -- -- -- (583)
Conversion of preferred
stock into common. . . . (1) (176) 6 29 144 -- -- 3 -- -- --
Purchase of common stock
for treasury . . . . . . -- -- -- -- -- -- (125) (4,046) -- -- (4,046)
Issuance of common stock:
Stock option plans. . . -- -- 556 2,781 10,412 -- 125 4,043 -- -- 17,236
Acquisition . . . . . . -- -- 14 68 937 -- 355 10,018 -- -- 11,023
Directors deferred
fee plan . . . . . . . -- -- 2 12 64 -- -- -- -- -- 76
Net change in stock
option loans . . . . . . -- -- -- -- -- -- -- -- (1,550) -- (1,550)
Net change in unrealized
gains (losses) on
available-for-sale
securities . . . . . . . -- -- -- -- -- -- -- -- -- 28,551 28,551
----- -------- ------ -------- -------- -------- ---- ------- ------- ------- --------
Balance, December 31, 1995 248 $ 99,324 28,144 $140,721 $119,148 $312,397 -- $ -- $(3,444) $ 5,825 $673,971
===== ======== ====== ======== ======== ======== ==== ======= ======= ======= ========
The accompanying notes are an integral part of the financial statements.
</TABLE>
3
<PAGE> 4
<TABLE>
FOURTH FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended December 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND DUE FROM BANKS
Cash Flows From Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61,176 $ 83,124 $ 78,109
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Minority interest. . . . . . . . . . . . . . . . . . . . . . . . . . . -- 84 355
Provision for credit losses. . . . . . . . . . . . . . . . . . . . . . 13,068 836 7,037
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . 28,524 27,814 29,264
Accretion of discounts on investment securities,
net of amortization of premiums . . . . . . . . . . . . . . . . . . . 5,899 12,657 16,097
Write-down of other real estate owned. . . . . . . . . . . . . . . . . 1,371 409 4,392
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . 1,432 6,473 (5,637)
Investment securities loss (gain). . . . . . . . . . . . . . . . . . . 21,759 (3,632) (1,555)
Gain on sales of premises and equipment, other real estate
owned, and other assets . . . . . . . . . . . . . . . . . . . . . . . (350) (2,861) (2,525)
Write-down of goodwill, core deposit intangibles, and premises
and equipment associated with pooling transactions, and other
asset write-downs . . . . . . . . . . . . . . . . . . . . . . . . . . 389 1,148 2,228
Change in assets and liabilities, net of effects
from purchases of acquired entities and branch sales:
Trading account. . . . . . . . . . . . . . . . . . . . . . . . . . . (183) 28 3,062
Loans held for sale. . . . . . . . . . . . . . . . . . . . . . . . . (6,828) 117,017 (116,537)
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,400 67,425 317,228
Accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,180) (4,686) (11,073)
Interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . 5,160 (6,765) 3,873
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . 6,556 311 (3,032)
---------- ---------- ----------
Net cash provided by operating activities . . . . . . . . . . . . 155,193 299,382 321,286
---------- ---------- ----------
Cash Flows From Investing Activities:
Purchase of banks, net of cash acquired . . . . . . . . . . . . . . . . (4,091) (87,818) (2,468)
Branch sales, including cash and cash equivalents sold . . . . . . . . . (15,232) (36,271) --
Activity in available-for-sale investment securities:
Sales proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445,891 603,458 --
Maturities, prepayments, and calls. . . . . . . . . . . . . . . . . . . 222,633 223,223 --
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,801) (554,315) --
Activity in held-to-maturity investment securities:
Sales proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 20,483
Maturities, prepayments, and calls. . . . . . . . . . . . . . . . . . . 224,208 535,632 1,073,088
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,550) (597,787) (1,519,700)
Proceeds from sales of premises and equipment, other real
estate owned, and other assets. . . . . . . . . . . . . . . . . . . . . 6,320 14,558 17,246
Purchases of premises and equipment. . . . . . . . . . . . . . . . . . . (23,705) (19,271) (35,087)
Purchases of mortgage and credit card loans. . . . . . . . . . . . . . . (83,835) -- --
Purchases of mortgage servicing rights . . . . . . . . . . . . . . . . . -- (355) --
Change in assets, net of effects from purchases of
acquired entities and branch sales:
Interest-bearing deposits in other financial institutions. . . . . . . 575 2,538 4,321
Federal funds sold and securities purchased under
agreements to resell. . . . . . . . . . . . . . . . . . . . . . . . . (111,324) 18,608 199,115
Loans and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . (215,249) (482,906) (209,861)
---------- ---------- ----------
Net cash provided by (used in) investing activities. . . . . . . . 425,840 (380,706) (452,863)
---------- ---------- ----------
</TABLE>
4
<PAGE> 5
<TABLE>
FOURTH FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<CAPTION>
Year Ended December 31,
----------------------------------
1995 1994 1993
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash Flows From Financing Activities:
Transfer associated with the assumption of deposits and
other liabilities, net of premium paid. . . . . . . . . . . . . . . . . $ -- $ -- $ 91,832
Repayment of long-term debt. . . . . . . . . . . . . . . . . . . . . . . (7,596) (15,598) (15,405)
Purchase and retirement of preferred stock . . . . . . . . . . . . . . . (583) -- --
Acquisition of common stock for treasury . . . . . . . . . . . . . . . . (4,046) (10,018) (3,245)
Dividends on common stock. . . . . . . . . . . . . . . . . . . . . . . . (33,445) (27,662) (22,705)
Dividends on preferred stock . . . . . . . . . . . . . . . . . . . . . . (6,974) (7,000) (7,000)
Proceeds from exercise of stock options. . . . . . . . . . . . . . . . . 17,236 2,544 3,407
Net change in stock option loans . . . . . . . . . . . . . . . . . . . . (1,550) (99) (726)
Purchase of minority stockholder interest. . . . . . . . . . . . . . . . -- (36) --
Capital transactions of pooled companies . . . . . . . . . . . . . . . . -- (363) (2,405)
Change in liabilities, net of effects from purchase of
acquired entities and branch sales:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214,437 (292,902) (415,914)
Federal funds purchased and securities sold under
agreements to repurchase. . . . . . . . . . . . . . . . . . . . . . . (391,938) 395,095 166,033
Federal Home Loan Bank borrowings. . . . . . . . . . . . . . . . . . . (347,899) 132,800 250,000
Other borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,501) 19,827 (5,457)
---------- ---------- ----------
Net cash provided by (used in) financing activities. . . . . . . . (583,859) 196,588 38,415
---------- ---------- ----------
Increase (decrease) in cash and due from banks . . . . . . . . . . . . . . (2,826) 115,264 (93,162)
Cash and due from banks at beginning of period . . . . . . . . . . . . . . 438,930 323,666 416,828
---------- ---------- ----------
Cash and due from banks at end of period . . . . . . . . . . . . . . . . . $ 436,104 $ 438,930 $ 323,666
========== ========== ==========
Supplemental Disclosures:
Cash payments for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 269,054 $ 208,220 $ 184,083
========== ========== ==========
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,249 $ 35,758 $ 32,613
========== ========== ==========
The accompanying notes are an integral part of the financial statements.
</TABLE>
5
<PAGE> 6
FOURTH FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Fourth Financial Corporation (the "Company") is a bank holding company
headquartered in Wichita, Kansas. Through its banking subsidiaries, the
Company operates 87 retail banking offices in Kansas, 56 offices in
Oklahoma, and 3 offices in Independence, Missouri. The Company provides a wide
range of commercial and retail banking services to a diverse customer base.
Basis of Presentation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated.
The consolidated financial statements for prior years have been restated
to reflect the poolings of interests detailed in Footnote 3 - Acquisitions and
Branch Sales. Certain reclassifications of previously reported amounts have
been made to conform with current year presentation format.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Securities
The Company adopted Financial Accounting Standard ("FAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" on
December 31, 1993. Management reviewed the December 31, 1993 debt
securities portfolio and classified the debt securities as either
held-to-maturity or available-for-sale. Debt securities acquired
subsequent to December 31, 1993 were similarly classified.
Debt securities are classified as "Held-to-maturity" when management
has the positive intent and the Company has the ability to hold the debt
securities to maturity. Held-to-maturity securities are stated at cost,
adjusted for amortization of premiums and accretion of discounts, both
computed on the constant yield method. The prepayment history of each
mortgage-backed security pool is used to recalculate the yield for amortizing
and accreting the premium and discount on these securities. Amortization,
accretion, and interest on held-to-maturity securities are included in
"Interest and dividends on investment securities."
Marketable equity securities and debt securities that are deemed to be
available-for-sale for the implementation of asset and liability management
strategies, possible liquidity needs, and other purposes are classified as
"Available-for-sale." Available-for-sale securities are carried at fair
value, with the unrealized gains and losses, net of tax, reported in a
separate component of stockholders' equity. The amortized cost of debt
securities in this category is adjusted for amortization of premiums and
accretion of discounts to maturity. Amortization, accretion, and interest and
dividends on securities classified as available-for-sale are included in
"Interest and dividends on investment securities." Realized gains and losses
and declines in value judged to be other-than-temporary on available-for-sale
securities are included in "Investment securities gains (losses)." The cost of
securities sold is based on the specific identification method.
Securities held for sale to customers and in anticipation of short-term
market
6
<PAGE> 7
FOURTH FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
movements are classified as "Trading securities." Securities held for
trading are stated at market value. Gains and losses, both realized and
unrealized, are reflected in "Other noninterest income." The specific
identification method is used to determine the cost of securities sold.
"Other securities" include equity securities for which there is no
readily determinable fair value, and are carried at cost. Dividends on these
equity securities are included in "Interest and dividends on investment
securities."
Loans and Leases
Loans are reported at the principal amount outstanding, net of unearned
discount. Interest income on loans is accrued based on the unpaid principal
and the applicable rate. The net investment in direct financing leases
consists of the sum of all minimum lease payments and estimated residual
values, less unearned income. Unearned income on discounted loans and leases
is accreted and included in "Interest and fees on loans and leases" on a basis
approximating a level yield on the net investment in the loans or leases.
Residential mortgage loans and educational loans held for sale are
stated at the lower of cost or market value. These loans are analyzed on an
aggregate basis to determine the lower of cost or market value. Net gains or
losses on the sale of these loans, including adjustments to market value, are
part of normal operations and are reflected in "Other noninterest income."
The specific identification method is used to determine the cost of loans
sold.
A loan is placed on nonaccrual status when principal or interest is due
and has remained unpaid for 90 days or more unless the loan is both well
secured and in the process of collection. A loan is also placed on nonaccrual
status when there is reasonable doubt as to the ability of the borrower to
continue to pay principal or interest. At the time a loan is classified as
nonaccrual, interest previously recorded but not collected is reversed.
Interest payments received on such loans are generally recorded as a reduction
in carrying value unless such carrying value is deemed to be collectible. A
loan is not reclassified as accruing until all principal and interest payments
are brought current and the borrower has demonstrated the ability to service
the loan in accordance with its contractual terms.
Other Real Estate and Nonperforming Assets
Other real estate and nonperforming assets include assets acquired from
loan settlements and foreclosures. These assets are carried at the lower of
the loan carrying amount or fair value minus estimated selling costs and are
included in "Income receivable and other assets" in the consolidated
statements of condition. At the time of acquisition or repossession, any
write-down necessary to record an asset at its fair value is charged to the
allowance for credit losses. A valuation allowance for estimated selling
costs is recorded through a charge to "Net costs of operation of other real
estate and nonperforming assets." Losses and gains as well as net costs
associated with these properties are also included in "Net costs of operation
of other real estate and nonperforming assets" in the consolidated statements
of income.
Allowance for Credit Losses
The allowance for credit losses is the amount deemed by management to be
reasonably necessary to provide for possible losses on loans or leases that
may become uncollectible. Additions to the allowance are charged to expense
as the provision for credit losses. Loan and lease losses and recoveries are
charged or credited directly to the allowance. It is the Company's policy to
charge off any loan or portion of that loan when it is deemed to be
uncollectible in the ordinary course of business.
An evaluation of the overall quality of the portfolio is performed to
determine the necessary level of the allowance for credit losses. Effective
January 1, 1995, the Company adopted Financial Accounting Standard ("FAS")
No. 114,
7
<PAGE> 8
FOURTH FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
"Accounting by Creditors for Impairment of a Loan." Under the new
standard, the amount of the allowance for credit losses related to individual
loans that are identified for evaluation in accordance with FAS No. 114 is
determined based on estimates of expected cash flows on each such loan which
are then discounted using that loan's effective interest rate. Alternatively,
the fair value of the collateral is used to determine the allowance for credit
losses related to identified collateral dependent loans. For the remainder of
the loan portfolio, the determination of the allowance for credit losses takes
into consideration the risk classification of loans and the application of
loss estimates to these classifications.
It is the responsibility of management in each of the Company's markets
to classify its loans as pass, special mention, substandard, doubtful, or
loss. The classification criteria are established by the credit
administration function of the Company, which is independent of all lending
functions, and are intended to be consistent with the criteria applied by
federal banking system examiners. These classifications take into
consideration all sources of repayment, underlying collateral, the value of
such collateral, and current and anticipated economic conditions, trends, and
uncertainties. The Company has an independent loan review function which
periodically reviews the loans and the classifications. The Company's bank
subsidiaries also are subjected to periodic examinations by the Office of the
Comptroller of the Currency.
Loss factors are developed by loan type and risk classification using
historical loss data, statistical modeling techniques, and analyses of general
economic conditions, trends in portfolio volume, maturity, and composition.
The application of these loss factors to the portfolio classifications
combined with estimates of potential future losses on specific large loans
(based on either the discounted present value of the expected cash flows or
collateral values), provide management with data essential to identify and
estimate the credit risk inherent in the loan portfolio. The allowance for
credit losses reflects the result of these estimates and is deemed to be
adequate at each balance sheet date.
Loan and Loan Commitment Fees
The Company generally recognizes loan and loan commitment fees as
revenue when received and related costs as expenses when incurred. FAS No.
91, "Accounting for Nonrefundable Fees and Costs Associated with Originating
Loans," provides for the deferral of such fees and direct loan origination
costs and the amortization of such fees and costs over the lives of the
related loans as an adjustment of yield. However, the adoption of FAS No. 91
would not have a material effect on operating results.
Bank Premises and Equipment
Land is stated at cost, and buildings and equipment are stated at cost
less accumulated depreciation. For financial reporting purposes, depreciation
is included in operating expenses and is computed principally on the
straight-line method over the estimated useful lives of the related assets.
Accelerated methods are generally used for income tax purposes with deferred
income taxes provided for timing differences. Additions, major replacements,
and improvements to buildings and equipment are added to the asset accounts at
cost. Maintenance, repairs, and minor replacements are charged directly to
operating expense.
The costs incidental to the operation and maintenance of buildings, net
of income received from tenants, are reflected as "Net occupancy" expense in
the accompanying consolidated statements of income.
8
<PAGE> 9
FOURTH FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Stock Based Compensation
The Company grants stock options for a fixed number of shares to
employees with an exercise price equal to the fair value of the shares at the
date of grant. The Company accounts for stock option grants in accordance
with APB Opinion No. 25, "Accounting for Stock Issued to Employees," and,
accordingly, recognizes no compensation expense for the stock option grants.
Income Taxes
Effective January 1, 1993, the Company adopted FAS No. 109, "Accounting
for Income Taxes." There are two components of the income tax provision,
current and deferred. The current income tax provisions approximate taxes to
be paid or refunded for the applicable period. Deferred tax expense or
benefit is recognized for the change in deferred tax liabilities or assets
between periods.
Deferred tax liabilities or assets are recognized on the temporary
differences between the bases of assets and liabilities as measured by the tax
laws and their bases as reported in the financial statements. Recognition of
deferred tax assets is based on management's belief that it is more likely
than not that the tax benefit associated with certain temporary differences,
operating loss carryforwards, and tax credits will be realized. A valuation
allowance is recorded for those deferred tax items for which it is more likely
than not that realization will not occur.
Interest, Currency, and Financial Futures Contracts
In the normal course of business in meeting the investment and financing
needs of its customers and managing its own exposure to fluctuations in
interest rates, the Company is a party to various interest rate, foreign
currency, and financial futures contracts.
From time to time, interest rate swaps are used to modify the interest
sensitivity position inherent in the repricing characteristics of specific
assets or liabilities. The net interest received or paid on the interest rate
swaps is accounted for as an adjustment to the interest income or interest
expense on the assets or liabilities, respectively, that the swap was intended
to modify.
The Company enters into forward foreign currency contracts to assist
customers with their foreign currency needs related to foreign manufacturing
operations, exporting, or importing. These customer-driven contracts are
generally hedged with offsetting contracts. The market value gains and losses
relating to currency exchange contracts are recorded at settlement in "Other
noninterest income." Gains and losses associated with futures contracts,
entered into as trading positions, are marked to market and recognized
currently in "Other noninterest income."
9
<PAGE> 10
FOURTH FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2 - SUBSEQUENT EVENT
On January 31, 1996, the Company merged into a subsidiary of Boatmen's
Bancshares, Inc. ("Boatmen's"). Under the terms of the merger, each
outstanding share of the Company's common stock was converted into the right
to receive one share of Boatmen's common stock, and each outstanding share of
the Company's Class A Cumulative Convertible Preferred Stock was converted
into the right to receive one share of Boatmen's 7% Cumulative Convertible
Preferred Stock, Series A, having substantially the same rights and
preferences as the Company's preferred.
3 - ACQUISITIONS AND BRANCH SALES
Purchase Transactions
During 1995 and 1994, a total of four business combinations accounted
for as purchases were completed. The following table presents information
regarding these purchase transactions.
<TABLE>
<CAPTION>
ACQUISITION COMPANY ACQUIRED COMPANY ASSETS CASH NUMBER OF
DATE LOCATION ABBREVIATION ACQUIRED PAID SHARES ISSUED
- ----------- ---------------------------------------- ------------ ---------- --------- -------------
(IN THOUSANDS)
<C> <S> <C> <C> <C> <C>
1995
- ----
January 6 Oklahoma Savings, Inc.
Stillwater, OK. . . . . . . . . . . . "OSI" $ 95,082 $ 97 368,981
February 3 Blackwell Security Bancshares, Inc.
Blackwell, OK . . . . . . . . . . . . "BSB" 50,254 8,256 --
--------- -------- -------
$ 145,336 8,353 368,981
--------- -------- -------
1994
- ----
May 26 Equity Bank for Savings, F.A.
Oklahoma City, OK . . . . . . . . . . "Equity" $ 491,506 $ 90,720 --
May 31 Emprise Bank, National Association
Hutchinson, KS. . . . . . . . . . . . "Emprise" 258,731 31,206 --
--------- -------- -------
$ 750,237 $121,926 --
--------- -------- -------
$ 895,573 $130,279 368,981
========= ======== =======
</TABLE>
10
<PAGE> 11
Additional information regarding the cash paid in these purchase
transactions is summarized in the following table.
<TABLE>
<CAPTION>
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Fair value of assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . $145,336 $750,237
Fair value of liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . (131,676) (660,742)
Cost in excess of net assets acquired . . . . . . . . . . . . . . . . . . . . . 5,716 32,431
-------- --------
Consideration given . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,376 121,926
Less: Fair market value of stock issued. . . . . . . . . . . . . . . . . . . 11,023 --
-------- --------
Cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,353 121,926
Cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,262 34,108
-------- --------
Net cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,091 $ 87,818
======== ========
</TABLE>
For each of these transactions, the consolidated statements of income
include only the income and expenses of the acquired company since
acquisition. The purchase price was allocated to the net assets acquired
based on their fair values with the excess allocated to cost in excess of net
assets acquired. The effect on results of operations for 1995 and 1994, had
the purchase transactions occurred at the beginning of these years, was not
material.
Poolings of Interests
On January 27, 1995, the Company issued 315,000 shares to acquire
Standard Bancorporation, Inc. ("SBI") in a business combination accounted for
as a pooling of interests. Total assets acquired amounted to $89,548,000.
The consolidated statements for the prior periods have been restated as if
the entities had been combined at the beginning of the periods presented.
Adjustments to conform the accounting policies of SBI to the accounting
policies of the Company were immaterial.
11
<PAGE> 12
The effect of the 1995 pooling of interests on previously reported
selected operating results is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1994 1993
-------- --------
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Interest income:
Company. . . . . . . . . . . . . . . . . . . . . . . . . . $483,474 $443,913
SBI. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,790 5,552
-------- --------
Combined . . . . . . . . . . . . . . . . . . . . . . . . $489,264 $449,465
======== ========
Net interest income:
Company. . . . . . . . . . . . . . . . . . . . . . . . . . $276,920 $264,411
SBI. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,735 3,650
-------- --------
Combined . . . . . . . . . . . . . . . . . . . . . . . . $280,655 $268,061
======== ========
Net income:
Company. . . . . . . . . . . . . . . . . . . . . . . . . . $ 83,122 $ 77,292
SBI. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 817
-------- --------
Combined . . . . . . . . . . . . . . . . . . . . . . . . $ 83,124 $ 78,109
======== ========
Net income applicable to common and
common-equivalent shares:
Company. . . . . . . . . . . . . . . . . . . . . . . . . . $ 76,122 $ 70,292
SBI. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 817
-------- --------
Combined . . . . . . . . . . . . . . . . . . . . . . . . $ 76,124 $ 71,109
======== ========
Primary earnings per common share:
Company. . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.83 $ 2.67
SBI. . . . . . . . . . . . . . . . . . . . . . . . . . . . (.03) --
-------- --------
Combined . . . . . . . . . . . . . . . . . . . . . . . . $ 2.80 $ 2.67
======== ========
Fully diluted earnings per common share:
Company. . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.74 $ 2.55
SBI. . . . . . . . . . . . . . . . . . . . . . . . . . . . (.03) --
-------- --------
Combined . . . . . . . . . . . . . . . . . . . . . . . . $ 2.71 $ 2.55
======== ========
</TABLE>
On June 30, 1994, the Company issued 590,710 shares to acquire First
Dodge City Bancshares, Inc. ("First Dodge") in a business combination
accounted for as a pooling of interests. Total assets acquired amounted to
$144,999,000. The consolidated statements for the prior periods have been
restated as if the entities had been combined at the beginning of the periods
presented. Included in "Merger and integration costs" for 1994 is a charge
of $1,124,000 to conform the amortization of intangible assets of First Dodge
to the Company's accounting policies. Other adjustments to conform the
accounting policies of First Dodge to the accounting policies of the Company
were immaterial. Also on June 30, 1994, the Company issued 70,300 shares and
paid $36,000 in cash to acquire the minority interests of two of First
Dodge's subsidiaries. As prescribed by Accounting Principles Board ("APB")
Opinion 16, the acquisitions of the minority interests were accounted for as
purchases. The fair market value of shares issued and cash paid totaled
$2,118,000, which exceeded the net assets acquired by $951,000.
Branch Sales
At the time Equity Bank for Savings, F.A. ("Equity") was acquired in
May 1994, four branches were identified for sale. Three of the branches were
sold in 1994. On January 6, 1995, the Company completed the final sale. The
combined sales price of these branches was equal to the fair value of assets
and liabilities of such branches acquired in the Equity business combination.
Accordingly, no gain or loss was recognized on these branch sales.
On September 7, 1995, the Company completed the sale of its branch
located in Meade, Kansas. As the result of this sale, the Company recognized
a gain of $705,000. In the sale transactions, the Company transferred
deposit liabilities and sold loans and bank premises. The following table
presents information regarding the branches sold in 1995 and 1994.
12
<PAGE> 13
<TABLE>
<CAPTION>
1995 1994
---------- ----------
(In thousands)
<S> <C> <C>
Fair value of assets sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (5,577) $ (485)
Fair value of liabilities transferred . . . . . . . . . . . . . . . . . . . . . . 21,646 38,048
Reduction of cost in excess of net assets acquired. . . . . . . . . . . . . . . . (132) (1,292)
Gain on sale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (705) --
-------- --------
Net cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,232 $ 36,271
======== ========
</TABLE>
On December 19, 1995, the Company entered into an agreement to sell its
3 branches located in Independence, Missouri. The sale of these Missouri
branches was required by the merger of the Company and Boatmen's, a Missouri
based bank holding company. Missouri law prevents Boatmen's from acquiring
Missouri banks and branches of banks because Boatmen's already holds more than
the 13% limit of the state's total deposits. This sale is expected to be
completed in the second quarter of 1996 and will involve the transfer of
approximately $76,000,000 in deposit liabilities and the sale of loans with a
carrying value of approximately $45,000,000 and bank premises.
4 - CASH AND DUE FROM BANKS
The subsidiary banks are required by federal law to maintain reserves
against their deposit liabilities. These reserves can be maintained in the
form of vault cash or balances at a Federal Reserve Bank. The average cash
and Federal Reserve balances maintained as reserves were $143,303,000 for 1995
and $146,040,000 for 1994. Cash and due from banks also includes checks in
process of collection and balances maintained at correspondent banks for
services rendered.
5 - SECURITIES
Debt securities classified as held-to-maturity are those securities
management has the positive intent and the Company has the ability to hold
until maturity. The available-for-sale securities include marketable equity
securities and those debt securities deemed to be available-for-sale for the
implementation of asset and liability management strategies, possible
liquidity needs, and other purposes.
The following table presents the amortized cost and estimated fair value
of debt securities classified as held-to-maturity and carried at amortized
cost.
Held-to-maturity
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------------------------------ ---------------------------------------------
GROSS GROSS ESTIMATED GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE COST GAINS LOSSES VALUE
--------- ---------- ---------- --------- --------- ---------- ---------- ---------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury obligations. $ 2,505 $ 21 $ (5) $ 2,521 $ 98,971 $ 2 $ (5,996) $ 92,977
Obligations of U.S.
government agencies
and corporations:
Mortgage-backed. . . . . -- -- -- -- 1,582,938 339 (89,978) 1,493,299
Other. . . . . . . . . . 250 -- (2) 248 265,170 33 (14,456) 250,747
Obligations of states and
political subdivisions. . 3,292 22 (32) 3,282 8,866 -- (365) 8,501
Other securities:
Foreign debt securities. 2,050 -- -- 2,050 2,050 -- (2) 2,048
Money market mutual
funds . . . . . . . . . 286 -- -- 286 195 -- -- 195
---------- ------- ------- -------- ---------- ------- --------- ----------
Total. . . . . . . . . $ 8,383 $ 43 $ (39) $ 8,387 $1,958,190 $ 374 $(110,797) $1,847,767
========== ======= ======= ======== ========== ======= ========= ==========
</TABLE>
13
<PAGE> 14
The amortized cost and estimated fair value of the held-to-maturity debt
securities at December 31, 1995 are shown below by contractual maturity.
<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------------
ESTIMATED
AMORTIZED FAIR
COST VALUE
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Due in one year or less . . . . . . . . . . . . . . $ 2,766 $ 2,768
Due after one year through five years . . . . . . . 3,117 3,098
Due after five years through ten years. . . . . . . 2,500 2,521
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . $ 8,383 $ 8,387
======== ========
</TABLE>
The following table presents the amortized cost and estimated fair
value of securities classified as available-for-sale and carried at
estimated fair value.
Available-for-sale
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------------------------------ ---------------------------------------------
GROSS GROSS ESTIMATED GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE COST GAINS LOSSES VALUE
--------- ---------- ---------- --------- --------- ---------- ---------- ---------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury obligations. $ 135,044 $ 2,355 $ -- $ 137,399 $ 286,260 $ 102 $(16,920) $ 269,442
Obligations of U.S.
government agencies
and corporations:
Mortgage-backed. . . . . 1,602,374 7,975 (12,696) 1,597,653 138,838 1,190 (8,049) 131,979
Other. . . . . . . . . . 299,937 4,557 (5) 304,489 283,237 25 (13,891) 269,371
Obligations of states and
political subdivisions. . 98,472 6,224 (97) 104,599 167,811 7,883 (888) 174,806
Collateralized credit
card receivables. . . . . 53,125 591 -- 53,716 62,579 -- (4,061) 58,518
Corporate notes and
bonds. . . . . . . . . . 34,994 539 -- 35,533 41,208 19 (2,567) 38,660
---------- ------- -------- ---------- ---------- ------- -------- ---------
Total debt securities. . 2,223,946 22,241 (12,798) 2,233,389 979,933 9,219 (46,376) 942,776
Equity securities. . . . . 368 79 -- 447 1,290 68 (164) 1,194
---------- ------- -------- ---------- ---------- ------- -------- ---------
Total. . . . . . . . . $2,224,314 $22,320 $(12,798) $2,233,836 $ 981,223 $ 9,287 $(46,540) $ 943,970
========== ======= ======== ========== ========== ======= ======== =========
</TABLE>
The amortized cost and estimated fair value of the available-for-sale debt
securities at December 31, 1995 are shown below by contractual maturity.
<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------------
ESTIMATED
AMORTIZED FAIR
COST VALUE
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Due in one year or less . . . . . . . . . . . . . . $ 35,244 $ 35,765
Due after one year through five years . . . . . . . 538,323 548,875
Due after five years through ten years. . . . . . . 42,674 45,452
Due after ten years . . . . . . . . . . . . . . . . 5,331 5,644
-------- --------
621,572 635,736
Mortgage-backed securities. . . . . . . . . . . . . 1,602,374 1,597,653
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . $2,223,946 $2,233,389
========== ==========
</TABLE>
The fair values of securities are based upon available market data and
estimates which often reflect transactions of relatively small size and which
are not necessarily indicative of prices at which larger amounts of particular
issues could be readily sold. Expected maturities may differ from contractual
maturities because borrowers have the right to call or prepay obligations with
or without call or prepayment penalties.
14
<PAGE> 15
The following table presents equity securities which do not have a
readily determinable fair value and are carried at cost.
Other securities
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Federal Home Loan Bank stock. . . . . . . . . . . . $ 33,660 $ 37,886
Federal Reserve Bank stock. . . . . . . . . . . . . 14,311 14,242
Other equity securities . . . . . . . . . . . . . . 1,550 1,549
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . $ 49,521 $ 53,677
======== ========
</TABLE>
The book value of securities pledged to secure public deposits and for
other purposes, as required or permitted by law, aggregated $1,219,584,000 at
December 31, 1995.
In December 1995, the Company securitized variable-rate one-to-four
family real estate mortgage loans of $152,501,000 and are holding them in the
available-for-sale securities portfolio. Also, concurrent with the adoption
of the Financial Accounting Standard Board's November 1995 guidance on FAS
115, "Accounting for Certain Investments in Debt and Equity Securities",
securities previously classified as held-to-maturity with an amortized cost of
$1,719,412,000 were transferred to the available-for-sale category. At the
date of transfer, the unrealized loss on these securities was $7,537,000.
The sales price, gains, and losses realized from the sale of
available-for-sale investment securities are detailed in the following table.
This table does not include proceeds from nor realized gains and losses
attributable to prepayments of available-for-sale securities.
<TABLE>
<CAPTION>
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Sales price of available-for-sale securities. . . . . . . . . . . . . . . $445,891 $603,458
======== ========
Gross realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,322 $ 8,485
Gross realized losses . . . . . . . . . . . . . . . . . . . . . . . . . . 23,328 4,931
-------- --------
Net gains (losses). . . . . . . . . . . . . . . . . . . . . . . . . . . . $(22,006) $ 3,554
======== ========
</TABLE>
The following table presents the sales price, gains, and losses
realized from the sale of securities, prior to the adoption of FAS 115 on
December 31, 1993. This table does not include proceeds from nor realized
gains and losses attributable to prepayments of securities.
<TABLE>
<CAPTION>
1993
-------------
(IN THOUSANDS)
<S> <C>
Sales price of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,483
========
Gross realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 307
Gross realized losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
--------
Net gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 256
========
</TABLE>
15
<PAGE> 16
6 - LOANS AND LEASES
The composition of the loan and lease portfolio was as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------- ---------------------
AMOUNT PERCENT AMOUNT PERCENT
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial:
Commercial and industrial . . . . . . . . . . . . . . . . . . $1,046,048 24.4% $1,028,034 25.3%
Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . 207,377 4.8 227,367 5.6
Energy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,591 3.9 129,742 3.2
Bank stock. . . . . . . . . . . . . . . . . . . . . . . . . . 17,768 .4 25,173 .6
Real estate:
Construction. . . . . . . . . . . . . . . . . . . . . . . . 186,091 4.3 135,558 3.3
Permanent commercial real estate and other. . . . . . . . . 773,907 18.1 705,625 17.4
Lease financing . . . . . . . . . . . . . . . . . . . . . . . 68,423 1.6 43,380 1.1
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,441 .3 27,557 .7
---------- ------ ---------- ------
Total commercial loans. . . . . . . . . . . . . . . . . . . 2,477,946 57.8 2,322,436 57.2
---------- ------ ---------- ------
Consumer:
Secured by 1-4 family residences, less unearned discount. . . 1,020,718 23.8 990,126 24.4
Residential mortgage loans held for sale. . . . . . . . . . . 8,354 .2 1,526 --
Consumer, less unearned discount. . . . . . . . . . . . . . . 488,133 11.4 491,898 12.1
Credit card . . . . . . . . . . . . . . . . . . . . . . . . . 132,931 3.1 130,098 3.2
Educational . . . . . . . . . . . . . . . . . . . . . . . . . 93,752 2.2 82,238 2.0
Auto lease financing. . . . . . . . . . . . . . . . . . . . . 65,997 1.5 43,729 1.1
---------- ------ ---------- ------
Total consumer loans. . . . . . . . . . . . . . . . . . . . 1,809,885 42.2 1,739,615 42.8
---------- ------ ---------- ------
Total loans and leases. . . . . . . . . . . . . . . . . . $4,287,831 100.0% $4,062,051 100.0%
========== ====== ========== ======
</TABLE>
The Company manages exposure to credit risk through loan portfolio
diversification by customer and market, as well as by type. Although the
aggregate legal lending limits of the Company's bank subsidiaries totaled
$88,054,000 at December 31, 1995, the Company had no single lending
relationship with an aggregate loan amount outstanding in excess of
$20,000,000. The Company principally lends to businesses and individuals in
Kansas, Oklahoma, Missouri, and the contiguous states and to Kansas, Oklahoma,
and Missouri based customers that do business in other states.
In the ordinary course of business, the Company has made loans to
directors and executive officers of the Company and its significant
subsidiaries. Loans to these customers were transacted on the same terms,
including similar interest rates and collateral terms, as those prevailing at
the time for comparable transactions with unrelated persons and, in
management's opinion, did not involve more than a normal risk of
collectibility or present other unfavorable features at the time they were
made. An analysis of aggregate loan activity with this group, including their
immediate families, companies in which they are principal owners, and trusts
in which they are involved, follows:
<TABLE>
<CAPTION>
1995
--------------
(IN THOUSANDS)
<S> <C>
Loans outstanding at December 31, 1994. . . . . . . . . . . . . . . . . . . $ 76,552
New loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,518
Repayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (73,230)
Other changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,903)
--------
Loans outstanding at December 31, 1995. . . . . . . . . . . . . . . . . . . $ 64,937
========
</TABLE>
Other changes include loans outstanding at December 31, 1994 to
directors elected or retired in 1995, loans purchased or sold during the
current year, and any other loans outstanding at December 31, 1994 to related
individuals or entities not considered to be related parties at December 31,
1995.
16
<PAGE> 17
Nonaccrual loans and troubled debt restructurings are summarized below:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans . . . . . . . . . . . . . . . . . . . . . . . . . . $31,624 $29,301
Troubled debt restructurings . . . . . . . . . . . . . . . . . . . . 557 503
------- -------
$32,181 $29,804
======= =======
</TABLE>
The effect of nonaccrual loans and troubled debt restructurings on
interest income was:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income which would have been
recorded pursuant to the original terms . . . . . . . . . . $5,986 $5,098 $4,060
====== ====== ======
Interest income recorded . . . . . . . . . . . . . . . . . . $1,868 $1,384 $1,504
====== ====== ======
</TABLE>
7 - ALLOWANCE FOR CREDIT LOSSES
Changes in the allowance for credit losses are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at January 1, as previously reported . . . . . . . . . . . . . . . . $71,874 $67,617 $74,395
Adjustment for pooling of interests. . . . . . . . . . . . . . . . . . . . 993 610 674
------- ------- -------
Balance at January 1, as restated. . . . . . . . . . . . . . . . . . . . . . 72,867 68,227 75,069
Allowance for credit losses of purchased banks . . . . . . . . . . . . . . 1,633 5,449 3,266
------- ------- -------
74,500 73,676 78,335
Provisions charged to operating expense. . . . . . . . . . . . . . . . . . 13,068 836 7,037
Recoveries on loans and leases previously charged off. . . . . . . . . . . 12,516 12,562 9,869
Loans and leases charged off . . . . . . . . . . . . . . . . . . . . . . . (30,508) (14,207) (27,014)
------- ------- -------
Balance at December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . $69,576 $72,867 $68,227
======= ======= =======
</TABLE>
Effective January 1, 1995, the Company adopted FAS No. 114, "Accounting
by Creditors for Impairment of a Loan." Under the new standard, the amount
of the allowance for credit losses related to individual loans that are
identified for evaluation in accordance with FAS No. 114 is determined based
on estimates of expected cash flows on each such loan which are then
discounted using that loan's effective interest rate. Alternatively, the
fair value of the collateral is used to determine the allowance for credit
losses related to identified collateral dependent loans. The determination
of the allowance for credit losses for the remainder of the loan portfolio
takes into consideration the risk classification of loans and the application
of loss estimates to these classifications.
At December 31, 1995, the recorded investment in loans that are
considered to be impaired under FAS No. 114 was $12,281,000 (all of which
were being accounted for on a nonaccrual basis). The related allowance for
credit losses was $5,322,000. The average recorded investment in impaired
loans for the year ended December 31, 1995 was approximately $16,166,000.
For the year ended December 31, 1995 the Company recognized interest income
on these impaired loans of $881,000, using the cash basis method of income
recognition.
17
<PAGE> 18
8 - BANK PREMISES AND EQUIPMENT
A summary of land, buildings, and equipment appears below:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------------- --------------------------------
ACCUMULATED BOOK ACCUMULATED BOOK
COST DEPRECIATION VALUE COST DEPRECIATION VALUE
-------- ------------ ------- -------- ------------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Land . . . . . . . . . . . . . . . . . . $ 27,211 $ -- $ 27,211 $ 26,367 $ -- $ 26,367
Buildings and leasehold improvements . . 181,817 83,176 98,641 172,821 77,715 95,106
Furniture and equipment. . . . . . . . . 126,470 89,765 36,705 121,348 83,936 37,412
-------- -------- -------- -------- -------- --------
Total. . . . . . . . . . . . . . . . $335,498 $172,941 $162,557 $320,536 $161,651 $158,885
======== ======== ======== ======== ======== ========
</TABLE>
Depreciation expense amounted to $17,894,000 in 1995, $17,896,000 in
1994, and $16,285,000 in 1993.
9 - INTANGIBLE ASSETS
Included in intangible assets are the following items:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------------- --------------------------------
ACCUMULATED BOOK ACCUMULATED BOOK
COST AMORTIZATION VALUE COST AMORTIZATION VALUE
-------- ------------ ------- -------- ------------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Cost in excess of net assets acquired . . $102,208 $30,125 $72,083 $ 96,795 $24,813 $71,982
Value of core deposits assumed. . . . . . 29,179 19,651 9,528 29,180 16,453 12,727
Purchased credit card relationships . . . 9,381 2,712 6,669 9,300 1,049 8,251
Purchased mortgage servicing rights . . . 7,612 5,799 1,813 7,886 5,240 2,646
-------- ------- ------- -------- ------- -------
$148,380 $58,287 $90,093 $143,161 $47,555 $95,606
======== ======= ======= ======== ======= =======
</TABLE>
The cost of purchased entities in excess of the fair value of net assets
acquired is being amortized on a straight-line basis over a period of twenty
years. The value of core deposits assumed, purchased credit card
relationships, and the purchased mortgage servicing rights are being amortized
using accelerated methods over the estimated periods benefitted, not exceeding
ten years.
10 - DEPOSITS
The book values of deposits are presented below:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Noninterest-bearing deposits . . . . . . . . . . . . . . . . . . . . . $1,033,024 $1,049,118
Interest-bearing deposits:
Regular savings and interest checking . . . . . . . . . . . . . . . . 1,105,143 1,197,577
Money market savings. . . . . . . . . . . . . . . . . . . . . . . . . 1,378,194 912,965
Time deposits under $100,000. . . . . . . . . . . . . . . . . . . . . 2,182,020 2,159,435
Time deposits of $100,000 or more . . . . . . . . . . . . . . . . . . 347,713 405,501
---------- ----------
Total interest-bearing deposits . . . . . . . . . . . . . . . . . . 5,013,070 4,675,478
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,046,094 $5,724,596
========== ==========
</TABLE>
18
<PAGE> 19
11 - PURCHASED FUNDS, BORROWINGS, AND LONG-TERM DEBT
The following schedules summarize, by category, purchased funds,
borrowings, and long-term debt.
Federal funds purchased and securities sold
under agreements to repurchase
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------- -------------------
AMOUNT RATE AMOUNT RATE
-------- ------ -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Federal funds purchased . . . . . . . . . . . . . . . . . . . . $ 98,700 5.60% $391,970 5.85%
Securities sold under agreements to repurchase. . . . . . . . . 443,068 5.16 541,736 5.66
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $541,768 5.24 $933,706 5.74
======== ========
</TABLE>
Federal funds purchased and securities sold under agreements to
repurchase generally mature daily or on demand.
Federal Home Loan Bank borrowings
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------- -------------------
AMOUNT RATE AMOUNT RATE
-------- ------ -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Federal Home Loan Bank borrowings . . . . . . . . . . . . . . . $ 93,498 5.24% $441,097 5.72%
======== ========
</TABLE>
At December 31, 1995, Federal Home Loan Bank ("FHLB") borrowings
included $43,900,000 with an average rate of 5.12% that matures in 1996. The
remaining balance matures in 1997 ($24,685,000), and 1998 ($24,913,000).
Other borrowings
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------- -------------------
AMOUNT RATE AMOUNT RATE
-------- ------ -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Treasury tax and loan . . . . . . . . . . . . . . . . . . . . . $21,500 5.32% $23,001 5.20%
Note payable. . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 20,000 6.19
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,500 5.32 $43,001 5.66
======= =======
</TABLE>
Treasury tax and loan borrowings generally mature daily or on demand.
The $20,000,000 note payable at December 31, 1994 was borrowed under the
Company's committed line of credit from a correspondent bank. This committed
line of credit was replaced by two new credit agreements, entered into on
January 3, 1995. This borrowing was subsequently repaid during 1995.
The January 3, 1995 credit agreements provided that the Company could
borrow up to $100,000,000 on a revolving basis at any time prior to January 3,
1996. Amounts borrowed under the credit agreements could have maturities not
to exceed 90 days. Interest rates based on, at the Company's option, the
lenders' published "reference rate" or rates tied to the London Interbank
Offered Rate existed. A facility fee was charged on these commitments. The
Company was required to maintain consolidated stockholders' equity at a
certain level and maintain specific ratios related to leverage, risk-based
capital, and nonperforming assets. The Company was in compliance with these
covenants at December 31, 1995. When these credit agreements expired on
January 3, 1996, they were not renewed by the Company.
19
<PAGE> 20
Long-term debt
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------- -------------------
AMOUNT RATE AMOUNT RATE
-------- ------ -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- --% $4,375 8.60%
Notes Payable . . . . . . . . . . . . . . . . . . . . . . . . . . -- -- 3,077 7.41
Mortgage indebtedness and other notes payable . . . . . . . . . . 166 9.97 310 10.85
------ ------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 166 9.97 $7,762 8.22
====== ======
</TABLE>
The parent company's term loan with an unaffiliated bank required
semiannual installments of $4,375,000, the last of which was paid in March
1995. The $3,077,000 of notes payable in 1994 is the result of the current
year pooling of interests acquisition. The acquired balance was paid off at
the acquisition date. Certain buildings and real estate have been pledged as
collateral on mortgage indebtedness and other notes payable. Maturities of
this long-term debt for years subsequent to December 31, 1995, are as follows:
<TABLE>
<CAPTION>
Years ended December 31, (IN THOUSANDS)
------------------------- --------------
<S> <C>
1996 . . . . . . . . . . . . . $ 2
1997 . . . . . . . . . . . . . 2
1998 . . . . . . . . . . . . . 2
1999 . . . . . . . . . . . . . 2
2000 . . . . . . . . . . . . . 2
Thereafter . . . . . . . . . . 156
----
Total . . . . . . . . . . . . $166
====
</TABLE>
12 - PREFERRED STOCK
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1994
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Class A cumulative convertible preferred stock,
par value $100 per share
Authorized: 250,000 shares
Issued: 248,310 and 250,000 shares (at liquidation preference) . $ 99,324 $100,000
Class B preferred stock, no par value
Authorized: 5,000,000 shares . . . . . . . . . . . . . . . . . . -- --
-------- --------
$ 99,324 $100,000
======== ========
</TABLE>
On February 24, 1992, the Company issued 250,000 shares of nonvoting
Class A Cumulative Convertible Preferred Stock. This preferred stock was
issued in the form of 4,000,000 depositary shares each representing a 1/16
interest in a share of preferred stock and each having a liquidation
preference of $25.00. Dividends are payable quarterly (beginning June 1,
1992) at an annual rate of $1.75 per depositary share. The depositary shares
are not redeemable by the Company prior to March 1, 1997. However, they may
be converted at the election of shareholders into shares of the Company's
common stock at a conversion price of $29.00 per common share. At December
31, 1995, there were 3,972,960 depositary shares outstanding which could be
converted into 3,424,972 shares of the Company's common stock.
At the Company's annual meeting in April 1992, the stockholders
authorized 5,000,000 shares of a new class of preferred stock, designated
Class B Preferred Stock. The Board of Directors has been authorized to set
the dividend, voting, conversion, redemption, and other rights of this stock
when and if issued.
20
<PAGE> 21
13 - MERGER AND INTEGRATION COSTS
The components of merger and integration costs related to the 1995,
1994, and 1993 pooling-of-interests transactions are detailed in the following
schedule.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Premises and equipment writedowns . . . . . . . . . . . . . . . $ -- $ 389 $1,252
Severance and other compensation. . . . . . . . . . . . . . . . -- 948 2,970
Systems conversion costs. . . . . . . . . . . . . . . . . . . . -- 402 1,579
Legal, accounting, and other transaction costs. . . . . . . . . 28 386 829
Conform intangible asset amortization policies. . . . . . . . . -- 1,124 --
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 338 1,004
------ ------ ------
$ 28 $3,587 $7,634
====== ====== ======
</TABLE>
14 - INCOME TAXES
Effective January 1, 1993, the Company changed its method of accounting
for income taxes from the deferred method to the liability method required by
FAS No. 109, "Accounting for Income Taxes." Shown separately in the 1993
Statement of Income is the cumulative effect on adopting FAS No. 109 as of
January 1, 1993 which increased net income by $10,582,000.
At December 31, 1995, the Company had net operating loss and general
business credit carryforwards of $48,798,000 and $172,000, respectively, which
can be carried forward to reduce future federal income taxes payable. These
carryforwards are principally related to previous losses of banks acquired
from 1992 through 1995. Utilization of the carryforwards is limited by tax
law to the future earnings of and other limits on the use of tax attributes of
acquired companies. Net operating loss carryforwards expire in years 2000
through 2008 and general business credit carryforwards expire in years 1996
through 2001 if not utilized. For financial reporting purposes, a valuation
allowance of $10,552,000 has been recognized to offset the deferred tax assets
related to these carryforwards and other deferred tax assets whose realization
is uncertain. If realized, the tax benefit of $11,794,000 of net operating
loss carryforwards will be applied to reduce "cost in excess of net assets
acquired" recorded in connection with acquisitions accounted for as purchases.
The net change in the valuation allowance for deferred tax assets for 1995 was
a decrease of $2,015,000.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of
21
<PAGE> 22
the Company's deferred tax liabilities and assets as of December 31, 1995 and
December 31, 1994 are as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------
1995 1994
---------- ----------
<S> (IN THOUSANDS)
Deferred tax assets: <C> <C>
Provision for credit losses . . . . . . . . . . . . . . . . . . . . . $26,644 $22,829
Net operating loss carryforwards. . . . . . . . . . . . . . . . . . . 22,937 29,575
Securities fair value adjustment. . . . . . . . . . . . . . . . . . . -- 14,347
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . 3,494 2,584
Core deposit amortization . . . . . . . . . . . . . . . . . . . . . . 2,072 2,163
Write-down of other real estate owned . . . . . . . . . . . . . . . . 1,763 1,808
Pension contribution. . . . . . . . . . . . . . . . . . . . . . . . . 999 1,093
Merger and integration costs accrual. . . . . . . . . . . . . . . . . 920 1,399
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,259 --
------- -------
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . 60,088 75,798
Valuation allowance for deferred tax assets . . . . . . . . . . . . . (10,552) (12,567)
------- -------
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . 49,536 63,231
------- -------
Deferred tax liabilities:
Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,503) (3,798)
Purchase accounting adjustment. . . . . . . . . . . . . . . . . . . . (5,338) (6,492)
Depreciation expense. . . . . . . . . . . . . . . . . . . . . . . . . (4,042) (2,657)
Discount accretion. . . . . . . . . . . . . . . . . . . . . . . . . . (3,873) (4,519)
Securities fair value adjustment. . . . . . . . . . . . . . . . . . . (3,724) --
Loan origination fees . . . . . . . . . . . . . . . . . . . . . . . . (2,006) (1,226)
State taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (981) (3,184)
Other, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (730)
------- -------
Total deferred tax liabilities. . . . . . . . . . . . . . . . . . . (28,467) (22,606)
------- -------
Net deferred tax asset (liability). . . . . . . . . . . . . . . . . $21,069 $40,625
======= =======
</TABLE>
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------
1995 1994 1993
------------- ------------- -------------
(In thousands)
<S> <C> <C> <C>
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . $24,509 $29,467 $24,580
State . . . . . . . . . . . . . . . . . . . . . . . . . . 9,152 4,928 4,037
------- ------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . 33,661 34,395 28,617
------- ------- -------
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . 2,764 7,121 (5,862)
State . . . . . . . . . . . . . . . . . . . . . . . . . . (1,332) (650) 225
------- ------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . 1,432 6,471 (5,637)
------- ------- -------
Total income tax expense. . . . . . . . . . . . . . . $35,093 $40,866 $22,980
======= ======= =======
</TABLE>
Tax effects of investment securities transactions included in the above
amounts are a tax benefit of $7,616,000 in 1995 and tax expenses of $1,271,000
and $544,000 in 1994 and 1993, respectively.
The effective income tax rates differ from the federal statutory rates
for the reasons shown in the following table.
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1993
------------------- ------------------- -------------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
---------- -------- ---------- -------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income tax expense at federal statutory rate . . . $33,694 35.0% $43,398 35.0% $31,707 35.0%
Tax-preferred income on obligations of states,
political subdivisions, and U.S. possessions. . . (4,449) (4.6) (5,776) (4.7) (6,627) (7.3)
Goodwill and purchase accounting amortization. . . 1,925 2.0 1,027 .8 1,271 1.4
State taxes, net of federal income tax benefit . . 3,806 4.0 2,695 2.2 2,752 3.0
Benefit of net operating losses and
alternative minimum tax credits . . . . . . . . . -- -- (927) (.7) (4,090) (4.5)
Other, net . . . . . . . . . . . . . . . . . . . . 117 .1 449 .4 (2,033) (2.2)
------- ---- ------- ---- ------- -----
Actual income tax expense. . . . . . . . . . . $35,093 36.5% $40,866 33.0% $22,980 25.4%
======= ==== ======= ==== ======= ====
</TABLE>
22
<PAGE> 23
15 - EMPLOYEE BENEFIT PLANS
The Company and its subsidiaries have two types of pension plans. The
Company's defined benefit plan covers substantially all employees. The
supplemental executive retirement plan provides for payments equal to the
benefit which would have been paid under the pension plan and the savings and
investment plan if certain Internal Revenue Code limitations had not been
imposed including Section 415, Section 401(a)(17), and the Section 401(a)(4)
prohibition on deferred compensation as eligible compensation under the
pension plan.
The plans' funded status and amounts included in the consolidated
financial statements are presented below:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------- -------------------------
SUPPLEMENTAL SUPPLEMENTAL
DEFINED EXECUTIVE DEFINED EXECUTIVE
BENEFIT RETIREMENT BENEFIT RETIREMENT
PLAN PLAN PLAN PLAN
---------- ------------ ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation . . . . . . . . . . . . . . . . $(24,218) $(1,180) $(19,360) $ (838)
======== ======= ======== =======
Accumulated benefit obligation. . . . . . . . . . . . . . $(25,914) $(1,387) $(20,765) $ (915)
======== ======= ======== =======
Projected benefit obligation. . . . . . . . . . . . . . . $(36,864) $(2,080) $(27,223) $(1,120)
Plan assets, at fair value. . . . . . . . . . . . . . . . . 25,756 -- 20,375 --
-------- ------- -------- -------
Funded status . . . . . . . . . . . . . . . . . . . . . . . (11,108) (2,080) (6,848) (1,120)
Prior service benefit not yet recognized in periodic
pension cost, being amortized over 10 years. . . . . . . . (2,272) (80) (1,311) (7)
Unrecognized net (asset) obligation from date of
initial application, being amortized over 15 years . . . . (1,821) 74 (2,181) 89
Unrecognized net loss from past experience different
from that assumed and effects of changes in assumptions. . 13,959 1,035 8,525 201
-------- ------- -------- -------
Accrued pension cost included in
consolidated statements of condition . . . . . . . . . . $ (1,242) $(1,051) $ (1,815) $ (837)
======== ======= ======== =======
</TABLE>
The assets of the defined benefit plan are administered by the trust
division of a subsidiary bank and consist of a wide variety of diversified
securities including common stocks, corporate bonds, and U.S. Treasury
obligations. During 1994, the trust's investments in commingled funds for
qualified employee benefit accounts were converted to the Funds IV equity and
bond mutual funds. Contributions to the plan are based upon the Projected
Unit Credit Actuarial Funding method and are limited to amounts that are
currently deductible for tax reporting purposes.
23
<PAGE> 24
Net pension cost includes the following components:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned during the year. . . . . . . . . . $3,384 $2,968 $2,329
Interest cost on the projected benefit obligation . . . . . . . 2,212 1,891 1,579
Actual (return) loss on plan assets . . . . . . . . . . . . . . (3,861) 419 (2,119)
Net amortization and deferrals. . . . . . . . . . . . . . . . . 2,174 (2,167) 691
------ ------ ------
Net periodic pension cost . . . . . . . . . . . . . . . . . . $3,909 $3,111 $2,480
====== ====== ======
</TABLE>
Assumptions used in the accounting include:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Discount rates. . . . . . . . . . . . . . . . . . . . . . . . . 7.25% 8.00% 7.00%
Average rates of increase in compensation levels. . . . . . . . 4.70% 4.70% 4.70%
Expected long-term rate of return on assets . . . . . . . . . . 8.75% 8.75% 8.75%
</TABLE>
The Company and its subsidiaries also maintain a contributory savings
and investment plan for substantially all employees. The savings and
investment plan and related trust qualify under Section 401 of the Internal
Revenue Code as a qualified profit-sharing plan and trust. According to the
plan, an employee may contribute from 2% to 4% of base salary, which the
employer then supplements with a contribution of 50% of the employee's
contributed amount. Employees may contribute up to an additional 11% of base
salary in pre-tax dollars, but without further employer contributions. The
plan also provides for an additional matching contribution of up to an
additional 2% of the employee's eligible compensation based on the Company's
achievement of established earnings-per-share targets. Vesting in the
employer contributions ranges from 20% with three years to 100% with seven
years of service. During 1995, employees could elect to invest in one or more
of five investment funds, in 10% increments. These funds included a Fourth
Financial Corporation common stock fund, a fixed-income fund, an equity fund,
an international equity fund, and a money market fund. Forfeitures are used
to reduce the Company's contributions. The expense for this plan plus similar
plans of pooled companies which were merged with this plan was $1,176,000 in
1995, $2,438,000 in 1994, and $2,046,000 in 1993. Additional matching
contributions of $633,000 and $933,000, which were attributable to the
achievement of performance goals, were paid for 1994 and 1993, respectively.
The Company does not provide medical coverage for employees subsequent
to retirement. Approximately 53 employees who retired prior to January 1,
1995, who were between age 55 and age 65 ("Early retirees") at retirement and
who had at least ten years' service have continued participation in the
Company's health plan until age 65, but the plan requires that the full cost
of providing coverage under the plan be paid by the covered retirees. FAS
No. 106, which establishes accounting standards for "Employers' Accounting for
Postretirement Benefits Other Than Pensions," was not adopted as it would not
have a material effect on the Company's statement of condition and operating
results.
16 - STOCK OPTION AND STOCK PURCHASE PLANS
The Company grants options to key employees under incentive stock option
plans at prices equal to the market value on the date of grant. Terms of the
plans generally provide for the exercise of the options for periods of up to
ten years, as determined by the Board of Directors. Each plan provides for
accelerated exercise rights for holders of options in case of a change in
control, which occured on December 12, 1995 upon the approval by the Company's
shareholders of the acquisition of the Company by Boatmen's. The following
schedule details the shares reserved for issuance at December 31, 1995 under
each of the plans, as well as the number of shares under option and
exercisable at the end of the year. Options may no longer be granted under
the plans.
24
<PAGE> 25
<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------------------------------------
SHARES SHARES
RESERVED FOR UNDER SHARES
ISSUANCE OPTION EXERCISABLE
------------ ---------- -----------
<S> <C> <C> <C>
1993 Stock Option Plan . . . . . . . . . . . . . . . . 910,838 424,088 424,088
1986 Stock Option Plan . . . . . . . . . . . . . . . . 443,723 392,394 392,394
1981 Stock Option Plan . . . . . . . . . . . . . . . . 108,514 41,348 41,348
--------- ------- -------
1,463,075 857,830 857,830
========= ======= =======
</TABLE>
The 1993 Plan provides that any unvested options vest fully and are
immediately exercisable upon a change in control. Boatmen's agreed to assume
the outstanding options following the merger, with the options continuing to
be fully vested and constituting options to acquire Boatmen's common stock
until they expire or otherwise become unexercisable in accordance with their
terms.
Unvested options under the 1986 Plan do not become vested upon a change
in control. Holders of options under this plan have the right to exercise all
options, including unvested options, during the 30-day period commencing on
the date of a merger approval. Following this 30-day period, vested options
remain vested and unvested options continue to vest according to the original
vesting schedule. Under the agreement with Boatmen's, following the merger
the options would continue to vest on their original vesting schedule and
constitute options to acquire Boatmen's common stock.
All incentive stock options under the 1981 Plan are vested and
constitute options to acquire Boatmen's common stock following the merger.
The following table presents information regarding stock option
transactions and prices:
<TABLE>
<CAPTION>
SHARES UNDER OPTION
-------------------------------------------------------------------------
1995 1994 1993
----------------------- ----------------------- -----------------------
PRICE PRICE PRICE
NUMBER PER SHARE NUMBER PER SHARE NUMBER PER SHARE
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1 . . . . . . . 1,370,894 $17.00-31.06 798,038 $17.00-30.38 684,339 $14.80-29.88
Granted. . . . . . . . . . . . . . 7,500 30.75-33.00 685,000 26.75-31.06 299,100 27.50-30.38
Exercised. . . . . . . . . . . . . (481,414) 17.00-31.06 (85,305) 17.00-28.75 (172,747) 14.80-23.20
Terminated or canceled . . . . . . (39,150) -- (26,839) -- (12,654) --
--------- --------- --------
Balance at December 31 . . . . . . 857,830 17.00-33.00 1,370,894 17.00-31.06 798,038 17.00-30.38
========= ========= ========
</TABLE>
An optionee may pay the option exercise price by tendering stock of the
Company having a market value equal to the exercise price. The optionee must
have held the tendered stock for at least six months before it can be used to
exercise an option. Transactions under this program are accounted for as the
purchase and reissuance of treasury stock. The following is a summary of
activity:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Shares tendered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,011 17,899 45,399
Shares issued under the stock option plans (including
reissued treasury stock). . . . . . . . . . . . . . . . . . . . . . . . 71,986 22,785 75,720
</TABLE>
An optionee also may borrow the amount of the option exercise price from
the Company. The loans under this program bear interest at the prime rate of
an unaffiliated bank, adjusted quarterly. All loans outstanding at December
31, 1995 under this program mature on December 5, 1996. At a minimum, Company
stock valued at 125% of the loan amount must collateralize the loan. Such
loans, which amounted to $3,444,000 and $1,894,000 at December 31, 1995 and
1994, respectively, are reported as a reduction of stockholders' equity.
The Fourth Financial Corporation 1993 Non-Employee Directors Stock
Option Plan (the "Directors Option Plan") was approved by stockholders and
adopted in 1993. The Directors Option Plan provides that each year, on the
first Monday following the
25
<PAGE> 26
Company's annual meeting of stockholders, each non-employee director of the
Company will automatically receive an option to acquire 2,000 shares of the
Company's common stock and each non-employee director of the Company's
subsidiaries will automatically receive an option to acquire 1,000 shares of
the Company's common stock. Options issued under the plan are immediately
exercisable and will expire ten years from the date of grant. Following the
merger, Boatmen's will assume sponsorship of the plan; however, no new
options will be granted under the plan. At December 31, 1995, there were
483,400 shares reserved for issuance under the plan of which 103,400 were
under option. The following table presents information regarding stock
option transactions and prices under the Directors Option Plan:
<TABLE>
<CAPTION>
SHARES UNDER OPTION
-------------------------------------------------------------------------
1995 1994 1993
----------------------- ----------------------- -----------------------
PRICE PRICE PRICE
NUMBER PER SHARE NUMBER PER SHARE NUMBER PER SHARE
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1. . . . . . . . . 81,700 $27.50-29.50 43,000 $29.50 -- --
Granted . . . . . . . . . . . . . . . 38,000 31.50 44,000 27.50 44,000 29.50
Exercised . . . . . . . . . . . . . . (16,300) 27.50-31.50 (300) 27.50 -- --
Terminated or canceled. . . . . . . . (3,000) -- (5,000) -- (1,000) --
------- ------- -------
Balance at December 31. . . . . . . . 100,400 27.50-31.50 81,700 27.50-29.50 43,000 29.50
======= ======= =======
</TABLE>
Under the 1988 Employee Stock Purchase Plan, which expired in April,
1993, and the 1993 Employee Stock Purchase Plan which replaced it, employees
are offered the option to purchase shares of the Company's common stock at 85%
of the lower of the fair market value of such shares on the date granted or
one year thereafter. Options issued under the plan are exercisable one year
from the date of grant. With the shareholders' approval of the acquisition of
the Company by Boatmen's, stock options granted on May 1, 1995 in Offering
Three under the 1993 Plan became fully vested and immediately exercisable on
December 12, 1995. After the merger, the options will constitute options to
purchase Boatmen's common stock. At December 31, 1995, 468,776 shares were
reserved for issuance, including 157,050 shares under option which are
exercisable through April 30, 1996. Additional data regarding the Employee
Stock Purchase Plan are as follows:
<TABLE>
<CAPTION>
SHARES UNDER OPTION
-------------------------------------------------------------------------
1995 1994 1993
----------------------- ----------------------- -----------------------
PRICE PRICE PRICE
NUMBER PER SHARE NUMBER PER SHARE NUMBER PER SHARE
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1. . . . . . . 242,694 $23.74 180,597 $24.81 165,078 $23.06
Granted . . . . . . . . . . . . . 296,075 26.56 268,384 23.74 192,109 24.81
Exercised . . . . . . . . . . . . (227,471) 23.74-26.56 (53,753) 23.74 (71,259) 23.06
Terminated or canceled. . . . . . (154,248) -- (152,534) -- (105,331) --
-------- -------- --------
Balance at December 31. . . . . . 157,050 26.56 242,694 23.74 180,597 24.81
======== ======== ========
</TABLE>
17 - EARNINGS PER COMMON SHARE
Earnings per common share are based on the following weighted average
numbers of shares outstanding.
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . 27,629,855 27,229,657 26,639,549
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . 31,065,028 30,677,932 30,670,263
</TABLE>
Primary earnings per common share were computed by dividing net income
applicable to common and common-equivalent shares by the weighted average
common and common-equivalent shares outstanding during the period (common
share equivalents include the preferred stock of pooled companies). Fully
diluted earnings per common share were computed by adjusting net income for
interest expense (net of income taxes) associated with pooled companies'
convertible debt. The adjusted net income was then divided by the weighted
average of common and common-equivalent shares outstanding plus the number of
shares which would have been outstanding during the year had the Class A
convertible preferred stock and the pooled companies' convertible debt and
preferred stock been converted in accordance with their respective governing
instruments. For the year ended December 31, 1995, fully diluted earnings
per common share were the same as primary earnings per common share since
the effect of the convertible preferred stock was anti-dilutive. Stock
options outstanding have been excluded from the computations as they were not
materially dilutive.
26
<PAGE> 27
18 - DIVIDENDS PER COMMON SHARE
Dividends per common share represent the Company's historical dividends
declared without adjustment for the poolings of interests. The following
table presents dividends declared by entities pooled during 1995, 1994, and
1993 prior to their combinations with the Company.
<TABLE>
<CAPTION>
1995 1994 1993
--------------------- --------------------- ---------------------
PER PER PER
EQUIVALENT EQUIVALENT EQUIVALENT
POOLED ENTITY HISTORICAL SHARE HISTORICAL SHARE HISTORICAL SHARE
- --------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Standard Bancorporation, Inc. . . . . . $ .-- $ .-- $ .-- $ .-- $ .-- $ .--
First Dodge City Bancshares, Inc. . . . n/a n/a 58.46 .52 132.00 1.17
Southgate Banking Corporation . . . . . n/a n/a n/a n/a -- --
Nichols Hills Bancorporation, Inc. . . n/a n/a n/a n/a .43 .48
Commercial Landmark Corporation . . . . n/a n/a n/a n/a .93 .72
Western National Bancorporation, Inc. . n/a n/a n/a n/a -- --
Ponca Bancshares, Inc. . . . . . . . . n/a n/a n/a n/a .99 .81
</TABLE>
19 - RESTRICTIONS ON INTERCOMPANY FUNDS TRANSFERS
Restrictions imposed by federal law limit the transfer of funds to the
Company and certain other affiliates from a subsidiary bank in the form of
loans or other extensions of credit, investments, and purchases of assets.
Transfers by a subsidiary bank to the Company or any such single affiliate may
not exceed 10% and transfers in the aggregate may not exceed 20% of the bank's
capital, surplus, and undivided profits, after adding back the allowance for
credit losses and subtracting certain intangibles. Based on these
limitations, approximately $58,319,000 was available for transfer to the
Company at December 31, 1995. In addition, the approval of the Comptroller of
the Currency is required if dividends declared by any of the Company's
national bank subsidiaries in 1996 exceed the bank's net profits for that year
combined with its retained net profits for 1994 and 1995. In 1996, the
subsidiary banks may distribute to the Company (in addition to their 1996 net
profits) an aggregate of approximately $17,041,905 in dividends without
approval from regulatory agencies.
20 - DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In the normal course of business in meeting the investment and financing
needs of its customers and managing its own exposure to fluctuations in
interest rates, the Company is a party to various financial instruments.
These instruments involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized in the Statements of Condition.
Derivative financial instruments held for trading purposes:
The Company enters into forward foreign currency contracts primarily to
assist customers with their foreign currency needs related to foreign
manufacturing operations, exporting, or importing. These customer-driven
contracts are generally hedged with offsetting contracts. The Company's net
position in forward foreign currency contracts plus due from bank accounts
denominated in foreign currencies cannot exceed $2,500,000 on a daily basis.
The market value gains and losses relating to forward foreign currency
contracts are recorded at settlement in "Other noninterest income." The
contracts held at December 31, 1994 all matured by March 1995. The contracts
outstanding at December 31, 1995 will all mature by February 15, 1996.
The Company maintains a trading account in which it takes positions in
the interest-rate futures markets based on expectations of future market
conditions. Interest rate futures contracts are commitments to either
purchase or sell designated financial instruments at a future date for a
specified price and may be settled in cash or through delivery of the
financial instrument. Initial margin requirements are met in cash or other
instruments and changes in the contract value are settled daily and the gains
or losses recorded in "Other noninterest income." The interest rate futures
generally have contractual terms of up to six months,
27
<PAGE> 28
although the instruments are rarely held that long. It is the Company's
policy to limit the contracts outstanding to $5,000,000.
The contract amounts of derivative financial instruments held for
trading purposes at December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
CONTRACT AMOUNT
-----------------------
DECEMBER 31,
-----------------------
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Forward foreign currency contracts
Commitments to purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $363 $390
Commitments to sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505 461
Interest rate futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
</TABLE>
The following table presents the fair value of derivatives held for
trading purposes at December 31, 1995 and 1994 and on average for the years
ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
-------------------- --------------------
FAIR VALUE FAIR VALUE
-------------------- --------------------
AVERAGE AVERAGE
YEAR-END FOR YEAR YEAR-END FOR YEAR
-------- -------- -------- --------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Forward foreign currency contracts
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 504 $ 612 $ 464 $ 1,989
Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 365 581 394 1,991
Interest rate futures contracts
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- -- $ -- $ --
Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . -- <F*> -- <F*>
<FN>
- ------------
<F*> Less than $1,000.
</TABLE>
The fair values of forward foreign currency and interest rate futures
contracts represent an estimate of the accounting loss the Company would incur
if any party to the financial instrument failed completely to perform and any
collateral proved to be of no value to the Company. The net trading revenues
arising from the Company's derivative trading activities for 1995 totalled
$67,000.
Derivative financial instruments held for purposes other than trading:
From time to time, interest rate swaps are used to modify the interest
sensitivity position inherent in the repricing characteristics of specific
assets or liabilities. Interest rate swaps involve the contractual exchange
of fixed and floating rate interest payments based on established notional
amounts. The notional amounts do not represent direct credit exposure.
Credit exposure is limited to the net difference between the calculated pay
and receive amounts on each transaction which is accrued as interest
receivable or payable and generally netted and settled quarterly. The net
interest accrued and received or paid on the interest rate swaps is accounted
for as an adjustment to the interest income or interest expense on the assets
or liabilities, respectively, that the swap was intended to modify. Net
interest income for 1995 and 1994 includes $580,000 and $1,544,000,
respectively, attributable to interest rate swaps.
28
<PAGE> 29
At December 31, 1995 and 1994 interest rate swaps were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
--------------------------------------------------------------
WEIGHTED WEIGHTED AVERAGE RATE
NOTIONAL AVERAGE ------------------------
AMOUNT TERM RECEIVED PAID
---------- -------- ---------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Receive fixed rate . . . . . . . . . . . . $123,000 8 months <F1> 6.14% 5.93%
<CAPTION>
DECEMBER 31, 1994
--------------------------------------------------------------
WEIGHTED WEIGHTED AVERAGE RATE
NOTIONAL AVERAGE ------------------------
AMOUNT TERM RECEIVED PAID
---------- -------- ---------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Receive fixed rate . . . . . . . . . . . . $151,000 18 months <F1> 6.05% 5.90%
Pay fixed rate . . . . . . . . . . . . . . 100,000 4 months 5.79% 4.25%
<FN>
- ------------
<F1> The term of $50.0 million of these swaps may extend up to an additional
48 months after the initial term depending on the level of the 3-month
LIBOR rate at the end of the initial term (May 1996) and each quarter
thereafter as compared to the 3-month LIBOR rate when the swaps were
initiated. If the 3-month LIBOR rate is less than approximately 4.2%
in May 1996 none of the $50.0 million swap will continue. A 3-month
Libor rate in excess of approximately 7.2% will result in an extention
of the entire $50.0 million swap. At LIBOR rates between 4.2% and 7.2%
the amount of the swap continuing is linearly interpolated. At
December 31, 1995, the 3-month LIBOR rate was 5.66%.
</TABLE>
Activity in interest rate swaps is summarized below:
<TABLE>
<CAPTION>
RECEIVE PAY
Fixed Rate FIXED RATE
---------- ----------
(NOTIONAL AMOUNTS, IN THOUSANDS)
<S> <C> <C>
Balance, January 31, 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,000 $200,000
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 --
Maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (100,000)
-------- --------
Balance, December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,000 100,000
-------- --------
Maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,000) (100,000)
-------- --------
Balance, December 31, 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . $123,000 $ --
======== ========
</TABLE>
At December 31, 1995, the Company was committed under a $10,000,000
Master Agreement with the Federal National Mortgage Association (the "FNMA
Agreement") and a $5,000,000 Master Agreement with the Federal Home Loan
Mortgage Corporation (the "FHLMC Agreement") to sell $8,088,000 and
$1,908,000, respectively, of 10- to 30-year fixed-rate residential mortgage
loans. The FNMA Agreement requires delivery by September 30, 1996 and the
FHLMC Agreement requires delivery by April 30, 1996.
Other financial instruments with off-balance-sheet risk:
Single-family mortgage loans which the Company's subsidiaries originate
for sale are sold without recourse. However, the Company is obligated under
recourse provisions related to $19,755,000 of loans associated with its
purchased mortgage servicing. The Company assesses the credit risk of these
and other loan commitments when evaluating the adequacy of the allowance for
credit losses.
Commitments to extend credit are agreements to lend to a customer as
long as the customer is in compliance with the conditions established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
Company uses the same credit policies in making
29
<PAGE> 30
commitments as it does for direct extensions of credit. The Company
evaluates each customer's creditworthiness on a case-by-case basis. The
amount of collateral obtained, if deemed necessary by the Company upon
extension of credit, is based on management's credit evaluation of the
customer. Collateral held varies but may include accounts receivable,
inventory, real estate, equipment, and income-producing commercial
properties. Standby letters of credit irrevocably obligate the issuing bank
to pay a third-party beneficiary when a customer fails to repay an
outstanding debt instrument or fails to perform some contractual
non-financial obligation. Standby letters of credit are primarily issued to
secure bonds from insurance companies, provide security for self-insured
portions of workers compensation insurance, and collateralize guaranties or
secure loans to other financial institutions. A commercial letter of credit
is issued to facilitate trade or commerce. Under the terms of a commercial
letter of credit, drafts will be drawn when the underlying transaction is
consummated as intended. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loans to
customers. Substantially all letters of credit mature within two years.
The following table summarizes the contract amount of the Company's
commitments to extend credit.
<TABLE>
<CAPTION>
CONTRACT AMOUNT
------------------------
DECEMBER 31,
------------------------
1995 1994
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Commitments to extend credit:
Standby letters of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 134,778 $101,771
Commercial letters of credit. . . . . . . . . . . . . . . . . . . . . . . . . . . 19,100 24,181
Credit card lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497,497 480,809
Funding of 1-4 family residential mortgage loans. . . . . . . . . . . . . . . . . 49,976 54,281
Other loan commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,493,716 1,332,383
</TABLE>
21 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and fair values of the
Company's financial instruments at December 31, 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
------------------------ ------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Trading instruments:
Debt securities . . . . . . . . . . . . . . . . . . $ 920 $ 920 $ 463 $ 463
Equity securities . . . . . . . . . . . . . . . . . -- -- 256 256
Foreign exchange contracts
Assets. . . . . . . . . . . . . . . . . . . . . . -- 504 -- 464
Liabilities . . . . . . . . . . . . . . . . . . . -- (365) -- (394)
Nontrading instruments:
Cash and due from banks . . . . . . . . . . . . . . 436,104 436,104 438,930 438,930
Interest-bearing deposits in other
financial institutions . . . . . . . . . . . . . . 926 957 499 501
Federal funds sold and securities purchased
under agreements to resell . . . . . . . . . . . . 125,975 125,975 8,470 8,470
Securities. . . . . . . . . . . . . . . . . . . . . 2,291,740 2,291,744 2,955,837 2,845,414
Loans and leases. . . . . . . . . . . . . . . . . . 4,287,831 4,296,270 4,062,051 4,000,405
Deposits. . . . . . . . . . . . . . . . . . . . . . (6,046,094) (6,062,502) (5,724,596) (5,720,471)
Federal funds purchased, securities sold under
agreements to repurchase, and other borrowings . . (563,268) (563,268) (976,707) (976,707)
Federal Home Loan Bank borrowings . . . . . . . . . (93,498) (93,827) (441,097) (440,268)
Long-term debt. . . . . . . . . . . . . . . . . . . (166) (169) (7,762) (7,806)
Interest-rate swaps relating to:
Securities
Liabilities . . . . . . . . . . . . . . . . . . -- (294) -- (5,045)
Loans
Assets. . . . . . . . . . . . . . . . . . . . . -- 680 -- --
Liabilities . . . . . . . . . . . . . . . . . . -- -- -- (1,571)
Deposits
Assets. . . . . . . . . . . . . . . . . . . . . -- 56 -- 824
</TABLE>
The carrying amounts in the table are included in the Statements of
Condition under the indicated captions.
30
<PAGE> 31
The following methods and assumptions were used by the Company in
estimating its fair value disclosures in accordance with FAS No. 107,
"Disclosures About Fair Value of Financial Instruments." Because there is no
market for many of these financial instruments, the Company has no basis to
determine whether these estimated fair values would be indicative of the
value that could be obtained in an arm's-length sale.
Cash and due from banks: The carrying amounts reported in the
-------------------------
consolidated statements of condition for cash and due from banks
approximate those assets' fair values.
Interest-bearing deposits in other financial institutions: Fair
-----------------------------------------------------------
values of these fixed-rate certificates of deposit were estimated using
a discounted cash flow calculation that applies interest rates
currently being offered on certificates with similar maturities.
Federal funds sold and securities purchased under agreements to resell:
-----------------------------------------------------------------------
The carrying amounts of federal funds sold and securities purchased
under agreements to resell approximate their fair values.
Securities: Fair values for debt and equity securities were based on
-----------
quoted market prices, where available. If quoted market prices were not
available, fair values were based on quoted market prices of comparable
instruments.
Loans and leases: Except for variable-rate 1-4 family mortgage
-----------------
loans, the fair values of variable-rate loans that reprice in accordance
with indices were estimated to be equal to carrying values. A
significant portion of a credit card portfolio's value results from the
ongoing cardholder relationship that generates receivables and fees
over time. This relationship value is not defined as a financial
instrument and therefore not disclosed under FAS No. 107. The carrying
values of the credit card receivables approximate their fair values.
The fair values for 1-4 family variable-rate and fixed-rate
mortgage loans were based on quoted market prices of similar loans,
adjusted for differences in loan characteristics. The fair values of
other fixed-rate loans were estimated using discounted cash flow
analyses, using interest rates currently being offered for loans with
similar terms. Because the allowance for credit losses provides for
the credit risk inherent in the loan and lease portfolio, neither the
cash flows nor discount rates were adjusted to reflect changes in
credit risk subsequent to when loans were originated. Nonperforming
loans have not been discounted.
Deposits: For deposits with no defined maturities, demand deposits,
----------
interest-bearing checking deposits, and savings deposits, FAS No. 107
defines fair value as the amount payable on demand at the reporting
date (i.e., their carrying amounts). Included in "Intangible assets"
at December 31, 1995 was $9,528,000 (net of accumulated amortization)
representing the value of core deposits assumed in deposit assumption
transactions. The value of the core deposit relationships built by the
Company over time was neither considered in the fair value amounts nor
recorded as an intangible asset in the statements of condition. The
carrying amounts for variable-rate certificates of deposit approximated
their fair values at the reporting date. Fair values for fixed-rate
certificates of deposit were estimated using a discounted cash flow
calculation that applies interest rates currently being offered on
certificates with similar maturities.
Federal funds purchased, securities sold under agreements to
------------------------------------------------------------
repurchase, and other borrowings: The carrying amounts of federal funds
---------------------------------
purchased, borrowings under repurchase agreements, and other short-term
borrowings approximate their fair values.
Federal Home Loan Bank borrowings: The carrying amounts of the
----------------------------------
variable-rate FHLB borrowings approximate their fair values. A
discounted cash flow analysis, using the current rates on FHLB
borrowings of similar maturities, was used to estimate the fair values
of the fixed-rate borrowings.
Long-term debt: The fair value of the Company's long-term debt was
---------------
estimated using discounted cash flow analyses, based on the Company's
current incremental borrowing rates for similar types of borrowing
arrangements.
Off-balance-sheet instruments: No premium or discount was ascribed to
------------------------------
loan commitments because virtually all funding will be at current market
rates. The estimated fair values of the interest rate swaps generally
represent an estimate of the amount the Company would receive or pay to
terminate the agreement at the reporting date. These values were based
on dealer quotes with respect to the amortizing swaps. For swaps with
fixed maturities, the estimated values represent the present value of
the cash flow stream discounted at current interest rate spreads. Fair
values of forward foreign currency and interest rate futures contracts
were based on quoted market prices.
22 - COMMITMENTS AND CONTINGENCIES
At December 31, 1995, the Company was committed to make future rental
payments under several long-term lease agreements for land, buildings, and
equipment. There were no material capital leases. Future minimum rental
31
<PAGE> 32
payments required under operating leases that have initial or remaining
non-cancelable lease terms in excess of one year as of December 31, 1995 are
as follows:
<TABLE>
<CAPTION>
Years ending December 31, (IN THOUSANDS)
--------------------------
<S> <C>
1996 . . . . . . . . . . . . . $ 3,981
1997 . . . . . . . . . . . . . 3,879
1998 . . . . . . . . . . . . . 3,472
1999 . . . . . . . . . . . . . 2,658
2000 . . . . . . . . . . . . . 2,401
Later years . . . . . . . . . 8,488
-------
Total . . . . . . . . . . . $24,879
=======
</TABLE>
Total rental expense (net of sublease income, which is not material)
amounted to $4,612,000, $5,215,000, and $5,676,000 for 1995, 1994, and 1993,
respectively.
The Company and its subsidiaries are defendants in various legal
proceedings that arise in the ordinary course of business. Claims in various
amounts of up to approximately $20,000,000 have been asserted in some of these
proceedings. However, after consultation with legal counsel, management
believes that potential liabilities, if any, arising from these claims would
not have a material adverse effect on the Company's business or financial
condition.
23 - CONDENSED FINANCIAL INFORMATION OF PARENT CORPORATION
In the following condensed financial information of Fourth Financial
Corporation (parent only), investments in subsidiaries are recorded using the
equity method of accounting.
32
<PAGE> 33
<TABLE>
Fourth Financial Corporation (Parent Only)
Condensed Statements Of Condition
<CAPTION>
DECEMBER 31,
------------------------
1995 1994
------------------------
(IN THOUSANDS)
<S> <C> <C>
Assets:
Cash in subsidiary banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100 $ 2,018
Interest-bearing deposits in subsidiary banks. . . . . . . . . . . . . . . . . . . 8,276 12,543
Securities repurchase agreement with subsidiary bank . . . . . . . . . . . . . . . 31,000 16,600
Investment securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446 1,111
Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 256
Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,099 19,983
Investments in bank subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 527,799 497,006
Investments in other subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 33,824 31,544
Other assets (including receivables from subsidiaries
of $7,755 in 1995 and $4,964 in 1994) . . . . . . . . . . . . . . . . . . . . . . 15,430 11,795
Cost in excess of net assets acquired. . . . . . . . . . . . . . . . . . . . . . . 49,868 48,240
-------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $684,842 $641,096
======== ========
Liabilities And Stockholders' Equity:
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ 20,000
Other liabilities (including amounts owed to subsidiaries
of $237 in 1995 and $46 in 1994). . . . . . . . . . . . . . . . . . . . . . . . . 10,871 8,343
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 7,452
-------- --------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,871 35,795
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673,971 605,301
-------- --------
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . . . . . $684,842 $641,096
======== ========
</TABLE>
<TABLE>
Fourth Financial Corporation (Parent Only)
Condensed Statements of Income
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Dividends from subsidiaries:
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 78,000 $126,445 $ 76,891
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 18,000 470
Fee income (principally from subsidiaries) . . . . . . . . . . . . . . . . 64,136 59,636 57,382
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,943 1,587 1,775
Securities gains (losses). . . . . . . . . . . . . . . . . . . . . . . . . 51 (5) 161
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 -- 315
-------- -------- --------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,258 205,663 136,994
-------- -------- --------
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . . 39,846 36,987 33,023
Furniture and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . 9,446 9,699 11,532
Net occupancy (includes rent paid to bank subsidiaries
of $2,719 in 1995, $2,515 in 1994, and $2,371 in 1993). . . . . . . . . . 3,342 3,399 3,039
Professional fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,247 3,248 2,518
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 639 2,407 2,459
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,515 2,187 2,180
Fees paid to bank subsidiaries . . . . . . . . . . . . . . . . . . . . . . 376 404 42
Amortization of cost in excess of net assets acquired. . . . . . . . . . . 3,790 3,300 2,765
Merger and integration costs . . . . . . . . . . . . . . . . . . . . . . . 28 1,964 1,936
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,529 13,272 12,701
-------- -------- --------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,758 76,867 72,195
-------- -------- --------
Income before income taxes, cumulative effect of a change in
accounting principle, and undistributed net income of subsidiaries. . . . 68,500 128,796 64,799
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,761 5,127 4,117
Cumulative effect of a change in accounting for income taxes . . . . . . . -- -- 681
Net income of subsidiaries in excess of (less than) dividends received . . (9,085) (50,799) 8,512
-------- -------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61,176 $ 83,124 $ 78,109
======== ======== ========
</TABLE>
33
<PAGE> 34
<TABLE>
Fourth Financial Corporation (Parent Only)
Condensed Statements of Cash Flows
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
-------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (IN THOUSANDS)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 61,176 $ 83,124 $ 78,109
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . 8,417 8,454 7,744
Write-down of goodwill associated with a
pooling transaction and other asset write-downs . . . . . . . . . . -- 1,061 1,250
Net income of subsidiaries (in excess of) less than
dividends received. . . . . . . . . . . . . . . . . . . . . . . . . 9,085 50,799 (8,512)
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . 762 (108) (889)
Investment securities (gains) losses . . . . . . . . . . . . . . . . 2 5 (161)
(Gain) loss on sale of equipment . . . . . . . . . . . . . . . . . . (39) 25 (8)
Change in assets and liabilities, net of effects
from purchases of acquired entities:
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,305) (1,266) (4,561)
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . (190) (1,239) 1,401
-------- -------- --------
Net cash provided by operating activities. . . . . . . . . . . . 75,908 140,855 74,373
-------- -------- --------
Cash Flows From Investing Activities:
Purchase of banks, net of cash acquired. . . . . . . . . . . . . . . . (7,916) (90,720) (30,043)
Purchases of premises and equipment. . . . . . . . . . . . . . . . . . (3,247) (6,971) (11,001)
Proceeds from sales of premises and equipment. . . . . . . . . . . . . 535 10 25
Purchase of available-for-sale securities. . . . . . . . . . . . . . . -- (368) (901)
Proceeds from sales of available-for-sale securities . . . . . . . . . 899 5 --
Investments in subsidiaries. . . . . . . . . . . . . . . . . . . . . . (1,150) (500) (15,290)
Liquidation of subsidiaries. . . . . . . . . . . . . . . . . . . . . . -- 637 --
-------- -------- --------
Net cash used in investing activities. . . . . . . . . . . . . . (10,879) (97,907) (57,210)
-------- -------- --------
Cash Flows From Financing Activities:
Net change in commercial paper . . . . . . . . . . . . . . . . . . . . -- -- (425)
Net change in other borrowings . . . . . . . . . . . . . . . . . . . . (20,000) 20,000 (5,850)
Repayment of long-term debt. . . . . . . . . . . . . . . . . . . . . . (7,452) (15,045) (14,345)
Purchase and retirement of preferred stock . . . . . . . . . . . . . . (583) -- --
Acquisition of common stock for treasury . . . . . . . . . . . . . . . (4,046) (10,018) (3,245)
Dividends on common stock. . . . . . . . . . . . . . . . . . . . . . . (33,445) (27,662) (22,705)
Dividends on preferred stock . . . . . . . . . . . . . . . . . . . . . (6,974) (7,000) (7,000)
Proceeds from exercise of stock options. . . . . . . . . . . . . . . . 17,236 2,544 3,407
Purchase of minority stockholder interest. . . . . . . . . . . . . . . -- (36) --
Net change in stock option loans . . . . . . . . . . . . . . . . . . . (1,550) (99) (726)
Capital transactions of pooled companies . . . . . . . . . . . . . . . -- (307) (1,670)
-------- -------- --------
Net cash used in financing activities. . . . . . . . . . . . . . (56,814) (37,623) (52,559)
-------- -------- --------
Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . 8,215 5,325 (35,396)
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . 31,161 25,836 61,232
-------- -------- --------
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . $ 39,376 $ 31,161 $ 25,836
======== ======== ========
Supplemental Disclosures:
Cash and cash equivalents:
Cash in subsidiary banks . . . . . . . . . . . . . . . . . . . . . . $ 100 $ 2,018 $ 880
Interest-bearing deposits in subsidiary banks. . . . . . . . . . . . 8,276 12,543 1,856
Securities repurchase agreements with subsidiary bank. . . . . . . . 31,000 16,600 23,100
-------- -------- --------
Total cash and cash equivalents. . . . . . . . . . . . . . . . . $ 39,376 $ 31,161 $ 25,836
======== ======== ========
Cash payments for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 878 $ 2,347 $ 2,497
======== ======== ========
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,897 $ 29,771 $ 21,985
======== ======== ========
Detail of entities acquired:
Fair value of bank stock and other assets acquired . . . . . . . . . $ 13,660 $ 77,629 $ 20,986
Cost in excess of net assets acquired. . . . . . . . . . . . . . . . 5,716 13,091 9,328
-------- -------- --------
Consideration given. . . . . . . . . . . . . . . . . . . . . . . . 19,376 90,720 30,314
Less fair market value of stock issued . . . . . . . . . . . . . . (11,023) -- --
-------- -------- --------
Cash paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,353 $ 90,720 $ 30,314
======== ======== ========
</TABLE>
34
<PAGE> 35
FOURTH FINANCIAL CORPORATION
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Fourth Financial Corporation
We have audited the accompanying consolidated statements of condition of
Fourth Financial Corporation as of December 31, 1995 and 1994 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, 1995.
These financial statements are the responsibility of the Company's
management. 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
Fourth Financial Corporation at December 31, 1995 and 1994, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
As discussed in Notes 1, 5 and 14 to the consolidated financial
statements, in 1993 the Company changed its method of accounting for
income taxes and investment securities.
/s/ Ernst & Young LLP
Ernst & Young LLP
Wichita, Kansas
January 19, 1996,
except for Note 2,
as to which the date
is January 31, 1996
35
<PAGE> 1
PRO FORMA FINANCIAL DATA
BOATMEN'S BANCSHARES, INC. AND FOURTH FINANCIAL CORPORATION
The pro forma combined balance sheet assumes that the Merger was
consummated on December 31, 1995, and the pro forma combined statements of
income assume that the Merger was consummated on January 1 of each period
presented. The pro forma combined balance sheet as of December 31, 1995,
and the pro forma combined statements of income for each of the years
in the three-year period ended December 31, 1995, give effect to the Merger
based on the historical consolidated financial statements of the Registrant
and Fourth Financial and their subsidiaries, and do not give effect to any
restatements that may be necessary to conform accounting policies. Such
adjustments, if any, are not expected to have a material impact on the
Registrant's restated historical consolidated financial statements. Other
supplementary financial information provided herein includes consolidated
balance sheets and income statements for each quarter ended period of 1995
as if the Registrant and Fourth Financial had always been combined.
The pro forma financial information previously filed on Form 8-K dated
February 2, 1996, included unaudited financial statements of Fourth Financial.
The pro forma financial information provided herein reflects audited financial
statements of Fourth Financial and includes additional net charge-offs of $6.8
million, a corresponding increase in the provision for loan losses of $6.8
million and foreclosed property writedowns of $.6 million. On an after-tax
basis, the aforementioned adjustments decreased net income for the year ended
December 31, 1995 as reported in the Form 8-K dated February 2, 1996, by
approximately $4.5 million.
<PAGE> 2
<TABLE>
PRO FORMA COMBINED BALANCE SHEET
December 31, 1995
(In Thousands)
<CAPTION>
Boatmen's Fourth Financial Boatmen's
Bancshares, Inc. Corporation Adjustments Pro Forma
---------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Cash and due from banks $2,175,804 $436,104 $2,611,908
Short-term investments 82,240 926 83,166
Securities:
Held to maturity 914,747 8,383 923,130
Available for sale 8,063,815 2,283,357 10,347,172
Trading 57,442 920 58,362
Federal funds sold and securities
purchased under resale agreements 1,099,696 125,975 1,225,671
Loans, net of unearned income 19,763,244 4,287,831 24,051,075
Less reserve for loan losses 382,984 69,576 452,560
------------- ----------- -------------
Loans, net 19,380,260 4,218,255 23,598,515
------------- ----------- -------------
Property and equipment 637,945 162,557 800,502
Other assets 1,291,881 201,524 1,493,405
------------- ----------- -------------
Total assets $33,703,830 $7,438,001 $41,141,831
============= =========== =============
LIABILITIES AND EQUITY:
Liabilities:
Demand deposits $5,862,531 $1,033,024 $6,895,555
Retail savings deposits and interest-
bearing transaction accounts 11,027,383 2,483,337 13,510,720
Time deposits 9,042,216 2,529,733 11,571,949
------------- ----------- -------------
Total deposits 25,932,130 6,046,094 31,978,224
------------- ----------- -------------
Federal funds purchased and securities
sold repurchase agreements 2,361,204 541,768 2,902,972
Short-term borrowings 1,359,993 21,500 1,381,493
Capital lease obligations 38,910 166 39,076
Long-term debt 615,129 93,498 708,627
Other liabilities 467,444 61,004 528,448
------------- ----------- -------------
Total liabilities 30,774,810 6,764,030 37,538,840
------------- ----------- -------------
Redeemable preferred stock 961 961
------------- ----------- -------------
Stockholders' Equity:
Preferred stock 99,324 99,324
Common stock 129,924 140,721 (112,577)<F1> 158,068
Surplus 984,557 115,704 112,577 <F1> 1,212,838
Retained earnings 1,827,023 312,397 2,139,420
Treasury stock (18,096) (18,096)
Unrealized net appreciation (depreciation),
available for sale securities 4,651 5,825 10,476
------------- ----------- ------------- -------------
Total stockholders' equity 2,928,059 673,971 0 3,602,030
------------- ----------- ------------- -------------
Total liabilities and stockholders'
equity $33,703,830 $7,438,001 $41,141,831
============= =========== =============
Common stockholders' equity per share $22.62 $20.42 $22.23
============= =========== =============
Period end shares outstanding 129,446,988 28,144,251 157,591,239
============= =========== =============
<FN>
<F1> Based on the exchange ratio of 1.0 share of Boatmen's Common for each share of Fourth common stock.
</TABLE>
<PAGE> 3
<TABLE>
PRO FORMA COMBINED STATEMENT OF INCOME
Year ended December 31, 1995
(In Thousands, except per share data)
<CAPTION>
Boatmen's Fourth Financial Boatmen's
Bancshares, Inc. Corporation Pro Forma
--------------------- --------------------- ----------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $1,711,549 $395,223 $2,106,772
Interest on short-term investments 4,527 87 4,614
Interest on federal funds sold and
securities purchased under resale
agreements 33,673 6,354 40,027
Interest on securities:
Taxable 511,958 139,259 651,217
Tax-exempt 56,108 11,525 67,633
--------------------- --------------------- ----------------
Total interest on securities 568,066 150,784 718,850
Interest on trading securities 1,956 93 2,049
--------------------- --------------------- ----------------
Total interest income 2,319,771 552,541 2,872,312
-------------------- --------------------- ----------------
Interest expense:
Interest on deposits 797,256 228,202 1,025,458
Interest on Federal funds purchased and
other short-term borrowings 257,239 30,851 288,090
Interest on capital lease obligations 3,875 21 3,896
Interest on long-term debt 47,338 16,535 63,873
--------------------- --------------------- ----------------
Total interest expense 1,105,708 275,609 1,381,317
--------------------- --------------------- ----------------
Net interest income 1,214,063 276,932 1,490,995
Provision for loan losses 46,688 13,068 59,756
--------------------- --------------------- ----------------
Net interest income after
provision for loan losses 1,167,375 263,864 1,431,239
--------------------- --------------------- ----------------
Noninterest income:
Trust fees 177,185 23,057 200,242
Service charges 190,823 40,761 231,584
Mortgage banking revenues 78,638 2,745 81,383
Credit card 49,753 13,779 63,532
Investment banking revenues 35,281 6,171 41,452
Securities gains (losses), net 14,719 (21,759) (7,040)
Other 129,979 20,034 150,013
--------------------- --------------------- ----------------
Total noninterest income 676,378 84,788 761,166
--------------------- --------------------- ----------------
Noninterest expense:
Staff 597,212 128,618 725,830
Net occupancy 80,170 18,592 98,762
Equipment 95,657 22,260 117,917
FDIC insurance 31,197 8,091 39,288
Intangible amortization 33,576 10,737 44,313
Advertising 34,032 8,711 42,743
Other 327,157 55,374 382,531
--------------------- --------------------- ----------------
Total noninterest expense 1,199,001 252,383 1,451,384
--------------------- --------------------- ----------------
Income before income tax expense 644,752 96,269 741,021
Income tax expense 225,917 35,093 261,010
--------------------- --------------------- ----------------
Net income $418,835 $61,176 $480,011
===================== ===================== ================
Net income available to
common shareholders $418,760 $54,108 $472,868
===================== ===================== ================
Net income per share $3.25 $1.96 $3.02
===================== ===================== ================
Average shares (YTD) 129,034 27,630 156,664
===================== ===================== ================
Returns:
Return on assets 1.28% 0.81% 1.19%
Return on total equity 15.15% 9.53% 14.09%
Return on common equity 15.15% 9.98% 14.30%
</TABLE>
<PAGE> 4
<TABLE>
PRO FORMA COMBINED STATEMENT OF INCOME
Year ended December 31, 1994
(In Thousands, except per share data)
<CAPTION>
Boatmen's Fourth Financial Boatmen's
Bancshares, Inc. Corporation Pro Forma
--------------------- --------------------- ----------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $1,439,508 $309,224 $1,748,732
Interest on short-term investments 3,472 97 3,569
Interest on federal funds sold and
securities purchased under resale
agreements 17,136 911 18,047
Interest on securities:
Taxable 498,727 162,216 660,943
Tax-exempt 60,488 16,712 77,200
--------------------- --------------------- ----------------
Total interest on securities 559,215 178,928 738,143
Interest on trading securities 2,525 104 2,629
--------------------- --------------------- ----------------
Total interest income 2,021,856 489,264 2,511,120
--------------------- --------------------- ----------------
Interest expense:
Interest on deposits 609,616 159,379 768,995
Interest on Federal funds purchased and
other short-term borrowings 173,244 29,262 202,506
Interest on capital lease obligations 3,983 33 4,016
Interest on long-term debt 46,725 19,935 66,660
--------------------- --------------------- ----------------
Total interest expense 833,568 208,609 1,042,177
--------------------- --------------------- ----------------
Net interest income 1,188,288 280,655 1,468,943
Provision for loan losses 25,340 836 26,176
--------------------- --------------------- ----------------
Net interest income after
provision for loan losses 1,162,948 279,819 1,442,767
--------------------- --------------------- ----------------
Noninterest income:
Trust fees 164,936 21,145 186,081
Service charges 186,786 38,693 225,479
Mortgage banking revenues 60,695 2,654 63,349
Credit card 44,628 10,871 55,499
Investment banking revenues 37,768 4,550 42,318
Securities gains, net 6,200 3,632 9,832
Other 114,131 16,969 131,100
--------------------- --------------------- ----------------
Total noninterest income 615,144 98,514 713,658
--------------------- --------------------- ----------------
Noninterest expense:
Staff 590,698 127,894 718,592
Net occupancy 82,985 17,924 100,909
Equipment 93,372 22,815 116,187
FDIC insurance 52,947 12,776 65,723
Intangible amortization 35,152 10,154 45,306
Advertising 33,491 9,514 43,005
Other 268,093 53,266 321,359
--------------------- --------------------- ----------------
Total noninterest expense 1,156,738 254,343 1,411,081
--------------------- --------------------- ----------------
Income before income tax expense 621,354 123,990 745,344
Income tax expense 213,552 40,866 254,418
--------------------- --------------------- ----------------
Net income $407,802 $83,124 $490,926
===================== ===================== ================
Net income available to
common shareholders $407,722 $76,124 $483,846
===================== ===================== ================
Net income per share $3.17 $2.80 $3.10
===================== ===================== ================
Average shares (YTD) 128,652 27,230 155,882
===================== ===================== ================
Returns:
Return on assets 1.29% 1.12% 1.26%
Return on total equity 16.14% 13.79% 15.69%
Return on common equity 16.14% 15.13% 15.97%
</TABLE>
<PAGE> 5
<TABLE>
PRO FORMA COMBINED STATEMENT OF INCOME
Year ended December 31, 1993
(In Thousands, except per share data)
<CAPTION>
Boatmen's Fourth Financial Boatmen's
Bancshares, Inc. Corporation Pro Forma
--------------------- --------------------- ----------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $1,282,802 $266,984 $1,549,786
Interest on short-term investments 2,101 233 2,334
Interest on federal funds sold and
securities purchased under resale
agreements 18,799 1,948 20,747
Interest on securities:
Taxable 491,599 160,631 652,230
Tax-exempt 62,310 19,534 81,844
--------------------- --------------------- ----------------
Total interest on securities 553,909 180,165 734,074
Interest on trading securities 2,570 135 2,705
--------------------- --------------------- ----------------
Total interest income 1,860,181 449,465 2,309,646
--------------------- --------------------- ----------------
Interest expense:
Interest on deposits 607,349 159,802 767,151
Interest on Federal funds purchased and
other short-term borrowings 82,351 12,735 95,086
Interest on capital lease obligations 4,082 23 4,105
Interest on long-term debt 40,767 8,844 49,611
--------------------- --------------------- ----------------
Total interest expense 734,549 181,404 915,953
--------------------- --------------------- ----------------
Net interest income 1,125,632 268,061 1,393,693
Provision for loan losses 63,885 7,037 70,922
--------------------- --------------------- ----------------
Net interest income after
provision for loan losses 1,061,747 261,024 1,322,771
--------------------- --------------------- ----------------
Noninterest income:
Trust fees 159,365 18,690 178,055
Service charges 176,850 33,983 210,833
Mortgage banking operations 68,623 2,399 71,022
Credit card 33,433 7,657 41,090
Investment banking revenues 41,934 6,139 48,073
Securities gains, net 8,348 1,555 9,903
Other 104,979 16,612 121,591
--------------------- --------------------- ----------------
Total noninterest income 593,532 87,035 680,567
--------------------- --------------------- ----------------
Noninterest expense:
Staff 568,490 118,828 687,318
Net occupancy 88,198 16,940 105,138
Equipment 89,643 23,804 113,447
FDIC insurance 52,007 13,295 65,302
Intangible amortization 36,265 12,549 48,814
Advertising 31,736 8,598 40,334
Other 276,658 63,538 340,196
--------------------- --------------------- ----------------
Total noninterest expense 1,142,997 257,552 1,400,549
--------------------- --------------------- ----------------
Income before income tax expense 512,282 90,507 602,789
Income tax expense 161,917 12,398 174,315
--------------------- --------------------- ----------------
Net income $350,365 $78,109 $428,474
===================== ===================== ================
Net income available to
common shareholders $350,280 $71,109 $421,389
===================== ===================== ================
Net income per share $2.75 $2.67 $2.74
===================== ===================== ================
Average shares (YTD) 127,304 26,640 153,944
===================== ===================== ================
Returns:
Return on assets 1.20% 1.16% 1.19%
Return on total equity 15.25% 13.71% 14.94%
Return on common equity 15.25% 15.21% 15.24%
<FN>
<F1> Net income includes $10,582 for the year ended December 31, 1993, for the cumulative
effect of SFAS No. 109 adoption by Fourth Financial.
</TABLE>
<PAGE> 6
<TABLE>
PRO FORMA CONSOLIDATED QUARTERLY EARNINGS TREND <F1>
(In Thousands, except per share data)
<CAPTION>
1995
--------------------------------------------------------------------------
First Quarter Second Quarter Third Quarter Fourth Quarter Full Year
--------------- -------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $498,555 $530,147 $540,089 $537,981 $2,106,772
Interest on short-term investments 918 1,010 1,146 1,540 4,614
Interest on federal funds sold and securities
purchased under resale agreements 8,801 9,440 10,025 11,761 40,027
Interest on securities:
Taxable 168,901 165,478 159,204 157,634 651,217
Tax-exempt 17,466 17,082 16,618 16,467 67,633
--------------- -------------- ------------- -------------- --------------
Total interest on securities 186,367 182,560 175,822 174,101 718,850
Interest on trading securities 435 361 546 707 2,049
--------------- -------------- ------------- -------------- --------------
Total interest income 695,076 723,518 727,628 726,090 2,872,312
--------------- -------------- ------------- -------------- --------------
Interest expense:
Interest on deposits 238,125 259,633 262,651 265,049 1,025,458
Interest on Federal funds purchased and
other short-term borrowings 74,544 76,998 74,099 62,449 288,090
Interest on capital lease obligations 977 976 972 971 3,896
Interest on long-term debt 18,433 16,448 14,906 14,086 63,873
--------------- -------------- ------------- -------------- --------------
Total interest expense 332,079 354,055 352,628 342,555 1,381,317
--------------- -------------- ------------- -------------- --------------
Net interest income 362,997 369,463 375,000 383,535 1,490,995
Provision for loan losses 10,743 10,171 12,391 26,451 59,756
--------------- -------------- ------------- -------------- --------------
Net interest income after
provision for loan losses 352,254 359,292 362,609 357,084 1,431,239
--------------- -------------- ------------- -------------- --------------
Noninterest income:
Trust fees 45,670 51,902 50,444 52,226 200,242
Service charges 55,234 57,827 58,802 59,721 231,584
Mortgage banking revenues 23,549 16,967 20,422 20,445 81,383
Credit card 15,164 14,864 16,763 16,741 63,532
Investment banking revenues 10,057 10,294 10,422 10,679 41,452
Securities gains (losses), net (22,017) 3,005 938 11,034 (7,040)
Other 37,485 36,421 37,765 38,342 150,013
--------------- -------------- ------------- -------------- --------------
Total noninterest income 165,142 191,280 195,556 209,188 761,166
--------------- -------------- ------------- -------------- --------------
Noninterest expense:
Staff 179,088 177,766 182,575 186,401 725,830
Net occupancy 25,124 23,661 25,613 24,364 98,762
Equipment 28,994 28,782 28,596 31,545 117,917
FDIC insurance 16,594 16,594 1,155 4,945 39,288
Intangible amortization 10,897 11,024 11,125 11,267 44,313
Advertising 9,909 11,469 9,689 11,676 42,743
Other 104,180 87,033 92,735 98,583 382,531
--------------- -------------- ------------- -------------- --------------
Total noninterest expense 374,786 356,329 351,488 368,781 1,451,384
--------------- -------------- ------------- -------------- --------------
Income before income tax expense 142,610 194,243 206,677 197,491 741,021
Income tax expense 52,347 66,439 72,995 69,229 261,010
--------------- -------------- ------------- -------------- --------------
Net income $90,263 $127,804 $133,682 $128,262 $480,011
=============== ============== ============= ============== ==============
Net income available to
common shareholders $88,494 $126,042 $131,924 $126,408 $472,868
=============== ============== ============= ============== ==============
Net income per share $0.57 $0.80 $0.84 $0.81 $3.02
=============== ============== ============= ============== ==============
Average shares (YTD) 156,232 156,541 156,578 156,664 156,664
=============== ============== ============= ============== ==============
Returns:
Return on assets 0.90% 1.27% 1.32% 1.27% 1.19%
Return on total equity 11.12% 15.13% 15.48% 14.48% 14.09%
Return on common equity 11.25% 15.38% 15.73% 14.68% 14.30%
<FN>
<F1> Includes Boatmen's Bancshares, Inc. and Fourth Financial Corporation on a combined basis.
</TABLE>
<PAGE> 7
<TABLE>
PRO FORMA CONSOLIDATED BALANCE SHEET TREND <F1>
(In Thousands)
<CAPTION>
3/31/95 6/30/95 9/30/95 12/31/95
---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
ASSETS:
Cash and due from banks $2,239,319 $2,310,520 $2,205,926 $2,611,908
Short-term investments 44,830 52,750 61,249 83,166
Securities:
Held to maturity 7,195,695 7,010,999 6,802,763 923,130
Available for sale 4,752,262 4,492,629 4,456,289 10,347,172
Trading 19,795 28,255 29,272 58,362
Federal funds sold and securities
purchased under resale agreements 419,839 784,254 690,132 1,225,671
Loans, net of unearned income 23,554,838 24,307,529 24,184,508 24,051,075
Less reserve for loan losses 454,731 457,221 461,352 452,560
---------------- --------------- --------------- ---------------
Loans, net 23,100,107 23,850,308 23,723,156 23,598,515
---------------- --------------- --------------- ---------------
Property and equipment 802,124 801,399 802,170 800,502
Other assets 1,513,706 1,581,420 1,512,482 1,493,405
---------------- --------------- --------------- ---------------
Total assets $40,087,677 $40,912,534 $40,283,439 $41,141,831
================ =============== =============== ===============
LIABILITIES AND EQUITY:
Liabilities:
Demand deposits $5,891,811 $6,233,310 $6,439,391 $6,895,555
Retail savings deposits and interest-
bearing transaction accounts 12,306,852 12,456,252 12,558,121 13,510,720
Time deposits 11,645,044 11,768,983 11,542,671 11,571,949
---------------- --------------- --------------- ---------------
Total deposits 29,843,707 30,458,545 30,540,183 31,978,224
---------------- --------------- --------------- ---------------
Federal funds purchased and securities
sold repurchase agreements 3,216,314 2,708,270 3,022,423 2,902,972
Short-term borrowings 2,244,209 2,855,536 1,993,157 1,381,493
Capital lease obligations 40,075 39,699 39,373 39,076
Long-term debt 917,775 790,562 692,705 708,627
Other liabilities 506,020 626,749 523,717 528,448
---------------- --------------- --------------- ---------------
Total liabilities 36,768,100 37,479,361 36,811,558 37,538,840
---------------- --------------- --------------- ---------------
Redeemable preferred stock 1,142 1,132 1,007 961
---------------- --------------- --------------- ---------------
Stockholders' Equity:
Preferred stock 99,969 99,469 99,362 99,324
Common stock 156,559 158,442 157,562 158,068
Surplus 1,181,482 1,203,437 1,205,870 1,212,838
Retained earnings 1,923,809 1,997,785 2,073,895 2,139,420
Treasury stock (2,151) (23,194) (59,205) (18,096)
Unrealized net appreciation (depreciation),
available for sale securities (41,233) (3,898) (6,610) 10,476
---------------- --------------- --------------- ---------------
Total stockholders' equity 3,318,435 3,432,041 3,470,874 3,602,030
---------------- --------------- --------------- ---------------
Total liabilities and stockholders'
equity $40,087,677 $40,912,534 $40,283,439 $41,141,831
================ =============== =============== ===============
Common stockholders' equity per share $20.57 $21.26 $21.62 $22.23
================ =============== =============== ===============
Period end shares outstanding 156,481,540 156,726,993 155,912,820 157,591,239
================ =============== =============== ===============
<FN>
<F1> Includes Boatmen's Bancshares, Inc. and Fourth Financial Corporation on a combined basis.
</TABLE>
