CONFORMED 1.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995 Commission file number 1-2940
MARINE MIDLAND BANKS, INC.
(Exact name of registrant as specified in its charter)
Delaware Corporation 22-1093160
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Marine Midland Center, Buffalo, N.Y. 14203
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 841-2424
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
All voting stock (1,000 shares of Common Stock, $5 par value) is
owned by HSBC Holdings B.V., a wholly-owned indirect subsidiary of HSBC
Holdings plc.
This report includes a total of 21 pages.
FORM 10-Q 2.
Part I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Marine Midland Banks, Inc.:
Page
Consolidated Balance Sheet
March 31, 1995 and December 31, 1994 3
Consolidated Statement of Income
For The Three Months Ended
March 31, 1995 and 1994 4
Consolidated Statement of Changes in
Shareholders' Equity For The Three Months
Ended March 31, 1995 and 1994 5
Consolidated Statement of Cash Flows
For The Three Months Ended
March 31, 1995 and 1994 5
In the opinion of Registrant's management, the Consolidated Balance
Sheet at March 31, 1995 and December 31, 1994 and the Consolidated Statements
of Income, Changes in Shareholders' Equity and Cash Flows for the three months
ended March 31, 1995 and 1994 include all adjustments, consisting only of
normal recurring accruals, necessary for a fair presentation of the results
for such interim periods. The interim financial information should be read in
conjunction with the 1994 Annual Report on Form 10-K.
FORM 10-Q 6.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Marine Midland Banks, Inc. (the Company) reported first quarter 1995 net
income of $66.0 million. This is the first quarter that the Company reported
results consolidated with Concord Leasing, Inc. (Concord), which was merged
into the Company on January 1, 1995 through the contribution of Concord's
outstanding common stock held by HSBC Holdings B.V. to the Company. Net
income for the comparable three month period of 1994 was $38.8 million.
Concord provides equipment financing through secured loan and finance
lease transactions. Assets of Concord totaled $1.5 billion at December 31,
1994, including an aircraft exit portfolio of $428 million. This exit
portfolio was reduced to $322 million at March 31, 1995. The merger
transaction was accounted for as a transfer of assets between companies under
common control, with the assets and liabilities of Concord combined with those
of the Company at their historical carrying values. The Company's
consolidated financial statements reflect a restatement of prior periods to
include the accounts and results of operations of Concord as though they had
been combined as of the beginning of the earliest period presented.
The discussion that follows describes consolidated results of operations
of the Company, including Concord. The results of operations previously
reported by the Company and Concord for the three month period ended March 31,
1994 and the combined amounts presented in the accompanying consolidated
statements of income are summarized below.
<TABLE>
<CAPTION>
Three months ended 3/31/94
Marine Concord
Midland Leasing
Banks, Inc. Inc. Combined
(in millions)
<S>
Net interest income, <C> <C> <C>
after provision for loan losses $183.9 $ .6 $184.5
Net income (loss) 52.6 (13.8) 38.8
Net income in the first quarter of 1995 reflected improved net interest
income and lower operating expenses. The large provision for loan losses was
primarily done to strengthen the reserves associated with assets acquired
through the Concord merger due to accelerating the timing of control and
disposal of Concord's exit portfolios. A one-time tax benefit was recognized
for the expected use of Concord's net operating loss carryforwards.
Net Interest Income
Net interest income for the first quarter of 1995 was $214.4 million
compared with $187.0 million for the first quarter of 1994.
FORM 10-Q 7.
Interest income of $352.5 million in the first quarter of 1995 was 18.8%
higher than the first quarter of 1994. Average earning assets of $17.1
billion in the first quarter of 1995 were at the same level as a year ago
whereas, the average rate earned on earning assets increased to 8.33% from
6.98% for these periods. The improvement in interest income is due to a
number of factors, including increases in consumer and small and medium sized
business loans, a higher prime rate, and a better yielding investment
portfolio.
Interest expense for the first quarter of 1995 was $138.1 million,
representing a 26.0% increase over the first quarter of 1994. Average
interest bearing liabilities for the first quarter of 1995 were $13.3 billion,
approximately the same level as a year ago. The average rate paid on interest
bearing liabilities was 4.22% compared with 3.33% a year ago. The increase in
the rate paid reflects a higher interest rate environment, offset in part by
increases in lower rate consumer deposits.
The taxable equivalent net yield on average total assets for the current
year's first quarter was 4.72%, compared with 4.11% in the 1994 first quarter.
The increase in net yield resulted from increases in net interest income and
increases in noninterest bearing demand deposits and stockholders' equity, as
funding sources.
Other Operating Income
Total other operating income was $76.4 million in the first quarter of
1995, compared with $68.9 million in the 1994 first quarter. The major
variance in other operating income was the improvement in trading revenues
which were $1.4 million in 1995 compared with a loss of $5.0 million in 1994.
Other Operating Expenses
Other operating expenses were $163.1 million in the 1995 first quarter
compared with $189.8 million for the 1994 first quarter. The Company
continues a vigilant expense control discipline. Operating expenses in the
1994 quarter included a $15.0 million provision to cover the estimated costs
of an early retirement program.
Income Taxes
Contemplated in the merger of Concord and the Company was the
availability of net operating loss carryforwards and other temporary
deductible differences of Concord that can be used to offset future taxable
income of the Company. At December 31, 1994, Concord had net deferred tax
assets of approximately $206 million resulting from loss carryforwards and
deductible differences, which were offset in full by a valuation allowance due
to the uncertainty of Concord realizing the tax benefits on a stand-alone
basis. As a result of the merger, management determined that a reduction in
the valuation allowance of $73.5 million relating to Concord's operating loss
carryforwards should be recognized in the first quarter of 1995. The deferred
tax asset at March 31, 1995 was $131 million, net of valuation reserve of $172
million.
FORM 10-Q 8.
Asset Quality
The following table provides a summary of the loan loss allowance and
nonaccruing loans:
<CAPTION>
3 Months 3 Months Year
Ended Ended Ended
3/31/95 3/31/94* 12/31/94*
<S> (in millions)
Allowance for Loan Losses <C> <C> <C>
Balance at beginning of period $495.4 $473.3 $473.3
Provision related to acquired companies - - 1.2
Provision charged to income 125.0 2.5 150.6
Net charge offs 78.0 9.6 129.7
Balance at end of period $542.4 $466.2 $495.4
<CAPTION>
March 31, December 31, March 31,
1995 1994* 1994*
<S> (in millions)
Allowance Ratios
Allowance for loan losses as a
percent of: <C> <C> <C>
Loans 4.24% 3.84% 3.79%
Nonaccruing loans 99.23 57.92 40.36
Nonaccruing Loans
Balance at end of period $546.6 $855.4 $1,155.3
As a percent of loans outstanding 4.27% 6.62% 9.39%
Nonperforming Loans and Assets **
Balance at end of period $727.8 $880.4 $1,205.9
As a percent of total assets 3.87% 4.71% 6.37%
* Restated to include the accounts and results of Concord Leasing, Inc.
merged with the Company on January 1, 1995.
** Includes nonaccruing loans, other real estate and other owned assets.
Provisions for loan losses were $125.0 million in the first quarter of 1995
compared with $2.5 million in the same quarter of 1994. The large provision
in the first quarter of 1995 primarily was to strengthen the reserves
associated with assets acquired through the Concord merger due to accelerating
the timing of control and disposal of Concord's exit portfolios.
Nonaccruing loans were $546.6 million at March 31, 1995 compared with $855.4
million at December 31, 1994. The Company has been aggressively dealing with
the problem credits primarily attributable to Concord. For the first three
months of 1995, there were $78.0 million in net charge offs compared with net
charge offs of $9.6 million for the same period in 1994.
FORM 10-Q 9.
Other owned assets of $160 million and $24 million at March 31, 1995 and March
31, 1994, respectively, include foreclosed assets and other equipment
previously held under lease financing contracts recorded at fair value.
The Company has outstanding loans in highly leveraged transactions ("HLT").
An HLT occurs when credit is extended or investment is made involving the
buyout, acquisition, or recapitalization of an existing business resulting in
a high leverage ratio. Total committed amounts as of March 31, 1995 in this
category of loans were $194 million, including outstandings of $164 million,
compared with commitments of $216 million, including outstandings of $138
million at December 31, 1994. At March 31, 1995, $28 million of these loans
were on nonaccruing status, compared with $17 million at December 31, 1994.
Charge offs on these loans during the first quarter of 1995 and the first
quarter of 1994 were nominal.
New Accounting Standards
Effective January 1, 1995, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 114, Accounting by Creditors for Impairment
of a Loan (FAS 114) as amended by Statement of Financial Accounting Standards
No. 118, Accounting by Creditors for Impairment of a Loan - Income Recognition
and Disclosures (FAS 118). FAS 114 applies to all loans, except large groups
of smaller-balance homogeneous loans that are collectively evaluated for
impairment (generally consumer loans), loans that are measured at fair value,
leases and debt securities. FAS 114 provides guidance in defining and
measuring loan impairment. A loan is considered impaired when, based on
current information and events, it is probable that a creditor will be unable
to collect all amounts due (principal and interest) according to the
contractual terms of the loan agreement. Impaired loans are measured at the
present value of expected future cash flows, discounted at the loan's original
effective interest rate or, as a practical expedient, at the loan's observable
market price or the fair value of the collateral if the loan is collateral
dependent.
The Company identified impaired loans, as defined by FAS 114, totalling $498
million at March 31, 1995. Of these loans, $234 million had a specific loan
loss allowance of $126 million. The remaining $264 million of impaired loans
did not have a specific loan loss allowance.
As a result of adopting the provisions of FAS 114, insubstance foreclosed real
estate (ISORE) and insubstance foreclosed other assets are now classified as
nonaccruing loans. ISORE totaling $67 million and insubstance foreclosed
other assets totaling $3.2 million at December 31, 1994 have been reclassified
to loans in the accompanying 1994 balance sheet to reflect consistent
presentation.
Interest income on impaired loans is recognized only to the extent of cash
received, with payments first applied to principal due. No interest income
was recognized on impaired loans during the first quarter. FORM 10-Q 10.
Derivative Financial Instruments
As principally an end-user of off-balance sheet financial instruments, the
Company uses various derivative financial instruments to manage its overall
interest rate risk and to reduce the risk associated with changes in the
income stream of certain on-balance sheet assets. At March 31, 1995, $16.9
billion notional value of such positions, with an estimated negative fair
value of approximately $11.8 million were outstanding.
The Company also maintains various derivatives in its trading portfolio to
offset risk associated with changes in market value of certain trading assets,
and to satisfy the foreign currency requirements of retail customers. These
derivatives are carried at fair value. At March 31, 1995, $1.8 billion
notional value of such positions with an estimated negative fair value of $2.2
million were outstanding.
The Company's credit risk associated with off-balance sheet positions is not
considered material, since almost all derivative contracts are executed with
counterparties affiliated through common ownership.
Liquidity
The Company maintains a strong liquidity position. Short-term investments and
trading assets were $2.4 billion compared with $2.2 billion at December 31,
1994. Loans at March 31, 1995 were 68.1% of total assets compared with 69.1%
at December 31, 1994.
Deposits at March 31, 1995 were $14.3 billion, compared with $13.8 billion at
December 31, 1994. Deposits continue to exceed loans and were 111.8% of loans
at March 31, 1995. Short-term borrowings, including repurchase agreements
were $1.8 billion at March 31, 1995 compared with $2.3 billion at December 31,
1994. Long-term borrowings of $.7 billion at March 31, 1995 were at the same
level as December 31, 1994.
Capital
Shareholders' equity was $1,565 million at March 31, 1995, compared with
$1,500 million at December 31, 1994.
Under risk-based capital guidelines, the Company's capital ratios were
10.54% at the Tier 1 level and 16.47% at the total capital level at March 31,
1995. These ratios compare with 10.93% at the Tier 1 level and 17.25% at the
total capital level at December 31, 1994.
Under guidelines for leverage ratios, the Company's ratio of Tier 1 capital to
quarterly average total assets was 8.39% at March 31, 1995, compared with
8.16% at December 31, 1994.
FORM 10-Q 12.
Part II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(3) Registrant's By-Laws, as Amended to Date
(b) Report on Form 8-K
A Current Report on Form 8-K dated February 3, 1995, was filed with
the Securities and Exchange Commission on February 3, 1995,
reporting that Concord Leasing, Inc. was merged with the Company
on January 1, 1995. Financial statements of Concord were provided.
FORM 10-Q 13.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARINE MIDLAND BANKS, INC.
(Registrant)
Date May 12, 1995 /s/ Gerald A. Ronning
Gerald A. Ronning
Executive Vice President & Controller
(On behalf of Registrant and
as Chief Accounting Officer)
FORM 10-Q 3.
CONSOLIDATED BALANCE SHEET MARINE MIDLAND BANKS, INC.
<CAPTION>
March 31, December 31,
dollars in thousands 1995 1994 *
------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 974,349 $ 1,050,558
Interest bearing deposits with banks 897,740 1,231,757
Federal funds sold and securities purchased
under resale agreements 1,099,383 599,993
Trading assets 399,701 404,300
Securities held to maturity (market value $2,090,574
and $1,907,650) 2,116,294 1,967,638
Securities available for sale 79,916 80,232
Loans 12,802,102 12,914,445
Less - allowance for loan losses 542,404 495,434
------------------------------------------------------------------------------------------
Loans, net 12,259,698 12,419,011
Premises and equipment 182,629 185,211
Customers' acceptance liability 20,189 24,746
Accrued interest receivable 140,885 124,967
Other real estate 21,078 18,140
Other owned assets 160,149 6,830
Other assets 435,609 584,928
------------------------------------------------------------------------------------------
TOTAL ASSETS $ 18,787,620 $ 18,698,311
==========================================================================================
LIABILITIES
Deposits in domestic offices:
Noninterest bearing $ 2,958,559 $ 3,213,845
Interest bearing 9,938,525 9,660,674
Interest bearing deposits in foreign offices 1,417,879 909,629
------------------------------------------------------------------------------------------
Total deposits 14,314,963 13,784,148
Federal funds purchased and securities sold
under repurchase agreements 738,208 729,169
Other short-term borrowings 1,039,038 1,526,720
Interest, taxes and other liabilities 397,817 420,435
Acceptances outstanding 20,189 24,746
Long-term debt 712,888 713,104
------------------------------------------------------------------------------------------
TOTAL LIABILITIES 17,223,103 17,198,322
------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Preferred stock 98,063 98,063
Common shareholder's equity:
Common stock 5 5
Capital surplus 1,531,127 1,531,127
Accumulated deficit (64,678) (129,206)
------------------------------------------------------------------------------------------
Total common shareholder's equity 1,466,454 1,401,926
------------------------------------------------------------------------------------------
Total shareholders' equity 1,564,517 1,499,989
------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 18,787,620 $ 18,698,311
==========================================================================================
* Restated to include the accounts and results of Concord Leasing, Inc. merged with the
Company on January 1, 1995.
At March 31, 1995, securities, loans and other assets carried at $1,562,097 were pledged
as collateral for borrowings, to secure public and trust deposits and for other purposes.
FORM 10-Q 4.
CONSOLIDATED STATEMENT OF INCOME MARINE MIDLAND BANKS, INC.
<CAPTION>
dollars in thousands Three months ended March 31
1995 1994 *
<S>
Interest income: <C> <C>
Interest and fees on loans $ 286,439 $ 238,672
Interest and dividends on securities 33,739 26,026
Interest on trading assets 6,971 17,711
Interest on deposits with banks 17,008 9,692
Interest on federal funds sold and securities
purchased under resale agreements 8,337 4,555
-------------------------------------------------------------------------------
Total interest income 352,494 296,656
-------------------------------------------------------------------------------
Interest expense:
Deposits:
In domestic offices 88,599 61,435
In foreign offices 13,290 5,446
Federal funds purchased and securities
sold under repurchase agreements 6,006 5,639
Other short-term borrowings 17,228 14,154
Long-term debt 12,947 22,940
-------------------------------------------------------------------------------
Total interest expense 138,070 109,614
-------------------------------------------------------------------------------
Net interest income 214,424 187,042
Provision for loan losses 125,000 2,519
-------------------------------------------------------------------------------
Net interest income, after provision for loan losses 89,424 184,523
-------------------------------------------------------------------------------
Other operating income:
Trust income 11,336 12,240
Service charges 19,929 20,106
Mortgage servicing income 4,510 4,571
Other fees and commissions 30,057 32,253
Trading revenues (loss) 1,402 (5,029)
Other income 9,137 4,774
-------------------------------------------------------------------------------
Total other operating income 76,371 68,915
-------------------------------------------------------------------------------
165,795 253,438
-------------------------------------------------------------------------------
Other operating expenses:
Salaries 69,031 70,804
Pension and other employee benefits 20,641 20,515
-------------------------------------------------------------------------------
Total personnel expense 89,672 91,319
Net occupancy expense 17,485 18,995
Other expenses 55,942 79,478
-------------------------------------------------------------------------------
Total other operating expenses 163,099 189,792
-------------------------------------------------------------------------------
Income before taxes 2,696 63,646
Applicable income tax expense (benefit) (63,300) 24,800
-------------------------------------------------------------------------------
Net income $ 65,996 $ 38,846
===============================================================================
* Restated to include the accounts and results of Concord Leasing, Inc.
merged with the Company on January 1, 1995.
FORM 10-Q 5.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY MARINE MIDLAND BANKS, INC.
--------------------------------------------------------------------------------------------
<CAPTION>
Three months ended March 31
dollars in thousands 1995 1994 *
--------------------------------------------------------------------------------------------
<S> <C> <C>
At beginning of period $1,499,989 $1,438,705
Net income 65,996 38,846
Cash dividends declared on preferred stock (1,468) (1,468)
--------------------------------------------------------------------------------------------
At end of period $1,564,517 $1,476,083
============================================================================================
--------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
--------------------------------------------------------------------------------------------
Three months ended March 31
dollars in thousands 1995 1994 *
--------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 65,996 $ 38,846
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 14,403 16,036
Provision for loan losses 125,000 2,519
Net change in other accrual accounts (71,741) 53,239
Net change in loans originated for sale (37,748) 62,180
Net change in trading assets 7,636 113,882
Other, net (93,643) 4,911
--------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities 9,903 291,613
--------------------------------------------------------------------------------------------
Cash flows from investing activities:
Net change in interest bearing deposits with banks 334,017 (160,497)
Net change in federal funds sold and securities purchased
under resale agreements (499,390) 390,461
Purchases of securities (302,033) (54,045)
Sales of securities 4,933 7,339
Maturities of securities 134,801 158,431
Net change in credit card receivables (67,832) 61,260
Net change in other short-term loans 23,928 (23,815)
Net originations and maturities of long-term loans 157,849 (284,681)
Expenditures for premises and equipment (5,234) (1,220)
Other, net 86,702 17,973
--------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities (132,259) 111,206
--------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net change in deposits 530,815 22,689
Net change in federal funds purchased and securities sold
under repurchase agreements. 9,039 (386,008)
Net change in other short-term borrowings and acceptances (492,239) (231,961)
Proceeds from issuances of long-term debt -- 21,451
Repayment of long-term debt -- (287,786)
Dividends paid (1,468) (1,468)
--------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 46,147 (863,083)
--------------------------------------------------------------------------------------------
Net change in cash and due from banks (76,209) (460,264)
Cash and due from banks at beginning of period 1,050,558 1,154,044
--------------------------------------------------------------------------------------------
Cash and due from banks at end of period $ 974,349 $ 693,780
============================================================================================
* Restated to include the accounts and results of Concord Leasing, Inc. merged with the
Company on January 1, 1995.
FORM 10-Q 11.
CONSOLIDATED AVERAGE BALANCES AND INTEREST RATES* MARINE MIDLAND BANKS, INC.
<CAPTION>
First Quarter 1995 First Quarter 1994**
Balance Interest Rate Balance Interest Rate
dollars in millions
<S>
Assets <C> <C> <C> <C> <C> <C>
Interest bearing deposits with banks $ 1,112 $ 17.0 6.20 % $ 1,121 $ 9.7 3.51 %
Federal funds sold and securities
purchased under resale agreements 578 8.4 5.85 546 4.5 3.38
Trading assets 387 7.0 7.24 1,405 17.7 5.07
Securities:
U.S. Government and
federal agency obligations 2,055 31.0 6.08 1,552 21.4 5.56
Other securities 199 2.7 5.71 346 4.6 5.37
----------------------------------------------------------------------------------------------------------------------
Total securities 2,254 33.7 6.05 1,898 26.0 5.53
Loans:
Domestic:
Commercial 6,338 132.5 8.46 6,494 105.9 6.60
Consumer 5,852 143.8 9.87 5,200 126.3 9.76
----------------------------------------------------------------------------------------------------------------------
Total domestic 12,190 276.3 9.14 11,694 232.2 8.00
International 548 10.1 7.52 532 7.6 5.81
----------------------------------------------------------------------------------------------------------------------
Total loans 12,738 286.4 9.07 12,226 239.8 7.91
----------------------------------------------------------------------------------------------------------------------
Total earning assets 17,069 $ 352.5 8.33 % 17,196 $ 297.7 6.98 %
----------------------------------------------------------------------------------------------------------------------
Less - allowance for loan losses (496) (471)
Cash and due from banks 911 940
Other assets 807 749
----------------------------------------------------------------------------------------------------------------------
Total assets $18,291 $18,414
======================================================================================================================
Liabilities and Shareholders' Equity
Interest bearing demand deposits $ 1,571 $ 7.6 1.95 % $ 1,574 $ 5.8 1.51 %
Consumer savings deposits 3,821 29.6 3.14 4,001 23.8 2.41
Other consumer time deposits 2,864 36.6 5.19 2,121 23.1 4.42
Commercial and public savings
and other time deposits 1,506 14.8 3.99 1,396 8.6 2.53
Deposits in foreign offices 1,262 13.3 4.27 725 5.5 3.05
----------------------------------------------------------------------------------------------------------------------
Total time deposits 11,024 101.9 3.75 9,817 66.8 2.76
----------------------------------------------------------------------------------------------------------------------
Short-term borrowings 1,534 23.2 6.14 2,024 19.7 3.97
Long-term debt 713 13.0 7.36 1,526 23.1 6.09
----------------------------------------------------------------------------------------------------------------------
Total funds borrowed 2,247 36.2 6.53 3,550 42.8 4.88
----------------------------------------------------------------------------------------------------------------------
Total interest bearing liabilities 13,271 $ 138.1 4.22 % 13,367 $ 109.6 3.33 %
----------------------------------------------------------------------------------------------------------------------
Interest rate spread 4.11 % 3.65 %
----------------------------------------------------------------------------------------------------------------------
Demand deposits 3,033 3,132
Other liabilities 453 455
Total shareholders' equity 1,534 1,460
----------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $18,291 $18,414
======================================================================================================================
Net interest income $ 214.4 $ 188.1
Net yield on average earning assets 5.05 % 4.40 %
Net yield on average total assets 4.72 4.11
----------------------------------------------------------------------------------------------------------------------
Net interest income/net yield on average earning assets:
Domestic $ 201.4 5.30 % $ 182.5 4.76 %
International 13.0 2.97 5.6 1.27
======================================================================================================================
* Interest and rates are presented on a taxable equivalent basis.
**Restated to include the accounts and results of Concord Leasing, Inc. merged with the
Company on January 1, 1995.
</TABLE>
<PAGE>
(Restated as amended as of April 12, 1990)
BY-LAWS
of
MARINE MIDLAND BANKS, INC.
ARTICLE I
SHAREHOLDERS' MEETINGS
Section 1.1 Annual Meeting. The Annual Meeting of the
shareholders for the election of directors and the transaction of
such other business as may properly come before the meeting, shall
be held in April each year at the Office of the Corporation, One
Marine Midland Center, City of Buffalo, State of New York, or at
such other place and at such time and on such day as may be
designated from time to time by the Board of Directors.
Section 1.2 Special Meetings. Except as otherwise
specifically provided by statute, special meetings of the
shareholders may be called for any purpose at any time by the
Board, the Chairman of the Board, the President, the Chief
Executive Officer or the Secretary. Business transacted at all
special meetings of shareholders shall be confined to the purposes
stated in the Notice of Meeting.
Section 1.3 Quorum. The holders of a majority of the stock
issued and outstanding, and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all
meetings of shareholders unless otherwise provided by law.
Section 1.4 Voting. At any meeting of the shareholders each
shareholder may vote in person or by proxy duly authorized in
writing. Each shareholder shall at every meeting of shareholders
be entitled to one vote for each share of stock held by such share-
holder. A majority of the votes cast shall decide every question
or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Certificate of Incorporation.
Any action required to be taken at an annual or special
meeting of shareholders may be taken without a meeting by written
consent setting forth the action and signed by the holders of
outstanding shares having not less than the minimum number of
shares necessary to authorize or to take such action at a meeting
at which all shares entitled to vote thereon were present and
voted.
Section 1.5 Notice of Meeting. Written notice of each
meeting of shareholders stating the place, date, and hour of the
meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered
personally or shall be mailed postage prepaid to each share-
holder entitled to vote at such meeting, directed to the
shareholder at his address as it appears on the records of the
Corporation, not less than ten days before the date of the meeting.
ARTICLE II
DIRECTORS
Section 2.1 Board of Directors. The Board of Directors
(hereinafter referred to as the "Board"), shall have the power to
manage and administer the business and affairs of the Corporation,
and, except as expressly limited by law, all corporate powers of
the Corporation shall be vested in and may be exercised by said
Board unless such powers are required by statute, by the Certif-
icate of Incorporation, or by these By-Laws to be done by the
shareholders.
Section 2.2 Number and Term. The Board shall consist of not
less than five nor more than twenty-five directors, the exact
number within such minimum and maximum limits to be fixed and
determined from time to time by resolution of a majority of the
full Board or by resolution of the shareholders at any meeting of
shareholders. Unless sooner removed or disqualified, each director
shall hold office until the next annual meeting of the shareholders
and until his successor has been elected and qualified.
Section 2.3 Organization Meeting. At its first meeting
after each annual meeting of shareholders, the Board shall choose
a Chairman of the Board, a President and a Chief Executive Officer
from its own members and otherwise organize the new Board and
appoint officers of the Corporation for the succeeding year.
Section 2.4 Chairman of the Board. The Chairman of the
Board shall preside at all meetings of the Board and of
shareholders and perform such duties as shall be assigned to him
from time to time by the Board. In the absence of the Chairman of
the Executive Committee, the Chairman of the Board shall act as
Chairman of the Executive Committee. Except as may be otherwise
provided by the By-Laws or the Board, he shall be a member ex
officio of all committees authorized by these By-Laws or the Board.
He shall be kept informed by the executive officers about the
affairs of the Corporation.
Section 2.5 Regular Meetings. The Regular Meetings of the
Board shall be held each month at the time and location designated
by the Board. No notice of a Regular Meeting shall be required if
the meeting is held according to a Schedule of Regular Meetings
approved by the Board.
Section 2.6 Special Meetings. Special meetings of the Board
may be called by the Chairman of the Board, the President, the
Chief Executive Officer or the Secretary or at the written request
of any three or more directors. Each member of the Board shall be
given notice stating the time and place of each such special
meeting by telegram, telephone, or similar electronic means, or in
person, at least one day prior to such meeting, or by mail at least
three days prior.
Section 2.7 Quorum. One-third of the directors shall
constitute a quorum at any meeting, except when otherwise provided
by law. If a quorum is not present at any meeting, the directors
present may adjourn the meeting, and the meeting may be held, as
adjourned, without further notice provided that a quorum is then
present. The act of a majority of the directors present at any
meeting at which there is a quorum, shall be the act the Board,
unless otherwise specifically provided by statute, by the
Certificate of Incorporation, or by these By-Laws.
Section 2.8 Vacancies. When any vacancy occurs among the
directors, the remaining members of the Board may appoint a
director to fill each such vacancy at any regular meeting of the
Board, or at a special meeting called for that purpose. Any
director so appointed shall hold office until the next an- nual
meeting of the shareholders and until his successor has been
elected and qualified, unless sooner displaced.
Section 2.9 Removal of Directors. Any director may be
removed either with or without cause, at any time, by a vote of the
holders of a majority of the shares of the Corporation at any
meeting of shareholders called for that purpose. A director may be
removed for cause by a vote of a majority of the full Board.
Section 2.10 Compensation of Directors. The Board shall fix
the amounts to be paid directors for their services as directors
and for their attendance at the meetings of the Board or of
committees or otherwise. No director who receives a salary from
the Corporation shall receive any fee for attending meetings of the
Board or of any of its committees.
Section 2.11 Action of the Board. Except as otherwise
provided by law, corporate action to be taken by the Board shall
mean such action at a meeting of the Board or the Executive
Committee of the Board. Any action required or permitted to be
taken by the Board, the Executive Committee or any other committee
of the Board may be taken without a meeting if all members of the
Board or the committee consent in writing to a resolution
authorizing the action. The resolution and the written consents
thereto shall be filed with the minutes of the proceedings of the
Board or committee. Any one or more members of the Board or any
committee may participate in a meeting of the Board or committee by
means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear
each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
Section 2.12 Waiver of Notice. Notice of the Meeting need
not be given to any director who submits a signed Waiver of Notice
whether before or after the meeting, or who attends the meeting
without protesting, prior thereto or at its commencement, a lack of
such notice.
ARTICLE III
COMMITTEES OF THE BOARD
Section 3.1 Executive Committee. There shall be an
Executive Committee which shall be composed of at least three
members elected by the Board from among its members at its first
meeting following the Annual Meeting to serve for the ensuing year
and shall include the Chairman of the Board, the President, the
Chief Executive Officer, and the Chairman of the Executive
Committee, all of which offices may be held by one person. The
Chairman of the Board may appoint one or more directors as
alternate members to serve in place of any absent members of the
Executive Committee. Any vacancy in the Executive Committee shall
be filled by the Board but until its next regular Board meeting may
be filled temporarily by the Chairman of the Board.
The Executive Committee shall possess and exercise all of the
powers of the Board except when the latter is in session.
Section 3.2 Chairman of the Executive Committee. The Board
shall appoint one of its members to be Chairman of the Executive
Committee. The Chairman of the Board, the President or the Chief
Executive Officer may at the same time be appointed Chairman of the
Executive Committee. The Chairman of the Executive Committee shall
preside at all meetings of the Executive Committee, and he shall,
in the absence of the Chairman of the Board, the President and the
Chief Executive Officer, preside at all meetings of share- holders
and the Board. He shall also perform such other duties and be
vested with such other powers as may from time to time be conferred
upon him by these By-Laws or as shall be assigned to him from time
to time by the Board or the Chief Executive Officer.
Section 3.3 Meetings of the Executive Committee. Meetings
of the Executive Committee may be called by the Chairman of the
Board, the Chairman of the Executive Committee, the President, the
Chief Executive Officer or the Secretary, and may be held at any
place and at any time designated in the notice thereof. Each
member of the Executive Committee shall be given notice stating the
time and place of each such meeting, by telegram, telephone, or
similar electronic means, or in person, at least one day prior to
such meeting, or by mail at least three days prior.
Section 3.4 Audit Committee. The Board shall designate an
Audit Committee, which shall hold office until the next annual
meeting, consisting of not less than three of its members, other
than officers of the Corpora- tion. The Committee shall meet with
the Corporation's independent auditors and review with them the
scope of their examination, and their findings and recommendations.
The Audit Committee shall also meet with and receive reports from
the Corporation's internal auditors. The Committee shall oversee
the accounting policies used in the preparation of the financial
statements of the Corporation and its affiliates. The Committee
will report the results of their meetings and reviews to the Board.
Section 3.5 Other Committees. The Board may appoint, from
time to time, from its own members, committees of the Board of one
or more persons, for such purposes and with such powers as the
Board may determine.
ARTICLE IV
OFFICERS
Section 4.1 President. The Board shall appoint one of its
members to be President. In the absence of the Chairman of the
Board, the President shall preside at all meetings of the Board and
of shareholders and in the absence of the Chairman of the Executive
Committee and the Chairman of the Board at all meetings of the
Executive Committee. Except as may be otherwise provided by the
By-Laws or the Board, he shall be a member ex officio of all
committees authorized by these By-Laws or the Board. The President
shall have general executive powers, shall participate actively in
all major policy decisions and shall have and may exercise any and
all other powers and duties pertaining by law, regulation, or
practice, to the Office of President, or imposed by these By-Laws.
The President shall also have and may exercise such further powers
and duties as from time to time may be conferred, or assigned by
the Board or the Chief Executive Officer.
Section 4.2 Chief Executive Officer. The Board shall
appoint one of its members to be Chief Executive Officer of the
Corporation. The Chairman of the Board or the President may at the
same time be appointed Chief Executive Officer. The Chief
Executive Officer shall exercise general supervision over the
policies and business affairs of the Corporation and the carrying
out of the policies adopted or approved by the Board. Except as
otherwise provided by these By-Laws, he shall have power to
determine the duties to be performed by the officers appointed as
provided in Section 4.5 of these By-Laws, and to employ and
discharge officers and employees. Except as otherwise provided by
the By-Laws or the Board, he shall be a member ex officio of all
committees authorized by these By-Laws or created by the Board. In
the absence of the Chairman of the Board and the President, he
shall preside at all meetings of the Board and of shareholders.
Section 4.3 Executive and Other Senior Officers. The Board
shall by resolution determine from time to time those officers
whose appointment shall require approval by the Board or a
committee of the Board. Each such officer shall have such powers
and duties as may be assigned by the Board, a committee of the
Board, the President or the Chief Executive Officer.
Section 4.4 Secretary. The Board shall appoint a Secretary
who shall be the Secretary of the Board and of the Corporation and
shall keep accurate minutes of all the meetings of shareholders and
of the Board. The Secretary shall attend to the giving of all
notices required to be given by these By- Laws; shall be custodian
of the corporate seal, records, documents, and papers of the
Corporation; shall provide for the keeping of proper records of all
transactions of the Corporation; shall have and may exercise any
and all other powers and duties pertaining by law, regulation or
practice, to the Office of Secretary, or imposed by these By-Laws;
and shall also perform such other duties as may be asssigned from
time to time by the Board, the President or the Chief Executive
Officer.
Section 4.5 Other Officers. The President or the Chief
Executive Office or his designee may appoint all officers whose
appointment does not require approval by the Board or a committee
of the Board, and assign to them such titles, as from time to time
may appear to be required or desirable to transact the business of
the Corporation. Each such officer shall have such powers and
duties as may be assigned by the Board, the President or the Chief
Executive Officer.
Section 4.6 Tenure of Office. The Chairman of the Board,
the President, the Chief Executive Officer and the Chairman of the
Executive Committee shall hold office for the current year for
which the Board was elected, unless they shall resign, become
disqualified, or be removed. All other officers shall hold office
until their successors have been appointed and qualify unless they
shall resign, become disqualified or be removed. The Board shall
have the power to remove the Chairman of the Board, the President,
the Chief Executive Officer and the Chairman of the Executive
Committee. The Board or the Chief Executive Officer or his
designee shall have the power to remove all other officers and
employees. Any vacancy occurring in the offices of Chairman of the
Board, President or Chief Executive Officer shall be filled
promptly by the Board.
Section 4.7 Compensation. The Board shall by resolution
determine from time to time the officers whose compensation will
require approval by the Board or a committee of the Board. The
Chief Executive Officer shall fix the compensation of all officers
and employees whose compensation does not require approval by the
Board or the Compensation and Nominating Committee.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 5.1 Transfers. Shares of stock shall be
transferable on the books of the Corporation only by the person
named in the certificate or by an attorney, lawfully constituted in
writing, and upon surrender of the certifi- cate therefor. Every
person becoming a shareholder by such transfer shall, in proportion
to his shares, succeed to all rights of the prior holder of such
shares.
Section 5.2 Stock Certificates. The certificates of stock
of the Corporation shall be numbered and shall be entered in the
books of the Corpor- ation as they are issued. They shall exhibit
the holder's name and number of shares and shall be signed by the
Chairman of the Board, the President, the Chief Executive Officer,
a Vice President or any other officer appointed by the Board for
this purpose, and the Secretary or an Assistant Secretary.
ARTICLE VI
CORPORATE SEAL
Section 6.1 Corporate Seal. The Chairman of the Board, the
President, the Chief Executive Officer, the Secretary, any
Assistant Secretary, Vice President, Assistant Vice President, or
other officer thereunto designated by the Board or the Chief
Executive Officer or his designee, shall have authority to affix
the corporate seal to any document requiring such seal, and to
attest the same. Such seal shall be substantially in the following
form:
(impression )
( of )
( Seal )
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1. Fiscal Year. The Fiscal Year of the
Corporation shall be the calendar year.
Section 7.2. Execution of Instruments. All agreements,
indentures, mortgages, deeds, conveyances, transfers, certificates,
declarations, receipts,
discharges, releases, satisfactions, settlements, petitions,
schedules, accounts, affidavits, bonds, undertakings, proxies and
other instruments or documents may be signed, executed,
acknowledged, verified, delivered or accep- ted in behalf of the
Corporation by the Chairman of the Board, or the Presi- dent, or
the Chief Executive Officer, or the Secretary, or any Vice
President, or any other officer or employee designated by the Board
or the Chief Execu- tive Officer or his designee. Any such
instruments may also be executed, acknowledged, verified, delivered
or accepted in behalf of the Corporation in such other manner and
by such other officers as the Board may from time to time direct.
The provisions of this Section 7.2 are supplementary to any other
provision of these By-Laws. Each of the foregoing authorizations
shall be at the pleasure of the Board, and each such authorization
by the Chief Executive Officer or his designee also shall be at the
pleasure of the Chief Executive Officer.
Section 7.3. Records. The By-Laws and the proceedings of
all meet- ings of the shareholders, the Board, and standing
committees of the Board, shall be recorded in appropriate minute
books provided for the purpose. The minutes of each meeting shall
be signed by the Secretary or other officer appointed to act as
Secretary of the meeting.
Section 7.4 Emergency Operations. In the event of war or
warlike damage or disaster of sufficient severity to prevent the
conduct and management of the affairs, business, and property of
the Corporation by its directors and officers as contemplated by
these By-Laws, any two or more available members of the then
incumbent Executive Committee shall constitute a quorum of that
committee for the full conduct and management of the affairs,
business, and property of the Corporation. In the event of the
unavailability at such time of a minimum of two members of the then
incumbent Executive Committee, any three available directors shall
constitute the Executive Committee for the full conduct and
management of the affairs, business, and property of the
Corporation. This By-Law shall be subject to implementation by
resolutions of the Board passed from time to time for that purpose,
and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementary resolutions
shall be suspended until it shall be determined by any interim
Executive Committee acting under this Section that it shall be to
the advantage of the Corporation to resume the conduct and
management of its affairs, business, and property under all of the
other provisions of these By-Laws.
Section 7.5 (a) Right to Indemnification. Each person who
was or is made a party or is threatened to be made a party to or is
otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the
fact that he is or was a director or officer of the Corporation or,
while a director or officer of the Corporation is or was serving at
the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to an
employee benefit plan (an "Indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving
as a director or officer, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be
amended, against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by
such Indemnitee in connection therewith and such indemnification
shall continue as to an Indemnitee who has ceased to be a director
or officer and shall inure to the benefit of the Indemnitee's
heirs, executors and administrators; provided, however, that,
except as provided in Section 7.5(b) hereof with respect to
proceedings to enforce rights to indemnification, the Corporation
shall indemnify any such Indemnitee in connection with a proceeding
(or part thereof) initiated by such Indemnitee only if such
proceeding (or part thereof) was authorized by the Board. The
right to indemnification conferred in this Section 7.5 shall be a
contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that, if
the Delaware General Corporation Law so requires, an advancement of
expenses incurred by an Indemnitee shall be made only upon delivery
to the Corporation of an undertaking, by or on behalf of such
Indemnitee, to repay all amounts so advanced if it shall ultimately
be determined by final judicial decision from which there is no
further right to appeal that such Indemnitee is not entitled to be
indemnified for such expenses
under this Section or otherwise.
(b) Right of Indemnitee to Bring Suit. If a claim under
paragraph (a) of this Section 7.5 is not paid in full by the
Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim for an
advancement of expenses, in which case the applicable period shall
be twenty days, the Indemnitee may at any time thereafter bring
suit against the Corporation to recover the unpaid amount of the
claim. If successful in whole or in part in any such suit, or in
a suit brought by the Corporation to recover an advancement of
expenses pursuant to the terms of such Indemnitee's undertaking,
the Indemnitee shall be entitled to be paid the expense of
prosecuting or defending such suit. In any suit brought by the
Indemnitee to enforce a right to indemnification hereunder it shall
be a defense that, and in any suit by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking the
Corporation shall be entitled to recover such expenses upon a final
adjudication that, the Indemnitee has not met the applicable
standard of conduct set forth in the Delaware General Corporation
Law. Neither the failure of the Corporation to have made a
determination prior to the commencement of such suit that
indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable standard of conduct
set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation that the Indemnitee has not met
such applicable standard of conduct, shall create a presumption
that the Indemnitee has not met the applicable standard of conduct
or, in the case of such a suit brought by the Indemnitee, be a
defense to such suit. In any suit brought by the Indemnitee to
enforce a right to indemnifi- cation or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement
of expenses pursuant to the terms of an undertaking by the
Indemnitee, the Corporation shall have the burden of proving that
the Indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Section 7.5 or otherwise.
(c) Non-Exclusivity of Rights. The rights to indemnification
and to the advancement of expenses conferred in this Section 7.5
shall not be exclusive of any other right which any person may have
or hereafter acquire under any statute, the Corporation's
Certificate of Incorporation, By-Law, agreement, vote of
shareholders or disinterested directors or otherwise.
(d) Indemnification of Employees and Agents of the
Corporation. The Corporation may, to the extent authorized from
time to time by the Board, grant rights to indemnification, and to
the advancement of expenses to any employee or agent of the
Corporation to the fullest extent of the provisions of this Section
7.5 with respect to the indemnification and advancement of expenses
of directors and officers of the Corporation.
(e) Insurance. The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer, employee
or agent of the Corporation or another corporation, partnership,
joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law, as
the same exists or may hereafter be amended.
Section 7.6 Amendments. The By-Laws may be added to,
amended, altered or repealed at any regular meeting of the Board,
by a vote of a majority of the total number of the directors, or at
any meeting of shareholders, duly called and held, by a majority of
the stock represented at such meeting.
I, XXX, CERTIFY that: (1) I am the duly constituted XXX
Secretary of Marine Midland Banks, Inc., and as such officer have
access to its official records; (2) the foregoing By-Laws are the
By-Laws of said Corporation, and all of them are now lawfully in
force and effect.
IN TESTIMONY WHEREOF, I have hereunto affixed my official
signature and the seal of the said Corporation, in the city of XXX,
New York, on this XX day of XXX, 19XX.
Gea Tung
Assistant Secretary
5126d
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