<PAGE>
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
HARRIS BANKCORP, INC.
111 West Monroe Street
Chicago, Illinois 60603
(312) 461-2121
Commission File Number 0-18179
Incorporated in the State of Delaware
IRS Employer Identification No. 36-2722782
Harris Bankcorp, Inc. (the "Corporation") has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and has been subject to such filing requirements for the
past 90 days.
At May 12, 1995 the Corporation had 6,667,490 shares of $8 par value common
stock outstanding.
<PAGE>
Part 1. Financial Information
- - -----------------------------
Item 1. Financial Statements.
Consolidated Statement of Condition as of March 31, 1995, December 31,
1994 and March 31, 1994.
Consolidated Statement of Income for the quarter ended March 31, 1995
and 1994.
Consolidated Statement of Changes in Stockholder's Equity and
Consolidated Statement of Cash Flows for the three months ended March
31, 1995 and 1994.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The above financial statements and financial review, included in the
Corporation's 1995 First Quarter Report, are filed as Exhibit A and incorporated
herein by reference.
Part II. Other Information
- - --------------------------
Items 1, 2, 3, 4, and 5 are being omitted from this report because such items
are not applicable to the reporting period.
Item 6. Exhibits and Reports on Form 8-K.
(a) No exhibits are included in this report because such items are not
applicable to the reporting period.
(b) No Current Report on Form 8-K was filed during the quarter ended
March 31, 1995, for which this report is filed.
SIGNATURES
- - ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, Harris
Bankcorp, Inc., has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on the 12th day of May 1995.
/s/ Pierre O. Greffe
___________________________
Pierre O. Greffe
Chief Financial Officer
/s/ Paul R. Skubic
___________________________
Paul R. Skubic
Chief Accounting Officer
<PAGE>
EXHIBIT A--HARRIS BANKCORP, INC.
1995 FIRST QUARTER REPORT
March 31, 1995
<PAGE>
FINANCIAL HIGHLIGHTS Harris Bankcorp, Inc. and Subsidiaries
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quarter Ended March 31
1995 1994 Change
------------------------------
<S> <C> <C> <C>
- - --------------------------------------------------------------------------------------------------
EARNINGS AND DIVIDENDS (IN THOUSANDS)
Net interest income............................................... $117,414 $105,576 11%
Net interest income (fully taxable equivalent).................... 122,853 111,405 10
Provision for credit losses....................................... 8,662 13,430 -36
Noninterest income................................................ 80,601 80,540 -
Noninterest expenses.............................................. 138,242 138,618 -
Net income........................................................ 34,718 27,421 27
Cash dividends.................................................... 14,000 13,509 4
- - --------------------------------------------------------------------------------------------------
SELECTED RATIOS
Return on average stockholder's equity............................ 13.59% 10.98% 261bp
Return on average assets.......................................... 0.95 .82 13
Tier 1 risk-based capital ratio................................... 8.80 8.90 -10
Total risk-based capital ratio.................................... 12.36 12.86 -50
Tier 1 leverage ratio............................................. 7.12 7.24 -12
Allowance for possible credit losses to total loans (period-end).. 1.52 1.78 -26
- - --------------------------------------------------------------------------------------------------
DAILY AVERAGE BALANCES (IN MILLIONS)
Loans, net of unearned income..................................... $ 8,195 $ 7,473 10%
Portfolio securities.............................................. 3,465 2,947 18
Money market assets............................................... 1,051 1,260 -17
Total interest-earning assets..................................... 12,764 11,721 9
Total assets...................................................... 14,822 13,607 9
Deposits.......................................................... 9,913 9,530 4
Short-term borrowings............................................. 2,803 2,354 19
Stockholder's equity.............................................. 1,036 1,013 2
- - --------------------------------------------------------------------------------------------------
BALANCES AT QUARTER-END (IN MILLIONS)
Loans, net of unearned income..................................... $ 8,370 $ 7,785 8%
Allowance for possible credit losses.............................. 127 139 -9
Portfolio securities.............................................. 3,283 2,865 15
Total assets...................................................... 15,062 13,900 8
Deposits.......................................................... 9,710 9,594 1
Stockholder's equity.............................................. 1,063 1,012 5
</TABLE>
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REPORT FROM MANAGEMENT
- - --------------------------------------------------------------------------------
Harris Bankcorp's first quarter earnings were $34.7 million, a 27% increase from
1994 first quarter net income of $27.4 million. The earnings improvement is
attributable to strong loan growth, cost control, and a lower provision for
credit losses.
Net interest income on a fully taxable equivalent basis was $122.9 million, up
$11.4 million or 10% from first quarter last year. Average earning assets rose
9% to $12.8 billion from $11.7 billion in first quarter 1994, primarily
attributable to an increase of $722 million or 10% in average loans. Commercial
loans and charge card outstandings were the strongest contributors to this
growth. Net interest margin increased to 3.90% from 3.83% in the same quarter
last year, reflecting an improved mix of earning assets.
Noninterest income of $80.6 million was unchanged from the same quarter last
year. In 1995, revenue from money market and bond trading activities improved by
$3.1 million compared to first quarter 1994. Foreign exchange income was lower
by $1.7 million, and service fees and charges declined by $1.3 million in the
higher interest rate environment. In addition, Harris Bankcorp realized a net
gain of $2.1 million from sales of portfolio securities in 1995, compared to a
$3.1 million net gain in the first quarter one year earlier.
- - --------------------------------------------------------------------------------
1
<PAGE>
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First quarter noninterest expenses of $138.2 million were also virtually
unchanged from first quarter last year. Income tax expense rose by $9.7 million
reflecting both higher pretax income and a favorable adjustment of tax reserves
in the prior year's first quarter.
The first quarter 1995 provision for credit losses of $8.7 million was down
from $13.4 million in the first quarter of 1994. Net loan charge-offs during the
current quarter were $6.0 million compared to $6.3 million in the same period
last year, primarily a result of higher recoveries on real estate loans.
Nonperforming assets at March 31, 1995 totaled $89 million, or 1.1% of total
loans, compared to $95 million or 1.2% at December 31, 1994, and $116 million or
1.5% a year ago. At March 31, 1995, the allowance for possible credit losses was
$127 million, equal to 1.5% of loans outstanding, compared to $139 million or
1.8% at the end of the 1994 first quarter. As a result, the ratio of the
allowance for possible credit losses to nonperforming assets increased from 119%
at March 31, 1994 to 143% at March 31, 1995.
At March 31, 1995, equity capital of Harris Bankcorp amounted to $1.06
billion, up from $1.01 billion at March 31, 1994. The regulatory capital
leverage ratio was 7.12% for the first quarter of 1995 compared to 7.24% in the
same quarter one year earlier. Harris Bankcorp's capital ratio substantially
exceeds the prescribed regulatory minimum for bank holding companies. At March
31, 1995, the Corporation's Tier 1 and total risk-based capital ratios were
8.80% and 12.36%, respectively, compared to respective ratios of 8.90% and
12.86% at March 31, 1994. Regulatory minimums for these capital measures are 4%
and 8%.
Annualized return on average stockholder's equity was 13.59% in the current
quarter and 10.98% a year ago, while the annualized first quarter 1995 return on
average assets was .95% compared to .82% in first quarter 1994.
After a distinguished career spanning more than 30 years, B. Kenneth West
stepped down as Chairman of the Board this month. Ken led the Corporation
through a period of rapid expansion as Chief Executive Officer from 1984 to
1993, and was instrumental in ensuring the success of our merger with Bank of
Montreal. The Board elected Alan G. McNally Chairman, in addition to his duties
as Chief Executive Officer.
Richard M. Jaffe, Chairman and Chief Executive Officer of Oil-Dri
Corporation of America and James O. Webb, President, James O. Webb & Associates,
Inc. were elected as new Board members.
The Harris organization added another branch to its growing community bank
network. In January, Harris Bank Libertyville opened its new branch in
Mundelein, located at 685 S. Route 83. Also during the first quarter, the U.S.
Small Business Administration named Harris Trust and Savings Bank as a Preferred
Lender. Harris Trust and Savings Bank is the largest of only ten banks in
Illinois to hold this distinction.
/s/ Alan G. McNally /s/ Donald S. Hunt
Alan G. McNally Donald S. Hunt
Chairman and President and
Chief Executive Officer Chief Operating Officer April 28, 1995
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2
<PAGE>
CONSOLIDATED STATEMENT OF INCOME Harris Bankcorp, Inc. and Subsidiaries
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<TABLE>
<CAPTION>
Quarter Ended March 31
----------------------
(in thousands except per share data) 1995 1994
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Loans, including fees................................................................ $180,501 $127,692
Money market assets:
Deposits at banks............................................................ 9,970 5,623
Federal funds sold and securities purchased under agreement to resell........ 5,513 4,963
Trading account...................................................................... 849 480
Securities available for sale:
U.S. Treasury and Federal agency............................................. 35,128 24,829
Other........................................................................ 2,064 607
Securities held to maturity:
U.S. Treasury and Federal agency............................................. 9,643 3,433
State and municipal.......................................................... 8,486 9,330
Other........................................................................ 142 727
-------- --------
Total interest income....................................................... 252,296 177,684
-------- --------
INTEREST EXPENSE
Deposits............................................................................. 85,836 49,956
Short-term borrowings................................................................ 38,700 17,757
Short-term senior notes.............................................................. 4,574 --
Long-term notes...................................................................... 5,772 4,395
-------- --------
Total interest expense....................................................... 134,882 72,108
-------- --------
NET INTEREST INCOME.................................................................. 117,414 105,576
Provision for credit losses.......................................................... 8,662 13,430
-------- --------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES................................ 108,752 92,146
-------- --------
NONINTEREST INCOME
Trust and investment management fees................................................. 38,745 37,625
Trading account...................................................................... 1,933 (1,208)
Foreign exchange..................................................................... 4,557 6,218
Charge card.......................................................................... 9,245 8,061
Service fees and charges............................................................. 17,653 18,996
Securities gains..................................................................... 2,062 3,148
Other................................................................................ 6,406 7,700
-------- --------
Total noninterest income..................................................... 80,601 80,540
-------- --------
NONINTEREST EXPENSES
Salaries and other compensation...................................................... 62,540 60,814
Pension, profit sharing and other employee benefits.................................. 17,701 20,912
Net occupancy........................................................................ 11,354 11,066
Equipment............................................................................ 9,826 10,696
Marketing............................................................................ 5,795 5,494
Communication and delivery........................................................... 4,729 4,152
Deposit insurance.................................................................... 3,818 3,918
Other................................................................................ 22,479 21,566
-------- --------
Total noninterest expenses................................................... 138,242 138,618
-------- --------
Income before income taxes........................................................... 51,111 34,068
Applicable income taxes.............................................................. 16,393 6,647
-------- ---------
NET INCOME................................................................... $ 34,718 $ 27,421
======== =========
Earnings per Common Share (based on 6,667,490 average shares outstanding)
Net income........................................................................... $ 5.21 $ 4.11
======== =========
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</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CONDITION Harris Bankcorp, Inc. and Subsidiaries
- - ----------------------------------------------------------------------------------------------------------------------------------
March 31 December 31 March 31
(in thousands except share data) 1995 1994 1994
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash and demand balances due from banks............................................... $ 1,115,794 $ 1,399,781 $ 1,085,489
Money market assets:
Interest-bearing deposits at banks................................................... 645,626 757,227 719,077
Federal funds sold and securities purchased under agreement to resell................ 585,906 404,226 609,235
Trading account assets................................................................ 23,908 36,067 42,224
Portfolio securities:
Held to maturity (market value of $1,003,949 in 1995, $1,101,927 and $791,025
in 1994)............................................................................ 994,789 1,107,659 758,998
Available for sale................................................................... 2,287,788 2,581,293 2,106,089
Loans, net of unearned income of $19,036 in 1995, $20,724 and $21,568 in 1994......... 8,369,583 8,229,254 7,785,464
Allowance for possible credit losses.................................................. (127,432) (124,734) (138,779)
Premises and equipment................................................................ 222,501 221,494 223,001
Customers' liability on acceptances................................................... 108,888 125,113 66,441
Other assets.......................................................................... 834,696 594,159 642,710
----------- ----------- -----------
TOTAL ASSETS........................................................................ $15,062,047 $15,331,539 $13,899,949
=========== =========== ===========
LIABILITIES
Deposits in domestic offices -- noninterest-bearing $ 2,844,734 $ 3,222,043 $ 2,866,639
-- interest-bearing...................................... 4,200,131 4,214,273 4,460,582
Deposits in foreign offices -- noninterest-bearing.................................... 64,487 31,903 27,115
-- interest-bearing....................................... 2,600,218 2,451,513 2,239,408
----------- ----------- -----------
Total deposits...................................................................... 9,709,570 9,919,732 9,593,744
Federal funds purchased and securities sold under agreement to repurchase............. 2,113,831 2,632,167 1,620,884
Commercial paper outstanding.......................................................... 260,557 306,737 336,796
Other short-term borrowings........................................................... 412,625 670,362 523,636
Short-term senior notes............................................................... 500,000 - -
Acceptances outstanding............................................................... 108,888 125,113 66,441
Accrued interest, taxes and other expenses............................................ 138,437 126,723 108,855
Other liabilities..................................................................... 455,937 230,741 338,891
Long-term notes....................................................................... 298,844 298,810 298,712
----------- ----------- -----------
TOTAL LIABILITIES................................................................... 13,998,689 14,310,385 12,887,959
----------- ----------- -----------
STOCKHOLDER'S EQUITY
Preferred stock (no par value); authorized 1,000,000 shares; issued none.............. - - -
Common stock ($8 par value); authorized 10,000,000 shares;
issued and outstanding 6,667,490 shares.............................................. 53,340 53,340 53,340
Surplus............................................................................... 203,897 203,897 203,897
Retained earnings..................................................................... 817,335 796,617 747,921
Unrealized holding (losses)gains, net of deferred taxes............................... (11,214) (32,700) 6,832
----------- ----------- -----------
TOTAL STOCKHOLDER'S EQUITY.......................................................... 1,063,358 1,021,154 1,011,990
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY.......................................... $15,062,047 $15,331,539 $13,899,949
=========== =========== ===========
</TABLE>
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4
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY Harris Bankcorp, Inc. and Subsidiaries
- - -----------------------------------------------------------------------------------------------------------------------
(in thousands) 1995 1994
- - -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at January 1........................................................................ $ 1,021,154 $ 1,017,672
Net income................................................................................. 34,718 27,421
Cash dividends............................................................................. (14,000) (13,509)
Net change in unrealized holding gains/losses on available for sale securities, net of tax. 21,486 (19,594)
----------- -----------
Balance at March 31......................................................................... $ 1,063,358 $ 1,011,990
=========== ===========
CONSOLIDATED STATEMENT OF CASH FLOWS
- - -----------------------------------------------------------------------------------------------------------------------
Quarter Ended March 31
--------------------------
(in thousands) 1995 1994
- - -----------------------------------------------------------------------------------------------------------------------
Operating Activities:
Net income................ $ 34,718 $ 27,421
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Provision for credit losses................................................................ 8,662 13,430
Depreciation and amortization, including intangibles....................................... 11,834 12,656
Deferred tax benefit....................................................................... (1,342) (3,425)
Gain on sales of portfolio securities...................................................... (2,062) (3,148)
Trading account net sales (purchases)...................................................... 12,159 7,837
Net (increase) decrease in interest receivable............................................. 3,968 (766)
Net increase in interest payable........................................................... 11,924 4,439
Net (increase) decrease in loans held for resale........................................... (87,051) 123,367
Other, net................................................................................. 15,377 (72,434)
----------- -----------
Net cash provided by operating activities................................................. 8,187 109,377
----------- -----------
Investing Activities:
Net (increase) decrease in interest-bearing deposits at banks............................. 111,601 (191,597)
Net increase in Federal funds sold and securities purchased under agreement to resell...... (181,680) (91,325)
Proceeds from maturities of securities held to maturity.................................... 222,778 167,777
Purchases of securities held to maturity................................................... (107,994) (179,475)
Proceeds from sales of securities available for sale....................................... 447,381 38,796
Proceeds from maturities of securities available for sale.................................. 922,526 1,475,812
Purchases of securities available for sale................................................. (1,038,048) (1,226,749)
Net increase in loans...................................................................... (66,245) (211,201)
Proceeds from sales of premises and equipment.............................................. 8,344 27,950
Purchases of premises and equipment........................................................ (18,741) (34,038)
Other, net................................................................................. (45,681) 28,112
----------- -----------
Net cash (used) provided by investing activities.......................................... 254,241 (195,938)
----------- -----------
Financing Activities:
Net increase (decrease) in deposits........................................................ (210,162) 217,873
Net decrease in Federal funds purchased and securities sold under agreement to repurchase.. (518,336) (240,177)
Net increase (decrease) in commercial paper outstanding.................................... (46,180) 10,528
Net increase (decrease) in short-term borrowings........................................... (257,737) 64,444
Proceeds from issuance of short-term senior notes.......................................... 500,000 -
Cash dividends paid........................................................................ (14,000) (13,509)
----------- -----------
Net cash provided (used) by financing activities.......................................... (546,415) 39,159
----------- -----------
Net decrease in cash and demand balances due from banks................................... (283,987) (47,402)
Cash and demand balances due from banks at January 1...................................... 1,399,781 1,132,891
----------- -----------
Cash and demand balances due from banks at March 31....................................... $1,115,794 $1,085,489
=========== ===========
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</TABLE>
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS Harris Bankcorp, Inc. and Subsidiaries
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1. BASIS OF PRESENTATION
Harris Bankcorp, Inc. (the "Corporation") is a wholly-owned subsidiary of
Bankmont Financial Corp. (a wholly-owned subsidiary of Bank of Montreal). The
consolidated financial statements of the Corporation include the accounts of the
Corporation and its wholly-owned subsidiaries. Significant intercompany accounts
and transactions have been eliminated. Certain reclassifications were made to
conform prior years' financial statements to the current year's presentation.
The consolidated financial statements have been prepared by management from
the books and records of the Corporation, without audit by independent certified
public accountants. However, these statements reflect all adjustments and
disclosures which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented and should be read
in conjunction with the notes to financial statements included in the
Corporation's Form 10-K for the year ended December 31, 1994.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission.
Because the results of operations are so closely related to and responsive to
changes in economic conditions, the results for any interim period are not
necessarily indicative of the results that can be expected for the entire year.
- - --------------------------------------------------------------------------------
2. LEGAL PROCEEDINGS
Certain subsidiaries of the Corporation are defendants in various legal
proceedings arising in the normal course of business. In the opinion of
management, based on the advice of legal counsel, the ultimate resolution of
these matters will not have a material adverse effect on the Corporation's
consolidated financial position.
- - --------------------------------------------------------------------------------
3. CASH FLOWS
For purposes of the Corporation's Consolidated Statement of Cash Flows, cash and
cash equivalents is defined to include cash and demand balances due from banks.
Cash interest payments (net of amounts capitalized) for the three months ended
March 31, totaled $122,958,000 and $67,699,000 in 1995 and 1994, respectively.
Cash income tax payments over the same periods totaled $4,694,000 and
$8,398,000, respectively.
- - --------------------------------------------------------------------------------
4. ACCOUNTING CHANGES
During the first quarter of 1995, the Corporation adopted Statement of
Financial Accounting Standards (SFAS) No. 114--Accounting by Creditors for
Impairment of a Loan and SFAS No. 118--Accounting by Creditors for Impairment of
a Loan--Income Recognition and Disclosures. SFAS No. 114 addresses accounting by
creditors for impairment of certain loans. It requires that impaired loans
within the scope of the statement (primarily commercial credits) be measured
based on the present value of expected future cash flows (discounted at the
loan's effective interest rate) or, alternatively, at the loan's observable
market price or the fair value of supporting collateral. The Corporation will
determine loan impairment when assessing the adequacy of the allowance for
possible credit losses. SFAS No. 118 permits existing income recognition
practices to continue. The adoption of these statements did not have a material
impact on the Corporation's net income or financial position.
- - --------------------------------------------------------------------------------
5. FOREIGN EXCHANGE ACTIVITIES
Effective April 3, 1995, the Corporation and Bank of Montreal (BMO) agreed to
combine their U.S. foreign exchange activities (FX). Under this arrangement, FX
net profits will be shared by the Corporation and BMO in accordance with a
specific formula set forth in the agreement. This agreement expires in April
2002 but may be extended at that time. Either party may terminate the
arrangement at their option. Management of the Corporation does not believe that
1995 net income will be materially affected by this agreement.
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6
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATISTICAL SUMMARY Harris Bankcorp, Inc. and Subsidiaries
- - -----------------------------------------------------------------------------------------------------------------------------
Quarter Ended March 31
--------------------------------------------
Daily Average Balances (in millions) 1995 1994
Average Rates Earned and Paid ---------------------- -------------------
(fully taxable equivalent basis) Balances Rates Balances Rates
- - -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Money market assets:
Interest-bearing deposits at banks..................................... $ 675 5.99% $ 605 3.77%
Federal funds sold and securities purchased under agreement to resell.. 376 5.95 655 3.07
------- --------
Total money market assets............................................. 1,051 5.98 1,260 3.41
Trading account assets.................................................. 53 7.87 40 6.14
Portfolio securities:
Held to maturity:
U.S. Treasury and Federal agency....................................... 624 6.27 214 6.52
State and municipal.................................................... 431 12.05 479 12.01
Other.................................................................. 8 5.59 59 4.96
------- --------
Total held to maturity................................................ 1,063 8.61 752 9.90
Available for sale:
U.S. Treasury and Federal agency....................................... 2,257 6.40 2,119 4.75
Other.................................................................. 145 6.13 77 3.19
------- --------
Total available for sale.............................................. 2,402 6.39 2,196 4.70
------- --------
Total portfolio securities.......................................... 3,465 7.08 2,948 6.02
Loans, net of unearned income........................................... 8,195 8.93 7,473 6.94
------- --------
Total interest-earning assets......................................... 12,764 8.18 11,721 6.33
Cash and demand balances due from banks................................. 1,196 1,199
Other assets............................................................ 862 687
------- --------
Total assets.......................................................... $14,822 $13,607
======= ========
Liabilities and Stockholder's Equity
Interest checking deposits and money market accounts.................... $ 1,662 3.17 $ 1,917 2.31
Savings deposits and certificates....................................... 2,332 4.69 2,161 3.50
Other time deposits..................................................... 520 6.00 529 3.50
Foreign office time deposits............................................ 2,559 6.05 1,934 3.31
------- --------
Total interest-bearing deposits....................................... 7,073 4.92 6,541 3.10
Short-term borrowings................................................... 2,803 5.59 2,354 3.05
Short-term senior notes................................................. 293 6.23 - -
Long-term notes......................................................... 299 7.73 299 5.89
------- --------
Total interest-bearing liabilities.................................... 10,468 5.22 9,194 3.18
Noninterest-bearing deposits............................................ 2,840 2,989
Other liabilities....................................................... 478 411
Stockholder's equity.................................................... 1,036 1,013
------- --------
Total liabilities and stockholder's equity............................ $14,822 $13,607
======= ========
Net interest margin (related to average interest-earning assets)........ 3.90% 3.83%
===== =====
</TABLE>
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7
<PAGE>
FINANCIAL REVIEW Harris Bankcorp, Inc. and Subsidiaries
- - --------------------------------------------------------------------------------
FIRST QUARTER 1995 COMPARED WITH FIRST QUARTER 1994
- - --------------------------------------------------------------------------------
SUMMARY
The Corporation's first quarter 1995 net income was $34.7 million, an increase
of 27% from first quarter 1994 earnings of $27.4 million. This improvement is
attributable to strong loan growth and the resulting increase in net interest
income, along with stringent cost control and a lower provision for credit
losses.
Net interest income on a fully taxable equivalent ("FTE") basis was $122.9
million, up $11.4 million or 10% from first quarter last year, reflecting a 7
basis point increase in net interest margin plus a 9% increase in average
earning assets. The provision for credit losses fell from $13.4 million in first
quarter 1994 to $8.7 million currently. Both noninterest income and noninterest
expenses were virtually unchanged from first quarter last year.
The Corporation's annualized returns on average assets and equity were .95%
and 13.59%, respectively, for first quarter 1995 compared to returns of .82% and
10.98%, respectively, for the same quarter last year.
Additional commentary on the matters included in the above summary are
provided in the following sections of this quarterly report.
- - --------------------------------------------------------------------------------
NET INTEREST INCOME
<TABLE>
<CAPTION>
Quarter Ended March 31
----------------------
(in thousands) 1995 1994
- - --------------------------------------------------------------------------------
<S> <C> <C>
Interest income......................................... $252,296 $177,684
Fully taxable equivalent adjustment..................... 5,439 5,829
-------- --------
Interest income (fully taxable equivalent basis)...... 257,735 183,513
Interest expense........................................ 134,882 72,108
-------- --------
Net interest income (fully taxable equivalent basis).. $122,853 $111,405
======== ========
Increase (decrease) due to change in:
Volume................................................ $ 9,984 $ 12,810
Rate.................................................. 1,464 (17,128)
-------- --------
Total increase (decrease) in net interest income.... $ 11,448 $ (4,318)
======== ========
</TABLE>
First quarter net interest income on an FTE basis was $122.9 million, up 10%
from $111.4 million in first quarter 1994. Average earning assets increased 9%,
or $1.04 billion, and net interest margin, the other principal determinant of
net interest income, increased from 3.83% to 3.90% in the current quarter.
Average loans rose $722 million, or 10%, and represented over two-thirds of
the overall increase in average earning assets. Loan categories showing most
significant growth over prior year totals were commercial, charge card and
installment which increased by $319 million, $169 million and $138 million,
respectively. Average portfolio securities were up 18%, or $518 million,
reflecting greater holdings of U.S. Treasury securities partially offset by
decreases in Federal agencies and state and municipal securities. Money market
assets declined by $209 million or 17% quarter-to-quarter.
Funding for this asset growth came primarily from wholesale foreign time
deposits, short-term borrowings and short-term senior notes issued by Harris
Trust and Savings Bank which increased by an average of $625 million, $449
million and $293 million, respectively.
- - --------------------------------------------------------------------------------
8
<PAGE>
- - -------------------------------------------------------------------------------
The Corporation's consolidated net interest margin increased to 3.90% from
3.83% in the same quarter last year, primarily reflecting an improved mix of
earning assets as indicated above. This was somewhat offset by the heavy
reliance on wholesale deposits for incremental funding, the sale of relatively
higher-yielding securities during the quarter and rising rates on retail funds.
Average Earnings Assets--Net Interest Margin
Quarter Ended March 31
-----------------------------------
Daily Average Balances (in millions) 1995 1994
Average Rates Earned and Paid ---------------- ----------------
(fully taxable equivalent basis) Balances Rates Balances Rates
- - -------------------------------------------------------------------------------
Average interest-earning assets........... $12,764 8.18% $11,721 6.33%
======= =======
Interest-bearing liabilities.............. $10,468 5.22 $ 9,194 3.18
Noninterest-bearing sources of funds...... 2,296 -- 2,527 --
------- -------
Total supporting liabilities...... $12,764 4.28 $11,721 2.50
======= =======
Net interest margin (related to average
interest-earning assets).......... 3.90% 3.83%
==== ====
- - -------------------------------------------------------------------------------
NONINTEREST INCOME
Quarter Ended March 31 Increase (Decrease)
---------------------- -------------------
(dollars in thousands) 1995 1994 Amount %
- - -------------------------------------------------------------------------------
Trust and investment management fees.. $38,745 $37,625 $ 1,120 3
Trading account....................... 1,933 (1,208) 3,141 +
Foreign exchange...................... 4,557 6,218 (1,661) (27)
Charge card........................... 9,245 8,061 1,184 15
Service fees and charges.............. 17,653 18,996 (1,343) (7)
Securities gains...................... 2,062 3,148 (1,086) (34)
Other................................. 6,406 7,700 (1,294) (17)
------- ------- ------- ---
Total noninterest income...... $80,601 $80,540 $ 61 --
======= ======= ======= ===
Noninterest income for the first quarter was $80.6 million, virtually
unchanged from the first quarter of 1994. Increased levels of trust and
investment management fees, charge card fees and trading account gains were
offset by decreased foreign exchange revenues and lower service fees and
charges.
Trust and investment management fees were $38.7 million, up $1.1 million or
3% from the previous year. During the current quarter, the Corporation began to
accrue certain fees from institutional trust customers. As a result, an
additional $3.6 million of income was recognized. Excluding this change, trust
and investment management fees would have declined by 7%. Foreign exchange
revenue was $4.6 million, a decline of $1.7 million or 27% from the previous
year. Service fees and charges totaled $17.7 million, a decline of $1.3 million
or 7% from the same period last year, reflecting customer preferences for
compensating balances. Revenue from money market and bond trading activities
improved by $3.1 million compared to first quarter 1994. Charge card income
totaled $9.2 million, an increase of $1.2 million or 15% from the previous year
due to increased customer volume. The Corporation realized net gains of $2.1
million from the sales of portfolio securities, compared to $3.1 million during
the first quarter of 1994.
- - -------------------------------------------------------------------------------
9
<PAGE>
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSES AND INCOME TAXES
Quarter Ended March 31 Increase (Decrease)
---------------------- -------------------
(dollars in thousands) 1995 1994 Amount %
- - ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salaries and other compensation...................... $ 62,540 $ 60,814 $ 1,726 3
Pension, profit sharing and other employee benefits.. 17,701 20,912 (3,211) (15)
Net occupancy........................................ 11,354 11,066 288 3
Equipment............................................ 9,826 10,696 (870) (8)
Marketing............................................ 5,795 5,494 301 5
Communication and delivery........................... 4,729 4,152 577 14
Deposit insurance.................................... 3,818 3,918 (100) (3)
Other................................................ 22,479 21,566 913 4
-------- -------- -------
Total noninterest expenses.......................... $138,242 $138,618 $ (376) -
======== ======== =======
Provision for income taxes........................... $ 16,393 $ 6,647 $ 9,746 147
======== ======== ======= ===
</TABLE>
Noninterest expenses for the first quarter totaled $138.2 million, a decrease of
$.4 million from the first quarter of 1994.
Employment expenses were $80.2 million, down $1.5 million or 2% from the same
quarter last year. Total salaries were up approximately 3% from the year-ago
quarter while employee benefits declined by 15% primarily because of reduced
settlement losses in the retirement plans and a change in the discount rate used
in determining pension costs. Deposit insurance expense was $3.8 million,
virtually unchanged from the first quarter of 1994. Marketing expenses and
communication and delivery expenses increased $.3 million and $.6 million,
respectively, from the previous year. Net occupancy expenses totaled $11.4
million, up $.3 million from the prior year's first quarter, while equipment
expenses decreased $.9 million to $9.8 million.
Income tax expense totaled $16.4 million, an increase of $9.7 million,
reflecting both higher pretax income and a favorable adjustment of tax reserves
in the prior year's first quarter.
- - ------------------------------------------------------------------------------
CAPITAL POSITION
The Corporation's total equity capital at March 31, 1995 was $1.06 billion,
compared with $1.02 billion and $1.01 billion at December 31, 1994 and March 31,
1994, respectively. During the preceding twelve months, the Corporation
declared dividends of $35 million.
U.S. banking regulators have issued risk-based capital guidelines, based on
the international "Basle Committee" agreement, which are applicable to all U.S.
banks and bank holding companies. These guidelines serve to: 1) establish a
uniform capital framework which is more sensitive to risk factors, including
off-balance-sheet exposures; 2) promote the strengthening of capital positions;
and 3) diminish a source of competitive inequality arising from differences in
supervisory requirements among countries. The guidelines specify minimum ratios
for Tier 1 capital to risk-weighted assets of 4% and total regulatory capital to
risk-weighted assets of 8%.
Risk-based capital guidelines define total capital to consist of Tier 1 (core)
and Tier 2 (supplementary) capital. In general, Tier 1 capital is comprised of
stockholder's equity, including certain types of preferred stock, less goodwill
and certain other intangibles. Core capital must comprise at least 50 percent of
total capital. Tier 2 capital basically includes subordinated debt (less a
discount factor during the five years prior to maturity), other types of
preferred stock and the allowance for possible credit losses. The portion of the
allowance for possible credit losses includable in Tier 2 capital is limited to
1.25% of risk-weighted assets. The Corporation's Tier 1 and total risk-based
capital ratios were 8.80% and 12.36%, respectively, at March 31, 1995.
- - ------------------------------------------------------------------------------
10
<PAGE>
- - -------------------------------------------------------------------------------
Another regulatory capital measure, the Tier 1 leverage ratio, is computed by
dividing period-end Tier 1 capital by adjusted quarterly average assets. The
Federal Reserve Board established a minimum ratio of 4% to 5% for most holding
companies. The Corporation's Tier 1 leverage ratio was 7.12% for the quarter
ended March 31, 1995 compared to 7.24% for the year-ago quarter.
The Federal Deposit Insurance Corporation Improvement Act of 1991 contains
several provisions that established five capital categories for all FDIC-insured
institutions ranging from "well capitalized" to "critically undercapitalized."
Based on those regulations effective at March 31, 1995, all of the Corporation's
subsidiary banks were designated as "well capitalized," the highest capital
category.
Capital adequacy guidelines generally restrict the inclusion of intangible
assets in Tier 1 capital; however, purchased mortgage servicing rights and the
premium on purchased credit card relationships may be included with (i.e., not
deducted from) Tier 1 capital provided that certain percentage limitations are
not violated. All other intangibles (including core deposit premiums and
goodwill), along with amounts in excess of the above limits, are to be deducted
from Tier 1 capital for purposes of risk-based and leverage capital ratio
calculations. At March 31, 1995, the Corporation's intangible assets totaled $45
million, including approximately $19 million of intangibles excluded under
capital guidelines. The Corporation's tangible Tier 1 leverage ratio (which
excludes all intangibles) was 6.95% for the first quarter of 1995.
The following is a summary of the Corporation's capital ratios:
<TABLE>
<CAPTION>
March 31 December 31 March 31
(dollars in thousands) 1995 1994 1994
- - ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total assets (end of period)......................................... $15,062,047 $15,331,539 $13,899,949
=========== =========== ===========
Average assets (quarter)............................................. $14,821,516 $14,668,264 $13,607,273
=========== =========== ===========
Risk-based on-balance sheet assets................................... $ 9,478,094 $ 9,078,759 $ 8,734,529
Risk-based off-balance sheet assets.................................. 2,503,528 2,580,005 2,303,533
----------- ----------- -----------
Total risk-based assets (based on regulatory accounting principles).. $11,981,622 $11,658,764 $11,038,062
=========== =========== ===========
Tier 1 capital....................................................... $ 1,054,765 $ 1,033,481 $ 982,865
Supplementary capital................................................ 425,968 423,254 436,411
----------- ----------- -----------
Total capital........................................................ $ 1,480,733 $ 1,456,735 $ 1,419,276
=========== =========== ===========
Tier 1 leverage ratio................................................ 7.12% 7.03% 7.24%
Risk-based capital ratios:
Tier 1.............................................................. 8.80% 8.86% 8.90%
Total............................................................... 12.36% 12.49% 12.86%
- - ------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------
NONPERFORMING ASSETS
March 31 December 31 March 31
(dollars in thousands) 1995 1994 1994
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nonaccrual loans..................................... $79,377 $83,803 99,836
Restructured loans................................... 2,828 2,889 2,361
------- ------- --------
Total nonperforming loans........................... 82,205 86,692 102,197
Other assets received in satisfaction of debt........ 7,108 8,071 14,089
------- ------- --------
Total nonperforming assets.......................... $89,313 $94,763 $116,286
======= ======= ========
Nonperforming loans to total loans (end of period)... .98% 1.05% 1.31%
Nonperforming assets to total loans (end of period).. 1.07 1.15 1.49
======= ======= ========
90-day past due loans still accruing interest........ $40,146 $31,071 $ 33,776
======= ======= ========
</TABLE>
Nonperforming assets consist of loans placed on nonaccrual status when
collection of interest is doubtful, restructured loans on which interest is
being accrued but which have terms that have been renegotiated to provide for a
reduction of interest or principal, and real estate or other assets which have
been acquired in full or partial settlement of defaulted loans. These assets, as
a group, are not earning at rates comparable to earning assets.
Nonperforming assets at March 31, 1995 totaled $89.3 million, or 1.07% of
total loans, down from $94.8 million or 1.15% of loans at December 31, 1994 and
also down from $116.3 million or 1.49% of loans a year ago.
Interest shortfall for the quarter ended March 31, 1995 was $1.4 million,
compared to $1.6 million one year earlier.
Impaired loans are defined as those where it is probable that amounts due
according to contractual terms, including principal and interest, will not be
collected. Both nonaccrual and restructured loans meet this definition. Impaired
loans are measured by the Corporation at the present value of expected future
cash flows or, alternatively, at the fair value of collateral. Known losses of
principal on these loans have been charged off. Interest income on nonaccrual
loans is recognized only at the time cash is received and only if the collection
of the entire principal balance is expected. Interest income on restructured
loans is accrued according to the most recently agreed upon contractual terms.
<TABLE>
<CAPTION>
Impaired Loans Impaired Loans
for which there is for which there is Total Impaired
(dollars in thousands) March 31, 1995 related allowance no related allowance Loans
- - ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance.................................................... $48,516 $33,689 $82,205
Related allowance.......................................... 12,139 -- 12,139
------- ------- -------
Balance, net of allowance.................................. $36,377 $33,689 $70,066
======= ======= =======
Quarter Ended
(dollars in thousands) March 31, 1995
- - ------------------------------------------------------------------------------------------------------------------------
Average amount of impaired loans..................................................................... $83,910
=======
Total interest income on impaired loans.............................................................. $ 273
=======
Interest income on impaired loans recorded on a cash basis........................................... $ 193
=======
- - ------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
- - -------------------------------------------------------------------------------
ALLOWANCE FOR POSSIBLE CREDIT LOSSES
<TABLE>
<CAPTION>
Quarter Ended March 31
----------------------
(dollars in thousands) 1995 1994
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at January 1.......................................................... $124,734 $131,676
-------- --------
Charge-offs................................................................... (12,966) (9,997)
Recoveries.................................................................... 7,002 3,670
-------- --------
Net charge-offs............................................................. (5,964) (6,327)
Provision charged to operations............................................... 8,662 13,430
-------- --------
Balance at March 31........................................................... $127,432 $138,779
======== ========
Net charge-offs as a percentage of provision charged to operations............ 69% 47%
Allowance for possible credit losses to nonperforming loans (period-end)...... 155 136
Allowance for possible credit losses to total loans outstanding (period-end).. 1.52 1.78
======== ========
</TABLE>
The Corporation's provision for credit losses for the most recent quarter was
$8.7 million, down 36% from $13.4 million provided in the first quarter of 1994.
Net loan charge-offs during the most recent quarter were $6.0 million, compared
to $6.3 million in the same period last year. Net write-offs in the domestic
commercial loan portfolio were $1.2 million in the 1995 quarter, up from $.1
million in the 1994 quarter. Net charge-offs of charge card receivables
increased to $5.9 million in 1995 from $5.5 million in first quarter 1994. In
1995, the Corporation recorded a $1.4 million net recovery for real estate loans
compared to $.5 million of net charge-offs in the year-ago quarter.
At March 31, 1995, the allowance for possible credit losses was $127.4
million, equal to 1.52% of total loans outstanding, compared to $138.8 million
or 1.78% of total loans one year ago.
- - --------------------------------------------------------------------------------
LIQUIDITY AND SOURCES OF FUNDS
Effective liquidity management allows a banking institution to accommodate the
changing net funds flow requirements of customers who may deposit or withdraw
funds, or modify their credit requirements. The Corporation manages its
liquidity position through continuous monitoring of profitability trends, asset
quality, interest rate sensitivity, maturity schedules of earning assets and
supporting liabilities, the composition of managed and other (primarily demand)
liabilities, and prospective customer credit demand based upon knowledge of
major customers and overall economic conditions. Appropriate responses to
changes in these conditions preserve customer confidence in the ability of the
Corporation to continually serve their credit and deposit withdrawal
requirements. Some level of liquidity is provided by maintaining assets which
mature within a short timeframe or could be sold quickly without significant
loss. The Corporation's liquid assets include cash and demand balances due from
banks, money market assets, portfolio securities available for sale and trading
account assets. Liquid assets represented approximately 31% of the Corporation's
total assets and amounted to $4.66 billion at March 31, 1995. However, the most
important source of liquidity is the ability to raise funds, as required, in a
variety of markets using multiple intstruments.
The Corporation, in connection with the issuance of commercial paper and for
other corporate purposes, has a $130 million revolving credit agreement with
five nonaffiliated banks that terminates on December 20, 1995. This agreement
allows for extensions of its termination date, if requested by the Corporation
and approved by the nonaffiliated banks. The Corporation did not request an
extension of this agreement during the first quarter of 1995. There were no
borrowings under this credit facility in 1995 or 1994.
Total deposits averaged $9.91 billion in the first quarter of 1995, an
increase of $383 million compared to the same quarter last year. The
Corporation's average volume of core deposits, consisting of demand deposits,
interest checking deposits, savings deposits and certificates, and money market
accounts fell 3%. This decline in core deposits reflected decreases in demand
and interest checking deposits and money market accounts, partially offset by
increases in savings deposits and certificates. Core deposits represented
approximately 53% of average supporting liabilities in the first quarter of 1995
down from 60% one year ago.
- - -------------------------------------------------------------------------------
13
<PAGE>
Harris Bankcorp, Inc. and Subsidiaries
- - --------------------------------------------------------------------------------
Average money market assets in the first quarter of 1995 decreased $209
million from the same quarter last year. These assets represented 8% of average
earning assets in 1995, compared to 11% one year ago. Average money market
liabilities increased 19% to $2.80 billion this quarter from $2.35 billion in
the same quarter last year, primarily the result of increases in federal funds
borrowed and securities sold under repurchase agreements.
In December 1994, Harris Trust and Savings Bank distributed an offering
circular which described its capability to offer, from time to time, unsecured
short-term and medium-term bank notes in an aggregate principal amount of up to
$1.5 billion outstanding at any time. The term of each note could range from
fourteen days to fifteen years as selected by the initial purchaser and agreed
to by HTSB. The notes are being offered and sold only to institutional investors
and are subordinate to deposits and rank pari passu with all other senior
unsecured indebtedness of HTSB. As of March 31, 1995, $500 million of short-term
notes were outstanding.
- - -------------------------------------------------------------------------------
14
<PAGE>
- - ---------------------------------------------------------------------------
HARRIS BANKCORP, INC.
111 West Monroe Street
Chicago, Illinois 60603
- - -----------------------------
HARRIS BANKCORP, INC.
EXECUTIVE OFFICERS
Alan G. McNally
Chief Executive Officer
Donald S. Hunt
President and
Chief Operating Officer
Edward W. Lyman, Jr.
Senior Executive Vice President
Corporate and Institutional
Financial Services
Maribeth S. Rahe
Senior Executive Vice President
Personal and Commercial
Financial Services
- - -----------------------------
HARRIS BANKCORP, INC.
BOARD OF DIRECTORS
Alan G. McNally
Chairman and
Chief Executive Officer
Donald S. Hunt
President and
Chief Operating Officer
Matthew W. Barrett
Chairman of the Board and
Chief Executive Officer
Bank of Montreal
F. Anthony Comper
President and
Chief Operating Officer
Bank of Montreal
Susan T. Congalton
Managing Director
Lupine Partners
Roxanne J. Decyk
Vice President, Planning
Amoco Corporation
Wilbur H. Gantz
President and
Chief Executive Officer
PathoGenesis Corporation
James J. Glasser
Chairman, President and
Chief Executive Officer
GATX Corporation
Daryl F. Grisham
President and
Chief Executive Officer
Parker House Sausage Company
Dr. Leo M. Henikoff
President and
Chief Executive Officer
Rush-Presbyterian-St. Luke's Medical Center
Dr. Stanley O. Ikenberry
President
University of Illinois
Richard M. Jaffe
Chairman and
Chief Executive Officer
Oil-Dri Corporation
of America
Charles H. Shaw
Chairman
The Shaw Company
Richard E. Terry
Chairman and
Chief Executive Officer
Peoples Energy Corporation
James O. Webb
President
James O. Webb & Associates, Inc.
William J. Weisz
Chairman of the Board
Motorola, Inc.
- - -----------------------------
HARRIS TRUST AND SAVINGS BANK
Member Federal Reserve System
Member Federal Deposit
Insurance Corporation
MAIN BANKING PREMISES
P.O. Box 755
111 West Monroe Street
Chicago, Illinois 60603
BRANCHES
Board of Trade Building
141 West Jackson Boulevard
Chicago, Illinois 60604
West Garfield Park Branch
3900 West Madison Avenue
Chicago, Illinois 60624
AUTOMATIC BANKING CENTERS
311 West Monroe Street
Chicago, Illinois 60606
Presidential Towers
555 West Madison Street
Chicago, Illinois 60606
Ameritech Corporate Offices
212 West Washington Street
Chicago, Illinois 60606
Loyola University
Lake Shore Campus
6525 North Sheridan Road
Chicago, Illinois 60626
Harris Bank Card Center
700 East Lake Cook Road
Buffalo Grove, Illinois 60089
BANKING DEPARTMENT
REPRESENTATIVE OFFICE
New York, New York
INVESTMENT DEPARTMENT
REPRESENTATIVE OFFICE
New York, New York
INTERNATIONAL BANKING FACILITY
Chicago, Illinois
INTERNATIONAL BRANCH
London, England
SUBSIDIARIES
HARRIS BANK INTERNATIONAL
CORPORATION
New York, New York
HARRISCORP LEASING, INC.
Chicago, Illinois
HARRIS TRADING ADVISORY
CORPORATION
Chicago, Illinois
HARRIS BUILDING SERVICES
CORPORATION
Chicago, Illinois
MIDWESTERN HOLDINGS, INC.
Chicago, Illinois
MICHIGAN HOLDINGS, INC.
Chicago, Illinois
BANK OF MONTREAL GLOBAL, INC.
Chicago, Illinois
BANK OF MONTREAL TRUST
COMPANY (C.I.), LTD.
St. Helier, Jersey
Channel Islands
- - -----------------------------
HARRIS BANKCORP, INC.
BANK SUBSIDIARIES
HARRIS TRUST AND SAVINGS BANK
Chicago, Illinois
(two branches)
HARRIS BANK ARGO
Summit, Illinois
(three branches)
HARRIS BANK BARRINGTON, N.A.
Barrington, Illinois
(six branches)
HARRIS BANK BATAVIA, N.A.
Batavia, Illinois
(one branch)
HARRIS BANK FRANKFORT
Frankfort, Illinois
(one branch)
HARRIS BANK GLENCOE--
NORTHBROOK, N.A.
Glencoe, Illinois
(one branch)
HARRIS BANK HINSDALE, N.A.
Hinsdale, Illinois
(one branch)
HARRIS BANK LIBERTYVILLE
Libertyville, Illinois
(three branches)
HARRIS BANK NAPERVILLE
Naperville, Illinois
(four branches)
HARRIS BANK ROSELLE
Roselle, Illinois
(four branches)
HARRIS BANK ST. CHARLES
St. Charles, Illinois
(five branches)
HARRIS BANK WILMETTE, N.A.
Wilmette, Illinois
HARRIS BANK WINNETKA, N.A.
Winnetka, Illinois
(one branch)
HARRIS TRUST BANK OF ARIZONA
Scottsdale, Arizona
(two branches)
- - -----------------------------
HARRIS BANKCORP, INC.
NON-BANK SUBSIDIARIES
HARRIS INVESTORS DIRECT, INC.
Chicago, Illinois
HARRIS TRUST COMPANY OF FLORIDA
West Palm Beach, Florida
(two branches)
HARRIS TRUST COMPANY OF NEW YORK
New York, New York
BANK OF MONTREAL TRUST COMPANY
New York, New York
HARRIS TRUST COMPANY OF
CALIFORNIA
Los Angeles, California
HARRISCORP CAPITAL CORPORATION
Chicago, Illinois
HARRISCORP FINANCE, INC.
Chicago, Illinois
HARRIS INVESTMENT
MANAGEMENT, INC.
Chicago, Illinois
HARRIS LIFE INSURANCE COMPANY
Scottsdale, Arizona
- - ---------------------------------------------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,115,794
<INT-BEARING-DEPOSITS> 645,626
<FED-FUNDS-SOLD> 585,906
<TRADING-ASSETS> 23,908
<INVESTMENTS-HELD-FOR-SALE> 2,287,788
<INVESTMENTS-CARRYING> 994,789
<INVESTMENTS-MARKET> 1,003,949
<LOANS> 8,369,583
<ALLOWANCE> 127,432
<TOTAL-ASSETS> 15,062,047
<DEPOSITS> 9,709,570
<SHORT-TERM> 3,287,013
<LIABILITIES-OTHER> 594,374
<LONG-TERM> 298,844
<COMMON> 53,340
0
0
<OTHER-SE> 1,010,018
<TOTAL-LIABILITIES-AND-EQUITY> 15,062,047
<INTEREST-LOAN> 180,501
<INTEREST-INVEST> 55,463
<INTEREST-OTHER> 15,483
<INTEREST-TOTAL> 252,296
<INTEREST-DEPOSIT> 85,836
<INTEREST-EXPENSE> 134,882
<INTEREST-INCOME-NET> 117,414
<LOAN-LOSSES> 8,662
<SECURITIES-GAINS> 2,062
<EXPENSE-OTHER> 138,242
<INCOME-PRETAX> 51,111
<INCOME-PRE-EXTRAORDINARY> 34,718
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,718
<EPS-PRIMARY> 5.21
<EPS-DILUTED> 5.21
<YIELD-ACTUAL> 3.90
<LOANS-NON> 79,377
<LOANS-PAST> 40,146
<LOANS-TROUBLED> 2,828
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 124,734
<CHARGE-OFFS> 12,966
<RECOVERIES> 7,002
<ALLOWANCE-CLOSE> 127,432
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
