SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[FEE REQUIRED]
For the fiscal year ended: December 31, 1993
-----------------
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the transition period from to
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Commission file Number 0-12709
LIBERTY BANCORP, INC.
(Exact Name of Registrant as specified in its charter)
Oklahoma 73-1218204
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 North Broadway
Oklahoma City, OK 73102
(Address of principal executive offices)
(Zip Code)
(405) 231-6000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the regis-
trant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .
------------------ ----------------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
or Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K [ ]
As of March 30, 1994, Registrant had 9,477,819 shares of Common Stock
outstanding.
As of March 30, 1994, the aggregate market value of the Registrant's
Common Stock held by nonaffiliates, was approximately $131.5 million.
DOCUMENTS INCORPORATED BY REFERENCE
Information required by Part III of this Form is incorporated by reference
from Registrant's Definitive Proxy Statement for its 1994 Annual Meeting of
Shareholders.
LIBERTY BANCORP, INC.
FORM 10-K
For the Fiscal Year Ended December 31, 1993
CROSS-REFERENCE INDEX
Reference Page(s)
Annual Report on
Form 10-K
PART I ITEM
ITEM 1 BUSINESS
ITEM 2 PROPERTIES
ITEM 3 LEGAL PROCEEDINGS
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS NONE
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON STOCK
AND RELATED SECURITYHOLDER MATTERS
ITEM 6 SELECTED FINANCIAL DATA
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERA-
TIONS (FINANCIAL REVIEW)
Guide 3 - Statistical Information
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Liberty Bancorp, Inc. and Subsidiaries (consolidated)
Report of Independent Public Accountants
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Shareholders' Investment
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statement
Reports of Other Independent Auditors Applicable
to Certain Subsidiaries (of which separate financial
statements are not required)
Liberty Mortgage Company
Liberty Real Estate Company
Selected Quarterly Financial Data
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE NONE
PART III (1)
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11 EXECUTIVE COMPENSATION
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
SIGNATURES
(1) The information required by Part III is incorporated by reference from the
Registrant's Proxy Statement, to be filed pursuant to Regulation 14A,
relating to the Annual Meeting of Shareholders of the Registrant pursuant
to General Instruction G to Form 10-K.
<TABLE>
Liberty Bancorp, Inc.
FINANCIAL HIGHLIGHTS
<CAPTION>
- ------------------------------------------------- ------------- ------------- ------------- ------------- ----------
December 31 (In thousands, except per share data) 1993 1992 1991 1990 1989
- ------------------------------------------------- ------------- ------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
For the Year-to-Date
Total Revenues $ 185,117 $ 172,762 $ 188,445 $ 194,298 $ 203,636
Net Interest Income 74,568 63,903 55,123 52,515 56,562
Provision for Loan Losses (7,363) 1,793 2,252 (3,367) (7,156)
Trust Fees 15,508 15,523 14,789 13,984 13,249
Mortgage Banking Income 7,449 7,391 5,771 3,962 3,717
Other Noninterest Income 33,759 25,742 23,340 21,093 22,788
Noninterest Expense 118,728 92,551 90,887 92,579 102,352
Cumulative Effect of Change in Accounting
Principle 14,255 _ _ _ _
Extraordinary Item - Use of Net Operating Loss
Carryforwards _ 4,640 832 60 _
Net Income 36,532 18,118 5,791 2,204 1,120
Income per Share _ Primary and Fully-diluted
Before Cumulative Effect of Change in
Accounting Principle and Extraordinary Item 2.28 1.49 .57 .25 .13
Net Income 3.74 2.01 .66 .25 .13
Cash Dividends Declared .30 _ _ _ _
- ------------------------------------------------- ------------- ------------- ------------- ------------- ----------
At December 31
Loans (exclusive of term federal funds sold) $ 930,941 $ 677,053 $ 730,591 $ 743,934 $ 812,132
Earning Assets 2,208,523 2,035,562 2,015,319 1,916,373 1,714,789
Assets 2,659,776 2,428,160 2,489,541 2,451,585 2,274,959
Deposits 2,125,144 1,929,079 1,909,264 1,849,664 1,750,274
Total Shareholders' Investment 227,245 178,841 159,776 153,425 150,389
Book Value per Common Share 23.98 20.29 18.21 17.55 17.32
- ------------------------------------------------- ------------- ------------- ------------- ------------- ----------
Average Year-to-Date Balances
Earning Assets $2,044,814 $1,813,871 $1,782,527 $1,702,380 $1,698,196
Assets 2,431,458 2,171,767 2,164,222 2,107,380 2,077,125
Deposits 1,957,313 1,740,590 1,676,001 1,638,876 1,606,655
Total Shareholders' Investment 208,137 170,846 158,363 151,652 151,403
- ------------------------------------------------- ------------- ------------- ------------- ------------- ----------
Ratios
Capital Ratios
Leverage 7.87% 7.97% 6.96% 7.16% N/A %
Risk-based 15.37 18.23 14.42 14.26 N/A
Average Shareholders' Investment as % of
Average Total Assets 8.56 7.87 7.32 7.20 7.29
Rate of Return, Before Cumulative Effect of
Change in Accounting Principle and
Extraordinary Item, on
Average Earning Assets 1.09 .74 .28 .13 .07
Average Total Assets .92 .62 .23 .10 .05
Average Total Shareholders' Investment 10.70 7.89 3.13 1.41 .74
Rate of Return on
Average Earning Assets 1.79 1.00 .32 .13 .07
Average Total Assets 1.50 .83 .27 .10 .05
Average Total Shareholders' Investment 17.55 10.60 3.66 1.45 .74
Average Earning Assets as % of Average
Total Assets 84.10 83.52 82.36 80.78 81.76
Dividend Payout Ratio 8.02 _ _ _ _
Operating Efficiency Ratio 90.73 80.36 88.98 97.74 102.84
Provision for Loan Losses as %
of Average Loans (.94) .26 .30 (.45) (.79)
</TABLE>
An Overview of the Company's
Operations
- ------------------------------------------------------------------------------
Liberty Bancorp, Inc. ("Liberty") is incorporated under the laws of the
State of Oklahoma and is registered as a bank holding company under the Bank
Holding Company Act of 1956. As such, it holds all of the shares of its two
major banking subsidiaries, Liberty Bank and Trust Company of Oklahoma City,
N.A. ("Liberty Oklahoma City") and Liberty Bank and Trust Company of Tulsa,
N.A. ("Liberty Tulsa"), as well as several other subsidiaries.
Liberty coordinates the financial resources of the consolidated
enterprise and also makes investments in and advances funds to its
subsidiaries to provide portions of their capital and credit requirements. In
addition, it supplies various managerial and support services to the sub-
sidiaries and coordinates their general policies and activities.
Both Liberty Oklahoma City and Liberty Tulsa provide a broad range of
financial services to individuals, business enterprises, financial
institutions and governmental authorities. Liberty Oklahoma City, which has a
total of twenty locations in Oklahoma City and the surrounding communities of
Choctaw, Edmond, Harrah, Midwest City and Norman, is Liberty's largest sub-
sidiary having assets of $1.7 billion and deposits of $1.4 billion at December
31, 1993. Liberty Tulsa has eight locations and an autobank facility in Tulsa
as well as banking centers in Broken Arrow and Jenks, and is the second
largest subsidiary of Liberty with assets of $950 million and deposits of $711
million at December 31, 1993.
Liberty Mortgage Company, a subsidiary of Liberty Oklahoma City, engages
in mortgage banking activities. Liberty Real Estate Company, a nonbank
subsidiary of Liberty, owns and operates Liberty Tower, in which Liberty and
Liberty Oklahoma City maintain principal offices. Other subsidiaries are in-
volved in insurance and other financial services.
Fiduciary Services
- ------------------------------------------------------------------------------
The principal activities of the trust departments of both banks include
administration and investment management of personal trusts and estates,
private and public employee benefit plans, including IRA's, corporate trusts
and agencies for individuals, corporations, foundations and political
entities. Trust assets under management at December 31, 1993 totaled $2.4
billion. Assets held in trust totaled $4.2 billion. These assets include
fixed income and equity securities, residential, commercial and agricultural
properties, mineral interests (mainly oil and gas) and private businesses
throughout Oklahoma and the Southwest. In addition, Liberty Oklahoma City's
Trust Department provides stock transfer, registration, dividend disbursing
and dividend reinvestment services for corporations.
Capital Market Services
- ------------------------------------------------------------------------------
The capital markets group of each bank provides investment and money
market services to individuals, trust accounts, corporations and correspondent
banks. The capital markets groups are responsible for portfolio management,
investment banking activities and the coordination of Liberty's funding and
asset/liability management. The capital markets group also serves as
broker/dealer in eligible investment securities and makes available a wide
variety of investments to both retail and institutional customers. In
addition, some 200 financial organizations utilize all or a portion of
Liberty's institutional products including safekeeping, investment portfolio
accounting, asset/liability consulting, and advanced portfolio strategies.
Mortgage Banking Services
- ------------------------------------------------------------------------------
Liberty Mortgage Company's ("LMC") residential mortgage operations are
carried out through the main Liberty Oklahoma City location and two banking
centers, one in Oklahoma City and one in Tulsa. Commercial mortgage
operations are available at the main bank locations of Liberty Oklahoma City
and the LMC branch in Tulsa. A major service provided by mortgage companies
is the servicing of the loans marketed to investors through individual loan
sales or by creating mortgage-backed pass-through securities. As of year-end
1993, LMC was servicing approximately $1.3 billion in mortgage loans.
Personal Banking Services
- ------------------------------------------------------------------------------
Liberty Oklahoma City and Liberty Tulsa provide an extensive array of
retail banking products and services. The emphasis on individual and small
business lines of credit, automobile loans, boat and recreational vehicle
loans, home improvement and second mortgage loans, as well as acquisitions,
have expanded retail loans to $195.4 million at December 31, 1993 compared to
$107.0 million at the end of 1992. Retail loans accounted for 21% and 16% of
total loans at the end of the respective years. Both banks offer checking,
savings, certificates of deposit, money market investments, IRA's, Keogh and
qualified retirement plan accounts.
Commercial Banking Services
- ------------------------------------------------------------------------------
Liberty Oklahoma City and Liberty Tulsa deliver comprehensive,
competitively priced commercial banking services to commercial customers
located in Oklahoma and contiguous states. Commercial customers use many
commercial banking services including credit, depository and cash management.
The commercial loan portfolio grew to $376.5 million at December 31, 1993
compared to $262.8 million at year end 1992. The commercial portfolio
comprises approximately 40% of Liberty's loan portfolio. Commercial banking
services are supported by an experienced lending staff. Liberty's statewide
presence strengthens its ability to serve corporate, institutional, and
individual financial requirements. In addition, Liberty commercial bankers
coordinate their customer's use of other Liberty services including Group Plan
Banking services provided to customer's employees.
Real Estate Financing
- ------------------------------------------------------------------------------
Liberty Oklahoma City and Liberty Tulsa actively provide construction,
development and intermediate term loan products along with related real estate
services. Real estate mortgage loans totaled $199.1 million at December 31,
1993 and accounted for 21% of total loans. Other real estate loans, including
construction and development, were $85.6 million at December 31, 1993 and
comprised 9% of total loans. This compares to real estate mortgage loans of
$154.4 million (23% of total loans) and other real estate loans of $67.4 mil-
lion (10% of total loans) one year ago.
Correspondent Banking Activities
- ------------------------------------------------------------------------------
Liberty Oklahoma City and Liberty Tulsa provide financial services to
over 300 banks in Oklahoma and other parts of the Midwest. Both banks work
closely with community and country banks, assisting them in satisfying the
loan demands of their customers by participating in their lending activities.
In addition, correspondents are provided with lending, investment, operations
and other financial and advisory services. At December 31, 1993,
correspondent and regional loans totaled $17.3 million or 2% of total loans.
This compares to $16.9 million, or 2% of total loans at December 31, 1992.
International Banking Activities
- ------------------------------------------------------------------------------
Liberty Oklahoma City and Liberty Tulsa provide international trade
finance and trade services to customers across Oklahoma and to banks within
Oklahoma and in surrounding states. Liberty's broad network enhances the
service capabilities of trade services representatives, foreign exchange
traders and international tellers in providing wire and draft services,
documentary collections, retail foreign currency products, foreign exchange
contracts and letters of credit. At December 31, 1993, Liberty Oklahoma
City's and Liberty Tulsa's outstanding international standby and commercial
letters of credit totaled $44.1 million.
Designated as a Priority Lender by the Export-Import Bank of the United
States, Liberty works with exporters and local banks in providing government-
backed financing for export sales. The trade finance officers work together
with trade services to provide full service for Liberty customers requiring
international financial expertise and service.
Acquisitions
- ------------------------------------------------------------------------------
Liberty continued to expand during 1993 with the acquisition of five
banking companies. Information concerning these acquisitions is shown below.
<TABLE>
1993 Bank Acquisitions
<CAPTION>
(In thousands)
- ----------------------------------------------------------------------------------------------------------
Parent Company/ Acquisition Consideration
Bank Date Loans Deposits Total Assets Given
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First National Holding Company
First National Bank of Jenks, Okla. March 1 $ 15,484 $ 29,829 $ 33,408 Stock
- ------------------------------------------ ----------- ---------- ------------- ------------- ------------
Interstate Financial Corporation
First Oklahoma Bank and Trust Co.,
Edmond, Okla. August 1 19,370 49,630 54,827 Cash
- ------------------------------------------ ----------- ---------- ------------- ------------- ------------
First Edmond Bancshares, Inc.
The First National Bank of Edmond,
Okla. October 1 25,384 79,762 87,328 Cash
- ------------------------------------------ ----------- ---------- ------------- ------------- ------------
Midwest National Bancshares, Inc.
Midwest National Bank, Midwest
City, Okla. December 1 15,140 35,049 38,581 Stock
- ------------------------------------------ ----------- ---------- ------------- ------------- ------------
Tulbancorp, Inc.
Bank of Tulsa, Tulsa, Okla. December 31 48,211 56,494 62,820 Stock
- ------------------------------------------ ----------- ---------- ------------- ------------- ------------
Total $123,589 $250,764 $276,964
- ------------------------------------------ ----------- ---------- ------------- ------------- ------------
<FN>
Liberty may continue to seek additional opportunities to expand through acquisition of additional banks and other
potential lines of business as well as potential combinations with larger institutions.
</TABLE>
Financial Review
- ------------------------------------------------------------------------------
Management's discussion and analysis of the 1993 financial results,
important events and trends should be read in conjunction with the con-
solidated financial statements, notes to the consolidated financial statements
and the supplemental statistical and financial data presented elsewhere in
this report.
Performance Summary
- ------------------------------------------------------------------------------
Liberty reported net income of $36.5 million for 1993. This compares to
net income of $18.1 million for 1992 and $5.8 million for 1991. Net income per
share for 1993 was $3.74, compared to $2.01 in 1992 and $.66 in 1991. Income
for the fourth quarter of 1993 was $6.3 million or $.64 per share. This com-
pares with income of $3.5 million or $.38 per share for the fourth quarter of
1992. The increase in net income from 1992 includes the cumulative effect of
a change in accounting for income taxes of $14.3 million. Income for 1993
also included total negative provisions for loan losses and losses on other
real estate and assets owned of $8.6 million compared to positive provisions
of $548 thousand in 1992. The negative provisions were made to reduce the
reserves to a level considered appropriate for the inherent risk in the
current portfolios.
Net Interest Income
- ------------------------------------------------------------------------------
A volume-rate analysis of the changes in net interest income on a fully
tax-equivalent basis is shown below. The volume-rate analysis reflects the
changes in net interest income from both changes in asset and liability
volumes and changes in interest rates. Because of numerous simultaneous bal-
ance and rate changes, it is not possible to allocate precisely such changes
between balances and rates. For purposes of this table, changes which are not
due solely to balance changes or solely to rate changes are allocated to such
categories based on the respective percentage changes in average daily
balances and average rates.
<TABLE>
Volume/Rate Analysis
<CAPTION>
- ----------------------------------------------------------------------------------------------------
(In Thousands) 1993 vs 1992 1992 vs 1991
- ----------------------------------------------------------------------------------------------------
Increase (Decrease) Due to Average Average Average Average
Change in Balance Rate Total Balance Rate Total
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning Assets
Loans (1) $ 7,153 ($ 180) $ 6,973 ($ 5,023) ($ 9,164) ($14,187)
Investment securities
Taxable 15,920 (13,796) 2,124 10,856 (9,616) 1,240
Nontaxable (170) (267) ( 437) (207) 226 19
Trading (161) (39) ( 200) (72) (34) ( 106)
Federal funds
sold and other (3,681) (782) (4,463) (3,938) (3,772) (7,710)
- ---------------------------------- --------- --------- ------------ ----------- ---------- ---------
Total earning assets 19,061 (15,064) 3,997 1,616 (22,360) (20,744)
- ---------------------------------- --------- --------- ------------ ----------- ---------- ---------
Interest-bearing Liabilities
Deposits
Savings and money market
accounts 3,415 (3,529) ( 114) 4,629 (10,209) (5,580)
Other time deposits 1,746 (7,316) (5,570) (2,648) (12,551) (15,199)
Federal funds purchased and
other 63 (544) ( 481) (2,320) (3,037) (5,357)
Other short-term borrowings 131 (228) ( 97) (714) (2,092) (2,806)
Long-term notes (113) 5 ( 108) (170) (107) ( 277)
- ---------------------------------- --------- --------- ------------ ----------- ---------- ---------
Total interest-bearing
liabilities 5,242 (11,612) (6,370) (1,223) (27,996) (29,219)
- ---------------------------------- --------- --------- ------------ ----------- ---------- ---------
Change in net interest income
(tax-equivalent) $13,819 $ (3,452) $10,367 $ 2,839 $ 5,636 $ 8,475
================================== ========= ========= ============ =========== ========== ==========
<FN>
(1) Includes loans classified as held for sale.
</TABLE>
On a tax-equivalent basis, net interest income increased $10.4 million or
16% in 1993 to $76.9 million compared to $66.5 million in 1992 and $58.0
million in 1991. Liberty's tax-equivalent interest margin has increased to
3.8% for 1993 from 3.7% in 1992. The increase in net interest income between
1993 and 1992 is due principally to the increased investments in taxable
securities and increased loan production as well as lower rates on interest-
bearing liabilities. Investment securities, including securities available for
sale and trading, increased $234.1 million over 1992 and accounted for 60.9%
of average earning assets during 1993 compared to 55.9% for 1992. Average
loans, including loans held for sale, increased $90.3 million during 1993.
Further discussion of Liberty's management of net interest income can be found
in "Interest Rate Sensitivity."
Tax-equivalent interest income increased $4.0 million to $130.7 million
in 1993. The increase is due to higher levels of earning assets, most
particularly loans and investment securities which were offset in part by
lower levels of federal funds sold. The average yield on average earning
assets for 1993 decreased from 7.0% to 6.4%. Interest rates have decreased
in all areas, with the yield on securities decreasing from 7.0% to 5.6% as a
result of securities purchased in the lower rate environment. Paydowns in
1993 of approximately $306 million in higher yielding mortgage-backed
securities have resulted in a net interest income reduction of $2.5 million.
These paydown levels are expected to be insignificant after the first quarter
of 1994, primarily due to reduced levels of these securities.
Total interest expense amounted to $53.8 million in 1993 compared to
$60.2 million in 1992. Of this $6.4 million decrease, $11.6 million is
directly attributable to declining interest rates while the offsetting $5.2
million comes from increased levels of interest-bearing liabilities. The
yield on interest-bearing liabilities declined from 4.2% in 1992 to 3.4% in
1993.
Noninterest Income
- ------------------------------------------------------------------------------
Noninterest income increased $8.1 million or 16.6% in 1993 from 1992.
Primary increases were in net securities gains, service charges on deposits
and other noninterest income.
- --------------------------------------------------------------------
(In thousands) 1993 1992 1991
- --------------------------------------------------------------------
Trust fees $15,508 $15,523 $14,789
Service charges on deposits 12,925 10,900 9,235
Mortgage banking income 7,449 7,391 5,771
Trading profits 4,591 3,713 4,089
Net securities gains 2,750 11 (200)
Loan fees 1,992 2,053 1,736
Other 11,501 9,065 8,480
- --------------------------------------------------------------------
Total $56,716 $48,656 $43,900
====================================================================
Net securities gains increased during 1993, principally in the fourth
quarter, to $2.8 million from $11 thousand in 1992 as Liberty elected to sell
securities as part of its tax planning strategy. Service charges on deposits
increased $2.0 million or 19% principally due to banks acquired during 1993.
Other noninterest income increased $2.4 million or 27% due to $1.2 million
recovered from other losses provided for in previous periods and $945 thousand
of other income of acquired banks.
Noninterest Expenses
- ------------------------------------------------------------------------------
Noninterest expenses (excluding net costs of other real estate and assets
owned ("OREO") which are discussed separately in "Provisions for Loan Losses
and Net Income From Other Real Estate and Assets Owned") increased in 1993 by
24% to $122.1 million from $98.5 million in 1992 and $93.4 million in 1991.
Increases were recorded in every major noninterest expense category.
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Salaries $44,701 $37,643 $36,586
Employee benefits 9,088 6,281 7,379
Professional and other services 10,001 8,543 8,128
Occupancy, net 8,806 7,336 6,861
Equipment 8,094 6,785 6,535
Amortization of intangibles 6,741 3,528 1,635
Data processing 5,901 5,866 5,735
Printing, postage and supplies 5,789 4,757 4,351
Deposit insurance assessment 4,564 3,814 3,191
Advertising and business development 4,382 3,119 2,463
Other 14,069 10,861 10,509
- ------------------------------------------------------------------------------
Total $122,136 $98,533 $93,373
==============================================================================
Salaries and employee benefits increased $9.9 million or 22.5% during
1993. Other than base salary increases, 1993 included $4.3 million in salary
and benefits for employees of new banking locations. This increase also
included an additional $906 thousand expensed for health care costs provided
to retirees according to Statement of Financial Accounting Standards ("SFAS")
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," adopted in the first quarter of 1993. This standard moves
companies from the recognition of postretirement benefits other than pensions
when paid to an accrual of the present value of future benefits to be expensed
during the years that the employee renders service. This obligation has been
estimated to be approximately $10.8 million and is currently being recognized
over a twenty-year period.
The amortization of intangibles increased $3.2 million or 91.1%, as a
result of accelerated write offs of the intangibles associated with purchased
mortgage servicing rights due to refinancings. Occupancy expense increased
$1.5 million or 20.0% primarily as a result of the additional locations.
Professional and other services increased $1.5 million or 17.1% as a result of
increased consulting fees, partially due to restructuring charges. Equipment
expense increased $1.3 million or 19.3% primarily due to management and
maintenance of a communications network.
Other noninterest expense increased $3.2 million or 29.5% during 1993, a
portion of which is attributable to the new banking centers. Also included in
this increase is $1.1 million provided for losses on mortgage receivables in
process of foreclosure which was offset by a similar negative provision for
loan losses as discussed in the following section.
Liberty's efficiency ratio for 1993 was 90.7% compared to 80.4% in 1992.
The efficiency ratio is defined as noninterest expense as a percentage of tax-
equivalent net interest income plus noninterest income excluding securities
gains and losses. Liberty has engaged an outside consultant to review its
operations and help implement plans to achieve greater operational
efficiencies for 1994 and beyond.
Provision for Loan Losses and Net Income from Other Real Estate and Assets
Owned
- ------------------------------------------------------------------------------
The provision for loan losses and losses on other real estate and assets
owned amounted to a negative $8.6 million during 1993 compared to a negative
$548 thousand during 1992 and charges of $2.4 million in 1991. As a result of
continued improving asset quality trends, it is possible that negative provi-
sions may continue in 1994.
Total provisions for loan losses amounted to a negative $7.4 million in
1993 compared with charges of $1.8 million during 1992 and $2.3 million
during 1991. Liberty reviews the adequacy of its reserve for loan losses on a
quarterly basis. The reserve is based on a financial model which estimates
the range of inherent loss in Liberty's loan portfolio. The model
incorporates various factors required by guidelines of the Comptroller of the
Currency, including trends and results in collecting loans, loss experience,
evaluation of underlying collateral values, identification and review of
specific problem loans, size of the loan portfolio and anticipated increases
or declines in size, overall quality of the portfolio and business and
economic conditions and trends. Variations in any or all of these factors may
cause variations in quarterly provisions or annual provisions to the reserve.
A similar analysis is conducted in connection with the reserve for losses on
other real estate and assets owned.
As a result of continuing improvement in asset quality trends, the levels
of Liberty's reserves for loan losses and losses from other real estate and
assets owned declined during 1993 compared to 1992. If asset quality trends
continue to improve, it is possible that Liberty may record additional
negative provisions in 1994 in either the provision for loan losses or the
provision for losses on other real estate and assets owned, or both. The
level of reserves is also influenced by the overall size of Liberty's loan
portfolio. Since the volume of Liberty's loans has increased during 1993, the
overall level of the reserve for loan losses may require adjustment to take
into consideration any additional aggregate loan risk. These adjustments
might offset, in whole or in part, the effects of any improving asset quality
trends. Because reserve adequacy is based on a future evaluation of various
factors, Liberty is unable to predict the specific level of provisions (or
negative provisions) that may be appropriate in future periods.
Net income from the operation of other real estate and assets owned is
comprised of the following:
Net Income from OREO
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Provisions ($1,207) ($2,341) $ 160
Expenses 856 1,676 2,992
Income (792) (1,524) (3,256)
Gains on sales (2,265) (3,793) (2,382)
- ------------------------------------------------------------------------------
Net income from OREO ($3,408) ($5,982) ($2,486)
==============================================================================
Income Taxes
- ------------------------------------------------------------------------------
Effective January 1, 1993, Liberty adopted SFAS No. 109 "Accounting for
Income Taxes" and recognized a benefit of $14.3 million, net of providing a
valuation allowance of $21.1 million against gross deferred tax assets of
$35.4 million. During 1993, Liberty recorded an income tax benefit of $2.4
million. This benefit occurred primarily due to a reduction in the valuation
allowance of $6.9 million. During 1993, Liberty generated taxable income
sufficient to utilize $18.8 million of net operating loss carryforwards for
which a valuation allowance had previously been provided. At December 31,
1993, Liberty had net operating loss carryforwards totaling $37 million which
can be used to reduce its future income tax liabilities. Due to annual
utilization limitations and uncertainties regarding Liberty's ability to
generate sufficient taxable income in future periods, a valuation allowance
has been provided against these net operating loss carryforwards. During 1994
income tax expense may be reduced as the valuation allowance is adjusted for,
among other things, the use of net operating loss carryforwards. To the
extent it is determined that it is more likely than not that Liberty will use
its net operating loss carryforwards, the need for the valuation allowance
will be reexamined and adjusted, if necessary.
Liberty recorded $97 thousand and $93 thousand in net alternative minimum
tax expenses in 1992 and 1991 respectively. Gross regular income tax expenses
in those respective years of $4.7 million and $925 thousand were offset by
$4.6 million and $832 thousand of net operating loss carryforwards.
==============================================================================
Balance Sheet
==============================================================================
Earning Assets
- ------------------------------------------------------------------------------
Earning assets averaged $2.0 billion in 1993 compared to $1.8 billion in
1992 and 1991. The increase in average earning assets is attributable
principally to Liberty's growth through acquisitions. During 1993, average
earning assets comprised approximately 84% of average total assets, the same
as 1992 and compared to 83% in 1991. Liberty's percentage of earning assets
to total assets is lower than its peer group (which is in the 90% range)
partially because of the significant amount of public funds processing done by
Liberty. This activity, in which Liberty generates fee income, increases
demand deposits and items in process in Liberty's consolidated balance sheet.
The composition of Liberty's earning assets also changed in 1993.
Because Liberty has been successful in increasing its access to federal funds
lines, management elected to reinvest a portion of Liberty's federal funds
sold in higher yielding U.S. Treasury securities. Average taxable securities
in 1993 increased $263.1 million or 31% to $1.2 billion, while average federal
funds sold decreased $115.8 million from $214.9 million in 1992 to $99.1
million in 1993. Average loans increased $88.1 million or 12.6% to $786.3
million. As a percentage of average earning assets, average federal funds
sold were 4.6% in 1993 compared to 11.7% in 1992, and, average taxable
securities were 54.0% in 1993 compares to 46.3% in 1992, while average loans
were unchanged from 1992 to 1993.
Investment Securities
- ------------------------------------------------------------------------------
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," was issued in May, 1993 and becomes effective for fiscal years
beginning after December 15, 1993, with early adoption allowed. Liberty
adopted the new standard as of December 31, 1993. As a result of the adoption
of SFAS No. 115, Liberty recorded an increase in shareholders' investment of
$6.2 million at year-end. The statement requires securities to be classified
into three categories: "securities held to maturity" (reported at amortized
cost); "trading securities" (reported at fair value) with unrealized gains and
losses including in earnings; and "securities available for sale" (reported at
fair value) with unrealized gains and losses excluded from earnings and
reported as a separate component of shareholders' investment.
The carrying values for investment securities other than trading
securities have traditionally been carried at their historical cost, adjusted
for accretion of discounts and amortization of premiums. Trading securities,
however, have been required to be recorded at their estimated market values.
At December 31, 1992, Liberty classified $49.1 million of investment
securities as "available for sale." These securities were accounted for at the
lower of cost or market. The securities were principally U.S. Treasury Bills.
Proceeds from securities sold during 1993 totaled $508.0 million.
The following table shows the recorded amounts for Liberty's investment
portfolio as of the end of the previous three years.
Investment Portfolio
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
U.S. Treasury
Trading $ 195 $ 50 $ 2,548
Available for sale 605,586 49,137 _
Held to maturity 54,478 380,583 242,311
U.S. Government Agencies
Mortgage-backed
Available for sale 226 _ _
Held to maturity 216,519 370,326 350,450
Other
Trading 660 708 1,977
Available for sale 108,550 _ _
Held to maturity 51,467 122,656 168,423
State and political
Trading 1,036 1,092 1,574
Available for sale 9,393 _ _
Held to maturity 63,346 70,668 70,282
Other securities
Mortgage-backed
Available for sale 43,072 _ _
Held to maturity 75,276 124 656
Other
Trading _ 1,741 _
Available for sale _ _ _
Held to maturity 1,998 6,392 2,526
Equity 18,628 12,875 11,826
- ------------------------------------------------------------------------------
Total $1,250,430 $1,016,352 $852,573
- ------------------------------------------------------------------------------
Totals
Trading securities $ 1,891 $ 3,591 $ 6,099
==============================================================================
Available for sale $ 766,827 $ 49,137 $ _
==============================================================================
Held to maturity $ 463,084 $ 950,749 $834,648
==============================================================================
Equity securities $ 18,628 $ 12,875 $ 11,826
==============================================================================
The market value of Liberty's investment securities portfolio was
approximately 100.7% of book value at December 31, 1993. Gross unrealized
gains included in the portfolio amounted to $20.7 million and are primarily
related to U.S. Treasury securities, U.S. government agencies and other
corporate bonds and debentures. Gross unrealized losses in the securities
portfolio amounted to $2.8 million, with $1.1 million of the unrealized losses
related to Liberty's other mortgage-backed securities portfolio. In addition,
Liberty's U.S. Treasury and U.S. government agencies mortgage-backed
securities also have small unrealized losses.
<TABLE>
Maturity of Investment Securities
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
After one After Five
Within But Within But Within After Ten
(In thousands) One Year Five Years Ten Years Years
- ---------------------------------------------------------------------------------------------------------------
Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
Held to maturity $ _ _ $ 75 3.9% $ _ _ $ 54,403 6.5%
Available for sale 290,373 4.4% 298,009 5.1 17,204 7.4% _ _
U.S. Government Agencies
Mortgage-backed
Held to maturity 21,218 4.5 25,874 7.9 16,099 7.5 153,328 5.4
Available for sale _ _ 226 5.5 _ _ _ _
Other
Held to maturity _ _ 5,811 5.2 40,791 5.1 4,865 6.1
Available for sale 24,917 6.1 83,019 5.7 406 5.5 208 6.7
State and political
Held to maturity 1,835 7.0 16,285 6.6 13,430 8.2 31,796 8.4
Available for sale 8,125 3.7 332 8.8 381 6.5 555 3.7
Other securities
Mortgage-backed
Held to maturity - - - - - - - -
Available for sale - - 346 7.9 - - 647 6.1
Other
Held to maturity 25 5.5 74,974 5.1 2,239 4.8 36 7.0
Available for sale 5,115 5.1 28,769 5.1 8,195 5.3 _ _
- ------------------------------- ----------- ------- ----------- ------- ----------- ------- ----------- -----
Totals
Held to maturity $ 23,078 4.7% $123,019 5.9% $72,559 6.2% $244,428 6.1%
=============================== =========== ======= =========== ======= =========== ======= =========== =====
Available for sale $328,530 4.5% $410,701 5.2% $26,186 6.7% $ 1,410 5.2%
=============================== =========== ======= =========== ======= =========== ======= =========== =====
<FN>
NOTE: The weighted average yields are calculated on the basis of cost, adjusted for accretion and amortization. Weighted
average yields on the tax-exempt obligations have been computed on a fully tax-equivalent basis at the statutory rate. The
above table excludes Federal Reserve Bank stock, Federal Home Loan Bank stock and other corporate stock of $18.6 million and
trading securities of $1.9 million.
</TABLE>
Loans
- ------------------------------------------------------------------------------
Loan concentrations are an important factor in the assessment of risk in
the loan portfolio. The composition of the loan portfolio at year-end for the
past five years is presented below.
Loan Portfolio
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------
Commercial and other (1) $376,454 $262,837 $388,493 324,650 $275,538
Energy 57,089 68,576 60,668 57,852 78,950
Real estate _ construction 85,566 67,417 89,704 84,388 129,629
Real estate _ mortgage 199,104 154,410 172,693 171,169 179,440
Correspondent and regional 17,336 16,855 29,063 36,364 57,703
Personal 195,392 106,958 104,970 105,011 100,872
- ------------------------------------------------------------------------------
Total $930,941 $677,053 $845,591 $779,434 $822,132
==============================================================================
(1) Includes term federal funds of $115.0 million in 1991, $35.5 million in
1990 and $10.0 million in 1989. Liberty had no term federal funds at the end
of 1993 or 1992.
Liberty's loan portfolio reflects significant sensitivity to the movement
of interest rates because of its relatively short-term nature and variable
pricing. Scheduled maturities of Liberty's loan portfolio (excluding real
estate mortgage and personal loans) at December 31, 1993 are summarized below:
- ------------------------------------------------------------------------------
After One
Within But Within After
(In thousands) One Year Five Years Five Years Total
- ------------------------------------------------------------------------------
Commercial,
correspondent and other $201,591 $146,049 $46,150 $393,790
Energy 18,105 38,984 _ 57,089
Real estate _ construction 50,262 23,514 11,790 85,566
- ------------------------------------------------------------------------------
Total $269,958 $208,547 $57,940 $536,445
==============================================================================
The loans shown above include both loans with an adjustable or floating
rate as well as those with a fixed, predetermined rate. The adjustable or
floating rate is tied to the national prime rate, Liberty`s base rate or other
market rates of interest. The total amount of these loans due after one year
which have pre-determined or floating or adjustable rates is summarized in the
following table.
- -------------------------------------------------
(In thousands)
- -------------------------------------------------
Predetermined rate $ 80,966
Floating or adjustable rate 185,521
- -------------------------------------------------
Total $266,487
=================================================
Liberty's personal loans have grown 82% to $195.4 million and constituted
20.9% of total loans at year-end 1993 compared to 15.8% at year-end 1992. This
growth is a result of bank acquisitions as well as a policy of emphasizing
personal lending. Liberty also commenced credit card issuances during 1993.
Credit card loans increased from $31 thousand at the end of 1992 to $1.2
million at the end of 1993.
Loans to executive officers and directors (or their associates) of Liberty
and its principal subsidiaries are made in the ordinary course of business.
These transactions are conducted on substantially the same terms as those
prevailing at the time for comparable transactions with other persons and, in
management's opinion, do not involve more than normal risk or present other
unfavorable features at the time they are made. No related-party borrowings
were included in nonperforming loans or potential problem loans at December 31,
1993, 1992 or 1991.
Liberty's practices in granting commitments and establishing lines of
credit are typical of industry practices and standards. Terms, particularly
rates and commitment fees, are subject to individual negotiations, with most
commitments extended for a one year period. Liberty's credit standards and
review practices with respect to loans are also used in granting commitments
and establishing lines of credit. At December 31, 1993, the bank subsidiaries
had legally binding loan commitments outstanding amounting to $558.8 million.
Liberty does not expect a significant portion of these commitments to be
exercised during the near-term. Management is of the opinion that no firm,
unfunded commitments of material amounts which represent unusual risks are
outstanding, except to the extent included in potential problem loans and/or
allocated for in the reserve for loan losses.
Nonperforming Loans
- ------------------------------------------------------------------------------
Liberty's nonperforming loans consist of nonaccrual, 90 days or more past
due and restructured loans. Liberty's consolidated financial statements are
prepared on the accrual basis of accounting, including recognition of interest
income on its loan portfolio. However, when the full collectibility of interest
or principal on any loan becomes uncertain or is collectible only after an
extended period of time, that loan is placed on nonaccrual status. Any accrued
yet uncollected interest is usually reversed. Thereafter, interest is
recognized as income only as it is collected in cash and only to the extent
that the collectibility of the principal is not in doubt. Restructured loans
include those loans earning interest at rates less than originally contracted
due to a troubled debtor situation. Interest on such loans is included in
income only to the extent of the reduced rate if it is deemed collectible.
Past due loans, while not performing contractually, do not meet the criteria to
become nonaccrual. Interest is accrued and payments are divided between income
and principal based on the loan contract.
Nonperforming loans decreased 32% or $6.3 million to $13.5 million at
year-end 1993 from $19.7 million at year-end 1992. This decrease reflects
Liberty's effort in reducing nonperforming loans since their year-end peak of
$147.7 million in 1987. Of the nonperforming loans at December 31, 1993,
approximately 62% were real estate-related.
Nonaccrual loans totaled $10.2 million at December 31, 1993. Of these
loans, $6.5 million or 64% were contractually current with a total of $7.0
million or 69% representing loans that have met at least 85% of their con-
tractual payments during 1993. The contractual balance on total nonaccrual
loans was $12.6 million at year-end 1993 with $8.4 million or 67% of these
loans contractually current and a total of $9.3 million or 74% rated 85%
current or better.
Nonperforming Loans
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------
Nonaccrual $10,138 $19,244 $37,026 $27,307 $31,483
Restructured _ _ _ _ _
Past due 90 days or more 3,313 487 750 1,058 1,549
- ------------------------------------------------------------------------------
Total nonperforming loans $13,451 $19,731 $37,776 $28,365 $33,032
==============================================================================
Nonperforming Loans as %
of Total Loans 1.44% 2.91% 4.47% 3.64% 4.02%
==============================================================================
Analysis of Nonperforming Loans by Type
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------
Commercial and other $ 3,604 $ 6,436 $ 8,999 $ 6,101 $ 8,488
Energy 632 706 1,685 1,496 1,706
Real estate _ construction 3,236 3,826 7,921 1,197 15,091
Real estate _ mortgage 5,135 8,126 13,378 12,041 1,518
Correspondent and regional _ _ 4,547 6,387 5,129
Personal 844 637 1,246 1,143 1,100
- ------------------------------------------------------------------------------
Total nonperforming loans $13,451 $19,731 $37,776 $28,365 $33,032
==============================================================================
The gross interest income from nonaccrual loans outstanding at December
31, 1993, had they been performing in accordance with their original terms,
would have been approximately $1.1 million for 1993. The amount of interest
from nonaccrual loans included in interest income for 1993 was approximately
$64 thousand. Foregone interest income from nonaccrual and restructured loans
for the past five years beginning with 1993 was approximately $1.0 million,
$1.5 million, $3.0 million, $1.6 million and $2.7 million, respectively.
Potential Problem Loans
- ------------------------------------------------------------------------------
"Potential problem loans" are those loans which, although currently
performing, have credit weaknesses such that management has serious doubts as
to the borrowers' future ability to comply with present terms, and thus may
result in a change to nonperforming status. Management has identified, through
internal credit ratings, certain performing loans which demonstrate some dete-
rioration in credit quality and, accordingly, are scrutinized more carefully.
At December 31, 1993, these loans totaled $17.0 million compared to $5.1
million and $13.3 million at December 31, 1992 and 1991, respectively. Of these
amounts, approximately $98 thousand, $415 thousand and $3.7 million represented
letters of credit and unfunded loan commitments at December 31, 1993, 1992 and
1991, respectively. The increase at year-end 1993 was primarily attributable
to one large loan which was favorably resolved subsequent to the end of the
year. Exposure to loss of principal on such loans and commitments has been
considered in the establishment of the reserve for loan losses.
Reserve for Loan Losses
- ------------------------------------------------------------------------------
Liberty allocates the reserve for loan losses according to the amount
deemed by management to be reasonably necessary to provide for inherent losses
within the categories of loans set forth in the following table. It should be
recognized that such allocations are not precise and are not necessarily
indicative of future loan losses. Although the loan loss reserve has been
allocated among loan categories, all of such reserve is available to absorb all
losses on loans from any category. Known loan losses and recoveries are charged
to the loan loss reserve on a monthly basis.
Allocation of Reserve for Loan Losses
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------
Commercial and other
Reserve amount $1,151 $2,382 $2,518 $3,610 $4,786
Loans as a percent of
total loans 40.76% 39.55% 46.26% 41.93% 33.51%
Energy
Reserve amount 3,305 2,603 635 939 2,003
Loans as a percent of
total loans 6.10% 10.00% 7.13% 7.38% 9.60%
Real estate _ construction
Reserve amount 999 2,533 4,611 3,605 7,454
Loans as a percent of
total loans 9.14% 9.84% 10.55% 10.77% 15.77%
Real estate _ mortgage
Reserve amount 452 2,533 1,041 1,187 2,036
Loans as a percent of
total loans 21.27% 22.54% 20.30% 21.88% 21.83%
Correspondent and regional
Reserve amount 183 545 3,490 3,756 4,358
Loans as a percent of
total loans 1.85% 2.46% 3.42% 4.64% 7.02%
Personal
Reserve amount 1,834 1,232 1,191 1,676 2,097
Loans as a percent of
total loans 20.88% 15.61% 12.34% 13.40% 12.27%
Unallocated reserve 12,062 13,753 12,502 10,057 9,411
- ------------------------------------------------------------------------------
Total reserve $19,986 $25,581 $25,988 $24,830 $32,145
Reserve for loan losses as
% of total loans 2.14% 3.73% 3.06% 3.17% 3.91%
Reserve for loan losses as
% of nonperforming loans 148.58% 129.65% 68.80% 87.54% 97.31%
- ------------------------------------------------------------------------------
Net loan recoveries for 1993 totaled approximately $527 thousand versus
net charge-offs of $2.3 million in 1992 and $1.1 million in 1991. At December
31, 1993, the consolidated reserve for loan losses amounted to $20.0 million or
2.1% of total loans and 148.6% of nonperforming loans. This level compares with
a reserve of $25.6 million or 3.8% of total loans and 129.7% of nonperforming
loans in 1992 and with a reserve of $26.0 million or 3.1% of total loans and
68.8% of nonperforming loans in 1991. The following table summarizes average
loan balances, changes in the reserve for loan losses arising from loans
charged off and recoveries on loans previously charged off, by loan category,
and additions to the reserve which have been charged to operating expense.
Analysis of Reserve for Loan Losses
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------
Balance at beginning of year $ 25,581 $ 25,988 $ 24,830 $ 32,145 $ 61,208
Charge-offs
Commercial and other 258 1,369 1,901 1,653 6,453
Energy _ 22 81 957 5,315
Real estate _ construction 378 1,511 190 3,749 8,909
Real estate _ mortgage 61 435 224 890 734
Correspondent and regional 22 433 22 _ 2,701
Personal 1,154 835 779 1,111 1,240
- ------------------------------------------------------------------------------
Total charge-offs 1,873 4,605 3,197 8,360 25,352
- ------------------------------------------------------------------------------
Recoveries
Commercial and other 680 520 863 818 1,116
Energy 106 100 338 1,542 1,072
Real estate _ construction 679 620 377 962 532
Real estate _ mortgage 264 562 55 166 79
Correspondent and regional 1 173 56 339 155
Personal 670 360 414 585 491
- ------------------------------------------------------------------------------
Total recoveries 2,400 2,335 2,103 4,412 3,445
- ------------------------------------------------------------------------------
Net charge-offs ( 527) 2,270 1,094 3,948 21,907
Provisions for loan losses (7,363) 1,793 2,252 (3,367) (7,156)
Reserves from acquired banks 1,241 70 _ _ _
- ------------------------------------------------------------------------------
Balance at end of year $ 19,986 $ 25,581 $ 25,988 $ 24,830 $ 32,145
==============================================================================
Average loans outstanding (1) $786,275 $698,162 $757,411 $749,585 $901,033
==============================================================================
Ratio of net charge-offs
(recoveries) to average
loans outstanding (.07%) .32% .14% .53% 2.43%
==============================================================================
(1) Includes loans held for sale.
Other Real Estate and Assets Owned
- ------------------------------------------------------------------------------
OREO (net of reserves) decreased to $10.8 million at December 31, 1993,
compared to $15.7 million and $36.2 million at December 31, 1992 and 1991,
respectively. At year-end 1993, foreclosed land represented 66% of other real
estate and assets owned before reserves. Commercial office buildings and motels
as well as single-family residential properties were also significant
categories of other real estate at year-end 1993, representing 19% and 12%,
respectively, of the total other real estate and assets owned.
Other Real Estate and Assets Owned
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------
Land $ 8,791 $14,516 $21,773 $38,200 $ 52,530
Commercial _ office
buildings and motels 2,487 2,481 7,541 20,639 16,987
Commercial _ shopping centers 200 660 8,429 17,125 19,382
Residential _ single-family 1,631 1,122 1,754 2,087 4,526
Residential _ multi-family _ 57 3,756 4,427 11,649
Oil and gas properties _ 306 523 765 980
Other 256 1,520 3,851 4,321 3,355
- ------------------------------------------------------------------------------
Total other real estate
and assets owned $13,365 $20,662 $47,627 $87,564 $109,409
Less reserve for losses (2,521) (5,001) (11,447) (22,078) (26,516)
- ------------------------------------------------------------------------------
Other real estate and
assets owned, net $10,844 $15,661 $36,180 $65,486 $ 82,893
==============================================================================
Reserve for Losses on Other Real Estate and Assets Owned
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------
Balance at beginning of year $5,001 $11,447 $22,078 $26,516 $22,071
Charge-offs (1,515) (4,105) (10,791) (16,652) (15,540)
Provisions for losses (1,207) (2,341) 160 12,214 19,985
Reserves from acquired banks 242 _ _ _ _
- ------------------------------------------------------------------------------
Balance at end of year $2,521 $5,001 $11,447 $22,078 $26,516
==============================================================================
Reserve for Losses on Other
Real Estate and Assets Owned
as % of Total Other Real Estate
and Assets Owned 18.86% 24.20% 24.03% 25.21% 24.24%
==============================================================================
Charge-offs (which include losses on sales and market writedowns) for 1993
were approximately $1.5 million compared to $4.1 million in 1992 and $10.8
million in 1991. As a result, the reserve for losses on other real estate and
assets owned totaled $2.5 million, $5.0 million and $11.4 million at December
31, 1993, 1992 and 1991, respectively. These reserves as a percentage of total
other real estate and assets owned were 19% for 1993 compared to 24% for 1992
and 1991. The reserves are in addition to recording foreclosed real estate at
or below current appraisal values.
Capital Funds
- ------------------------------------------------------------------------------
Year-end equity capital as a percentage of total assets amounted to 8.5%
for 1993, compared to 7.4% for 1992 and 6.4% for 1991.
Capital adequacy is currently measured by banking regulators using various
capital criteria and ratios under the heading of risk-based capital. Tier 1
capital for bank holding companies includes common equity and perpetual
preferred stock (subject to certain limitations) minus intangible assets. Tier
2 capital includes supplementary elements such as limited amounts of reserve
for loan losses, perpetual preferred stock (in excess of Tier 1 limits),
subordinated debt and other items. The leverage ratio, defined as Tier 1
capital divided by average adjusted total assets, limits the amount of
leverage a bank can undertake because of the ratio's emphasis on equity or
core capital.
All but the most highly-rated banks are required to carry a minimum
leverage ratio of 3% plus a cushion of 1 to 2%. The risk-based capital ratio,
defined as total capital (Tier 1 plus Tier 2) divided by risk-weighted assets,
is the regulators' other primary determinant of capital adequacy and was de-
signed principally as a measure of credit risk. Banking organizations have
been given a risk-based capital ratio requirement of 8%. The Federal Deposit
Insurance Corporation ("FDIC") assesses insurance premiums based in part on the
level of capital with banks which are "well capitalized" paying assessments at
lower rates. Liberty's and its subsidiary banks' capital ratios are
significantly higher than the current guidelines and the subsidiary banks are
"well capitalized" for deposit insurance purposes.
Risk-based Capital
- ------------------------------------------------------------
(In thousands) 1993 1992
- ------------------------------------------------------------
Tier 1 Capital
Shareholders' investment $ 227,245 $ 178,841
Nonqualifying assets (18,770) _
Intangible assets (10,650) (3,160)
Total Tier 1 Capital 197,825 175,681
Tier 2 Capital
Reserve for loan losses (1) 17,519 13,103
- ------------------------------------------------------------
Total capital 215,344 188,784
============================================================
Risk-weighted Assets $1,401,496 $1,035,729
============================================================
Leverage Ratio 7.87% 7.97%
Risk-based Ratio 15.37 18.23
(1) Limited to 1.25% of risk-weighted assets.
Liberty Oklahoma City had a risk-based capital ratio of 13.1% and Liberty
Tulsa had a risk-based capital ratio of 17.8%. Liberty and its subsidiary
banks exceed required ratios for 1993 and plan to do so in the future.
Deposits
- ------------------------------------------------------------------------------
Deposits represent the principal source of funds for Liberty Oklahoma City
and Liberty Tulsa. Average deposits constituted approximately 80% of Liberty's
average level of total assets in 1993, with total deposits averaging $2.0
billion in 1993 and $1.7 billion in 1992 and 1991. Levels of both demand
deposits and interest bearing deposits increased in 1993 and 1992 primarily due
to bank acquisitions.
Average Deposits
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Noninterest-bearing demand deposits $ 615,567 $ 551,121 $ 521,544
Interest-bearing demand deposits 481,595 408,474 350,665
Savings 142,174 98,196 85,497
Time deposits 717,977 682,799 718,295
- ------------------------------------------------------------------------------
Total $1,957,313 $1,740,590 $1,676,001
==============================================================================
The previous table includes average deposits with the branches of Liberty
Oklahoma City and Liberty Tulsa in Nassau, The Bahamas of $33.0 million, $39.5
million and $52.1 million for the years 1993, 1992 and 1991, respectively.
As of December 31, 1993, time certificates of deposit and other time
deposits issued in amounts of $100,000 or more mature as follows:
- ------------------------------------------------------------------------------
(In thousands)
- ------------------------------------------------------------------------------
Within three months $226,950
After three but within six months 30,517
After six but within twelve months 39,338
After twelve months 17,014
- ------------------------------------------------------------------------------
Total $313,819
==============================================================================
Both Liberty Oklahoma City and Liberty Tulsa continue to be primarily
funded in the local market place. In management's opinion, funding and
liquidity at Liberty's bank subsidiaries are adequate to meet current and
projected financial commitments.
Short-term Borrowings
- ------------------------------------------------------------------------------
The details of the major sources of short-term borrowings are included in
the following tables. The general terms of these borrowings are consistent
with industry standards.
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Borrowings outstanding
At year-end $116,486 $144,400 $136,781
Average for the year 122,103 120,173 170,608
Maximum month-end balance 167,608 144,400 208,814
Interest rates
Average for the year 2.9% 3.3% 5.5%
Average at end of year 2.9 2.5 3.8
- ------------------------------------------------------------------------------
Treasury, Tax and Loan Deposits and Other Short-Term Borrowings
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Borrowings outstanding
At year-end $161,626 $140,693 $227,407
Average for the year 110,847 106,944 121,719
Maximum month-end balance 241,434 281,423 227,407
Interest rates
Average for the year 3.2% 3.4% 5.3%
Average at end of year 2.9 2.7 3.8
- ------------------------------------------------------------------------------
International Exposure
- ------------------------------------------------------------------------------
Liberty has little direct exposure to foreign credits. This exposure has
primarily been limited to federal funds sold to the domestic branches of
foreign banks.
Cross-border outstandings include loans, acceptances, interest-bearing
deposits with other banks and interest-bearing investments or other monetary
assets denominated in nonlocal currencies of foreign banks (including domestic
branches of foreign banks). At December 31, 1993, Liberty had $1.2 million in
cross-border outstandings (none of which was with domestic branches of foreign
banks), compared to $35.9 million at December 31, 1992 and $246.5 million at
December 31, 1991. There were no cross-border outstandings of foreign
countries exceeding 1% of total assets at December 31, 1993. Cross-border
outstandings of foreign countries exceeding 1% of total assets at December 31,
1992 included $25.0 million with Japan. This compares with $165.3 million with
Japan, $35.4 million with Canada and $25.0 million with Italy at the end of
1991. Cross-border outstandings of foreign countries between .75% and 1% of
total assets were $20.0 million with Australia at the end of 1991. There were
no cross-border outstandings in this range in 1993 or 1992. This decrease is
due to the maturity of those term federal funds sold.
Asset and Liability Management
- ------------------------------------------------------------------------------
A senior management committee, the Investment/Asset/Liability Committee,
has the responsibility for monitoring and coordinating the asset and liability
positions, interest rate sensitivity, liquidity and other resource planning
strategies of Liberty on an ongoing basis. This committee monitors the
anticipated effects of interest rate changes on both earnings and market value
of capital of interest rate moves from 50 to 400 basis points. In addition,
the committee has recommended policies which the Board of Directors has adopted
setting limits within which the asset/liability risk positions are to be
maintained.
As a result of increased holdings of loans and marketable investment
securities, Liberty was a net purchaser of federal funds averaging $28.5
million for 1993 compared to a net seller of federal funds averaging $91.7
million and $93.8 million in 1992 and 1991, respectively.
Liquidity is the ability to meet financial obligations for the payment of
funds. Some of the sources of funds to provide liquidity include core
deposits, large certificates of deposit, federal funds purchased from both
upstream and downstream banks, sale of securities under agreements to
repurchase, Treasury Tax and Loan accounts, investment securities held in the
available-for sale account which can be sold or pledged for borrowing at the
Federal Reserve discount window or the Federal Home Loan Bank and the
availability of loans and investment securities held in the held-to-maturity
account which can be pledged for borrowing at the Federal Reserve discount
window or the Federal Home Loan Bank.
Interest Rate Sensitivity
- ------------------------------------------------------------------------------
Liberty's long-standing policy is to maintain as balanced a position in
interest-sensitive assets and liabilities as possible with a goal to achieve
consistent interest margins in all interest rate environments. Liberty is
liability sensitive largely due to the short-term nature of its deposits,
especially savings and money market accounts, and short-term borrowings. Be-
cause of this liability sensitivity, Liberty's net interest margin may be
vulnerable to upward trends in interest rates.
The net interest margin of Liberty has been impacted by a decline in
interest rates, as experienced in the past year, in two ways. First, because
Liberty is liability sensitive, its liabilities reprice at the lower rates
sooner than its assets. As such, the net interest margin is widened as li-
abilities are repriced or mature. However, the decline in liability rates,
particularly in a lower rate environment, may not decrease as much as asset
rates because there is a perceived level below which deposit rates likely will
not fall. Liberty monitors its interest-sensitivity posture on a continuing
basis to ensure that interest rate changes do not create a material adverse im-
pact. Liberty also adjusts its asset and liability structures, to the extent
possible, to allow for projected rate changes.
A table showing the repricing of Liberty's earning assets and interest-bearing
liabilities is below. Deposits without maturities, such as savings, now
accounts and money market accounts, are classified as less than 90 days.
Interest Rate Sensitivity
- ------------------------------------------------------------------------------
0-90 91-365 One to After
(In thousands) Days Days Five Years Five Years Total
- ------------------------------------------------------------------------------
Earning Assets
Loans (1) $ 503,239 $ 39,888 $222,671 $165,143 $ 930,941
Securities 262,310 361,959 471,855 154,306 1,250,430
Other earning assets 27,152 _ _ _ 27,152
- ------------------------------------------------------------------------------
Total earning assets 792,701 401,847 694,526 319,449 2,208,523
- ------------------------------------------------------------------------------
Interest-bearing
Liabilities
Deposts 1,084,820 193,900 115,857 41,340 1,435,917
Short-term borrowings 261,112 8,000 9,000 _ 278,112
- ------------------------------------------------------------------------------
Total interest-
bearing liabilities 1,345,932 201,900 124,857 41,340 1,714,029
- ------------------------------------------------------------------------------
Net position ($ 553,231) $199,947 $569,669 $278,109 $ 494,494
==============================================================================
Cumulative net
position ($ 553,231) ($353,284) $216,385 $494,494 $ 494,494
==============================================================================
% of earning assets (25.0)% (16.0)% 9.8% 22.4% 22.4%
==============================================================================
(1) Includes loans held for sale
Parent Company Funding Sources and Dividends
- ------------------------------------------------------------------------------
At December 31, 1993, the parent company had cash, including interest-
bearing deposits, of $6.2 million. This compares to $7.3 million at December
31, 1992. The primary changes in the funding position of the parent company
are due to the payoff of notes payable assumed in the acquisitions of financial
institutions, the payoff of long-term notes of Liberty Real Estate Company, the
payment of dividends, and advances to subsidiary companies offset by sales of
other real estate and dividends received from subsidiary banks. Liberty's
ability to fund various operating expenses and dividends is generally dependent
on parent-only earnings, cash reserves and funds derived from its subsidiaries,
principally Liberty Oklahoma City and Liberty Tulsa. These funds historically
have been provided primarily by intercompany dividends and management fees.
Management fees are generally limited to reimbursement of actual expenses. It
is anticipated that Liberty's recurring cash sources will continue to include
dividends and management fees from subsidiaries, proceeds from the sale of
other assets (principally other real estate and assets owned) and retained
rights to any gains from the sales of mortgage servicing or other assets.
Dividends may be paid by subsidiary banks from time to time to support
Liberty's acquisition activities. Liberty Oklahoma City and Liberty Tulsa are
limited in their ability to pay dividends based on applicable provisions of the
National Bank Act pertaining to earnings and undivided profits. As of January
1, 1994 the ability of Liberty Oklahoma City and Liberty Tulsa to pay dividends
without regulatory approval was limited to $30,500,000 and $17,600,000,
respectively.
Liberty Real Estate Company, a wholly-owned subsidiary, is dependent upon
Liberty for financial support to cover deficits in operating cash flows result-
ing from operating costs, debt service, capital expenditures and other needs.
These costs are primarily intercompany and insignificant to Liberty as a
whole. It is anticipated that Liberty will continue to provide such support.
During the fourth quarter of 1993 Liberty paid off a long-term 8% note
which was secured by Liberty Tower. The principal on the note, entered into in
1982 in connection with the purchase of Liberty Tower, was $7.1 million along
with a prepayment penalty of $82 thousand. Liberty also purchased the ground
lease pertaining to Liberty Tower for $1.8 million. The prepayment of these
obligations was considered beneficial in light of current interest rates.
Liberty paid three quarterly cash dividends of $.10 per common share in
1993, totaling $2.7 million. Prior to 1993, Liberty had not paid cash
dividends since 1986. It is expected that such cash dividends, at levels to be
determined by the Board of Directors from time to time, will continue if
justified by Liberty's earnings, capital adequacy and financial condition.
In management's opinion, Liberty's current liquidity and cash sources are
anticipated to be adequate to meet its obligations in the near term.
Liberty Bancorp, Inc.
CONSOLIDATED BALANCE SHEET
December 31 (In thousands, except share data) 1993 1992
- ------------------------------------------------------------------------------
Assets
Cash and due from banks
Noninterest-bearing $ 310,127 $ 293,596
Interest-bearing 2,587 9,009
Federal funds sold and securities purchased under
agreements to resell 24,565 333,148
Investment securities:
Trading account 1,891 3,591
Available for sale 766,827 49,137
Held to maturity 463,084 950,749
Equity 18,628 12,875
- ------------------------------------------------------------------------------
Total securities 1,250,430 1,016,352
- ------------------------------------------------------------------------------
Loans 930,941 677,053
Less: Reserve for loan losses (19,986) (25,581)
- ------------------------------------------------------------------------------
Loans, net 910,955 651,472
- ------------------------------------------------------------------------------
Other real estate and assets owned, net 10,844 15,661
Property and equipment, net 64,152 49,380
Accrued income receivable 23,675 18,035
Accounts receivable 17,639 12,546
Deferred tax asset, net 13,584 -
Other assets 31,218 28,961
- ------------------------------------------------------------------------------
Total Assets $2,659,776 $2,428,160
==============================================================================
Liabilities and Shareholders' Investment
Deposits
Noninterest-bearing $ 689,227 $ 665,759
Interest-bearing 1,435,917 1,263,320
- ------------------------------------------------------------------------------
Total deposits 2,125,144 1,929,079
Short-term borrowings
Federal funds purchased and securities sold under
agreements to repurchase 116,486 144,400
Other 161,626 140,693
Accrued interest, expenses and taxes 15,503 16,745
Accounts payable 11,621 9,500
Long-term notes - 7,545
Other liabilities 2,151 1,357
- ------------------------------------------------------------------------------
Total Liabilities 2,432,531 2,249,319
- ------------------------------------------------------------------------------
Shareholders' Investment
Common stock ($.01 par value; 50,000,000 shares authorized) 95 88
- --------------------------------------------------
1993 1992
- --------------------------------------------------
Shares issued 9,477,870 8,815,450
Shares outstanding 9,477,819 8,815,399
Capital surplus 211,708 204,165
Retained earnings (accumulated deficit) 11,785 (22,587)
Treasury stock, at cost - 51 common shares (1) (1)
Unrealized security gains, net of tax 6,184 -
Deferred compensation (2,526) (2,824)
Total Shareholders' Investment 227,245 178,841
- ------------------------------------------------------------------------------
Total Liabilities and Shareholders' Investment $2,659,776 $2,428,160
==============================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
Liberty Bancorp, Inc.
CONSOLIDATED STATEMENT OF INCOME
For the year (In thousands, except per share data) 1993 1992 1991
- -------------------------------------------------------------------------------
Interest Income
Loans $62,093 $54,982 $68,872
Investments
Taxable 60,261 58,137 56,897
Nontaxable 2,765 3,058 3,040
Trading 199 383 480
Federal funds sold and other 3,083 7,546 15,256
- -------------------------------------------------------------------------------
Total Interest Income 128,401 124,106 144,545
- -------------------------------------------------------------------------------
Interest Expense
Deposits 46,162 51,846 72,625
Short-term borrowings 7,079 7,657 15,820
Long-term notes 592 700 977
- -------------------------------------------------------------------------------
Total Interest Expense 53,833 60,203 89,422
- -------------------------------------------------------------------------------
Net Interest Income 74,568 63,903 55,123
Provision for loan losses (7,363) 1,793 2,252
- -------------------------------------------------------------------------------
Net Interest Income After Provision
for Loan Losses 81,931 62,110 52,871
- -------------------------------------------------------------------------------
Noninterest Income
Trust fees 15,508 15,523 14,789
Service charges on deposits 12,925 10,900 9,235
Mortgage banking income 7,449 7,391 5,771
Trading account profits and commissions 4,591 3,713 4,089
Net securities gains (losses) 2,750 11 (200)
Loan fees 1,992 2,053 1,736
Other 11,501 9,065 8,480
- -------------------------------------------------------------------------------
Total Noninterest Income 56,716 48,656 43,900
- -------------------------------------------------------------------------------
Noninterest Expense
Salaries 44,701 37,643 36,586
Employee benefits 9,088 6,281 7,379
Professional and other services 10,001 8,543 8,128
Occupancy, net 8,806 7,336 6,861
Equipment 8,094 6,785 6,535
Amortization of intangibles, including
purchased mortgage servicing rights 6,741 3,528 1,635
Data processing 5,901 5,866 5,735
Printing, postage and supplies 5,789 4,757 4,351
Deposit insurance assessments 4,564 3,814 3,191
Advertising and business development 4,382 3,119 2,463
Net income from operation of other real
estate and assets owned (3,408) (5,982) (2,486)
Other 14,069 10,861 10,509
- -------------------------------------------------------------------------------
Total Noninterest Expense 118,728 92,551 90,887
- -------------------------------------------------------------------------------
Income Before Provision (Benefit) for
Income Taxes 19,919 18,215 5,884
Provision (benefit) for Income taxes (2,358) 4,737 925
- -------------------------------------------------------------------------------
Income Before Cumulative Effect of Change in
Accounting Principle and Extraordinary Item 22,277 13,478 4,959
Cumulative effect of change in
accounting principle 14,255 - -
Extraordinary item - use of net operating
loss carryforwards - 4,640 832
- -------------------------------------------------------------------------------
Net Income $36,532 $18,118 $5,791
===============================================================================
Income Per Share (Primary and Fully-Diluted)
Income before cumulative effect of change in
accounting principle and extraordinary item $2.28 $1.49 $.57
Cumulative effect of change in
accounting principle 1.46 - -
Extraordinary item - use of net
operating loss carryforwards - .52 .09
- -------------------------------------------------------------------------------
Net Income - Primary and Fully-Diluted $3.74 $2.01 $.66
===============================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
Liberty Bancorp, Inc.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT
<CAPTION>
Retained
Earnings Unrealized Total
Common Capital (Accumulated Treasury Security Deferred Shareholders'
(Dollars in thousands) Stock Surplus Deficit) Stock Gains, Net Compensation Investment
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1990 $874 $202,546 ($46,496) ($1) $ _ ($3,498) $153,425
Net income _ _ 5,791 _ _ _ 5,791
Amortization of deferred compensation _ _ _ _ _ 322 322
Common stock issued (net of termin-
ations) to employee benefit plans
(31,277 common shares) 3 235 _ _ _ _ 238
- ----------------------------------------- --------- ----------- ------------ ---------- ---------- -------------- ----------
Balance December 31, 1991 877 202,781 (40,705) (1) _ (3,176) 159,776
Net income _ _ 18,118 _ _ _ 18,118
Par value change (1) (790) 790 _ _ _ _ _
Amortization of dererred compensation _ _ _ _ _ 352 352
Common stock issued (net of termin-
ations) to employee benefit plans
(43,182 common shares 1 594 _ _ _ _ 595
- ----------------------------------------- --------- ----------- ------------ ---------- ---------- -------------- ----------
Balance December 31, 1992 88 204,165 (22,587) (1) _ (2,824) 178,841
Common stock issued in
acquisitions (637,312 shares) 6 6,850 542 _ _ _ 7,398
Net income _ _ 36,532 _ _ _ 36,532
Dividends paid ($.30 per share) _ _ (2,702) _ _ _ (2,702)
Amortization of deferred compensation _ _ _ _ _ 483 483
Unrealized gains on available for sale
securities, net of tax _ _ _ _ 6,184 _ 6,184
Purchase of treasury stock
(16,106 shares) _ _ _ (440) _ _ (440)
Common and treasury stock issued
(net of terminations) to employee
benefit plans (25,108 common shares
and 16,106 treasury shares) 1 693 _ 440 _ (185) 949
- ----------------------------------------- --------- ----------- ------------ ---------- ---------- -------------- ----------
Balance December 31, 1993 $95 211,708 $11,785 ($1) $6,184 ($2,526) $227,245
========================================= ========= =========== ============ ========== ========== ============== ==========
<FN>
(1) In conjunction with Liberty's reincorporation under Oklahoma law, effective May 26, 1992, the par value of common stock
was changed from $.10 to $.01 per share. Additionally, the number of common shares authorized was reduced from 125,000,000
to 50,000,000.
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Liberty Bancorp, Inc.
CONSOLIDATED STATEMENT OF
CASH FLOWS
- -------------------------------------------------------------------------------
For the year (In thousands) 1993 1992 1991
- -------------------------------------------------------------------------------
Cash provided (absorbed) by operating activities
Net income $ 36,532 $ 18,118 $ 5,791
Adjustments to reconcile net income to net cash
provided (absorbed) by operating activities
Provisions for losses (7,335) 407 4,102
Cumulative effect of change in
accounting principle (14,255) _ _
Extraordinary item - use of net operating
loss carryforwards - (4,640) (832)
Deferred income taxes (2,688) 4,640 832
Depreciation and amortization 12,833 8,018 6,626
Net amortiztion (accretion) of
investment securities 12,125 (340) (1,319)
Gain on sale of assets (9,418) (7,267) (6,296)
Change in trading account securities 5,265 6,582 4,874
Loans made for purposes of resale (143,722) (121,993) (96,105)
Proceeds from sale of loans held for resale 116,748 124,955 75,422
Change in accrued income and
accounts receivable (10,642) 30,004 (14,593)
Change in other assets (1,110) 6,131 (1,826)
Change in accrued interest, expenses,
taxes, accounts payable and other
liabilities (3,093) (19,785) (71)
- -------------------------------------------------------------------------------
Net cash provided (absorbed) by
operating activities (8,760) 44,830 (23,395)
- -------------------------------------------------------------------------------
Cash provided (absorbed) by investing activities
Maturities of investment securities 399,023 265,814 103,325
Sales of investment securities 507,971 225,028 187,833
Purchases of investment securities (1,038,172) (643,325) (437,261)
Change in net loans made by bank subsidiaries (109,283) 168,550 (50,637)
Principal payments received on loans made by
parent company and nonbank subsidiaries 1,545 2,226 1,995
Loans made to customers by nonbank subsidiaries (2,370) (212) (492)
Expenditures for property and equipment (16,111) (5,777) (2,982)
Proceeds from sale of property and equipment 487 164 26
Sale proceeds and collections from other
real estate and assets owned 9,938 27,489 35,453
Capitalized expenditures for other real
estate and assets owned _ _ (68)
Cash and cash-equivalents received in
financial institution acquisitions,
net of consideration paid (1,552) 5,814 73,406
Purchases of mortgage servicing contracts (191) (3,176) (7,661)
- -------------------------------------------------------------------------------
Net cash provided (absorbed) by
investing activities (248,715) 42,595 (97,063)
- -------------------------------------------------------------------------------
Cash provided (absorbed) by financing activities
Change in savings and demand deposits 50,264 28,880 73,605
Change in time deposits (73,734) (41,891) (91,469)
Change in short-term borrowings (7,709) (79,094) (28,861)
Payment on long-term notes (7,627) (2,377) (1,150)
Proceeds from issuance of common and treasury
stock for employee benefit plans 949 595 238
Purchase of treasury stock (440) - -
Dividends paid on common stock (2,702) _ _
- -------------------------------------------------------------------------------
Net cash absorbed by financing activities (40,999) (93,887) (47,637)
- -------------------------------------------------------------------------------
Net change in cash and cash-equivalents (298,474) (6,462) (168,095)
Cash and cash equivalents at beginning of year 635,753 642,215 810,310
- -------------------------------------------------------------------------------
Cash and cash equivalents at end of year $337,279 $635,753 $642,215
===============================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
Accounting Policies
The accounting and reporting policies of Liberty Bancorp, Inc. ("Liberty")
reflect industry practices and are in accordance with generally accepted
accounting principles. Certain reclassifications have been made to provide con-
sistent financial statement classifications in the periods presented herein.
Such reclassifications had no effect on net income or total assets. The more
significant accounting policies are described below.
Consolidation - The consolidated financial statements include the accounts
of the parent company and all significant subsidiaries including Liberty Bank
and Trust Company of Oklahoma City, N.A. ("Liberty Oklahoma City") and Liberty
Bank and Trust Company of Tulsa, N.A. ("Liberty Tulsa"). All significant
intercompany accounts and transactions have been eliminated in the accompanying
consolidated financial statements.
Investment Securities - Securities purchased for trading purposes are held
in the trading portfolio at estimated market value, with unrealized gains and
losses reported in earnings. Securities that are being held for indefinite
periods of time, including securities that management intends to use as part of
its asset/liability strategy, or that may be sold in response to changes in
interest rates, changes in prepayment risk, the need to increase regulatory
capital or other situations are classified as available for sale and are
carried (at December 31, 1993) at estimated market value with unrealized gains
and losses reported as a separate component of shareholders' investment, net of
income tax. Prior to December 31, 1993, securities classified as available for
sale were carried at the lower of amortized cost or estimated market value,
with unrealized losses reported in earnings. Other debt securities that
management has the ability and intent to hold to maturity are classified as
held to maturity and are carried at cost, adjusted for amortization of premiums
and accretion of discounts. Equity securities which do not have a readily
determinable market value are carried at cost. Gains and losses on the sale of
investment securities are reported as of the trade date and are included as a
component of noninterest income. Applicable income taxes are included as
income taxes in the accompanying consolidated statement of income. Gains and
losses are determined by the use of the specific cost identification method.
Loans - Loans are placed on nonaccrual status when they become 90 days
past due unless their collateral position or other conditions warrant continued
accrual status. Previously accrued but uncollected interest on these loans is
usually reversed. Interest on nonaccrual loans is recognized only as it is re-
ceived and only to the extent that the collectibility of the principal is not
in doubt. Loan fees are deferred and recognized over the commitment and/or loan
period. Fees that are an adjustment of yield are included in interest income
and all other fees are included in noninterest income. Costs associated with
the origination of loans are expensed as incurred rather than capitalized and
amortized as the amount is not considered material. Loans which Liberty does
not intend or does not expect to hold until maturity are reported as held for
sale. These loans are carried at cost which approximates market value. Gains
and losses on the sale of loans held for sale are determined by the use of the
specific identification method and are reflected as a component of noninterest
income.
Reserve for Loan Losses - The reserve for loan losses is established by
charges to income. The reserve is an amount which management believes will be
adequate to absorb losses on existing loans that become uncollectible. The
level of the reserve is based on a number of factors, including the collection
of loans and the evaluation of underlying collateral values, loss experience,
identification and review of specific problem loans, overall quality of the
portfolios, and current business and economic conditions. The adequacy of the
reserve is periodically reviewed and approved by the Board of Directors. Ul-
timate losses, however, may differ from the current estimates. To the extent
that adjustments to increase and decrease the reserve for loan losses become
necessary, they are reported in earnings in the periods in which they become
known. It is Liberty's policy to charge off any loan or portion thereof when it
is deemed uncollectible in the ordinary course of business. Loan losses and
recoveries are charged or credited directly to the reserve for loan losses.
Other Real Estate and Assets Owned - Other real estate and assets owned
are carried at the lower of loan carrying amount or fair value, net of
estimated selling costs. Write-downs at the time of acquisition are accounted
for as loan losses. The reserve for losses on other real estate and assets
owned is established by charges to income. The reserve is an amount which
management believes will be adequate to absorb inherent losses from the dispo-
sition and/or decreases in fair value of those properties. Losses and
subsequent writedowns are charged to the reserve for other real estate and
assets owned. Operating income received and gains from the subsequent disposi-
tion of these assets are included as a component of net income from operation
of other real estate and assets owned.
Property and Equipment - Property and equipment are stated at cost, less
accumulated depreciation and amortization. Depreciation is computed on a
straight-line basis over the estimated useful lives of the assets. Leasehold
improvements are amortized over the estimated useful lives of the assets or the
terms of the leases, whichever is shorter. Maintenance and repairs are charged
to expense as incurred.
Intangible Assets - Intangible assets consist primarily of premiums paid
as a result of branch and bank acquisitions and purchased mortgage servicing
rights. These assets are included as a component of other assets and amounted
to $13,892,000 and $13,250,000 at December 31, 1993 and 1992, respectively, net
of accumulated amortization. The intangible assets, other than purchased
mortgage servicing rights, are being amortized over their estimated lives
(ranging from 10 to 18 years) by either the straight-line or interest methods.
Purchased mortgage servicing rights, which totaled $3,728,000 and $9,930,000 at
the end of 1993 and 1992, respectively, are being amortized over the estimated
servicing lives of the loans to which they relate in proportion to net
servicing income.
Income Taxes - Effective January 1, 1993, deferred income taxes are
provided to reflect the future tax consequences of differences between the tax
bases of assets and liabilities and their reported amounts in the consolidated
balance sheet. Prior years' deferred taxes, if any, were provided for timing
differences between items of income or expense reported for financial statement
purposes and those reported for income tax purposes. See Note 11 for a
discussion of the effects of the change in accounting for income taxes.
Transactions with Related Parties - In the ordinary course of business,
directors of Liberty, members of the advisory board, executive officers and
principal shareholders of Liberty and their associates engage in business
transactions with Liberty. These transactions are conducted on substantially
the same terms as those prevailing at the time for comparable transactions with
other persons and, in management's opinion, do not involve more than normal
risk or present other unfavorable features.
Earnings per Share - Earnings per share is calculated using Liberty's
weighted average common and common-equivalent shares (primarily stock options)
outstanding during the periods. The weighted average number of shares used to
compute primary and fully-diluted earnings per share are presented as follows:
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Weighted average shares outstanding
Primary 9,765 8,995 8,781
Fully-diluted 9,765 9,061 8,840
Statement of Cash Flows - For purposes of reporting cash flows, cash and
cash-equivalents represent cash and due from banks, including interest-bearing
deposits with original maturities less than 90 days, federal funds sold and
securities purchased under agreements to resell. Supplemental cash flow
information includes the following.
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Interest paid $54,899 $64,979 $91,858
Loans transferred to other real
estate and assets owned 1,559 1,203 2,282
Income taxes paid 762 100 219
Loans made by Liberty to finance sales of other real estate and assets
owned totaled approximately $630,000 in 1993 and $10,156,000 in 1992.
Fair Value of Financial Instruments - Liberty discloses certain
information regarding the fair value of its financial instruments. A financial
instrument is defined as cash, evidence of ownership interest in an entity or a
contractual arrangement that involves cash or another financial instrument.
Market prices are the best evidence of the fair value of financial instruments.
If quoted market prices are not available, a best estimate is made based on
quoted market prices of a financial instrument with similar characteristics or
on valuation techniques. Although the fair value of financial instruments with
quoted market prices are generally indicative of the amount at which an instru-
ment could be exchanged in a current transaction between willing parties, other
than in a forced or liquidation sale, the fair value of financial instruments
without an available quoted market price can vary greatly depending on the
method and assumptions used in the valuation techniques.
The process of determining the best estimate of the fair value of
financial instruments is complex and requires significant judgments to be made
by management. Computation of fair values for these financial instruments
without an available quoted market price is based upon the computation of the
present value of estimated future cash flows, utilizing a discount rate com-
mensurate with the risks associated with the various financial instruments.
The discount rate is based upon the U.S. Treasury yield curve with adjustments
determined by management for consideration of, among others, credit risk, pre-
payment risk and operational costs.
The fair value of a given financial instrument may change substantially
over time as a result of, among other things, changes in scheduled or fore-
casted cash flows, movement of the U.S. Treasury yield curve, and changes in
management's estimates of the related credit risk or operational costs. Conse-
quently, significant revisions to fair value estimates may occur during future
periods. Management believes it has taken reasonable efforts to ensure that
fair value estimates presented are accurate. However, adjustments to fair value
estimates may occur in the future and actual amounts realized from financial
instruments held as of December 31, 1993 and 1992, may differ from the amounts
presented herein.
The fair value estimates of Liberty's financial instruments are pre-
sented in the respective footnotes with the exception of cash and cash
equivalents and demand deposits. The carrying amounts reported in the
consolidated balance sheet for these instruments approximate their fair values.
The fair values presented apply only to financial instruments and, as
such, do not include such items as fixed assets, other real estate and assets
owned, other assets and liabilities as well as other intangibles which have
resulted over the course of business. As a result, the aggregation of the fair
value estimates presented herein do not represent, and should not be construed
to represent, the underlying value of Liberty.
Note 2
Acquisitions
Purchase Transactions _ On August 1, and October 1, 1993, Liberty acquired the
First Oklahoma Bank and Trust Co. of Edmond and The First National Bank of
Edmond, respectively, for a total cash purchase price of $20,148,000. The
transactions were accounted for as purchases. Total assets acquired amounted
to approximately $142,155,000. For each of these acquisitions, the
consolidated statement of income includes only the income and expense of the
acquired banks since acquisition. The purchase price was allocated to the net
assets acquired based on their estimated fair values with the excess allocated
to cost in excess of net assets acquired. The effect on Liberty's results of
operations for 1993, had these transactions occurred at the beginning of the
year, was not significant.
Poolings-of-Interests _ The following table presents the new business
combinations occurring during 1993 which have been accounted for as poolings-
of-interests. A total of 637,312 shares of common stock were issued in
connection with these business combinations. The consolidated statement of
income for 1992 and 1991 have not been restated due to the immateriality of
each business combination. Adjustments to conform the acquired banks'
accounting policies to those of Liberty were not material.
- ------------------------------------------------------------------------------
(In thousands) Assets
Acquired
- ------------------------------------------------------------------------------
First National Bank of Jenks $ 33,408
Midwest National Bank 38,581
Bank of Tulsa 62,820
- ------------------------------------------------------------------------------
Total $134,809
==============================================================================
The following table shows the effect of the three banks' 1993 results of
operations prior to combination:
- ------------------------------------------------------------------------
Pooled
(In thousands) Liberty Banks Combined
- ------------------------------------------------------------------------
Interest income $121,285 $7,116 $128,401
Net interest income 70,074 4,494 74,568
Cumulative effect of change
in accounting principle 14,412 (157) 14,255
Net income (loss) 36,643 (111) 36,532
Note 3
Cash and Due from Banks
As members of the Federal Reserve System, Liberty's subsidiary banks are
required to maintain certain cumulative reserve balances based on deposits.
Actual reserve balances amounted to $29,877,000 and $10,045,000, respectively,
at December 31, 1993 and 1992, and averaged $26,603,000 and $22,228,000 for
1993 and 1992, respectively. These reserve balances are included in cash and
due from banks in the accompanying consolidated balance sheet. This balance
sheet category also includes checks in process of collection, and cash balances
maintained at correspondent banks for services rendered.
Note 4
Investment Securities
As of December 31, 1993, Liberty changed its method of accounting for
certain investment securities as allowed by Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" ("SFAS No. 115"). The effect of adopting SFAS No. 115 was to
increase shareholders' investment approximately $6,184,000 for unrealized
gains, net of income taxes, on investment securities classified as available
for sale at December 31, 1993.
The following table is a summary of investment securities at December 31,
1993 and 1992. The estimated market values of investment securities are based
upon available market data and estimates, which often reflect transactions of
relatively small size and are not necessarily indicative of the price at which
large amounts of particular issues could be readily sold.
<TABLE>
INVESTMENT SECURITIES
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
1993 1992
- ------------------------------------------------------------------------------------------------------------------------
Gross Gross Estimated Gross Gross Estimated
Amortized Unrealized Unrealized Market Amortized Unrealized Unrealized Market
Cost Gains Losses Value Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
US. Treasury
Trading $ 195 $ _ $ _ $ 95 $ 50 $ _ $ _ $ 50
Available for sale 597,269 8,375 (58) 605,586 49,137 _ _ 49,137
Held to maturity 54,478 173 (732) 53,919 380,583 7,925 (161) 388,347
U.S. Government
Agencies
Mortgage-Backed
Available for sale 225 1 _ 226 _ _ _ _
Held to maturity 216,519 4,442 (508) 220,453 370,326 9,465 (23) 379,768
Other
Trading 660 _ _ 660 708 _ _ 708
Available for sale 107,448 1,165 (63) 108,550 _ _ _ _
Held to maturity 51,467 1,337 _ 52,804 122,656 1,972 (60) 124,568
State and Political
Trading 1,036 _ _ 1,036 1,092 _ _ 1,092
Available for sale 9,369 25 (1) 9,393 _ _ _ _
Held to maturity 63,346 2,363 (313) 65,396 70,668 739 (2,398) 69,009
Other Securities
Mortgage-Backed
Available for sale 981 13 _ 993 _ _ _ _
Held to maturity _ _ _ _ 124 _ _ 124
Other
Trading _ _ _ _ 1,741 _ _ 1,741
Available for sale 42,023 145 (90) 42,079 _ _ _ -
Held to maturity 77,274 20 (1,033) 76,261 6,392 - (100) 6,292
Equity 18,628 2,688 _ 21,316 12,875 2,848 _ 15,723
- ----------------------- -------------- ---------- --------- -------------- ----------- --------- ------------ ----------
Total $1,240,918 $20,747 ($2,798) $1,258,867 $1,016,352 $22,949 ($2,742) $1,036,559
- ----------------------- -------------- ---------- --------- -------------- ----------- --------- ------------ ----------
Totals
Trading $ 1,891 _ _ $ 1,891 $ 3,591 _ _ $ 3,591
======================= ============== ========== ========= ============== =========== ========= ============ ==========
Available for sale $ 757,315 $ 9,724 ($ 212) $ 766,827 $ 9,137 _ _ $ 49,137
======================= ============== ========== ========= ============== =========== ========= ============ ==========
Held to maturity $ 463,084 $ 8,335 ($2,586) $ 468,833 $ 950,749 $20,101 ($2,742) $ 968,108
======================= ============== ========== ========= ============== =========== ========= ============ ==========
Equity $ 18,628 $ 2,688 _ $ 21,316 $ 12,875 $ 2,848 $ _ $ 15,723
======================= ============== ========== ========= ============== =========== ========= ============ ==========
</TABLE>
The carrying value and estimated market value of debt securities,
exclusive of trading securities, at December 31, 1993 are shown below by
contractual maturity. Expected maturities will differ from contractual maturi-
ties because borrowers may have the right to call or repay obligations with or
without call or prepayment penalties.
- ------------------------------------------------------------------------------
Estimated
Carrying Market
(In thousands) Value Value
- ------------------------------------------------------------------------------
Due within one year $ 351,608 $ 351,330
Due after one but within five years 533,720 533,887
Due after five but within ten years 98,745 101,358
Due after ten years 245,838 249,085
- ------------------------------------------------------------------------------
$1,229,911 $1,235,660
===============================================================================
Proceeds from sales of investment securities during 1993 were $507,114,000
compared to $225,028,000 and $187,833,000 in 1992 and 1991, respectively.
Gross gains on total sales amounted to $3,074,000, $137,000 and $340,000 along
with gross losses of $364,000, $126,000 and $540,000 for the respective years
1993, 1992 and 1991.
Total dividends on investments totaled $1,863,000 for 1993 compared to
$1,153,000 for 1992 and $508,000 for 1991.
Securities with carrying values of approximately $1,006,282,000 at
December 31, 1993 were pledged to secure public and trust deposits and for
other purposes as required or permitted by law.
Note 5
Loans
The composition of the loan portfolio is shown below.
- ------------------------------------------------------------------------------
Loans
- ------------------------------------------------------------------------------
In thousands) 1993 1992
- ------------------------------------------------------------------------------
Commercial and other (1) $376,454 $262,837
Energy 57,089 68,576
Real estate _ construction 85,566 67,417
Real estate _ mortgage (2) 199,104 154,410
Correspondent and regional 17,336 16,855
Personal 195,392 106,958
- -----------------------------------------------------------------------------
Total loans (3) $930,941 $677,053
================================================================================
(1) Includes financing leases of $4,363,000 and $1,080,000 at December 31,1993
and 1992, respectively.
(2) Includes loans held for sale of $26,452,000 and $20,778,000 at
December 31, 1993 and 1992, respectively, which approximates estimated
market value.
(3) Includes unearned income of $3,525,000 and $2,443,000 at December 31, 1993
and 1992, respectively.
Loans to executive officers and directors (or their associates) of Liberty
and its principal subsidiaries and loans guaranteed by such persons are con-
sidered related-party loans. The aggregate amount of such loans is presented in
the following table.
- ------------------------------------------------------------------------------
Related Party Loans
- ------------------------------------------------------------------------------
(In thousands)
- ------------------------------------------------------------------------------
Balance at beginning of year $33,795
Advances 2,071
Payments (19,295)
- ------------------------------------------------------------------------------
Balance at end of year $16,571
===============================================================================
The estimated fair value of net loans at December 31, 1993 totaled
approximately $914,000,000 compared to $653,000,000 at December 31, 1992.
Variable rate loans whose rates are tied to Liberty's base rate have been val-
ued at their respective carrying values. Loans with a fixed rate of interest
have been estimated using a discounted cash flow analysis. Future cash flows
are projected based on contracual rates then discounted at an estimated current
market rate. The entire portfolio is adjusted to allow for estimated future
losses of principal and interest.
The following table summarizes the components of nonperforming loans.
- ------------------------------------------------------------------------------
Nonperforming Loans
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Nonaccrual $10,138 $19,244 $37,026
Past due 90 days or more 3,313 487 750
- ------------------------------------------------------------------------------
Total nonperforming loans $13,451 $19,731 $37,776
===============================================================================
Generally, the largest concentrations of nonperforming loans for 1993,
1992 and 1991 were in the real estate and commercial categories.
The gross interest income from nonaccrual loans outstanding at year-end,
had they been performing in accordance with their original terms, would have
been approximately $1,109,000 for 1993, $1,493,000 for 1992 and $3,490,000 for
1991. The amount of interest included in interest income from these loans was
approximately $64,000 in 1993, $37,000 in 1992, and $505,000 in 1991.
In addition, Liberty had certain loans which, although currently
performing, have credit weaknesses such that doubts exist as to the borrowers'
future ability to comply with present terms. At December 31, 1993, these po-
tential problem loans totaled $16,979,000 compared to $5,147,000 at December
31, 1992 and $13,252,000 at December 31, 1991. The increase at year-end 1993
was principally attributable to one loan which was favorably resolved
subsequent to year-end. Of these amounts, approximately $98,000, $415,000 and
$3,680,000 represented letters of credit and unfunded loan commitments at
December 31, 1993, 1992 and 1991, respectively. The principal portion of these
loans and commitments exposed to loss has been considered in the establishment
of the reserve for loan losses.
The following is an analysis of the reserve for loan losses.
- ------------------------------------------------------------------------------
Reserve for Loan Losses
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Balance at beginning of year $25,581 $25,988 $24,830
Additions
Recoveries 2,400 2,335 2,103
Provisions (7,363) 1,793 2,252
Reserves of acquired banks 1,241 70 _
Less _ Charge-offs (1,873) (4,605) (3,197)
- ------------------------------------------------------------------------------
Balance at end of year $19,986 $25,581 $25,988
===============================================================================
In May 1993, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 114, "Accounting by Creditors for Impairment of a Loan" ("SFAS No. 114").
SFAS No. 114 is effective for fiscal years beginning after December 15, 1994,
although earlier adoption is permitted. SFAS No. 114 addresses the accounting
by creditors for impairment of a loan by specifying how reserves for losses
related to impaired loans, as defined, shall be determined. A discounted cash
flow analysis is required for loans meeting the definition of impaired using
the original contractual interest rate as the discount rate. If the discounted
value is less than the contractual balance, the difference must be provided for
through the reserve for loan losses. The adoption of SFAS No. 114 is not
expected to have a material adverse effect on Liberty's financial position,
based on impaired loans, as defined, at December 31, 1993.
Note 6
Other Real Estate and Assets Owned
The following table summarizes the components of other real estate and
assets owned.
- ------------------------------------------------------------------------------
Other Real Estate and Assets Owned
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Land $ 8,791 $14,516 $21,773
Commercial _ office buildings and motels 2,487 2,481 7,541
Commercial _ shopping centers 200 660 8,429
Residential _ single-family 1,631 1,122 1,754
Residential _ multi-family _ 57 3,756
Oil and gas properties _ 306 523
Other 256 1,520 3,851
- ------------------------------------------------------------------------------
Total other real estate and assets owned 13,365 20,662 47,627
Less reserve for losses (2,521) (5,001) (11,447)
- ------------------------------------------------------------------------------
Other real estate and assets owned, net $10,844 $15,661 $36,180
===============================================================================
An analysis of the reserve for losses on other real estate and assets
owned is presented below.
- ------------------------------------------------------------------------------
Reserve for Losses on Other Real Estate and Assets Owned
- ------------------------------------------------------------------------------
In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Balance at beginning of year $5,001 $11,447 $22,078
Charge-offs (1,515) (4,105) (10,791)
Provisions for losses (1,207) (2,341) 160
Reserve from acquired banks 242 _ _
- ------------------------------------------------------------------------------
Balance at end of year $2,521 $5,001 $11,447
===============================================================================
Note 7
Property and Equipment
Property and equipment is stated at cost as follows.
- ------------------------------------------------------------------------------
Estimated
Useful
(In thousands) 1993 1992 Lives
- ------------------------------------------------------------------------------
Land $ 9,745 5,520 N/A
Buildings and other bank premises 59,649 52,667 3-40 Years
Leasehold improvements 8,264 5,318 4-50 Years
Equipment, furniture and fixtures and other 37,071 31,797 3-10 Years
- ------------------------------------------------------------------------------
Total property and equipment 114,729 95,302
Less _ Accumulated depreciation
and amortization (50,577) (45,922)
- ------------------------------------------------------------------------------
Property and equipment, net $64,152 $49,380
===============================================================================
Depreciation and amortization expense for the years 1993, 1992 and 1991
was approximately $5,365,000, $4,577,000 and $4,534,000, respectively.
Note 8
Interest-Bearing Deposits
The components of interest-bearing deposits are presented in the following
table.
- ------------------------------------------------------------------------------
(In thousands) 1993 1992
- ------------------------------------------------------------------------------
Savings and money market accounts $ 722,479 $ 562,716
Time _ $100,000 or more 131,829 140,234
Public funds 181,990 163,106
Other time deposits 399,619 397,264
- ------------------------------------------------------------------------------
Balance at end of year $1,435,917 $1,263,320
===============================================================================
Time deposits over $100,000 include international deposits with the
branches of Liberty Oklahoma City and Liberty Tulsa in Nassau, The Bahamas of
$24,981,000 and $30,892,000 at December 31, 1993 and 1992, respectively.
The estimated fair value of interest bearing deposits at December 31, 1993
was approximately $1,442,000,000 compared to $1,270,000,000 at December 31,
1992. The fair value of the savings and money market accounts approximates the
carrying value as shown. The fair value of the remaining classes of time
deposits were estimated using a discounted cash flow analysis based on the
market rate of interest being paid for similar deposits at December 31, 1993
and 1992.
Note 9
Short-Term Borrowings
The components of short-term borrowings are presented below.
- -------------------------------------------------------------------------------
Federal Funds Purchased and Securities Sold Under Agreements to Repurchase
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Borrowings outstanding
At year-end $116,486 $144,400 $136,781
Average for the year 122,103 120,173 170,608
Maximum month-end balance 167,608 144,400 208,814
Interest rates
Average for the year 2.9% 3.3% 5.5%
Average at end of year 2.9 2.5 3.8
- ------------------------------------------------------------------------------
Treasury, Tax and Loan Deposits and Other Short-Term Borrowings
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Borrowings outstanding
At year-end $161,626 $140,693 $227,407
Average for the year 110,847 106,944 121,719
Maximum month-end balance 241,434 281,423 227,407
Interest rates
Average for the year 3.2% 3.4% 5.3%
Average at end of year 2.9 2.7 3.8
Federal funds purchased and securities sold under agreements to repurchase
are generally issued on an overnight or demand basis. Treasury, tax and loan
deposits and other short-term borrowings generally have maturities of less than
one year. The fair value of these borrowings has been estimated to approximate
their carrying value.
Note 10
Long-Term Notes
The first mortgage on Liberty Tower, an 8% installment note originally due
in 2001, was paid in full during the fourth quarter of 1993. The balance of
this note at December 31, 1992 was $7,545,000 and had an estimated fair value
at that time of $7,693,000. This estimate was based on a discounted cash flow
analysis of the note using a market rate for similar financing.
Note 11
Income Taxes
Effective January 1, 1993, Liberty adopted SFAS No. 109, "Accounting for
Income Taxes." This standard requires, among other things, recognition of
future tax benefits, measured at enacted tax rates, attributable to deductible
temporary differences between financial statement and income tax bases of
assets and liabilities and to tax net operating loss carryforwards, to the
extent the realization of such benefits is more likely than not. Similarly,
future tax liabilities are also required to be recognized. The adoption of
SFAS No. 109 resulted in a net deferred asset and related benefit of $14.3
million or $1.46 per share on January 1, 1993. This change is reflected in the
consolidated statement of income as a cumulative effect of change in accounting
principle. Prior years' consolidated statements of income have not been
restated.
The total provision (benefit) for income taxes has been allocated as
follows:
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Income from continuing operations ($2,358) $4,737 $925
Shareholders' investment 3,362 _ _
- ------------------------------------------------------------------------------
Total $1,004 $4,737 $925
===============================================================================
The provision (benefit) for income taxes on income from continuing
operations before cumulative effect of change in accounting principle and
extraordinary item is summarized below:
- ------------------------------------------------------------------------------
Provision (Benefit) for Income Taxes
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Current expense $ 330 $ 97 $ 93
Deferred expense (benefit) (2,688) 4,640 832
- ------------------------------------------------------------------------------
Total provision (benefit) for income taxes ($2,358) $4,737 $ 925
===============================================================================
Deferred tax assets are composed of the following at December 31, 1993.
- ------------------------------------------------------------------------------
(In thousands)
- ------------------------------------------------------------------------------
Deferred tax assets _
Net operating loss carryforwards $12,913
Reserve for loan losses 6,807
Reserve for losses and writedowns on
other real estate and assets owned 6,061
Other loss provisions 3,039
Unrealized gains on investment securities
for income tax purposes 3,801
Accelerated amortization of purchased
mortgage servicing rights 2,232
Deferred compensation 984
Tax credit carryforwards 2,334
Other 1,147
- ------------------------------------------------------------------------------
39,318
- ------------------------------------------------------------------------------
Deferred tax liabilities _
Income reported on the cash basis for income tax purposes (1,071)
Accelerated depreciation of property and equipment (6,413)
Unrealized gains on investment securities for financial
reporting purposes (3,362)
- ------------------------------------------------------------------------------
(10,846)
- ------------------------------------------------------------------------------
Net deferred tax asset 28,472
Valuation allowance (14,888)
- ------------------------------------------------------------------------------
Deferred tax asset, net $13,584
==============================================================================
Prior to the change in accounting method, the sources of deferred taxes
and related tax effects were as follows.
- ------------------------------------------------------------------------------
(In thousands) 1992 1991
- ------------------------------------------------------------------------------
Writedowns on other real estate and assets owned $4,782 $5,268
Provision for losses on loans and other real estate
and assets owned 797 (543)
Other loss provisions 233 (796)
Deferred compensation (489) (95)
Income reported on cash basis for tax return purposes (445) 10
Net operating carryforwards generated (72) (3,053)
Depreciation (25) (109)
Gain on partnership dissolution _ (382)
Other, net (44) 15
- ------------------------------------------------------------------------------
Regular deferred taxes 4,737 315
- ------------------------------------------------------------------------------
Items not benefited for alternative minimum
tax purposes _ 610
- ------------------------------------------------------------------------------
Total deferred taxes $4,737 $ 925
===============================================================================
The effective income tax rates differ from the statutory federal income
tax rate of 35% in 1993 and 34% in 1992 and 1991. A reconciliation of the
provision (benefit) for income taxes based on the statutory rates with the
effective rates follows.
- ------------------------------------------------------------------------------
(In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Income tax at statutory rate $6,971 $6,193 $2,000
Nontaxable interest and dividend income (1,805) (1,766) (1,808)
Amortization of costs related to branch
and other bank acquisitions 137 204 98
Interest expense related to funding
tax-exempt assets 53 99 127
Change in valuation allowance due principally
to use of net operating loss carryforwards (6,901) _ _
Current year statutory rate change (406) _ _
Other, net (407) 7 (102)
- ------------------------------------------------------------------------------
Regular tax expense (benefit) (2,358) 4,737 315
Items not benefited for alternative
minimum tax purposes _ _ 610
- ------------------------------------------------------------------------------
Total provision (benefit) for income taxes ($2,358) $4,737 $ 925
===============================================================================
At December 31, 1993, Liberty had net operating loss carryforwards
approximating $37,000,000. Approximately $16,000,000 of the net operating loss
carryforwards can be used to offset future taxable income through 1996. The
remaining net operating loss carryforwards can be used through 2006. Liberty
also has approximately $2,000,000 in investment tax credit carryforwards which
will expire during the period from 1994 through 2000. At December 31, 1993
Liberty also had approximately $358,000 in alternative minimum tax credit
carryforwards with no expiration.
In accordance with the Tax Reform Act of 1986, use of net operating loss
and investment tax credit carryforwards is subject to certain limitations in
future years if an ownership change has occurred. Liberty's restructuring in
October 1988 resulted in an ownership change. During the period following the
ownership change, the limitation is an annual amount determined by the value of
Liberty's capital stock immediately prior to the ownership change, multiplied
by a statutorily determined interest rate. The carryforwards and the annual
amounts available for use are subject to review and possible adjustment by the
Internal Revenue Service ("IRS"). Approximately $27,000,000 of the net
operating loss carryforwards expired during 1993 due to limitations caused by
the ownership change. Due to these limitations as well as other uncertainties
regarding Liberty's ability to ultimately realize the benefit of its tax loss
and credit carryforwards, a valuation allowance of $14,888,000 has been
provided.
Liberty's federal income tax returns have been examined by and/or settled
with the IRS through the year 1983. Certain state tax returns through 1984 have
also been examined by the Oklahoma Tax Commission. Issues resulting from these
examinations are in the process of discussion with the appropriate agencies.
Due to the significant federal and state net operating loss carryforwards of
Liberty at December 31, 1993, the unresolved items are not expected to have a
significant effect on Liberty's future operating results.
Note 12
Shareholders' Investment
Liberty resumed cash dividends during 1993 with dividends declared of $.30
per share. Total dividends paid during 1993 were $2,702,000. Liberty Oklahoma
City and Liberty Tulsa are limited in their ability to pay dividends based on
applicable provisions of the National Bank Act pertaining to earnings and
undivided profits. As of January 1, 1994 the amount of retained earnings of
Liberty Oklahoma City and Liberty Tulsa available for the payment of dividends
without regulatory approval was approximately $30,500,000 and $17,600,000,
respectively.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") contains "prompt corrective action" provisions in which banks are
classified into one of five categories based primarily upon capital adequacy,
ranging from "well capitalized" to "critically undercapitalized" and which
require, subject to certain exceptions, the appropriate federal banking agency
to take prompt corrective action with respect to an institution which becomes
"undercapitalized" and to take additional actions if the institution becomes
"significantly undercapitalized" or "critically undercapitalized." At December
31, 1993, the regulatory capital ratios of Liberty's subsidiary banks were in
excess of those necessary to be considered "well capitalized."
Note 13
Stock Options
A summary of Liberty's stock options are as follows.
- ------------------------------------------------------------------------------
Shares Price Range
- ------------------------------------------------------------------------------
December 31, 1990 608,694 $9.50 - $11.25
Options granted 1,000 12.40
Options canceled (9,000) 12.40
- ------------------------------------------------------------------------------
December 31, 1991 600,694 $9.50 - $12.40
Options granted 217,200 14.75 - 28.89
Options exercised (4,800) 12.40
Options canceled (3,200) 12.40
- ------------------------------------------------------------------------------
December 31, 1992 809,894 $9.50 - $28.89
Options exercised (2,664) 12.40
- ------------------------------------------------------------------------------
December 31, 1993 807,230 $9.50 - $28.89
- ------------------------------------------------------------------------------
Exercisable 491,230 $9.50 - $28.89
Pursuant to an employment agreement with Liberty's former Chairman and
Chief Executive Officer, options to purchase 289,694 shares of common stock
were granted. An option covering 144,847 shares was granted on June 28, 1988 at
an option price of $11.25 per share and an option on an additional 144,847
shares was granted on June 28, 1989 at a price of $9.50 per share, each price
representing the fair market value at the date of grant. Each option is im-
mediately exercisable and expires ten years from the date of grant.
The Liberty Stock Option Plan, adopted in 1990, reserved 400,000 shares
of common stock for granting options and was increased to 525,000 shares in
1992. Options may be granted to employees of Liberty and its subsidiaries who
are executive, administrative, professional or technical personnel and who have
principal responsibility for the management and direction of the financial
success of Liberty. An employee owning more than 5% of the total combined
voting power or value of all classes of stock of Liberty will not be eligible
to receive an option under the plan. Options terminate and are no longer exer-
cisable after ten years from the date of the grant or three months from
termination of the employment of an optionee for any reason other than death,
or twelve months after the date of death of an optionee.
Note 14
Employee Benefits
Liberty sponsors the Liberty Bancorp, Inc. Profit Sharing, Salary Deferral
and Employee Stock Ownership Plan (the "Plan"). Under the stock ownership
and salary deferral portion of the Plan, eligible participants may contribute
from 1% to 10% of their regular monthly earnings. Depending upon length of
employee service, Liberty will match from 50% to 125% of employee contributions
not exceeding 6% of regular monthly earnings. Vesting ranges from 20% after two
years of service to 100% after six years of service. Employee contributions can
be invested in a variety of funds while the matching contributions are invested
in Liberty's common stock. As part of Liberty's 1988 restructuring, the Plan
borrowed $4,105,000 from Liberty to purchase stock for funding in future peri-
ods. The loan is serviced from annual plan contributions made by Liberty. The
loan is included as deferred compensation, a reduction of shareholders' invest-
ment, in the accompanying consolidated financial statements and had a remaining
balance of $2,375,000 at December 31, 1993. In addition to the contributions
required under the terms of the loan, discussed above, the Board of Directors
may make discretionary contributions to the Plan. The Board of Directors may
vary the amount of the additional discretionary contributions, if any, from
year to year. Contributions to the Plan amounted to $393,000 for 1993,
$435,000 for 1992 and $766,000 for 1991. Under the profit sharing portion of
the Plan, Liberty can make contributions for the benefit of eligible employees.
All Liberty contributions are invested in Liberty's common stock. Liberty made
contributions totaling $789,000 in 1993, $499,000 in 1992 and $290,000 in 1991.
An Incentive Cash Bonus Plan (the "Bonus Plan") was approved by the Board
of Directors in September 1990. The purpose of the Bonus Plan is to provide
Liberty and its subsidiaries with the means, along with other elements of its
compensatory system, to retain, motivate, reward and attract, if necessary,
able and high quality persons to serve in key management positions with
Liberty. The Bonus Plan is intended to provide such key employees with incen-
tive and reward opportunities designed to enhance the profitable growth and
operation of Liberty, thereby protecting depositors and increasing shareholder
value. Participants in this plan are identified at the beginning of each year,
along with the extent of potential awards and participants' individual objec-
tives relating to such awards. One-half of a participant's award will relate to
the attainment of individual goals, and the remaining one-half of the award
will relate to the achievement of Liberty's consolidated profit plan or other
corporate goals which may be determined by the Compensation Committee of the
Board of Directors. Liberty must have net income before extraordinary items
equal to or greater than the prior year's net income before extraordinary items
in order for participants to be eligible to earn any award under the Bonus
Plan. Charges to expense under this program totaled $760,000 in 1993 compared
to $463,000 in 1992 and $330,000 in 1991. Additionally, the Board of Directors
approved a one-time bonus in 1992 of $518,000 to be paid to all employees not
participating in other incentive plans.
The Stock Appreciation Rights Plan (the "SAR Plan"), which was approved by
the Board of Directors in September, 1990, is intended as an incentive to em-
ployees of Liberty and its subsidiaries. Its purposes are to retain and at-
tract employees whose services are considered unusually valuable, to encourage
a sense of proprietorship of such persons and to stimulate the active interests
of such persons in the development and financial success of Liberty. Persons
receiving a right pursuant to the SAR Plan will not be in any way construed to
be a stockholder of Liberty or have any right to receive shares of common
stock. Each right becomes exercisable at the rate of 20% per year, beginning
one year following the date of grant. Expenses accrued under this plan, based
on the fair market value of Liberty's common stock, totaled $95,000 in 1993,
$473,000 in 1992 and $16,000 in 1991.
The following table summarizes this plan since its inception.
- ------------------------------------------------------------------------------
Rights Price Range
- ------------------------------------------------------------------------------
December 31, 1990 _
Rights granted 25,000 $10.00
Rights canceled (1,500) 10.00
- ------------------------------------------------------------------------------
December 31, 1991 23,500
Rights granted 28,000 14.75
Rights exercised or canceled (930) 10.00
- ------------------------------------------------------------------------------
December 31, 1992 50,570
Rights exercised or canceled (7265) 10.00 - 14.75
- ------------------------------------------------------------------------------
December 31, 1993 43,305 10.00 - 14.75
- ------------------------------------------------------------------------------
Exercisable 13,105 10.00 - 14.75
During 1992, Liberty adopted the Management Incentive Bonus Plan with the
purpose of attracting, retaining and motivating key executives by providing
cash and stock incentive compensation for both organizational and individual
performance. The plan provides for annual incentive bonuses tied to organiza-
tional and individual goals with a portion of the bonuses payable in restricted
stock. Under the Plan, 75,000 shares, to be available for awards, are
restricted as to sale or transfer and are forfeited if the participant's em-
ployment is terminated. The restrictions on the shares lapse at the rate of
20% per year, commencing with the first anniversary date of the respective
awards. In 1993, 6,495 shares, valued at $219,000, were awarded to
participants. Charges to expense during 1993 totaled $34,000 with the
remainder reported as deferred compensation in the accompanying consolidated
statement of shareholders' investment.
During 1993, Liberty adopted the Supplemental Executive Retirement Plan
with the purpose of protecting, retaining and rewarding key executives and
certain highly compensated employees by providing supplemental retirement
benefits in addition to the benefits provided under Liberty`s qualified
retirement plan. The plan is intended to be an unfunded nonqualified deferred
compensation arrangement for a select group of management or highly compensated
employees. Liberty will contribute each year to a trust for each participant
an amount equal to 7% of the participant's earnings reduced by the amount
allocated to the participant's retirement plan, plus an actuarial amount
calculated to fund the excess of the participant`s projected benefits over the
anticipated value of the participant`s total retirement plan account balances
at a normal retirement date. A participant`s benefit vests at a rate of 20%
per year based upon number of years of participation service. A participant
shall also become fully vested upon his death, disability or on a change in
control. Benefits under the plan are payable upon a participant`s termination
of service, disability or death. Charges to expense under the plan totaled
$141,000 in 1993.
Statement of Position ("SOP") 93-6, "Employers' Accounting for Employee
Stock Ownership Plans," was issued in November 1993. This statement will bring
about significant changes in the way employers report transactions with
leveraged employer stock ownership plans ("ESOP's"). Among the changes are
ESOP shares committed to be released in a period to compensate employees
directly will be recognized as compensation cost equal to the fair value of the
shares committed to be released. The SOP is effective for fiscal years
beginning after December 15, 1993. Employers are required to apply the
provisions of the SOP to shares purchased by ESOP's after December 31, 1992,
that have not been committed to be released as of the beginning of the year of
adoption. Employers are permitted, but not required, to apply the provisions
of the SOP to shares purchased by ESOP's on or before December 31, 1992, that
have not been committed to be released as of the beginning of the year of
adoption. Liberty will likely not apply the provisions of this SOP to ESOP
shares acquired before December 31, 1992. There were no shares acquired by the
ESOP on or after December 31, 1992.
Liberty provides certain health care and life insurance benefits to em-
ployees subject to beneficiary-paid premiums, co-payment provisions and deduct-
ibles. These benefits are paid to trusts established for the various plans.
These trusts, in turn, provide the benefits to current and retired employees.
Expenses relating to health care and life insurance benefits provided to
current employees totaled $3,263,000 in 1993, $1,551,000 in 1992 and $2,026,000
in 1991.
As part of Liberty's effort to reduce noninterest expenses, Liberty has
engaged an outside consulting firm to assist in evaluating its operations. As
a result of a preliminary analysis, Liberty has accrued $1.9 million for
anticipated employee severance and other costs to be incurred in connection
with actions to reduce noninterest expense. In 1991 Liberty instituted an
early retirement program. Costs under this program totaled approximately
$1,800,000.
In November 1992, SFAS No. 112, "Employers' Accounting for Postemployment
Benefits" was issued. Liberty is required to adopt SFAS No. 112 no later than
1994, although earlier implementation is permitted. Management does not an-
ticipate the adoption of SFAS No. 112 to have a material adverse on its con-
solidated financial position or results of future operations.
Note 15
Postretirement Benefits
Employees of Liberty over the age of 55 with fifteen years of service or
over the age of 65 with ten years of service are entitled to postretirement
health care and life insurance benefits subject to retiree-paid premiums, co-
payment provisions and deductibles. Prior to 1993 these benefits were expensed
as paid by Liberty and totaled $535,000 in 1992 and $568,000 in 1991.
In December 1990, FASB issued a new standard on accounting for postre-
tirement benefits other than pensions ("SFAS No. 106"). SFAS No. 106 requires
that the anticipated postretirement costs for these benefits must be charged to
expense during the years that the employees render service. Liberty adopted
the new standard effective January 1, 1993 and is amortizing the discounted
present value of the obligation at that date to expense over a twenty-year pe-
riod. Estimates of the obligation are based on various assumptions, including
health care costs, work force demographics, interest rates and plan changes.
The accumulated postretirement benefit obligation was estimated to be approxi-
mately $10,847,000 at January 1, 1993. Expenses for 1993 totaled $1,562,000
with net claims paid totaling $656,000. Any changes in the plan or revisions
to assumptions that affect the amount of expected future benefits may have a
significant effect on the amount of the reported obligation and annual expense.
The following table reflects the funding status and amounts recognized in
Liberty's consolidated balance sheet at December 31, 1993:
- ------------------------------------------------------------------------------
(In thousands)
- ------------------------------------------------------------------------------
Accumulated postretirement benefit obligation
Current retirees ($ 9,001)
Other fully eligible participants (725)
Other active plan participants (1,484)
- ------------------------------------------------------------------------------
Total accumulated postretirement benefit obligation (11,210)
Fair value of plan assets _
- ------------------------------------------------------------------------------
Funded status (11,210)
Unrecognized prior service cost _
Unrecognized net loss (gain) _
Unamortized net transition obligation 10,304
- ------------------------------------------------------------------------------
Accrued postretirement benefit cost ($ 906)
===============================================================================
The weighted-average discount rate used to determine the actuarial present
value of the projected postretirement benefit obligation was 8.25%.
The following table provides a breakdown of net periodic postretirement
benefit cost expensed during 1993.
- -------------------------------------------------------------------------------
(In thousands)
- -------------------------------------------------------------------------------
Service cost (with interest) $ 151
Interest cost 869
Actual return on plan assets _
Amortization of unrecognized transition obligation 542
- -------------------------------------------------------------------------------
Net periodic postretirement benefit cost $1,562
===============================================================================
The medical benefit trend assumption for eligible benefit recipients under
age 65 was estimated to be 12.00% and was reduced each year to an ultimate
level of 6.00% for fiscal 2003 over fiscal 2002. The medical benefit trend
assumption for eligible benefit recipients age 65 and over was estimated to be
10.50% and was reduced each year to an ultimate level of 6.00% for fiscal 2003
over fiscal 2002. The dental, vision and hearing benefit trend assumption for
eligible benefit recipients was estimated to be 8.50% and was reduced each year
to an ultimate level of 5.00% for fiscal 2005 over fiscal 2004. Life insurance
benefit trend assumptions were based on final pay of each eligible retiring
employee adjusted for an assumed compensation rate increase of 4%. The initial
estimated benefit was then subject to a 10% annual reduction but increased for
each eligible retiring employee with age.
A 1% increase in the assumed health care cost trend rates for each future
year would increase the accumulated postretirement benefit obligation to
$12,432,000, an increase of 10.9%. Additionally, the aggregate of the service
and interest cost components of net periodic postretirement benefit cost would
increase to $1,117,000, an increase of 9.6%.
Note 16
Commitments and Contingencies
In the normal course of business, Liberty is a party to financial
instruments with off-balance sheet risk. These financial instruments include
commitments to extend credit, letters of credit, interest-rate forward
contracts and foreign exchange contracts. These instruments expose Liberty to
varying degrees of credit and/or market risk in excess of the amount recognized
in the accompanying consolidated balance sheet. To manage this risk, Liberty
uses the same credit and trading risk management processes for financial
instruments with off-balance sheet risk as it does for financial instruments
whose risk is reflected on the consolidated balance sheet. The fair value of
loan commitments and letters of credit, whether that value is an asset or
liability, is considered negligible. Interest-rate forward and foreign exchange
contracts used in trading activities are carried at their market value.
Standby letters of credit and other commitments, including legally binding loan
commitments, were outstanding in the total amount of $558,844,000 at December
31, 1993 and $390,869,000 at December 31, 1992. Liberty does not expect a
significant portion of these commitments to be exercised during the near-term.
Liberty's bank subsidiaries have sold to the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation certain residential
mortgage loans with recourse. Approximately $9,559,000 and $14,275,000 of loans
subject to this condition remained outstanding at December 31, 1993 and 1992,
respectively. For financial reporting purposes these loans have been treated as
sales and therefore are not included in total loans. Liberty does not
anticipate any significant adverse impact on its consolidated financial
position or results of future operations as a result of the "with recourse"
feature of these loans. Management believes Liberty has no other significant
off-balance sheet exposure.
At December 31, 1993, Liberty was committed to make future payments under
several long-term lease agreements and a data processing agreement. The minimum
payments required by these agreements are summarized below:
- -------------------------------------------------------------------------------
(In thousands) Bank Data Equipment
Premises Processing and Other Total
- -------------------------------------------------------------------------------
1994 $ 3,273 $ 5,214 $ 672 $ 9,159
1995 3,235 5,395 513 9,143
1996 2,991 5,568 480 9,039
1997 1,972 5,747 476 8,195
1998 1,869 5,931 476 8,276
Remainder 7,621 3,571 238 11,430
- -------------------------------------------------------------------------------
Total $20,961 $31,426 $2,855 $55,242
===============================================================================
Lease rentals included in Liberty's operating expenses for the years ended
December 31, 1993, 1992 and 1991 amounted to $5,631,000, $5,043,000 and
$4,918,000, respectively. Contingent rentals amounted to $324,000 in 1993,
$910,000 in 1992 and $1,178,000 for 1991. Occupancy expense has been reduced by
rental income from premises leased to third parties of $2,282,000, $2,108,000
and $2,212,000 for 1993, 1992 and 1991, respectively.
In August 1992, an agreement with a facilities manager to manage Liberty's
data processing operation was renewed for a seven year term. Under certain
conditions the agreement may be terminated early after August 1, 1995 by
Liberty paying a fee that decreases from $4.8 million in 1995 to $1.2 million
in 1998. Under the agreement, data processing fees paid are increased semi-
annually for the effects of inflation. The 1994 inflation adjustment of 3.21%
has been assumed to remain constant in determining the data processing minimum
payments. These fees totaled $5,043,000, $5,378,000 and $5,298,000 for 1993,
1992 and 1991, respectively.
In the ordinary course of business, Liberty and its subsidiaries are
subject to legal actions and complaints. Management, after consultation with
legal counsel, and based upon available facts and proceedings to date, which
are in preliminary stages in some instances, believes that the ultimate
liability, if any, arising from such legal actions or complaints, will not have
a material adverse effect on the financial position or results of future
operations of Liberty or its subsidiaries.
Many financial services companies, including Liberty, have been unable, or
have chosen not to, obtain insurance for various risks. Consequently, Liberty
is to some degree self-insured for various risks, including those associated
with lender and fiduciary liability. Liberty has recorded estimated liabili-
ties for uninsured risks to the extent permitted by generally accepted ac-
counting principles.
Note 17
Parent Company
Summarized financial information for Liberty Bancorp, Inc. (parent company
only) is presented in the following statements:
- ------------------------------------------------------------------------------
Condensed Balance Sheet
- ------------------------------------------------------------------------------
December 31 (In thousands) 1993 1992
- ------------------------------------------------------------------------------
Assets
Cash in subsidiary banks $ 6,228 $ 4,193
Time deposits with subsidiary banks _ 3,079
Investment securities 1,400 1,016
Advances to subsidiary 22,530 15,813
Loans 847 723
Less _ Reserve for loan losses (38) (38)
- ------------------------------------------------------------------------------
Net loans 809 685
- ------------------------------------------------------------------------------
Investment in subsidiaries
Liberty Oklahoma City 129,227 102,984
Liberty Tulsa 90,377 68,090
Other subsidiaries (19,225) (14,821)
- ------------------------------------------------------------------------------
Total investment in subsidiaries 200,379 156,253
- ------------------------------------------------------------------------------
Other real estate and assets owned, net 673 1,707
Other assets 4,336 2,951
- ------------------------------------------------------------------------------
Total assets $236,355 $185,697
==============================================================================
Liabilities
Accrued interest and other expenses $ 3,168 $ 4,114
Advances from subsidiary 1,605 1,605
Other payables to subsidiaries 4,337 1,137
- ------------------------------------------------------------------------------
Total liabilities 9,110 6,856
Shareholders' investment 227,245 178,841
- ------------------------------------------------------------------------------
Total liabilities and shareholders' investment $236,355 $185,697
==============================================================================
- ------------------------------------------------------------------------------
Condensed Statements of Income
- ------------------------------------------------------------------------------
For the year (In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Dividends received from subsidiaries
Cash dividends received from
subsidiaries $ 12,000 $ - $ _
Noncash dividends received from
subsidiaries - 77 _
Interest income
Loans to subsidiaries 29 29 2
Commercial and real estate loans 52 22 51
Interest-bearing deposits with
subsidiary banks 152 302 482
Dividends on investments 1,017 258 52
Management fees and expense reimbursements
Bank subsidiaries 15,473 14,119 12,557
Nonbank subsidiaries 262 117 125
- ------------------------------------------------------------------------------
Other income (a) 81 (33) 174
- ------------------------------------------------------------------------------
Total income 29,066 14,891 13,443
- ------------------------------------------------------------------------------
Interest expense 212 135 392
Salaries and employee benefits 3,818 2,828 2,819
Data processing 5,094 5,318 5,081
Equipment 2,394 1,904 1,759
Occupancy 597 629 434
Professional and other services 1,659 1,416 782
Net income from operation of
other real estate and assets owned (246) (630) (33)
Other expenses 2,972 2,446 2,375
- ------------------------------------------------------------------------------
Total expenses 16,500 14,046 13,609
Income (loss) before provision
(benefit) for income taxes 12,566 845 (166)
Provision (benefit) for income taxes (1,249) (216) (50)
- ------------------------------------------------------------------------------
Income before cumulative effect of
change in accounting principle and
equity in undistributed income of
subsidiaries 13,815 1,061 (116)
Cumulative effect of change in
accounting principle 533 - -
Equity in undistributed income
of subsidiaries 22,184 17,057 5,907
- ------------------------------------------------------------------------------
Net income $36,532 $18,118 $ 5,791
===============================================================================
(a) Includes net securities losses of $60,000 in 1992. There were no
securities gains or losses in 1993 or 1991.
Condensed Statement of Cash Flows
- ------------------------------------------------------------------------------
For the year (In thousands) 1993 1992 1991
- ------------------------------------------------------------------------------
Cash provided (absorbed) by operating activities
Net income $36,532 $18,118 $5,791
Adjustments to reconcile net income to net cash
provided (absorbed by) operating activities
Provisions for losses on loans and other
real estate and assets owned (85) 35 398
Cumulative effect of change in accounting
principle (533) _ _
Deferred income taxes (1,249) (216) (50)
Depreciation and amortization 607 376 533
Noncash dividend and equity in
undistributed income of subsidiaries (22,184) (17,134) (5,907)
Gain on sale of assets (147) (492) (135)
Change in accrued income and accounts
receivable (4,203) (346) 15
Change in other assets (4,278) (199) 60
Change in accrued interest, expenses, taxes,
accounts payable and other liabilities (992) 328 (2,796)
Change in other payables to subsidiaries 3,300 724 363
- ------------------------------------------------------------------------------
Net cash provided (absorbed) by operating
activities 6,768 1,194 1,728
- ------------------------------------------------------------------------------
Cash provided (absorbed) by investing activities
Principal payments received on loans 36 304 41
Repayments received on advances to subsidiaries _ _ 356
Advances on loans (162) (145) (288)
Advances to subsidiaries (6,717) (2,826) (2,320)
Proceeds from sale of property and equipment _ _ 1
Expenditures for property and equipment (50) (31) (4)
Proceeds from sale of other real estate and other
assets acquired in settlement of loans 882 2,167 2,394
Consideration, including cash and cash equivalents
received or paid in bank acquisition and
merger of non-bank subsidiary 392 (375) _
- ------------------------------------------------------------------------------
Net cash provided (absorbed) by
investing activities (5,619) ( 906) 180
- ------------------------------------------------------------------------------
Cash provided (absorbed) by financing activities
Payments on long-term notes _ (1,769) (590)
Advances from subsidiaries 1,605 1,605 1,605
Repayments of advances from subsidiaries (1,605) (1,605) (1,605)
Proceeds from sale of treasury stock and
issuance of common stock for employees'
and shareholders' plans 949 595 238
Purchase of treasury stock (440) _ _
Dividends paid (2,702) _ _
- ------------------------------------------------------------------------------
Net cash absorbed by financing activities (2,193) (1,174) (352)
- ------------------------------------------------------------------------------
Net change in cash and cash-equivalents (1,044) ( 886) (1,900)
Cash and cash-equivalents at beginning of year 7,272 8,158 10,058
- ------------------------------------------------------------------------------
Cash and cash-equivalents at end of year $ 6,228 $ 7,272 $ 8,158
==============================================================================
Supplemental disclosure of cash flow information:
Interest paid $ 57 $170 $391
Income taxes paid 762 100 219
Supplemental disclosure of noncash investing activities:
Transfer of advances to subsidiaries in
investment in nonbank subsidiaries $ 4,807 _ -
Contribution of acquired banks 10,919 _ _
Liberty Bancorp, Inc.
MANAGEMENT REPORT ON RESPONSIBILITY
FOR FINANCIAL REPORTING
The management of Liberty Bancorp, Inc. has the responsibility for
preparing the accompanying consolidated financial statements and for their
integrity and objectivity. The statements were prepared in accordance with
generally accepted accounting principles. The statements include amounts that
are based on management's best estimates and judgment, where necessary.
Management believes that all representations made to our external auditors
during their audit of the financial statements were valid and appropriate.
To meet its responsibility, management has established and maintained a
comprehensive system of internal control that provides reasonable assurance as
to the integrity and reliability of the financial statements, that assets are
safeguarded, and that transactions are properly executed and reported. This
system can provide only reasonable, not absolute, assurance that errors and
irregularities can be prevented or detected. The concept of reasonable assur-
ance is based on the recognition that the cost of a system of internal control
must be related to the benefits derived. The system of internal control is
subject to close scrutiny by management and is revised as considered necessary.
The accounting policies and system of internal control are under the
general oversight of the Liberty Bancorp, Inc. Board of Directors, acting
through its Audit Committee, which is comprised entirely of outside directors
who are not officers or employees of Liberty Bancorp, Inc. Liberty's General
Auditor, who reports directly to the Audit Committee, conducts an extensive
program of operational, financial and special audits to ensure the system of
control is adequate and operating as intended. In addition, Arthur Andersen &
Co., independent public accountants, has been engaged to conduct an audit and
to express an opinion as to the fairness of the presentation of the
consolidated financial statements.
Liberty Bancorp, Inc. is also examined periodically by the examiners from
the Federal Reserve Board and other regulatory agencies. The Board of Directors
and management appropriately consider and comply with all reports that arise
from such examinations.
Management maintains and enforces a strong code of corporate conduct
designed to foster a strong ethical climate so that the affairs of the
corporation are conducted according to the highest standards of personal and
corporate conduct. This code of conduct is furnished to all employees and is
periodically audited to ensure compliance.
Liberty Bancorp, Inc.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO LIBERTY BANCORP, INC:
We have audited the accompanying consolidated balance sheets of Liberty
Bancorp, Inc. (an Oklahoma corporation) and subsidiaries as of December 31,
1993 and 1992, and the related consolidated statements of income, shareholders'
investment and cash flows for each of the three years in the period ended De-
cember 31, 1993. These financial statements are the responsibility of
Liberty's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of certain consolidated subsidiaries, which statements reflect
assets constituting approximately 2% and 3% of the related December 31, 1993
and 1992 consolidated totals, respectively, and revenues of approximately 6% of
consolidated revenues for 1993 and 1991 and 8% for 1992. Those statements were
audited by other auditors whose reports have been furnished to us and our opin-
ion, insofar as it relates to the amounts included for such subsidiaries, is
based solely upon the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant esti-
mates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits and the reports of other auditors
provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all ma-
terial respects, the financial position of Liberty Bancorp, Inc. and sub-
sidiaries as of December 31, 1993 and 1992, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1993 in conformity with generally accepted accounting principles.
As explained in Note 4 to the consolidated financial statements, effective
December 31, 1993, Liberty changed its method of accounting for certain
investment securities. Additionally, as explained in Notes 11 and 15,
respectively, to the consolidated financial statements, effective January 1,
1993, Liberty changed its methods of accounting for income taxes and
postretirement benefits other than pensions.
ARTHUR ANDERSEN & CO.
Oklahoma City, Oklahoma,
January 21, 1994
Liberty Bancorp, Inc.
OTHER BUSINESS MATTERS
Personnel
On December 31, 1993, Liberty and its subsidiaries employed 1,435 full-
time persons, compared with 1,319 on December 31, 1992. The increase was
primarily due to acquisitions in 1993.
Competition
The Oklahoma market is highly competitive, especially in the area of
competition for loans because of the relatively low loan demand in the market.
Liberty also competes with money center and regional banks, money market funds,
consumer finance companies and mortgage banks, mutual fund sponsors, brokerage
firms, insurance companies and various other entities in connection with the
banking and related services provided by its subsidiaries. The market for such
services is highly competitive.
Supervision and Regulation
Bank holding companies and banks are extensively regulated under both
federal and state law. To the extent that the following information describes
statutory or regulatory provisions, it is qualified in its entirety by ref-
erence to the particular statutory and regulatory provisions described. Any
change in applicable law or regulation may have a material effect on the
business and prospects of Liberty, Liberty Oklahoma City or Liberty Tulsa.
Bank Holding Companies
Liberty is registered as a "bank holding company" under the Bank holding
Company Act of 1956, as amended (the "Act"). As a bank holding company, Liberty
is subject to regulation by the Federal Reserve Board. Registered bank holding
companies are required to file certain reports and information with the Federal
Reserve Board and are subject to examination by the Federal Reserve Board.
The Act requires the prior approval of the Federal Reserve Board in any
case where a bank holding company proposes to acquire direct or indirect
ownership or control of more than 5% of the voting shares of any bank which is
not already majority owned by it or to merge or consolidate with any other bank
holding company. The Act further provides that the Federal Reserve Board shall
not approve any such acquisition, merger or consolidation which would result in
a monopoly or would be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in any part of the
United States, or the effect of which may be to substantially lessen
competition or to tend to create a monopoly in any section of the country, or
which in any other manner would be in restraint of trade, unless the anti-
competitive effects of the proposed transaction are clearly outweighed in the
public interest by the probable effect of the transaction in meeting the
convenience and needs of the community to be served.
The Act prohibits the Federal Reserve Board from approving an application
from a bank holding company to acquire shares of a bank located outside the
state in which the operations of the holding company's banking subsidiaries are
principally conducted, unless such an acquisition is specifically authorized by
statute of the state in which the bank whose shares are to be acquired is
located.
The Act also prohibits a bank holding company, with certain exceptions,
from acquiring more than 5% of the voting shares of any company which is not a
bank and from engaging in any business other than banking or managing or
controlling banks. Under the Act, the Federal Reserve Board is authorized to
approve the ownership of shares by a bank holding company in any company whose
activities the Federal Reserve Board has determined to be so closely related to
banking or to managing or to controlling banks as to be a proper incident
thereto. In making such determinations, the Federal Reserve Board is required
to weigh the expected benefits to the public (such as greater convenience,
increased competition or gains in efficiency) against the possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices.
The Federal Reserve Board has by regulation determined that certain
activities are closely related to banking within the meaning of the Act. These
activities include operating a savings association, mortgage company, finance
company, credit card company or loan company, providing certain data processing
operations, providing investment financial advice, acting as insurance agent or
serving as underwriter for certain types of credit-related insurance, leasing
personal property on a full-payout nonoperating basis, providing management
consulting advice to nonaffiliated banks, operating a discount brokerage firm
and certain other activities. Under the Act, a bank holding company and its
subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with extensions of credit or provisions of property or services.
The Oklahoma Banking Code permits a bank holding company to own or control
more than one bank, subject to a limitation that a bank holding company may not
acquire a bank if the acquisition would result in such bank holding company
controlling banks whose deposits exceeded 11% of total deposits of insured
banks, savings associations and credit unions in Oklahoma, as reported in the
most recent reports of such institutions available at the time of any
acquisition. At the end of 1992, 11% of Oklahoma's total insured deposits
amounted to approximately $3.7 billion.
Oklahoma also has enacted an interstate banking law. Under the law, out-
of-state bank holding companies are permitted to acquire any Oklahoma bank or
bank holding company; however, further expansion by the acquiring holding
company within Oklahoma is prohibited for a four-year period from the date of
any acquisition unless its principal place of business is in a state which has
enacted reciprocal legislation authorizing Oklahoma bank holding companies to
acquire banks or bank holding companies in such state.
Banks
National banking associations, such as Liberty Oklahoma City and Liberty
Tulsa, are subject to the supervision of, and are regularly examined by, the
Office of the Comptroller of the Currency ("Comptroller"). Each of these banks
is a member of the Federal Reserve System and is therefore subject to
applicable provisions of the Federal Reserve Act which restricts the ability of
any such bank to extend credit to or purchase assets from its parent holding
company or any of the parent's subsidiaries or to invest in the stock or
securities thereof, or to take such stock or securities as collateral for loans
to any borrower, and which require that the terms of any such transactions
between a bank and its parent holding company or other subsidiaries meet
certain fairness standards. Affiliates of national banks are also subject to
certain restrictions concerning engaging in certain securities activities.
Certain restrictions are placed on the banks' abilities to pay dividends
by the National Banking Act and regulations of the Comptroller. Without the
approval of the Comptroller, total dividends declared by a national bank of
common stock in any calendar year may not exceed its net profits (as defined)
for that year combined with its retained net profits (as defined) of the
preceding two years, less any required transfers to surplus or a fund for the
retirement of any preferred stock. Further, a national bank may not pay any
dividends on common stock if it does not have undivided profits available.
Under these provisions, Liberty Oklahoma City and Liberty Tulsa could pay
dividends of no more than $30.5 million and $17.6 million, respectively, as of
January 1, 1994. The Comptroller also has authority to prohibit a national
bank from engaging in unsafe or unsound practices in the conduct of its
business. Depending upon the financial condition of a national bank, the pay-
ment of dividends could be deemed to constitute such an unsafe or unsound
practice. It is anticipated that the banks will pay common dividends to the
parent in 1994.
The Comptroller has the authority to take various administrative actions
concerning national banks when such actions are deemed necessary by the
Comptroller. These actions include imposing civil monetary penalties against a
bank or its directors and officers, removing directors or officers, entering
cease and desist orders, requiring formal or informal agreements between the
Comptroller and the bank, and various other actions.
National banks are required by the National Banking Act to adhere to
branch banking laws applicable to state banks in the states in which they are
located. Under current Oklahoma law, a state or national bank located in
Oklahoma may establish and maintain up to two branches (i) located within the
same city as the main bank; or (ii) located within 25 miles of the main bank if
located in a city or town which has no state or national bank. In addition, a
state or national bank located in Oklahoma may acquire, maintain and operate as
branches an unlimited number of banks, so long as such acquisitions do not
result in a bank having direct or indirect ownership or control of more than
eleven percent (11%) of the aggregate deposits of all financial institutions
located in Oklahoma which have insured deposits. Certain exceptions to the
deposit limitation exist in connection with the acquisition of stock of a bank
which is acquired (i) in a good faith fiduciary capacity; (ii) in the regular
course of securing or collecting a debt previously contracted in good faith; or
(iii) at the request of or in connection with the exercise of regulatory
authority in order to prevent imminent failure of a bank or to protect the
depositors of a bank.
Insured depository institutions are liable for any losses incurred by the
Federal Deposit Insurance Corporation in connection with the closing of another
insured depository institution under common control. These "cross-guarantee"
provisions may have an effect on the ability of multi-bank holding companies,
such as Liberty, and their subsidiary banks to raise capital and borrow funds
because of the increased risk of loss.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") provided for the recapitalization of the Bank Insurance Fund (which
resulted in an increase in deposit insurance costs). FDICIA also made many
far-reaching changes in the regulatory environment for insured banks and
savings associations, many of which have a significant impact on the operations
of banks and bank holding companies. These changes include: major revisions in
the supervision, examination and audit processes; new requirements for
corrective actions for undercapitalized institutions; required adoption of
uniform safety and soundness standards; increases in disclosure requirements
for deposit accounts; substantial new reporting requirements; changes in terms
of insurance coverage for certain deposits; and a number of other changes.
Most of the requirements of FDICIA are being implemented through regulations
which have been and will continue to be promulgated by the appropriate regula-
tory authority. FDICIA has resulted in increased regulatory compliance costs
but does not affect Liberty to any materially greater extent than other
comparable institutions.
Government Policies
The earnings of Liberty are affected not only by general economic
conditions, both domestic and foreign, but also by legislative and
administrative changes which, among other things, affect maximum lending rates,
and by the monetary and fiscal policies of the U.S. Government and its
agencies, including the Federal Reserve Board. An important function of the
Federal Reserve Board is to regulate the national supply of bank credit. Among
the instruments of monetary policy used by the Federal Reserve Board are open
market operations in U.S. Government securities, changes in the discount rate
on member bank borrowings, changes in reserve requirements against member bank
deposits and limitations on interest rates which member banks may pay on time
and savings deposits. These means are used in varying combinations to influence
overall growth of bank loans, investments and deposits, and may also affect
interest rates charged on loans or paid for deposits. The monetary policies of
the Federal Reserve Board have had a significant effect on the operating
results of commercial banks in the past and are expected to continue to have
such an effect in the future.
In view of the changing conditions in the national economy and in the
money markets and the effect of actions by monetary and fiscal authorities, as
well as other federal agencies and authorities, no prediction can be made as to
possible future changes in interest rates, deposit levels, loan demand or the
impact on the business and earnings of Liberty or its subsidiaries.
Properties
The principal business operations of Liberty and its Oklahoma City
subsidiaries are conducted from Liberty Tower, located at 100 North Broadway,
Oklahoma City, Oklahoma. In 1982, Liberty exercised an option to purchase this
36-story structure of approximately 512,000 square feet and ownership was
placed in a wholly-owned subsidiary. Approximately 44% of the property is
leased to Liberty. The ground lease pertaining to Liberty Tower was purchased
during 1993.
Liberty Tulsa maintains its offices in the 40-story First Place Tower and
the adjoining 20-story Liberty Bank Building, located in the central business
district of Tulsa, Oklahoma. Liberty Tulsa leases 183,000 square feet of the
combined buildings and has an option to lease an additional 67,000 square feet.
The lease agreement dated December 14, 1977, provides for a 25-year primary
lease term with two ten-year renewal options.
Legal Proceedings
In 1988 Cadijah Helmerich Patterson filed a civil action in the state
District Court of Tulsa County, Oklahoma against Liberty Tulsa claiming
breaches of fiduciary duty by Liberty Tulsa as trustee of a 1939 trust of which
Ms. Patterson is a contingent beneficiary. The lawsuit also named other
beneficiaries as defendants because of their beneficial interest in the trust,
including Ms. Patterson's mother, Cadijah C. Helmerich, and her brother, Walter
H. Helmerich, III, a director of Liberty and Liberty Tulsa. The plaintiff
alleges that Liberty Tulsa breached its duty of prudence by failing to
diversify properly trust investments, breached its duty of loyalty by investing
in securities of First Tulsa Bancorporation, Inc., Liberty and Helmerich &
Payne, Inc. and breached its duty to keep the plaintiff informed of the status
of the trusts. Plaintiff seeks compensatory damages of $21.5 million, and $5.0
million in punitive damages. The litigation is in a relatively preliminary
stage despite its filing date. Limited document discovery has been conducted.
Liberty Tulsa intends to vigorously contest this action and management of
Liberty believes, based upon the facts available at this time and after
consultation with legal counsel, that it will not have any material adverse
effect on the financial position of Liberty. The 1939 trust suit was filed
subsequent to other litigation filed by Ms. Patterson and her children as
contingent beneficiaries against her brother, in which similar allegations are
made as to his role in management of certain family trusts. Liberty Tulsa was
added as a defendant to this litigation in 1989 due to Liberty Tulsa's position
as co-trustee of a 1973 trust. In this 1973 trust action, the plaintiff
alleges that the co-trustees have made improper and unauthorized contributions
to charities from the assets of the trust in the amount of $977 thousand and
certain gifts, plus interest, from the co-trustees. A trial court ruling in
favor of Liberty Tulsa related to the 1973 trust was rendered in 1990. At
December 31, 1993, the case is currently on appeal with the Supreme Court of
Oklahoma.
In the ordinary course of business, Liberty and its subsidiaries are
subject to other legal actions and complaints. Management believes, after
consultation with legal counsel, based upon available facts and proceedings to
date, which are preliminary stages in some instances, that the ultimate
liability, if any, arising from such legal actions or complaints, will not have
a material adverse effect on the financial position or result of future
operations of Liberty or its subsidiaries.
REPORT OF OTHER INDEPENDENT AUDITORS
APPLICABLE TO SUBSIDIARY
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
Liberty Mortgage Company
We have audited the consolidated balance sheets of Liberty Mortgage
Company as of December 31, 1993 and 1992, and the related consolidated
statements of operations and retained earnings and cash flows for each of the
three years in the period ended December 31, 1993 (not presented separately
herein). These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reason-
able basis for our opinion.
Liberty Mortgage Company is one of several affiliated members of Liberty
Bancorp, Inc. and a substantial portion of its activities is with or is ar-
ranged by members of the affiliated group.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Liberty Mort-
gage Company at December 31, 1993 and 1992, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1993 in conformity with generally accepted accounting principles.
Liberty Mortgage Company changed its method of accounting for income taxes
and postretirement benefits other than pensions as more fully described in the
notes to the consolidated financial statements (not presented separately
herein).
ERNST & YOUNG
Oklahoma City, Oklahoma,
January 21, 1994
Liberty Bank and Trust Company of Oklahoma City, N.A.
and Subsidiaries
STATEMENT OF CONDITION (Unaudited)
- ------------------------------------------------------------------------------
December 31 (In thousands) 1993 1992
- ------------------------------------------------------------------------------
Assets
Cash and due from banks $ 245,364 $ 206,003
Federal funds sold and other 17,964 199,334
Trading account securities 205 165
Investment securities 721,703 562,629
Loans 649,536 478,640
Less: Reserve for loan losses (13,498) (13,139)
- ------------------------------------------------------------------------------
Loans, net 636,038 465,501
- ------------------------------------------------------------------------------
Other real estate and assets owned, net 7,823 29,713
Property and equipment, net 25,625 15,058
Deferred tax asset, net 10,416 _
Other assets 49,189 40,711
- ------------------------------------------------------------------------------
Total Assets $1,714,327 $1,519,114
==============================================================================
Liabilities and Shareholders' Investment
Deposits
Noninterest-bearing $ 480,662 $ 427,594
Interest-bearing 946,495 797,353
- ------------------------------------------------------------------------------
Total deposits 1,427,157 1,224,947
- ------------------------------------------------------------------------------
Short-term borrowings 140,626 174,444
Other liabilities 17,317 16,738
- ------------------------------------------------------------------------------
Total Liabilities 1,585,100 1,416,129
Total Shareholders' Investment 129,227 102,985
- ------------------------------------------------------------------------------
Total Liabilities and Shareholders' Investment $1,714,327 $1,519,114
==============================================================================
Liberty Bank and Trust Company of Oklahoma City, N.A. provides banking services
at the following locations:
Oklahoma City Norman Edmond
100 N. Broadway 116 S. Peters 18 E. 15th
320 N. Broadway 3600 W. Robinson 24 E. 1st
1112 N.W. 23rd 320 E. Comanche 300 S. Bryant
12324 N. May Ave. Midwest City 901 W. Edmond Rd.
N.W. 122nd and Rockwell Ave. 301 N. Midwest Blvd. Choctaw
9350 S. Western Ave. 10100 S.E. 15th 14483 N.E. 23rd
1200 N.W. 63rd St. 2201 N. Douglas Harrah
200 N. Air Depot 19625 N.E. 23rd
Liberty Bank and Trust Company of Tulsa, N.A.
and Subsidiaries
STATEMENT OF CONDITION (Unaudited)
- ------------------------------------------------------------------------------
December 31 (In thousands) 1993 1992
- ------------------------------------------------------------------------------
Assets
Cash and due from banks $ 73,274 $ 97,086
Federal funds sold and other 8,601 147,764
Trading account securities 1,687 3,426
Investment securities 525,361 447,541
Loans 308,369 207,917
Less: Reserve for loan losses (6,450) (12,385)
- ------------------------------------------------------------------------------
Loans, net 301,919 195,532
- ------------------------------------------------------------------------------
Other real estate and assets owned, net 2,392 2,539
Property and equipment, net 10,108 6,650
Deferred tax asset, net 4,942 _
Other assets 21,347 15,844
- ------------------------------------------------------------------------------
Total Assets $949,631 $916,382
==============================================================================
Liabilities and Shareholders' Investment
Deposits
Noninterest-bearing $ 216,047 $ 237,277
Interest-bearing 495,322 468,767
- ------------------------------------------------------------------------------
Total deposits 711,369 706,044
Short-term borrowings 139,485 127,213
Other liabilities 9,404 16,039
- ------------------------------------------------------------------------------
Total Liabilities 860,258 849,296
Total Shareholders' Investment 89,373 67,086
- ------------------------------------------------------------------------------
Total Liabilities and Shareholders' Investment $949,631 $916,382
==============================================================================
Liberty Bank and Trust Company of Tulsa, N.A. provides banking services at the
following locations:
Tulsa Broken Arrow
15 E. Fifth Street 701 W. New Orleans
615 S. Boston Avenue Jenks
6660 S. Sheridan Road 700 W. Main
6985 S. Lewis
8015 E. 71st Street
2070 Utica Square
5307 E. 41st St.
601 E. Apache
SHAREHOLDER INFORMATION
Executive Offices Stock Transfer Agent and Registrar
Liberty Bancorp, Inc. Liberty Bank and Trust Company of Oklahoma
City, N.A.
Liberty Tower 100 North Broadway
100 North Broadway P.O. Box 25848
Oklahoma City, OK 73102 Oklahoma City, OK 73125
(405) 231-6000
If you receive duplicate copies of this report, this indicates that you
hold stock in more than one account name. By reviewing the mailing label on
each report, you can determine the account listing for your holdings of Liberty
Bancorp, Inc.'s stock. Consolidating your accounts decreases the cost of our
stockholder relations activity. If you wish to consolidate any of your
accounts, you can do so by writing to the stock transfer agent.
Contact our stock transfer agent at the above address for assistance regarding:
* Change of address
* Transfer of stock certificates
* Replacement of lost, stolen or destroyed certificates
* Elimination of duplicate mailings
Stock Prices
The Common Stock of Liberty is traded over-the counter on the NASDAQ
National Market System under the symbol LBNA. As of December 31, 1993 there
were 2,587 shareholders of record.
The following sets forth the range of closing prices of Common Stock and
cash dividends declared for the periods indicated. These quotations represent
inter-dealer prices, do not include mark-up, mark-down or commissions and do
not necessarily represent actual transactions.
Dividends
Per Share High Low
1992
First Quarter $ _ $15.00 $12.75
Second Quarter _ 21.00 14.50
Third Quarter _ 27.63 19.75
Fourth Quarter _ 31.00 25.25
1993
First Quarter $ _ $33.75 $31.25
Second Quarter .10 34.25 28.75
Third Quarter .10 35.50 32.50
Fourth Quarter .10 34.00 28.00
Liberty's annual report on Form 10-K for the fiscal year ended December
31, 1993 (other than the exhibits thereto) is available upon written request
without charge. Requests for such copies should be directed to the attention
of Corporate Secretary, Liberty Bancorp, Inc., P.O. Box 25848, Oklahoma City,
OK 73125. Your comments, questions or suggestions on any aspect of our
business are welcome.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
The following documents are filed as part of this report:
(a) Financial Statements and Schedules
1. Financial Statements (See pages 26 through 44.)
2. Financial Statements Schedules. All schedules have been
omitted because they are not applicable or not required.
(b) Reports on Form 8-K
No reports 8-K were filed during the last quarter of the period
covered by this report.
(c) Exhibits. The following Exhibits (unless incorporated by
reference to another report) are included in a separate volume filed with this
report and are identified by the numbers indicated. References to Liberty are
to Liberty National Corporation, File No. 0-4547.
Exhibit No. Description
- ------------------------------------------------------------------------------
3.1 Certificate of Incorporation of Liberty Bancorp, Inc. (incorporated
by reference to Exhibit 3.1 to Registrant's Form 8-B dated May 26,
1992)
3.2 By-laws of Liberty Bancorp, Inc. (incorporated by reference to
Exhibit 3.2 to Registrant's form 8-B dated May 26, 1992)
10.1 Copy of Lease Agreement between Liberty Bank and Trust Company of
Oklahoma City, N.A. and Mid-America Plaza, Ltd. (incorporated by
reference to Exhibit 9.75 to Liberty's Form 10-K for the year ended
December 31, 1979)
10.2 Liberty Bancorp, Inc., 1990 Stock Option Plan, as amended
(incorporated by reference to Exhibit 10.1 to Registrant's Form 8-B
dated May 26, 1992)
10.3 Copy of documents relating to Liberty Bancorp, Inc. Executive
Mortgage Assistance Plan (incorporated by reference to Exhibit
10.21 to Amendment No. 1 to Liberty's Registration Statement on Form
S-14, Registration No. 2-87751)
10.4 Copy of Memorandum of Lease entered into December 14, 1977, between
First Place Corporation and Liberty Tulsa (incorporated by reference
to Exhibit 10.4 to Registrant's Form 10-K for the year ended
December 31, 1990)
10.7 Option to Purchase Common Stock between Registrant and Frank X.
Henke, III (incorporated by reference to Exhibit 10.16 to Amendment
No. 1 to Registrant's Registration Statement on Form S-1,
Registration No. 33-17239)
10.8 Management Incentive Bonus Plan (incorporated by reference to
Exhibit 10.8 to Registrant's Form 10-K for the year ended December
31, 1992)
10.9 Supplemental Executive Retirement Plan and Trust
22 Subsidiaries of Registrant (incorporated by reference to Exhibit 22
to Registrant's Form 10-K for the year ended December 31, 1992)
24.1 Consent of Arthur Andersen & Co.
24.2 Consent of Ernst & Young
25 Powers of Attorney
- ------------------------------------------------------------------------------
Liberty Bancorp, Inc. will furnish to any shareholder a copy of any of the
above exhibits upon the payment of $.25 per page. Any request should be sent
to Corporate Secretary, Liberty Bancorp, Inc., P.O. Box 25848, Oklahoma City,
Oklahoma 73125.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, this 20th day of
March, 1994.
Liberty Bancorp, Inc.
(Registrant)
/s/Mischa Gorkuscha
- --------------------------
By Mischa Gorkuscha, Senior Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated, this 23rd day of
March, 1994.
/s/Charles E. Nelson
- --------------------------
Charles E. Nelson Chairman and Chief Executive Officer
(Principal Executive Officer)
/s/Mischa Gorkuscha
- --------------------------
Mischa Gorkuscha Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/Rodney L. Lee
- --------------------------
Rodney L. Lee Senior Vice President and Controller
(Principal Accounting Officer)
Molly Shi Boren* Director
Donald L. Brawner, M.D.* Director
Robert S. Ellis, M.D.* Director
William J. Fischer, Jr.* Director
C.W. Flint, Jr.* Director
James L. Hall, Jr.* Director
Raymond H. Hefner, Jr.* Director
Walter H. Helmerich, III* Director
Joseph S. Jankowsky* Director
John E. Kirkpatrick* Director
Edward C. Lawson, Jr.* Director
Herb Mee, Jr.* Director
William G. Paul* Director
W.N. Pirtle* Director
V. Lee Powell* Director
Jon R. Stuart* Director
Robert E. Torray* Director
John S. Zink* Director
/s/Kenneth R. Brown
- --------------------------
*By Kenneth R. Brown, Attorney-in-fact
EXHIBITS
EXHIBIT 10.9
LIBERTY BANCORP, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
This Liberty Bancorp, Inc. Supplemental Executive Retirement Plan
("Plan") is adopted by Liberty Bancorp, Inc. ("Company") for the benefit of
certain officers, key management and highly compensated employees to be
effective January 20, 1993. The Plan is intended to protect and retain certain
qualified employees and to reward those qualified employees for loyal service
to the Company by providing for supplemental retirement benefits in addition to
the benefits provided to those employees under the qualified retirement plan
maintained by the Company. The Plan is intended to be an unfunded nonqualified
deferred compensation arrangement for a select group of management or highly
compensated employees.
ARTICLE I
DEFINITIONS
1.1 Accrued Projected Benefit means the Projected Benefit
multiplied by a fraction, not greater than one (1), the numerator of which is
the Participant's years of Participation Service and the denominator of which
is the aggregate number of years of Participation Service the Participant would
have if such Participant is employed by the Company to Participant's Normal
Retirement Date.
1.2 Actuarial Equivalence means a form of benefit differing in
time, period, or manner of payment from the benefit provided under the Plan but
having the same value when computed by assuming a life expectancy at age 65 of
18 years and an interest and discount rate of six percent (6%).
1.3 Average Annual Earnings means the average of the
Participant's Earnings for the five (5) consecutive calendar years immediately
preceding Participant's Normal Retirement Date or Termination of Service,
whichever occurs first.
1.4 Board means the Board of Directors of the Company.
1.5 Change in Control means:
(a) the date any entity or person, including a group as defined in
Section 13(d)(iii) of the Securities Exchange Act of 1934 shall become the
beneficial owner of, or shall have obtained voting control over, 25 percent or
more of the outstanding common shares of the Company;
(b) the date the shareholders of the Company approve a definitive
agreement (i) to merge or consolidate the Company with or into another
corporation, in which the Company is not the continuing or surviving
corporation or pursuant to which any common shares of the Company would be
converted into cash, securities or other property of another corporation, other
than a merger of the Company in which holders of common shares immediately
prior to the merger have the same proportionate interest of common stock of the
surviving corporation immediately after the merger as immediately before, or
(ii) to sell or otherwise dispose of substantially all of the assets of the
Company; or
(c) the date there shall have been change in a majority of the Board
of the Company within a 12 month period unless the nomination of each new
director was approved by the vote of two-thirds (2/3) of directors then still
in office who were in office at the beginning of the 12 month period.
1.6 Company means Liberty Bancorp, Inc., an Oklahoma corporation,
and any successor corporation.
1.7 Compensation Committee means the Human Resources and
Compensation Committee of the Board. Any function exercisable by such
Committee may also be exercised by the Board or such other committee as the
Board designates.
1.8 Disability Date means the date a Participant commences
benefits under the Company's long-term disability insurance plan as in effect
from time to time. If the Company has no long-term disability plan in effect,
a Participant's Disability Date shall be the first day of the seventh month
following the date the Participant is determined to be disabled pursuant to the
provisions of the Retirement Plan.
1.9 Earnings means only the base cash compensation paid to the
Participant by the Company or any subsidiary and shall not include overtime,
bonus, commissions, or any non-cash amounts (including amounts attributable to
stock options) which are required to be included in compensation. Earnings
shall not be reduced by amounts excluded from gross income under Sections 125,
402(a)(8) or 402(h) or limited as provided under Section 401(a)(17) of the
Internal Revenue Code of 1986, as amended ("Code").
1.10 Normal Retirement Date means the first day of the month
following the Participant's 65th birthday.
1.11 Participant means the executive officers of the Company
designated on the attached Exhibit A and any other executive who may be
designated as a Participant as provided in Article II. A Participant shall
also include a retired or terminated Participant who continues to be entitled
to benefits under this Plan after Participant's Termination of Service.
1.12 Participation Service means full-time employment with the
Company while a Participant in this Plan; provided, employment after a
Participant's Normal Retirement Date shall be disregarded. The number of years
of Participation Service shall be the Participant's completed months of
employment, whether or not consecutive, divided by 12, counting each twelve
months as one year and each additional full month as one-twelfth of a year.
1.13 Plan means this Liberty Bancorp, Inc. Supplemental Executive
Retirement Plan and amendments thereto.
1.14 Projected Benefit means the lump sum Actuarial Equivalence
of the right to receive at Normal Retirement Date thirty percent (30%) of the
Participant's Average Annual Earnings payable over the Participant's life based
on the mortality assumption used to calculate Actuarial Equivalence.
1.15 Retirement Plan means the Liberty Bancorp, Inc. Profit
Sharing, Salary Deferral and Employee Stock Ownership Plan, as amended from
time to time.
1.16 Termination of Service means the first day of the month next
following the termination of a Participant's employment whether by voluntary or
involuntary separation, retirement, disability or death; provided, if a
Participant continues in active employment through Participant's 70th birthday,
such Participant shall be deemed to retire on Participant's 70th birthday.
1.17 Trust means the trust established by the Company and
maintained for the benefit of the Participants, a copy of which is attached
hereto as Exhibit B.
1.18 Trust Accumulation Account means the account established and
maintained for a Participant under the Trust.
ARTICLE II
DESIGNATION OF PARTICIPANTS
AND ELIGIBILITY FOR BENEFITS
2.1 Designation of Participants. The Participants shall be those
executive officers or key employees of the Company designated on Exhibit A any
other executive officers or key employees designated by the Board or
Compensation Committee from time to time as Participants in the Plan; provided
no employee shall be designated as a Participant if such employee is not within
a "select group of management" or a "highly compensated employee" as such terms
are defined at Section 201(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
2.2 Eligibility for Benefits. Vested benefits under this Plan
shall be payable to Participant upon:
(a) a Participant's Termination of Service other than by disability or
death;
(b) a Participant's Disability Date which occurs before Participant's
Normal Retirement Date and while actively employed by the Company;
(c) a Participant's death before Normal Retirement Date and while
actively employed by the Company.
ARTICLE III
BENEFITS
3.1 Benefit. Each Participant's benefit under this Plan shall be
an amount equal to the greater of:
(a) the sum of (i) the vested percentage of the Participant's Trust
Accumulation Account, and (ii) the total of all such Participant's account
balances to which he is entitled under the Retirement Plan as of the valuation
date immediately following such Participant's Termination of Service; or
(b) an amount equal to the vested percentage of the Actuarial
Equivalence of the Participant's Accrued Projected Benefit as of such
Participant's Termination of Service less the total of all such Participant's
account balances to which he is entitled under the Retirement Plan
as of the valuation date immediately following such Participant's Termination
of Service.
3.2 Vested Percentage. A Participant's vested benefit shall be
determined in accordance with the following schedule:
Years of Participation Service Vested Percentage
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
A Participant shall also become fully vested in Participant's benefit
upon Participant's death, disability, or on a Change in Control.
3.3 Company Contributions. The Company shall contribute to the
Trust for each Participant each calendar year an amount equal to (a) plus (b)
where:
(a) is equal to 7% of the Participant's Earnings for such year reduced
by the amount allocated to such Participant's Retirement Plan account under
Section 5.2(b)(vii) of the Retirement Plan as of the end of such Plan Year, and
(b) is equal to the amount actuarially calculated to fund, in
substantially equal payments, the excess of the lump sum Actuarial Equivalence
of the Participant's Projected Benefit over the sum of the anticipated value of
the Participant's Trust Accumulation Account and the anticipated value of the
Participant's total Retirement Plan account balances at the Participant's
Normal Retirement Date.
Computation of anticipated values shall be made by assuming the same
interest rate as is used to determine Actuarial Equivalence, maximum
Participant contributions and matching contributions, and an additional
allocation of 1.5% of the Participant's compensation under the Retirement Plan.
Contributions to the Trust shall be made as soon as administratively
feasible after the end of each calendar year, but in any event prior to March
31st.
3.4 Trust Assets. All Company contributions shall be held by the
Trustee as a single investment fund. However, the Trustee shall maintain
separate Trust Accumulation Accounts for the benefit of each Participant which
shall be credited with the Company contributions allocated to each such
Participant and the earnings attributable thereto. Each Participant's Trust
Accumulation Account shall be each allocated its pro rata share of all
earnings, interest, gain and losses as of the last day of each calendar year.
It is expressly acknowledged that the assets of the Trust are and will remain
subject to the creditors of the Company as set forth in the Trust Agreement.
ARTICLE IV
PAYMENT OF RETIREMENT BENEFITS
4.1 Payment of Benefit. Payment of benefits shall be made in the
form of a lump sum payment. Benefit payment shall be made as soon as
administratively feasible following the applicable date set forth at Section
2.2. All payments of benefits shall be reduced by the amount of applicable
federal, state and local withholding taxes and FICA and FUTA taxes.
4.2 Survivor Benefit. If a Participant is entitled to a benefit
under the Plan and such Participant dies prior to full payment of such benefit,
payment shall be made to the personal representative of the Participant's
estate.
ARTICLE V
MISCELLANEOUS
5.1 Amendment and Termination. The Board may at any time, or
from time to time, amend this Plan in any respect or terminate this Plan
without restriction and without consent of any Participant or beneficiary;
provided, any such amendment or termination shall not impair the right of any
Participant or any beneficiary of any deceased Participant to receive benefits
vested hereunder prior to such amendment or termination without the consent of
such Participant or such beneficiary. No beneficiary of a Participant shall
have any right to benefits under this Plan or any other interest before the
death of such Participant. The Company's funding obligation under this Plan
may be terminated at any time.
5.2 Plan Administration. The administration of this Plan shall
be the responsibility of the Compensation Committee which is hereby
authorized, in its discretion, to delegate said responsibilities to an
administrator or administrative committee.
5.3 No Guarantee of Employment. Nothing contained herein shall
be construed as a contract of employment or give any Participant the right to
be retained in the employ of the Company or any subsidiary, or to interfere
with the rights of any such employer to discharge any individual at any time,
with or without cause.
5.4 Alienation of Benefits. No benefit payable under the Plan
may be assigned, pledged, mortgaged or hypothecated. Except as required by
applicable law, no such benefit shall be subject to legal process or attachment
for the payment of any claims of a creditor of a Participant or beneficiary.
5.5 Payment to Representatives. If any individual entitled to
receive any benefits is determined by the Compensation Committee or is
adjudicated by a court of competent jurisdiction to be legally incapable of
giving valid receipt and discharge for such benefits, such benefit shall be
paid to the duly appointed and acting guardian, if any, and if no such guardian
is appointed and acting, to such persons as the Compensation Committee may
designate. Such payment shall, to the extent made, be deemed a complete
discharge for such payments under this Plan.
5.6 Governing Law. The provisions of this Plan shall be
construed under federal law except to the extent that the laws of the State of
Oklahoma would be applicable.
5.7 Gender and Number. The masculine pronoun wherever used shall
include the feminine. Wherever any words are used herein in the singular, they
shall be construed as though they were also used in the plural in all cases
where they shall so apply.
5.8 Titles and Headings. The titles to articles and headings of
sections are for convenience of reference and, in case of any conflict, the
text of Plan rather than such titles and headings shall control.
5.9 Resolution of Disputes. Any dispute between a Participant
and the Company, or any successor, shall be first submitted to mediation under
the Commercial Mediation Rules of the American Arbitration Association, which
may be initiated by a written request by Participant or Company. If such
dispute is not resolved within sixty (60) days of the written request for
mediation, it shall be submitted to arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. In connection with such mediation and
arbitration, the following rules shall apply:
(i) Any mediation or arbitration shall be held in the city in
which the Participant resides at the time of submission to mediation;
(ii) Any mediation or arbitration shall be conducted by a single
person who shall serve as both mediator and arbitrator;
(iii) The costs of any mediation and arbitration shall be borne by
the Company.
LIBERTY BANCORP, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
TRUST AGREEMENT
This Agreement is made this day of , , by and
between Liberty Bancorp, Inc. ("Company") and Liberty Bank and Trust Company of
Oklahoma City, National Association ("Trustee");
WHEREAS, the Company has adopted the Liberty Bancorp, Inc.
Supplemental Executive Retirement Plan ("Plan") which is intended to be a
nonqualified deferred compensation plan as described in Section 201(2) of the
Employee Retirement Income Security Act of 1974 as amended, ("ERISA").
WHEREAS, Company has incurred or expects to incur liability under the
terms of such Plan with respect to the individuals participating in such Plan;
WHEREAS, Company wishes to establish a trust ("Trust") and to
contribute to the Trust assets that shall be held therein, subject to the
claims of Company's creditors in the event of Company's Insolvency, as herein
defined, until paid to Plan participants and their beneficiaries in such manner
and at such times as specified in the Plan;
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of ERISA;
WHEREAS, it is the intention of Company to make contributions to the
Trust to provide itself with a source of funds to assist it in the meeting of
its liabilities under the Plan;
NOW THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
ARTICLE I
ESTABLISHMENT OF TRUST
1.1 Deposits. Company hereby deposits with Trustee in trust
$100, and such other amounts as the Company may from time to time determine,
which shall become the principal of the Trust to be held, administered and
disposed of by Trustee as provided in this Trust Agreement.
1.2 Irrevocable Trust. The Trust hereby established shall be
irrevocable.
1.3 Grantor Trust. The Trust is intended to be a grantor trust,
of which Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as
amended ("Code"), and shall be construed accordingly.
1.4 Claims Against Trust. The principal of the Trust and any
earnings thereon shall be held separate and apart from other funds of Company
and shall be used exclusively for the uses and purposes of Plan participants
and general creditors as herein set forth. Plan participants and their
beneficiaries shall have no preferred claim on, or any beneficial ownership
interest in, any assets of the Trust. Any rights created under the Plan and
this Trust Agreement shall be mere unsecured contractual rights of Plan
participants and their beneficiaries against Company. Any assets held by the
Trust shall be subject to the claims of Company's general creditors under
federal and state law in the event of Insolvency, as defined in Section 3.1.
1.5 Additional Deposits. Company, in its sole discretion, may
at any time, or from time to time, make additional deposits of cash or other
property in trust with Trustee to augment the principal to be held,
administered and disposed of by Trustee as provided in this Trust Agreement.
Neither Trustee nor any Plan participant or beneficiary shall have any right to
compel such additional deposits.
ARTICLE II
PAYMENTS TO PLAN PARTICIPANTS AND BENEFICIARIES.
2.1 Payment Schedule. Company shall deliver to Trustee a
schedule ("Payment Schedule") that indicates the amounts payable in respect of
each Plan participant and his or her beneficiaries, that provides a formula or
other instructions acceptable to Trustee for determining the amounts so
payable, the form in which such amount is to be paid (as provided for or
available under the Plan), and the time of commencement for payment of such
amounts. Except as otherwise provided herein, Trustee shall make payments to
the Plan participants and their beneficiaries in accordance with such Payment
Schedule. The Trustee shall make provision for the reporting and withholding
of any federal, state or local taxes that may be required to be withheld with
respect to the payment of benefits pursuant to the terms of the Plan and shall
pay amounts withheld to the appropriate taxing authorities or determine that
such amounts have been reported, withheld and paid by Company.
2.2 Entitlement to Benefits. The entitlement of a Plan
participant or his or her beneficiaries to benefits under the Plan shall be
determined by Company or such party as it shall designate under the Plan, and
any claim for such benefits shall be considered and reviewed under the
procedures set out in the Plan.
2.3 Payment of Benefits. Company may make payment of benefits
directly to Plan participants or their beneficiaries as they become due under
the terms of the Plan. Company shall notify Trustee of its decision to make
payment of benefits directly prior to the time amounts are payable to
participants or their beneficiaries. In addition, if the principal of the
Trust, and any earnings thereon, are not sufficient to make payments of
benefits in accordance with the terms of the Plan, Company shall make the
balance of each such payment as it falls due. Trustee shall notify Company
where principal and earnings are not sufficient.
ARTICLE III
TRUSTEE'S RESPONSIBILITY UPON COMPANY'S INSOLVENCY.
3.1 Cessation of Payment. Trustee shall cease payment of
benefits to Plan participants and their beneficiaries if the Company is
Insolvent. Company shall be considered "Insolvent" for purposes of this Trust
Agreement if (a) Company is unable to pay its debts as they become due, or (b)
Company is subject to a pending proceeding as a debtor under the United States
Bankruptcy Code.
3.2 Assets Subject to Claims. At all times during the
continuance of this Trust, the principal and income of the Trust shall be
subject to claims of general creditors of Company under federal and state law
set forth below.
3.2.1 Notice of Insolvency. The Board of Directors and the
Chief Executive Officer of Company shall have the duty to inform Trustee in
writing of Company's Insolvency. If a person claiming to be a creditor of
Company alleges in writing to Trustee that Company has become Insolvent,
Trustee shall determine whether Company is Insolvent and, pending such
determination, Trustee shall discontinue payment of benefits to Plan
participants or their beneficiaries.
3.2.2 Duty of Inquiry. Unless Trustee has actual knowledge
of Company's Insolvency, or has received notice from Company or a person
claiming to be a creditor alleging that Company is Insolvent, Trustee shall
have no duty to inquire whether Company is Insolvent. Trustee may in all
events rely on such evidence concerning Company's solvency as may be furnished
to Trustee and that provides Trustee with a reasonable basis for making a
determination concerning Company's solvency.
3.2.3 Discontinuance of Benefits. If at any time Trustee has
determined that Company is Insolvent, Trustee shall discontinue payments to
Plan participants or their beneficiaries and shall hold the assets of the Trust
for the benefit of Company's general creditors. Nothing in this Trust
Agreement shall in any way diminish any rights of Plan participants or their
beneficiaries to pursue their rights as general creditors of Company with
respect to benefits due under the Plan or otherwise.
3.2.4 Resumption of Benefits. Trustee shall resume the
payment of benefits to Plan participants or their beneficiaries in accordance
with Article II of this Trust Agreement only after Trustee has determined that
Company is not Insolvent or is no longer Insolvent.
3.3 Continuation of Payments. Provided that there are
sufficient assets, if Trustee discontinues the payment of benefits from the
Trust pursuant to Section 3.2 hereof and subsequently resumes such payments,
the first payment following such discontinuance shall include the aggregate
amount of all payments due to Plan participants or their beneficiaries under
the terms of the Plan for the period of such discontinuance, less the
aggregate amount of any payments made to Plan participants or their
beneficiaries by Company in lieu of the payments provided for hereunder during
any such period of discontinuance.
ARTICLE IV
INVESTMENT AUTHORITY
4.1 Reversion of Assets. Except as provided in Article III
hereof, Company shall have no right or power to direct Trustee to return to
Company or to divert to others any of the Trust assets before all payment of
benefits have been made to Plan participants and their beneficiaries pursuant
to the terms of the Plan.
4.2 Securities. In no event may Trustee invest in securities
(including stock or rights to acquire stock) or obligations issued by Company,
other than a de minimis amount held in common investment vehicles in which
Trustee invests. All rights associated with assets of the Trust shall be
exercised by Trustee or the person designated by Trustee, and shall in no event
be exercisable by or rest with Plan participants.
4.3 Income Accumulation. During the term of this Trust, all
income received by the Trust, net of expenses and taxes, shall be accumulated
and reinvested.
4.4 Accounting. Trustee shall keep accurate and detailed
records of all investments, receipts, disbursements, and all other transactions
required to be made, including such specific records as shall be agreed upon in
writing between Company and Trustee. Within 60 days following the close of
each calendar year and within 60 days after the removal or resignation of
Trustee, Trustee shall deliver to Company a written account of its
administration of the Trust during such year or during the period from the
close of the last preceding year to the date of such removal or resignation,
setting forth all investments, receipts, disbursements and other transactions
effected by it, including a description of all securities and investments
purchased and sold with the cost or net proceeds of such purchases or sales
(accrued interest paid or receivable being shown separately), and showing all
cash, securities and other property held in the Trust at the end of such year
or as of the date of such removal or resignation, as the case may be.
ARTICLE V
RESPONSIBILITY OF TRUSTEE
5.1 Fiduciary Standard. Trustee shall act with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims, provided,
however, that Trustee shall incur no liability to any person for any action
taken pursuant to a direction, request or approval given by Company which is
contemplated by, and in conformity with, the terms of the Plan or this Trust
and is given in writing by Company. In the event of a dispute between Company
and a party, Trustee may apply to a court of competent jurisdiction to resolve
the dispute.
5.2 Indemnification. If Trustee undertakes or defends any
litigation arising in connection with this Trust, Company agrees to indemnify
Trustee against Trustee's costs, expenses and liabilities (including, without
limitation, attorneys' fees and expenses) relating thereto and to be primarily
liable for such payments. If Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, Trustee may obtain payment from the
Trust.
5.3 Consultation. Trustee may consult with legal counsel (who
may also be counsel for Company generally) with respect to any of its duties or
obligations hereunder.
5.4 Hiring of Professionals. Trustee may hire agents,
accountants, actuaries, investment advisors, financial consultants or other
professionals to assist it in performing any of its duties or obligations
hereunder.
5.5 Powers. Trustee shall have, without exclusion, all powers
conferred on Trustees by applicable law, unless expressly provided otherwise
herein, provided, however, that if an insurance policy is held as an asset of
the Trust, Trustee shall have no power to name a beneficiary of the policy
other than the Trust, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor Trustee, or to loan to
any person the proceeds of any borrowing against such policy.
5.6 Other Business. Notwithstanding any powers granted to
Trustee pursuant to this Trust Agreement or applicable law, Trustee shall not
have any power that could give this Trust the objective of carrying on a
business and dividing the gains therefrom, within the meaning of Section
301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant
to the Code.
5.7 Fees and Expenses. Company shall pay all administrative and
Trustee's fees and expenses. If not so paid, the fees and expenses shall be
paid from the Trust.
ARTICLE VI
RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
6.1 Resignation. Trustee may resign at any time by written
notice to Company, which shall be effective 30 days after receipt of such
notice unless Company and Trustee agree otherwise.
6.2 Removal. Trustee may be removed by Company on 30 days
notice or upon shorter notice accepted by Trustee.
6.3 Change of Control. Upon a Change of Control, as defined
herein, Trustee may not be removed by Company for 3 years.
6.4 Successor Trustee. If Trustee resigns or is removed within
3 years of a Change of Control, as defined herein, Trustee shall select a
successor Trustee in accordance with the provisions of Section 6.8 hereof prior
to the effective date of Trustee's resignation or removal.
6.5 Transfer of Assets. Upon resignation or removal of Trustee
and appointment of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be completed within
30 days after receipt of notice of resignation, removal or transfer, unless
Company extends the time limit.
6.6 Court Appointed Trustee. If Trustee resigns or is removed,
a successor shall be appointed, in accordance with Sections 6.7 through 6.9
hereof, by the effective date of resignation or removal under Section 6.1 or
6.2. If no such appointment has been made, Trustee may apply to a court of
competent jurisdiction for appointment of a successor or for instructions. All
expenses of Trustee in connection with the proceeding shall be allowed as
administrative expenses of the Trust.
6.7 Appointment of Successor by Company. If Trustee resigns or
is removed in accordance with Section 6.1 or 6.2 hereof, Company may appoint
any third party, such as a bank trust department or other party that may be
granted corporate trustee powers under state law, as a successor to replace
Trustee upon resignation or removal. The appointment shall be effective when
accepted in writing by the new Trustee, who shall have all of the rights and
powers of the former Trustee, including ownership rights in the Trust assets.
The former Trustee shall execute any instrument necessary or reasonably
requested by Company or the successor Trustee to evidence the transfer.
6.8 Appointment of Successor by Trustee. If Trustee resigns or
is removed pursuant to the provisions of Section 6.4 hereof and selects a
successor Trustee, Trustee may appoint any third party such as a bank trust
department or other party that may be granted corporate trustee powers under
state law. The appointment of a successor Trustee shall be effective when
accepted in writing by the new Trustee. The new Trustee shall have all the
rights and powers of the former Trustee, including ownership rights in Trust
assets. The former Trustee shall execute any instrument necessary or
reasonably requested by the successor Trustee to evidence the transfer.
6.9 Indemnification of Successor Trustee. The successor Trustee
need not examine the records and acts of any prior Trustee and may retain or
dispose of existing Trust assets, subject to Section 4.4 and Article V hereof.
The successor Trustee shall not be responsible for and Company shall indemnify
and defend the successor Trustee from any claim or liability resulting from any
action or inaction of any prior Trustee or from any other past event, or any
condition existing at the time it becomes successor Trustee.
ARTICLE VII
AMENDMENT OR TERMINATION
7.1 Amendment. This Trust Agreement may be amended by a written
instrument executed by Trustee and Company. Notwithstanding the foregoing, no
such amendment shall conflict with the terms of the Plan or shall make the
Trust revocable after it has become irrevocable in accordance with Section 1.2
hereof.
7.2 Termination. The Trust shall not terminate until the date
on which Plan participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan. Upon termination of the Trust any
assets remaining in the Trust shall be returned to Company.
Termination with Approval of Participants. Upon written approval any
Participants or Participant's beneficiaries entitled to payment of benefits
pursuant to the terms of the Plan, Company may terminate this Trust as to such
Participant prior to the time all benefit payments under the Plan have been
made. All assets in the Trust held for the benefit of such Participant at
termination shall be returned to Company.
ARTICLE VIII
MISCELLANEOUS
8.1 Severability. Any provision of this Trust Agreement
prohibited by law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
8.2 Assignment of Benefits. Benefits payable to Plan
participants and their beneficiaries under this Trust Agreement may not be
anticipated, assigned, either at law or in equity, alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution or other
legal or equitable process.
8.3 Governing Law. This Trust Agreement shall be governed by
and construed in accordance with the laws of Oklahoma.
8.4 Change of Control. For purposes of this Trust, Change of
Control shall mean:
(i) the date any entity or person, including a group as
defined in Section 13(d)(iii) of the Securities Exchange Act of 1934 shall
become the beneficial owner of, or shall have obtained voting control over, 25
percent or more of the outstanding common shares of the Company;
(ii) the date the shareholders of the Company approve a
definitive agreement (a) to merge or consolidate the Company with or into
another corporation, in which the Company is not the continuing or surviving
corporation or pursuant to which any common shares of the Company would be
converted into cash, securities or other property of another corporation, other
than a merger of the Company in which holders of common shares immediately
prior to the merger have the same proportionate interest of common stock of
the surviving corporation immediately after the merger as immediately before,
or (b) to sell or otherwise dispose of substantially all of the assets of the
Company; or
(iii) the date there shall have been change in a majority of
the Board of the Company within a 12 month period unless the nomination of each
new director was approved by the vote of two-thirds (2/3) of directors then
still in office who were in office at the beginning of the 12 month period.
8.5 Effective Date. The effective date of this Trust Agreement
shall be
, 19 .
TRUSTEE
LIBERTY BANK AND TRUST COMPANY
OF OKLAHOMA CITY, NATIONAL
ASSOCIATION
By:
Authorized Officer
COMPANY
LIBERTY BANCORP, INC.
By:
Authorized Officer
EXHIBIT 24.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation
of our report dated January 21, 1994, included in this Form 10-K for the year
ended December 31, 1993, into Liberty Bancorp, Inc.'s previously filed
registration statements No. 33-28760, Profit Sharing, Salary Deferral and
Employee Stock Ownership Plan and Trust Agreement; No. 33-48170, 1990 Stock
Option Plan of Liberty Bancorp, Inc. and No. 33-62814, Form S-3.
ARTHUR ANDERSEN & CO.
Oklahoma City, Oklahoma,
March 30, 1994
EXHIBIT 24.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-3, No. 33-62814) of Liberty Bancorp, Inc. and in the related Prospectus
and the Registration Statements pertaining to the Liberty Bancorp, Inc. Profit
Sharing, Salary Deferral and Employee Stock Ownership Plan and Trust Agreement
(Form S-8 No. 33-28760) and to the 1990 Stock Option Plan of Liberty Bancorp,
Inc. (Form S-8 No. 33-48170) of our report dated January 21, 1994 with respect
to the consolidated financial statements of Liberty Mortgage Company (not
presented separately herein) included in the Annual Report (Form 10-K) of
Liberty Bancorp, Inc. for the year ended December 31, 1993.
ERNST & YOUNG
Oklahoma City, Oklahoma
March 28, 1994
EXHIBIT 25
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/Molly Shi Boren Director
- ------------------------------
Molly Shi Boren
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/Donald L. Brawner, M.D. Director
- ------------------------------
Donald L. Brawner, M.D.
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/Robert S. Ellis, M.D. Director
- ------------------------------
Robert S. Ellis, M.D.
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/William J. Fischer, Jr. Director
- ------------------------------
William J. Fischer, Jr.
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/C.W. Flint, Jr. Director
- ------------------------------
C.W. Flint, Jr.
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/James L. Hall, Jr. Director
- ------------------------------
James L. Hall, Jr.
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/Raymond H. Hefner, Jr. Director
- ------------------------------
Raymond H. Hefner, Jr.
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/Walter H. Helmerich, III Director
- ------------------------------
Walter H. Helmerich, III
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/Joseph S. Jankowsky Director
- ------------------------------
Joseph S. Jankowsky
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/John E. Kirkpatrick Director
- ------------------------------
John E. Kirkpatrick
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/Edward C. Lawson Jr. Director
- ------------------------------
Edward C. Lawson Jr.
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/Herb Mee, Jr. Director
- ------------------------------
Herb Mee, Jr.
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/William G. Paul Director
- ------------------------------
William G. Paul
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/W.N. Pirtle Director
- ------------------------------
W.N. Pirtle
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/V. Lee Powell Director
- ------------------------------
V. Lee Powell
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/Jon R. Stuart Director
- ------------------------------
Jon R. Stuart
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/Robert E. Torray Director
- ------------------------------
Robert E. Torray
POWER OF ATTORNEY
The person whose signature appears below hereby appoints Mischa Gorkuscha
and Kenneth R. Brown, and both of them, with full power to act alone, as
attorney-in-fact to execute and fill in the name of and on behalf of Liberty
Bancorp, Inc. ("Corporation"), and the person whose signature appears below,
both individually and in the capacities indicated, the Corporation's Annual
Report on Form 10-K for the fiscl year ended December 31, 1993 required under
Section 13 of the Securities Exchange Act of 1934, and any and all amendments
thereto.
Dated this 23rd day of March, 1994
Signature Title
--------- -----
/s/John S. Zink Director
- ------------------------------
John S. Zink
