SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of
1934.
For the Quarter ended September 30, 1998 Commission File No. 0-14277
First Commerce Bancshares, Inc.
Nebraska 47-0683029
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1248 O Street, Lincoln, Nebraska 68508-1424
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (402) 434-4110
-----------------------------
None
Former name, former address, and former fiscal year, if changes since last
report.
"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 and Exchange Act
of 1934 during the preceding twelve months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
Common stock, $.20 par value; outstanding at September 30, 1998
Class A Common 2,591,336 shares.
Class B Common 10,938,951 shares.
<PAGE>
FIRST COMMERCE BANCSHARES, INC. & SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
(Unaudited)
September 30, 1998 December 31, 1997
<S> <C> <C>
Cash and due from banks $ 117,841 $ 156,664
Federal funds sold 23,195 36,495
----------- -----------
Cash and cash equivalents 141,036 193,159
Mortgages held for sale 49,861 31,360
Securities available for sale (cost of
$375,218,000 and $303,172,000) 391,100 336,857
Securities held to maturity (fair value of
$376,552,000 and $367,489,000) 369,954 362,768
Loans 1,239,582 1,236,443
Less allowance for loan losses 23,193 22,458
----------- -----------
Net loans 1,216,389 1,213,985
Premises and equipment 59,071 54,468
Other assets 71,541 58,503
----------- -----------
$ 2,298,952 $ 2,251,100
=========== ===========
Deposits:
Noninterest bearing $ 328,095 $ 353,109
Interest bearing 1,345,295 1,296,385
----------- -----------
1,673,390 1,649,494
Securities sold under agreement to repurchase and
other short-term borrowings 192,289 198,395
Federal Home Loan Bank borrowings 147,263 120,450
Accrued expenses and other liabilities 31,005 34,011
Long-term debt 13,669 16,170
----------- -----------
Total liabilities 2,057,616 2,018,520
Stockholders' equity:
Common stock:
Class A voting, $.20 par value; authorized
10,000,000 shares; issued and outstanding
2,591,336 shares; 518 518
Class B non-voting, $.20 par value; authorized
40,000,000 shares; issued and outstanding
10,938,951 shares 2,188 2,188
Paid in capital 21,601 21,601
Retained earnings 206,252 186,377
Net unrealized gains on securities available for
sale (net of tax) 10,777 21,896
----------- -----------
Total stockholders' equity 241,336 232,580
----------- -----------
$ 2,298,952 $ 2,251,100
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
FIRST COMMERCE BANCSHARES, INC. & SUBSIDIARIES
Consolidated Condensed Statements of Income
(Unaudited)
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
----------- ----------- ----------- ---------
Interest income:
<S> <C> <C> <C> <C>
Loans $27,487 $ 26,001 $82,786 $75,935
Investment securities:
Taxable 10,557 10,187 30,832 30,180
Non-taxable 380 326 1,096 1,042
Dividends 532 197 1,588 530
Mortgages held for sale 803 474 2,461 1,073
Short-term investments 492 794 1,477 2,003
-------- ------- -------- --------
Total interest income 40,251 37,979 120,240 110,763
Interest expense:
Deposits 16,142 15,159 47,319 44,668
Short-term borrowings 2,278 2,644 6,752 6,584
Federal Home Loan Bank borrowings 1,546 698 4,460 1,940
Long-term debt 341 352 1,003 1,117
-------- ------- -------- -------
Total interest expense 20,307 18,853 59,534 54,309
-------- ------- -------- -------
Net interest income 19,944 19,126 60,706 56,454
Provision for loan losses 1,531 1,840 4,511 6,064
-------- ------- -------- --------
Net interest income after provision for loan losses 18,413 17,286 56,195 50,390
Noninterest income:
Service charges and fees to customers 13,169 10,459 37,477 29,399
Trust services 1,438 1,416 4,816 5,081
Gains on securities sales 1,915 389 4,211 5,002
Other income 699 660 1,720 1,294
-------- ------- -------- --------
Total noninterest income 17,221 12,924 48,224 40,776
-------- ------- -------- --------
Noninterest expense:
Salaries and employee benefits 10,962 9,689 32,397 29,086
Occupancy and equipment 2,695 2,672 7,543 7,170
Fees and insurance 3,859 2,876 10,905 8,133
Other expenses 6,322 4,986 17,408 14,381
-------- ------- -------- --------
Total noninterest expense 23,838 20,223 68,253 58,770
-------- ------- -------- --------
Income before income taxes 11,796 9,987 36,166 32,396
Income tax provision 4,195 3,608 12,840 11,554
-------- ------- -------- --------
Net income $ 7,601 $ 6,379 $23,326 $20,842
======== ======= ======= =======
Weighted average shares outstanding 13,530 13,539 13,530 13,544
======== ======= ======== ========
Basic net income per share $ .56 $ .47 $ 1.72 $ 1.54
======= ====== ======= =======
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
FIRST COMMERCE BANCSHARES, INC. & SUBSIDIARIES
Consolidated Condensed Statements of Cash Flows
(Unaudited) (In Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------
1998 1997
-------- ------
<S> <C> <C>
Net cash flows from operating activities $ (349) $ 5,097
Cash flows from investing activities:
Proceeds from maturities of held to maturity securities 75,654 40,005
Purchase of held to maturity securities (82,840) (102,373)
Proceeds from maturities of available for sale securities 40,588 49,982
Proceeds from sales of available for sale securities 19,194 79,317
Purchase of available for sale securities (127,140) (42,968)
Net increase in loans (6,915) (56,303)
Capital expenditures (8,829) (6,472)
Proceeds from derivative financial instrument 697 -
Other (35) (12)
------- --------
Net cash flows from investing activities (89,626) (38,824)
------- --------
Cash flows from financing activities:
Increase in deposits 23,896 31,089
(Decrease)/Increase in securities sold under agreement
to repurchase and other short-term borrowings (6,106) 42,580
Net increase/(decrease) in Federal Home Loan Bank borrowings 26,813 (1,044)
Cash dividends paid (3,450) (3,050)
Repayment of long term debt (2,501) (2,535)
Purchase of common stock - (360)
Other (800) (57)
------ -------
Net cash flows from financing activities 37,852 66,623
------ -------
Net (decrease)/increase in cash and cash equivalents (52,123) 32,896
Cash and cash equivalents at January 1 193,159 159,837
------- -------
Cash and cash equivalents at September 30 $ 141,036 $ 192,733
======= ========
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
FIRST COMMERCE BANCSHARES, INC. & SUBSIDIARIES
Notes To Consolidated Condensed Financial Statements
A. GENERAL
The accompanying unaudited consolidated condensed financial statements and notes
thereto contain all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position of the Company
and its subsidiaries as of September 30, 1998, and the results of their
operations. The consolidated condensed financial statements should be read in
conjunction with the annual consolidated financial statements and the notes
thereto included in the Company's 1997 annual report and Form 10-K. Certain 1997
amounts have been reclassified to conform to 1998 classifications. The results
of operations for the unaudited nine-month period ended September 30, 1998, are
not necessarily indicative of the results which may be expected for the entire
calendar year 1998.
B. ALLOWANCE FOR LOAN LOSSES
Transactions in the allowance for the loan losses are summarized as follows:
<TABLE>
<CAPTION>
1998 1997
------ -----
(Amounts in Thousands)
<S> <C> <C>
Balance, January 1 $22,458 $20,157
Provision for loan losses 4,511 6,064
Charge-offs (5,890) (6,059)
Recoveries 2,114 2,154
------- --------
Balance, September 30 $23,193 $22,316
======= =======
</TABLE>
C. INVESTMENT SECURITIES
During the first nine months of 1998 and 1997, the Company realized $4,211,000
and $5,002,000, respectively, in profits on the sale of securities available for
sale. During the first nine months of 1998 and 1997, the Company did not sell
any held to maturity securities.
D. COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 (SFAS130), "Reporting Comprehensive Income." This statement
establishes standards for reporting and display of comprehensive income and its
components in a full set of financial statements. The Company's "other
comprehensive income" is comprised of unrealized gains and losses on debt and
equity securities classified as available for sale. "Other comprehensive income"
for the first nine months of 1998 and 1997 was a negative $11,119,000, net of
tax; and a positive $12,894,000, net of tax, respectively. Thereby, total
"comprehensive income" for the first nine months of 1998 was $12,207,000 as
compared to book net income of $23,326,000. For the first nine months of 1997
total "comprehensive income" was $33,736,000 as compared to book net income of
$20,842,000.
The 1998 decrease in unrealized gains and losses on debt and equity securities
classified as available for sale since December 31, 1997, was due principally to
the decline in the market value of Transcrypt International, Inc., a Lincoln,
Nebraska based company that first sold shares in the public stock market in
1997. At December 31, 1997, the Company's original investment of $429,000 had a
market value of $17 million; at September 30, 1998, the stock had a market value
of $1.8 million. The decline in the market value of Transcrypt and a net
decrease in the market value of other available for sale securities totaled
$17,803,000. During the first quarter of 1998, the Company settled a "collar" on
200,000 shares of Transcrypt and realized $697,000. Under the deferral method of
accounting, the gain, net of tax, was deferred and will be recognized in the
same period as the gains or losses on the item being hedged.
<PAGE>
FINANCIAL REVIEW
Nine Months Ended September 30, 1998 and 1997
Results of Operations
Net income for the nine months ended September 30, 1998, was $23,326,000 or
$1.72 per share as compared to $20,842,000 or $1.54 per share for the same
period one year ago. Net income for the three months ended September 30, 1998,
was $7,601,000 or $.56 per share as compared to $6,379,000 or $.47 per share for
the same period one year ago. Net income for the first nine months of 1998
includes $4,211,000 in pre-tax gains primarily from the sale of investments in
the Company's Global Fund, as compared to pre-tax gains of $5,002,000 for the
same period one year ago. If the securities gains were excluded for both
periods, net income would have been $20,589,000 and $17,590,000, respectively.
On a per share basis, earnings would have been $1.52 per share and $1.30 per
share respectively.
Net Interest Income
Net interest income (interest income less interest expense) was $19,944,000 for
the third quarter of 1998, compared to $19,126,000 for the third quarter of
1997, $20,637,000 for the second quarter of 1998, and $20,125,000 for the first
quarter of 1998. The primary reason for the increase in net interest income was
an increase in earning assets. Earning assets at September 30, 1998, September
30, 1997, and December 31, 1997 were $2,074 million, $1,896 million, and $2,004
million, respectively. The net yield on earning assets (net interest income
divided by earning assets) decreased slightly to approximately 4.07% as of
September 30, 1998 from 4.16% as of September 30, 1997. Loans were $1,240
million at the end of September 1998, as compared to $1,174 million at the same
time a year ago, a 5.6% increase. Investments were $761 million at September 30,
1998, compared to $652 million at September 30, 1997, a 16.7% increase.
Provision for Loan Losses
The provision for loan losses was $4,511,000 for the first three quarters of
1998, as compared to $6,064,000 as of September 30, 1997, a 25.6% decrease. For
the first nine months of 1998 net charge-offs were $3,776,000 compared to
$3,905,000 for the same period a year ago. Credit card charge offs have
stabilized in the past year. Net credit card charge offs totaled $3.4 million
for the first nine months of 1998 and $3.7 million for the first nine months of
1997. As a percentage of loans outstanding, the loan loss reserve was 1.9% as of
September 30, 1998 and 1997. Overall, management believes the credit quality of
the loan portfolio remains sound, although management will continue to monitor
credit card quality, agricultural loans and other loan trends.
The following table presents the amount of non-performing loans:
<TABLE>
<CAPTION>
September 30, 1998 December 31, 1997
------------------ -----------------
<S> <C> <C>
Loans accounted for on a non
accrual basis $1,351,000 $1,581,000
Accruing loans which are contractually
past due 90 days or more as to
principal or interest payment 1,704,000 1,106,000
Loans not included above which
are "troubled debt restructurings" 1,478,000 1,530,000
</TABLE>
The accruing loans that are contractually past due 90 days or more are in the
process of resolution. Non accrual loans and troubled debt restructurings have
decreased since December 31, 1997, due primarily to the pay off of two
agricultural loans. Virtually all of the Company's loans are to Nebraska-based
organizations, although the loan portfolio is well diversified by industry. The
Nebraska economy is dependent upon the general state of the agricultural
economy. The Company has $197 million in agricultural loans. The Company is
concerned about low agricultural commodity prices. Fat cattle feeders have lost
money for several months. Although overall yields were good for grain producers,
grain prices are at three-year lows. Current weather conditions and world
economic conditions are such that improvement in the general agricultural
economy may not be likely over the near term. Although the Company's borrowers
are in relatively good financial condition, the uncertain environment they are
working under may have a negative effect on agricultural producers in general,
and may have an impact on the banking sector. Recently, Congress appropriated
additional dollars for "market loss adjustments" which will provide some
monetary support to grain producers.
Noninterest Income
Noninterest income for the first nine months was $48,224,000 compared to
$40,776,000 for the first nine months of 1997, an 18.3% increase. If securities
gains were excluded, noninterest income would have been $44,013,000 compared to
$35,774,000, a 23.0% increase. Computer fees increased $1,611,000 or 25.3% due
to an increase in conversion and annual processing fees. Credit card fees
increased $1,813,000 primarily due to an increase in interchange and merchant
income. Mortgage banking income increased 58.0% over the same period one year
ago because of the large volume of mortgage refinancings in the first nine
months of 1998. In September 1997, the Company converted its common trust funds
to mutual funds, the "Great Plains Family of Funds." Fees earned from these
mutual funds are included in other service charges and fees, which accounts for
the 45.5% increase in this income category. This also accounts for the 5.2%
decrease in trust services income. Gains on the sale of securities were
$4,211,000 in the first nine months of 1998 as compared to $5,002,000 in the
first nine months of 1997, a $791,000 decrease. These gains were primarily the
result of selling certain positions held in the Company's Global Fund. Other
income increased 32.9% from the same period a year ago, primarily due to an
increase in the gain on sale of mortgages held for sale. (As a normal course of
business, First Commerce Mortgage Company holds mortgages from the time funded
until the time delivered.)
The following table shows the breakdown of noninterest income and the percentage
change:
<TABLE>
<CAPTION>
(In Thousands) Percent
September 30, Increase/
1998 1997 (Decrease)
------- ------- ----------
<S> <C> <C> <C>
Computer services $ 7,969 $ 6,358 25.3%
Credit card 11,411 9,598 18.9
Mortgage banking 6,213 3,933 58.0
Service charges on deposits 4,041 4,120 (1.9)
Other service charges and fees 7,843 5,390 45.5
Trust services 4,816 5,081 (5.2)
Gains on securities sales 4,211 5,002 (15.8)
Other income 1,720 1,294 32.9
--------- -------
Total noninterest income $48,224 $40,776 18.3
======= =======
</TABLE>
Noninterest Expense
Noninterest expenses were $68,253,000 for the first nine months of 1998 as
compared to $58,770,000 for the same period one year ago. This is an increase of
$9.5 million or 16.1% from a year ago. Salaries and employee benefits increased
$3,311,000 or 11.4% generally due to increases in the levels of pay and number
of employees. Equipment expenses increased $444,000 or 11.4% due to additional
equipment purchases, primarily computer related. Fees and insurance increased
$347,000 or 12.7% from the same period one year ago primarily due to increased
credit report and filing fees. Credit card processing fees increased $2,425,000
due to increased activity and an increase in Cabela's bucks expense, points
earned from using the Cabela's credit card (joint venture with Cabela's), which
can be redeemed for merchandise at Cabela's. Business development expenses
increased 16.6% due primarily to increased marketing for new solicitations at
Cabela's. Other expenses increased 27.0% due primarily to additional consulting
fees and additional software amortization expense. A decrease in minority
interest expense is related to the decrease in profits in the Cabela's credit
card joint venture. Amortization of mortgage servicing rights increased
$1,728,000 or 118.9% due to an increase in the volume of mortgages serviced by
First Commerce Mortgage combined with a significant increase in refinancings
during the first nine months of 1998, which results in the early write-off of
capitalized mortgage servicing rights on loans being refinanced.
<PAGE>
The following table shows the breakdown of noninterest expense and the
percentage change:
<TABLE>
<CAPTION>
(In Thousands) Percent
September 30, Increase/
1998 1997 (Decrease)
-------- --------- ----------
<S> <C> <C> <C>
Salaries and employee benefits $32,397 $29,086 11.4%
Net occupancy expense 3,195 3,266 (2.2)
Equipment expense 4,348 3,904 11.4
Fees and insurance 3,084 2,737 12.7
Credit card fees 7,821 5,396 44.9
Communications 3,327 3,245 2.5
Supplies 2,001 1,861 7.5
Business development 2,966 2,543 16.6
Other expenses 4,775 3,761 27.0
Minority interest 775 1,135 (31.7)
Goodwill amortization 383 383 --
Amortization of mortgage servicing rights 3,181 1,453 118.9
-------- --------
Total noninterest expense $68,253 $58,770 16.1
======= =======
</TABLE>
The Company's efficiency ratio -- noninterest expense (excluding net cost of
other real estate, minority interest and goodwill amortization) divided by the
sum of net interest income and noninterest income (excluding securities
gains/losses) -- was 64.0% and 62.2% at September 30, 1998 and 1997,
respectively.
Financial Condition at September 30, 1998
Total assets at September 30, 1998, were $2,299 million, compared to
$2,137 million at September 30, 1997, a 7.6% increase. Total assets at
December 31, 1997, were $2,251 million.
Since September 30, 1997, loans have increased from $1,174 million to $1,240
million, a 5.6% increase. Managed loans at September 30, 1998 were $1,327
million.
<TABLE>
<CAPTION>
Loans are summarized as follows: September 30, 1998 September 30, 1997
----------------- ------------------
(In thousands)
<S> <C> <C>
Real estate mortgage $ 398,635 $ 361,215
Consumer 268,891 287,703
Commercial and financial 257,877 260,091
Agricultural 170,449 139,412
Credit card 98,355 87,775
Real estate construction 45,375 37,441
------- -------
$1,239,582 $1,173,637
========== ==========
</TABLE>
The increase in real estate loans is primarily in commercial real estate
projects in the Lincoln and Omaha markets, both of which continue to exhibit
good economic growth. Agricultural loan increases are primarily in the cattle
feeding sector, reflecting higher cattle inventories. The credit card increase
has resulted primarily from the acquisition of a credit union portfolio. The
decrease in the consumer portfolio is due primarily to increased competition in
this market, as well as significant refinancings via home equity loans and home
loan refinancings.
Deposits have increased from $1,606 million at September 30, 1997 to $1,673
million at September 30, 1998, a 4.2% increase. The loan to deposit ratio was
74.1% as of September 30, 1998, compared to 73.1% at September 30, 1997.
Repurchase agreements and other short-term borrowings totaled $192 million at
September 30, 1998, compared to $184 million at September 30, 1997, and $198
million at December 31, 1997. Federal Home Loan Bank borrowings totaled $147
million at September 30, 1998, compared to $72 million at September 30, 1997,
and $120 million at December 31, 1997. Long-term debt consisting of Company
capital notes decreased $2.5 million since September 30, 1997 and December 31,
1997 because of the annual principal payment. In addition to repurchase
agreements and Federal Home Loan Bank borrowings, the Company has utilized
commercial paper and the securitization of credit card receivables as
supplemental funding sources. The Company has increased the utilization of
non-traditional (non-deposit) funding sources because of cost, liquidity, and
interest rate risk management factors. Stockholders' equity to assets was 10.0%
as of September 30, 1998. The net unrealized gains on available for sale
securities decreased $11,119,000 since December 31, 1997.
The 1998 decrease in unrealized gains and losses on debt and equity securities
classified as available for sale since December 31, 1997, was due principally to
the decline in the market value of Transcrypt International, Inc., a Lincoln,
Nebraska based company that first sold shares in the public stock market in
1997. At December 31, 1997, the Company's original investment of $429,000 had a
market value of $17 million; at September 30, 1998, the stock had a market value
of $1.8 million. The decline in the market value of Transcrypt and a net
decrease in the market value of other available for sale securities totaled
$17,803,000. During the first quarter of 1998, the Company settled a "collar" on
200,000 shares of Transcrypt and realized $697,000. Under the deferral method of
accounting, the gain, net of tax, was deferred and will be recognized in the
same period as the gains or losses on the item being hedged.
On June 29, 1998, the Company opened a new national-chartered bank, Western
Nebraska National Bank, Valentine, Nebraska. The new Valentine bank purchased
the assets and assumed the liabilities of the existing Loan Production Offices
in Valentine, Nebraska, and Mullen, Nebraska, from the Company's North Platte
Bank, Western Nebraska National Bank, North Platte, Nebraska. The new Valentine
bank opened with assets of approximately $14 million. At the end of an
eighteen-month statutory holding period, the Company intends to merge the
Valentine bank into the North Platte bank, subject to regulatory approval.
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios (set forth in the
table below) of Tier I capital (as defined in the regulations) to total average
assets (as defined), and minimum ratios of Tier I and total capital (as defined)
to risk-weighted assets (as defined). The Company's and the National Bank of
Commerce's (the Company's most significant bank subsidiary) actual capital
amounts and ratios are presented in the following table:
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
------------- ------------------ ----------------
Amount Ratio Amount Ratio Amount Ratio
-------------- ------------------ ----------------
As of September 30, 1998:
Total Capital (to Risk Weighted Assets):
<S> <C> <C> <C> <C> <C> <C>
Consolidated $245,885 16.8% $116,789 8.0% N/A N/A
National Bank of Commerce 115,392 12.5 73,638 8.0 $92,048 10.0%
Tier I Capital (to Risk Weighted Assets):
Consolidated 225,511 15.5 58,394 4.0 N/A N/A
National Bank of Commerce 103,886 11.3 36,819 4.0 55,229 6.0
Tier I Capital (to Quarterly Average Assets):
Consolidated 225,511 10.2 88,548 4.0 N/A N/A
National Bank of Commerce 103,886 8.3 50,270 4.0 62,837 5.0
As of December 31, 1997:
Total Capital (to Risk Weighted Assets):
Consolidated $226,623 14.9% $121,724 8.0% N/A N/A
National Bank of Commerce 108,772 12.1 71,956 8.0 $89,945 10.0%
Tier I Capital (to Risk Weighted Assets):
Consolidated 205,459 13.5 60,862 4.0 N/A N/A
National Bank of Commerce 97,499 10.8 35,978 4.0 53,967 6.0
Tier I Capital (to Quarterly Average Assets):
Consolidated 205,459 9.7 84,362 4.0 N/A N/A
National Bank of Commerce 97,499 8.1 48,046 4.0 60,058 5.0
</TABLE>
<PAGE>
Year 2000
The Company's assessment of internal Year 2000 issues is complete and the
Company is in the process of upgrading any computer hardware, software, and
other systems that are not Year 2000 ready and intends to have the upgrades
completed by the end of 1998. The Company plans to have all systems modified, if
necessary, and tested well in advance of 2000. The Company will continue testing
its systems throughout 1999 to insure they will function properly. In addition,
connectivity testing will be performed between the Company and outsource service
providers during 1999.
If critical outsource service providers are unable to resolve Year 2000 issues
in time, the conversion is delayed significantly, or major problems arise as a
result of the conversion, the Company would likely experience significant data
processing delays, mistakes or failures. These delays, mistakes or failures
could have significant adverse impact on the financial condition and results of
the operations of the Company. Contingency plans are already in place or will be
established for any critical outsource service providers failing to meet
internal testing criteria. The Company is addressing the Year 2000 issue with
its major bank customers to insure they will be Year 2000 ready.
The Company estimates the total costs, including costs incurred to date, of
addressing Year 2000 issues will be approximately $2 million. Scheduled systems
upgrades and enhancements which would have taken place anyway, are not included
as a Year 2000 expense, even though some might include a Year 2000 solution.
Forward Looking Information
When used or incorporated by reference in disclosure documents, the words
"anticipate," "estimate," "expect," "project," "target," "goal," and similar
expressions are intended to identify forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933. Such forward-looking
statements are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, estimated, expected or projected. These forward-looking statements
speak only as of the date of the document. The Company expressly disclaims any
obligation or undertaking to publicly release any updates or revisions to any
forward-looking statement contained herein to reflect any change in the
Company's expectation with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) None.
(b) None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST COMMERCE BANCSHARES, INC.
Date: November 13, 1998 By: James Stuart Jr.
-------------------------- ----------------
James Stuart, Jr., Chairman and CEO
Date: November 13, 1998 By: Donald Kinley
-------------------------- -------------
Donald Kinley, Vice President and
Treasurer (Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000768532
<NAME> First Commerce Bancshares, Inc.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Jun-30-1998
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0
0
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</TABLE>
