-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FTlBwbQn06JUTq9/goqhscdgaH7RfQH7aXwOUxbn4YS9cBS3P0q2EhcE9EFNvZ9k Dlsi80gpfZqR6dOYwDYvKg== 0000950114-95-000206.txt : 19951120 0000950114-95-000206.hdr.sgml : 19951120 ACCESSION NUMBER: 0000950114-95-000206 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951115 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANCTEXAS GROUP INC CENTRAL INDEX KEY: 0000310979 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 751604965 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08230 FILM NUMBER: 95593518 BUSINESS ADDRESS: STREET 1: 13747 MONTFORT CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2147014700 MAIL ADDRESS: STREET 1: BANCTEXAS GROUP INC STREET 2: 9605 ABRAMS ROAD CITY: DALLAS STATE: TX ZIP: 75243 FORMER COMPANY: FORMER CONFORMED NAME: COMMERCE SOUTHWEST INC DATE OF NAME CHANGE: 19820831 10-Q 1 FIRST BANKS AMERICA, INC. FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-8937 ------ FIRST BANKS AMERICA, INC. ------------------------- (Exact name of registrant as specified in its charter) DELAWARE 75-1604965 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) identification No.) P.O. Box 630369, HOUSTON, TEXAS 77263-0369 ------------------------------------------- (address of principal executive offices) (Zip Code) (713) 954-2400 -------------- (Registrant's telephone number, including area code) BancTEXAS GROUP INC. --------------------------------------------------- (Former name, former address, and former fiscal year, if changed 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 Exchange Act of 1934 during the preceding 12 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 ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Outstanding at Class October 31, 1995 ----- ---------------- Common Stock, $.01 par value 1,343,468 Class B Common Stock, $.01 par value 2,500,000
2 INDEX
Page PART I FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets as of September 30, 1995 and December 31, 1994 -2- Consolidated Statements of Income for the three and nine months ended September 30, 1995 and 1994 -4- Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 -5- Notes to Consolidated Financial Statements -6- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations -7- PART II OTHER INFORMATION Item 2. Changes in Securities -13- Item 4. Submission of Matters to a Vote of Security Holders -13- Item 6. Exhibits -14- Signatures -15-
-1- 3 PART I - FINANCIAL INFORMATION Item 1 Financial Statements First Banks America, Inc Consolidated Balance Sheets (unaudited) (dollars expressed in thousands, except per share data)
September 30, December 31, ASSETS 1995 1994 ------ ------------- ------------ Cash and cash equivalents: Cash and due from banks $ 8,282 14,029 Interest-bearing deposits with other financial institutions- with maturities of three months or less 705 25,042 Federal funds sold 2,200 8,000 ------------- ------------ Total cash and cash equivalents 11,187 47,071 ------------- ------------ Investment securities - available-for-sale, at market value 72,931 61,400 ------------- ------------ Loans: Commercial, financial and agricultural 12,689 14,556 Real estate construction and development 24,219 13,793 Real estate mortgage 11,547 14,796 Consumer and installment 156,190 157,570 Loans held for sale - 7,253 ------------- ------------ Total loans 204,645 207,968 Unearned discount (2,309) (4,654) Allowance for possible loan losses (5,953) (2,756) ------------- ------------ Net loans 196,383 200,558 ------------- ------------ Bank premises and equipment, net of accumulated depreciation 6,563 6,511 Accrued interest receivable 1,239 1,146 Foreclosed property, net 954 1,553 Deferred income taxes 16,131 12,517 Other assets 1,356 1,034 ------------- ------------ Total assets $ 306,744 331,790 ============= ============
-2- 4 FIRST BANKS AMERICA, INC Consolidated Balance Sheets (unaudited) (dollars expressed in thousands, except per share data) (continued)
September 30, December 31, LIABILITIES 1995 1994 ----------- ------------- ------------ Deposits: Demand: Non-interest bearing $ 42,662 45,418 Interest bearing 20,656 24,678 Savings 55,998 54,377 Time: Time deposits of $100 or more 24,740 23,063 Other time deposits 98,019 94,034 ------------- ------------ Total deposits 242,075 241,570 Federal Home Loan Bank advances 19,880 19,412 Federal funds purchased - 4,800 Securities sold under agreements to repurchase 692 19,433 Other borrowings 2,253 1,863 Accrued interest payable 810 716 Deferred income taxes 3,205 1,299 Accrued and other liabilities 2,753 2,983 ------------- ------------ Total liabilities 271,668 292,076 ------------- ------------ STOCKHOLDERS' EQUITY -------------------- Common Stock: Common stock, $.15 par value; 6,666,666 shares authorized; 1,390,335 and 1,377,535 shares issued and outstanding, respectively, at September 30, 1995 and 1,370,268 shares issued and outstanding at December 31, 1994 209 206 Class B common stock, $.15 par value; 4,000,000 shares authorized; 2,500,000 shares issued and outstanding 375 375 Capital surplus 39,229 39,133 Retained earnings since elimination of accumulated deficit of $259,117 effective December 31, 1994 (2,279) - Treasury stock, at cost; 12,800 shares at September 30, 1995 (144) - Net fair value adjustment for securities available-for-sale (2,314) - ------------- ------------ Total stockholders' equity 35,076 39,714 ------------- ------------ Total liabilities and stockholders' equity $ 306,744 331,790 ============= ============ See accompanying notes to consolidated financial statements
-3- 5 FIRST BANKS AMERICA, INC Consolidated Statments of Income (unaudited) (dollars expressed in thousands, except per share data)
Three months ended Nine months ended September 30, September 30, -------------------- ------------------ 1995 1994 1995 1994 -------- -------- -------- -------- Interest income: Interest and fees on loans $ 4,472 3,838 13,204 11,016 Investment securities 1,050 2,048 3,708 5,910 Federal funds sold and other 69 17 392 120 -------- -------- -------- -------- Total interest income 5,591 5,903 17,304 17,046 -------- -------- -------- -------- Interest expense: Deposits: Interest-bearing demand 115 122 351 357 Savings 493 439 1,601 1,240 Time deposits of $100 or more 376 192 945 616 Other time deposits 1,347 1,013 3,745 2,973 Federal Home Loan Bank advances 386 425 1,126 911 Securities sold under agreements to repurchase 176 778 754 2,359 Other borrowings 40 80 119 143 -------- -------- -------- -------- Total interest expense 2,933 3,049 8,641 8,599 -------- -------- -------- -------- Net interest income 2,658 2,854 8,663 8,447 Provision for possible loan losses 4,425 455 5,525 605 -------- -------- -------- -------- Net interest income (loss) after provision for possible loan losses (1,767) 2,399 3,138 7,842 -------- -------- -------- -------- Noninterest income: Service charges on deposit accounts and customer service fees 384 397 1,087 1,191 Loan servicing fees, net 30 101 138 371 Loss on sales of investment securities, net (99) (7,055) (99) (7,055) Other income 271 66 1,232 418 -------- -------- -------- -------- Total noninterest income 586 (6,491) 2,358 (5,075) -------- -------- -------- -------- Noninterest expenses: Salaries and employee benefits 1,000 3,728 3,247 7,168 Occupancy, net of rental income 429 317 989 961 Furniture and equipment 155 194 501 634 Federal Deposit Insurance Corporation premiums (17) 168 289 516 Postage, printing and supplies 26 136 240 416 Data processing fees 81 235 575 706 Legal, examination, and professional fees 331 274 884 1,031 Communications 121 124 415 363 Losses and expenses on foreclosed real estate, net of gains 23 173 151 196 Other expenses 450 257 1,319 621 -------- -------- -------- -------- Total noninterest expenses 2,599 5,606 8,610 12,612 -------- -------- -------- -------- Income (loss) before provision for income taxes (3,780) (9,698) (3,114) (9,845) Provision (credit) for income taxes (1,061) (9,209) (835) (9,209) -------- -------- -------- -------- Net income (loss) $(2,719) (489) (2,279) (636) ======== ======== ======== ======== Earnings (loss) per common share $ (0.66) (0.20) (0.56) (0.34) ======== ======== ======== ======== Weighted average shares of common stock and common stock equivalents outstanding (in thousands) 4,107 2,422 4,106 1,854 ======== ======== ======== ======== See accompanying notes to consolidated financial statements
-4- 6 FIRST BANKS AMERICA, INC Consolidated Statments of Cash Flows (unaudited) (dollars expressed in thousands)
Nine months ended September 30, -------------------------- 1995 1994 ---------- ---------- Cash flows from operating activities: Net income (loss) $ (2,279) (636) Adjustments to reconcile net income to net cash: Depreciation and amortization of bank premises and equipment 276 545 Amortization, net of accretion (347) 505 Provision for possible loan losses 5,525 605 (Increase) decrease in accrued interest receivable (93) (389) Increase (decrease) in loans originated for sale - 7,551 Interest accrued on liabilities 8,641 8,599 Payments of interest on liabilities (8,547) (8,606) Provision for income taxes (835) (9,209) Loss on sale of investment securities 99 7,055 Other (116) 1,909 ---------- ---------- Net cash provided by (used in) operating activities 2,324 7,929 ---------- ---------- Cash flow from investing activities: Sales of investment securities 13,149 - Maturities of investment securities 44,278 22,964 Purchases of investment securities (67,057) (30,703) Net increase in loans (1,854) (33,456) Recoveries of loans previously charged off 504 879 Purchases of bank premises and equipment (328) (225) Other investing activities (4,676) 1,349 ---------- ---------- Net cash provided by (used in) investing activities (15,984) (39,192) ---------- ---------- Cash flow from financing activities: Increase (decrease) in deposits 505 391 Decrease in borrowed funds (22,683) (14,754) Purchase of treasury stock (144) - Other financing activities 98 125 ---------- ---------- Net cash provided by (used in) financing activities (22,224) (14,238) ---------- ---------- Net increase (decrease) in cash and cash equivalents (35,884) (15,501) Cash and cash equivalents, beginning of period 47,071 25,490 ---------- ---------- Cash and cash equivalents, end of period $ 11,187 9,989 ========== ========== Noncash investing and financing activities: Transfer of loans to loans held for sale $ 7,253 8,419 Loans to facilitate sale of foreclosed real estate - 90 ========== ========== See accompanying notes to consolidated financial statements
-5- 7 FIRST BANKS AMERICA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Basis of Presentation The accompanying consolidated financial statements of First Banks America, Inc. (FBA) (formerly BancTEXAS Group Inc.) are unaudited and should be read in conjunction with the consolidated financial statements contained in the 1994 annual report on Form 10K. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included. Operating results for the three and nine months ended September 30, 1995 are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. The consolidated financial statements include the accounts of the parent company and its subsidiaries, all of which are wholly owned. All significant intercompany accounts and transactions have been eliminated. On August 23, 1995, the Common and Class B Common stock shareholders of FBA approved a reverse stock split. The reverse split converted 15 shares of Common Stock or Class B Common stock into one share of Common Stock or Class B Common Stock, respectively. Accordingly, all per share amounts, as well as ending and average common shares data, have been restated to reflect the one-for-15 reverse stock split. Certain reclassifications of 1994 amounts have been made to conform with the 1995 presentation. (2) Transactions with Related Party FBA purchases certain services and supplies from or through its majority shareholder, First Banks, Inc. (First Banks). This includes the purchase of insurance policies, office supplies and other commonly-used banking products which could be acquired more economically than had previously been possible for FBA separately. The amount of these purchases was not material to the consolidated financial position or results of operations of FBA for the three and nine month periods ended September 30, 1995. In December 1994, the Board of Directors of BankTEXAS N.A. (the Bank), a wholly owned subsidiary of FBA, approved a data processing agreement and a management fee agreement with First Banks. Under the data processing agreement, a subsidiary of First Banks began providing data processing and various related services to the Bank beginning in February 1995. The fees for such services are significantly less than the Bank was paying to its non-affiliated vendors. The management fee agreement provides that the Bank will compensate First Banks on an hourly basis for its use of personnel for various functions including internal auditing, loan review, income tax preparation and assistance, accounting, asset/liability and investment services, loan servicing and other management and administrative services. Hourly rates for such services compare favorably with those for similar services from unrelated sources, as well as the internal costs of the Bank personnel which were used previously, and it is estimated the aggregate cost for the services will be significantly more economical than those previously incurred by the Bank separately. Fees paid under these agreements were $185,000 and $602,000 for the three and nine month periods ended September 30, 1995, respectively. -6- 8 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations General FBA is a registered bank holding company, incorporated in Delaware and headquartered in Houston, Texas. At September 30, 1995, the Company had approximately $307 million in total assets; $202 million in total loans, net of unearned discount; $242 million in total deposits; and $35.1 million in total stockholders' equity. The Company operates through its subsidiary bank, BankTEXAS N.A. (the Bank). Through the Bank, FBA offers a broad range of commercial and personal banking services including certificate of deposit accounts, individual retirement and other time deposit accounts, checking and other demand deposit accounts, interest checking accounts, savings accounts and money market accounts. Loans include commercial, financial, agricultural, real estate construction and development, residential real estate and consumer and installment loans. Other financial services include credit-related insurance, automatic teller machines and safe deposit boxes. Financial Condition FBA's total assets were $307 million and $332 million at September 30, 1995 and December 31, 1994, respectively. The primary fluctuations from December 31, 1994 were an increase in investment securities of $11.5 million and a decrease in cash and cash equivalents of $35.9 million. Results of Operations Net Income Net loss for the three months ended September 30, 1995 was $2.72 million in comparison to a net loss of $489,000 For the same period in 1994. Net loss for the nine months ended September 30, 1995 was $2.28 million compared to a net loss Of $636,000 for the same period in 1994. For the three months ended September 30, 1995, the net loss reflects a sharply higher provision for loan losses in comparison to the same period in 1994. As more fully described below, the substantial increase in the provision for loan losses reflects higher than expected loan losses which have been experienced during 1995 and the relatively high level of loans which are over 30 days past due. Net Interest Income Net interest income was $2.66 million, or 3.60% of average interest earning assets, for the three months ended September 30, 1995, compared to $2.85 million, or 3.32% for the same period in 1994. Net interest income was $8.66 million, or 3.96% of average interest earning assets, for the nine months ended September 30, 1995 in comparison to $8.45 million or 3.24% for the same period in 1994. The increase in net interest income for the nine months ended September 30, 1995, is primarily attributable to the additional capital of $30 million from the sale of Class B common stock to First Banks on August 31, 1994. The interest income earned from the use of the additional capital was substantially offset by a reduction of net interest income resulting from a decrease in the average earning assets of approximately $49.8 million and $55.4 million for the three and nine month periods ended September 30, 1995, respectively, in comparison to the same periods in 1994. The decrease in average earning assets for 1995 in comparison to 1994 was primarily attributable to sales of investment securities which occurred in the fourth quarter of 1994. -7- 9 Provision for Possible Loan Losses The provision for possible loan losses was $4.4 million and $5.5 million for the three and nine month periods ended September 30, 1995, respectively, in comparison to $455,000 and $605,000 for the same periods in 1994. Net loan charge-offs were $743,000 and $2.3 million for the three and nine month periods ended September 30, 1995, respectively, in comparison to $296,000 and $613,000 for the same periods in 1994. As a result of the increased provision for loan losses , the allowance for loan losses was $6.0 million, or 2.94% of total loans, as of September 30, 1995, compared to $2.8 million, or 1.36% of total loans, as of December 31, 1994. Loans which were either 90 days or more past and still accruing or on non-accrual status totaled $967,000 at September 30, 1995, representing a relatively modest .48% of total loans at that date. However, loans which were between 30 and 89 days past due were $6.1 million at September 30, 1995, in comparison to $1.0 million and $1.3 million at December 31, 1994 and September 30, 1994, respectively. The increase in the provision for possible loan losses is attributable to the increased level of loan charge-offs and loans past due over 30 days within the automobile loan portfolio and management's evaluation of the quality of the loans in the portfolio. Because of the increased loan charge-offs and loans past due over 30 days, FBA conducted an extensive internal review of the reasons for the losses and increasing level of loans past due over 30 days. In addition, the level of loan charge-offs is partly due to a change in the practice and timing of recording such charge-offs. Previously, FBA charged-off the remaining balance of a loan after reducing that amount by the estimated value which the collateral would have been when it is in the possession of the Company. Currently, FBA charges-off the remaining balance of a loan after the loan has become 120 days or more past due, even if the collateral is not yet in the possession of FBA. When the collateral is subsequently received by FBA, the charged-off amount is adjusted for the value of the collateral. Also, in an effort to further reduce the overall level of loan charge-offs within this portfolio, FBA has increased its collection efforts and has implemented more stringent lending practices, including regular reviews of new loans originated and strict adherence to approved policies and practices. Noninterest Income Noninterest income improved from a loss of $6.49 million to income of $586,000 for the three months ended September 30, 1994 and 1995, respectively. Noninterest income for the nine months ended September 30, 1995 was $2.36 million in comparison to a loss of $5.08 million for the same period in 1994. The reported losses for the periods in 1994 related to a loss of $7.1 million on sale of $115 million of securities which was realized in the third quarter of 1994. Loan servicing fees decreased to $30,000 and $138,000 for the three and nine months ended September 30, 1995, in comparison to $101,000 and $371,000 for the same periods in 1994. The decrease is due to a reduction in the amount of loans serviced for others to $10.9 million at September 30, 1995 from $28.8 million at September 30, 1994. Loans serviced for others consist of automobile loans which were sold with servicing retained by FBA. The decrease in the loan servicing portfolio is attributable to FBA's decision to retain new loan originations in its loan portfolio. Noninterest income also includes net investment security losses of $99,000 and $7.06 million for the three months ended September 30, 1995 and 1994, respectively. The securities sold during 1995 were classified as available-for-sale within the investment security portfolio. For the three months ended September 30, 1995, the gross gains from the sales of securities were $1.2 million. The gross gains on sales of investment securities were offset by the recognition of $1.3 million of hedging losses. The sales of investment securities during 1994 were executed in connection with the restructuring of the investment portfolio and to provide -8- 10 funds to reduce borrowings. Other income for the three months ended September 30, 1995 includes $179,000 from the termination of the Directors' Retirement Plan. FBA had previously adopted a noncontributory defined benefit pension plan covering non-employee directors of FBA and the Bank. The Directors' Retirement Plan was terminated by the Board of Directors on September 11, 1995. The income represents the nonvested portion previously expensed by FBA under the Directors' Retirement Plan. Other income for the nine months ended September 30, 1995 includes $802,000 which was maintained in a trust. The trust which was established during 1990 and subsequently funded by FBA to provide limited protection against personal claims being taken or threatened against FBA's officers and directors and potential costs of litigation. Prior to FBA's affiliation with First Banks, officer and director liability insurance was not economically feasible. Considering the cost of such insurance, certain legal claims pending against FBA at that time and the potential for additional claims, FBA elected to establish and fund this trust. Since officer and director coverage is now available at a reasonable price, the trust fund is no longer necessary and, accordingly, was terminated, at which time the funds were returned to FBA. Other income for the nine months ended September 30, 1994 includes a $255,000 legal settlement. The legal settlement related to a lawsuit filed against the Federal Deposit Insurance Corporation regarding the closure of the FBA's former subsidiary, BankTEXAS Dallas. Noninterest Expenses Noninterest expenses decreased by $3.01 million to $2.60 million from $5.61 million for the three months ended September 30, 1995 and 1994, respectively. For the nine months ended September 30, 1995 and 1994, noninterest expenses decreased by $4.00 million to $8.61 million from $12.61 million, respectively. While virtually each functional area of FBA has experienced reductions in noninterest expenses, the decrease is primarily attributable to salaries and employee benefits. The decrease in salaries and employee benefits of $2.73 million to $1.00 million from $3.73 million for the three months ended September 30, 1995 and 1994, respectively, and of $3.92 million to $3.25 million from $7.17 million for the nine months ended September 30, 1995 and 1994, respectively, relates primarily to reductions in staff. FBA's staff was reduced to 95 employees (85 full-time; 10 part-time) at September 30, 1995, from the 167 full-time employees at September 30, 1994, or by 43%. Offsetting the decrease in salaries and employee benefits were increases in other expenses of $193,000 to $450,000 from $257,000 for the three months ended September 30, 1995 and 1994, respectively, and of $698,000 to $1.32 million from $621,000 for the nine months ended September 30, 1995 and 1994, respectively, which were primarily attributable to the conversion and centralization of data processing and certain operating functions to First Banks' systems and procedures. On August 8, 1995, the Federal Deposit Insurance Corporation (FDIC) voted to reduce the deposit insurance premiums paid by most members of the Bank Insurance Fund (BIF) and to keep existing assessment rates intact for members of the Savings Association Insurance Fund (SAIF). Under the reduced assessment rate schedule for the BIF, the best-rated institutions will pay an annual rate of four cents per $100.00 of assessable deposits, down from the current rate of 23 cents per $100.00. The weakest BIF and SAIF institutions will continue to pay 31 cents per $100.00 of assessable deposits. The reduction in the BIF rates are effective retroactively back to June 1, 1995. FBA is a BIF depository institution and was assessed four -9- 11 cents per $100.00. The reduced BIF rates resulted in a refund of previously paid deposit insurance premiums from the FDIC of $147,000. The refund is reflected as a reduction to FDIC premium expense for the three months ended September 30, 1995. Lending and Credit Management Interest earned on the loan portfolio is the primary source of income of FBA. Total loans, net of unearned discount, represented 66.0% and 61.3% of total assets as of September 30, 1995 and December 31, 1994, respectively. FBA has experienced modest improvements in commercial and consumer loan demand during the three and nine month period ended September 30, 1995 which was offset by the effects of more stringent lending practices with respect to its automobile loan portfolio. Total loans, net of unearned discount, were $202 million and $203 million at September 30, 1995 and December 31, 1994, respectively. FBA's nonperforming loans consist of loans on a nonaccrual status and loans on which the original terms have been restructured. Nonperforming loans were $545,000 and $293,000 at September 30, 1995 and December 31, 1994, respectively. Impaired loans, consisting of nonaccrual loans and consumer installment loans 60 days or more past due, were $2.2 million at September 30, 1995 and averaged $1.7 million for the nine months ended September 30, 1995. Loans past due 30 to 89 days or over 90 days and still accruing totaled $6.5 million and $1.6 million at September 30, 1995 and December 31, 1994, respectively. The allowance for possible loan losses is based on past loan loss experience, on FBA management's evaluation of the quality of the loans in the portfolio and on the anticipated effect of national and local economic conditions relative to the ability of loan customers to repay. Each quarter, the allowance for possible loan losses is revised relative to FBA's internal watch list and other data to determine its adequacy. The provision for possible loan losses is management's estimate of the amount necessary to maintain the allowance at a level consistent with this evaluation. As adjustments to the allowance for possible loan losses are considered necessary, they are reflected in the results of operations. Interest Rate Risk Management Managing interest rate risk is fundamental to banking. Banking institutions manage the inherently different maturity and repricing characteristics of the lending and deposit-taking activities to achieve a desired interest rate sensitivity position and to limit their exposure to interest rate risk. The maturity and repricing characteristics inherent to the lending and deposit-taking activities tends to create a naturally liability-sensitive interest rate risk profile. By using a combination of on- and off-balance sheet financial instruments, FBA manages its interest rate sensitivity to within policy guidelines. FBA's objective regarding interest rate risk management is to position FBA such that changes in interest rates do not have a material adverse impact upon the net market value and net interest income of FBA. To measure the impact from interest rate changes, FBA recalculates its net market value and net interest income on a proforma basis over a one year horizon assuming instantaneous, permanent parallel shifts in the yield curve, of varying amounts of increases and decreases in rates. Larger increases or decreases in FBA's net market value and net interest income as a result of these assumed interest rate changes indicate greater levels of interest rate sensitivity than do smaller increases or decreases. As more fully described in the 1994 Annual Report on Form 10K, FBA uses a combination of derivative financial instruments including interest rate cap agreements, interest rate futures contracts and options on interest rate futures contracts to assist in achieving that objective. -10- 12 Derivative financial instruments held by FBA for purposes of managing interest rate risk are summarized as follows:
September 30, 1995 December 31, 1994 ------------------ ----------------- Notional Credit Notional Credit amount exposure amount exposure -------- -------- -------- -------- (dollars expressed in thousands) Interest rate futures contracts $868,000 - 768,000 - Interest rate cap agreements 10,000 353 10,000 577 Options on interest rate futures contracts 405,000 44 - -
The notional amounts of derivative financial instruments do not represent amounts exchanged by the parties and, therefore, are not a measure of FBA's credit exposure through its use of derivative financial instruments. The amounts exchanged are determined by reference to the notional amounts and the other terms of the derivatives. FBA sells interest rate futures contracts to hedge the interest rate risk of its available-for-sale securities portfolio. In addition, during the third quarter of 1995, FBA purchased options on interest rate futures contracts. Interest rate futures contracts are commitments to either purchase or sell designated financial instruments at a future date for a specified price and may be settled in cash or through delivery of such financial instruments. Options on interest rate futures contracts confer the right to purchase or sell financial futures contracts at a specified price and are settled in cash. Changes in contract values are settled daily. Options and futures contracts have little credit risk because future exchanges are the counterparties. The contracts outstanding at September 30, 1995, which have expiration dates from December 1995 to September 1998 were selected to approximate the effective maturity of the available-for-sale securities portfolio. At September 30, 1995, the unamortized balance of net deferred losses on interest rate futures contracts was $3.14 million, which was applied to the carrying value of the available-for-sale securities portfolio as part of the mark-to-market valuation. At December 31, 1994, the unamortized balance of net deferred gains on interest rate futures contracts of $886,000 was applied to the carrying value of the available-for-sale securities portfolio in connection with the quasi-reorganization, as more fully described in Note 2 to the consolidated financial statements contained in the 1994 Annual Report on Form 10K. At September 30, 1995, the unamortized premium paid on the options to purchase interest rate futures contracts was $64,000 and was also applied to the carrying value of the available-for-sale securities portfolio as part of the mark-to-market valuation. The net change in the unamortized balance of net deferred losses is attributable to the significant decline in interest rates which occurred during the period from December 31, 1994 through September 30, 1995. The losses incurred on the interest rate futures contracts were partially offset by gains in the available-for-sale securities portfolio. The net loss in value to FBA, which totaled $2.3 million for the nine month period ended September 30, 1995, resulted from an increase in the projected prepayments of principal underlying the available-for-sale securities portfolio. These increased prepayment projections disproportionately shortened the expected lives of the available-for-sale securities portfolio in comparison to the effective maturity created with the hedge position. As a result, FBA adjusted its hedge position to coincide with the current expected life of the available-for-sale securities portfolio by reducing the number of outstanding interest rate futures contracts and purchasing options on interest rate futures contracts. The options will gain significant value in a falling interest rate environment. FBA also has an interest rate cap agreement to limit the interest expense associated with certain of its interest-bearing liabilities. In exchange for an initial fee, the interest rate cap -11- 13 agreement entitles FBA to receive interest payments when a specified index rate exceeds a predetermined rate. The agreement outstanding at September 30, 1995 effectively limits the interest rate to 5.0% on $10 million of interest-bearing liabilities from October 15, 1997 to May 15, 2000. At September 30, 1995 and December 31, 1994, the unamortized costs were $493,000 and $577,000, respectively, and were included in other assets. There are no amounts receivable under the agreement. Liquidity The liquidity of FBA and the Bank is the ability to maintain a cash flow which is adequate to fund operations, service its debt obligations and meet other commitments on a timely basis. The primary sources of funds for liquidity are derived from customer deposits, loan payments, maturities, sales of investments and operations. In addition, FBA and the Bank may avail themselves of more volatile sources of funds through issuance of certificates of deposit in denominations of $100,000 or more, federal funds borrowed, securities sold under agreements to repurchase and borrowings from the Federal Home Loan Bank. The aggregate funds acquired from those sources were $45.3 million at September 30, 1995 and $66.7 million at December 31, 1994. At September 30, 1995, FBA's more volatile sources of funds mature as follows:
(dollars expressed in thousands) -------------------------------- Three months or less $23,723 Over three months through six months 4,244 Over six months through twelve months 8,273 Over twelve months 9,072 ------- Total $45,312 =======
Management believes the available liquidity and future earnings of the Bank will be sufficient to provide funds for growth and to meet FBA's operating and debt service requirements both on a short-term and long-term basis. Capital Risk-based capital guidelines for financial institutions are designed to relate regulatory capital requirements to the risk profiles of the specific institutions and to provide more uniform requirements among the various regulators. FBA and the Bank are required to maintain a minimum risk-based capital to risk-weighted assets ratio of 8.00%, with at least 4.00% being "Tier 1" capital. Tier 1 capital is composed of total stockholders' equity excluding the net fair value adjustment for securities available-for-sale, less the excess of net deferred tax assets, which is more fully described below, and the net loss on financial futures contracts deferred for financial reporting purposes. In addition, a minimum leverage ratio (Tier 1 capital to total assets) of 3.00% plus an additional cushion of 100 to 200 basis points is expected. At September 30, 1995 and December 31, 1994, FBA's and the Bank's capital ratios were as follows:
Risk-based capital ratios ------------------------- Total Tier 1 Leverage Ratio ----- ------ -------------- 1995 1994 1995 1994 1995 1994 ---- ---- ---- ---- ---- ---- Company 12.05% 17.50% 10.78% 16.28% 8.64% 11.97% Bank 8.38 9.25 7.12 8.04 5.87 5.82
The decrease in the risk-based capital and leverage ratios for FBA is primarily due to a change in regulation affecting the treatment of net deferred tax assets and the regulatory -12- 14 treatment of net deferred losses on financial futures contracts. The change in regulation, which was effective for FBA on April 1, 1995, limits the amount of net deferred tax assets, as adjusted for any amounts applicable to the SFAS 115 "Accounting for Certain Investments in Debt and Equity Securities", that are included in Tier 1 capital. The amount of net deferred tax assets that may be included in Tier 1 capital is limited to the lesser of the amount of net deferred tax assets that FBA expects to realize over the next twelve month period or 10% of Tier 1 capital. The amount expected to be realized by FBA over the next twelve month period has been estimated at $1.6 million and is included in Tier 1 capital as it is less than 10% of Tier 1 capital. The remaining amount of the net deferred tax assets, as adjusted, of $10.4 million for FBA has been subtracted from stockholders' equity in arriving at Tier 1 capital at September 30, 1995. For purposes of determining regulatory capital ratios, net deferred hedging losses are deducted from the amount of stockholders' equity. The decrease in the risk-based capital and leverage ratios for the Bank is primarily due to an increase in the net deferred losses on financial futures contracts. PART II - OTHER INFORMATION Item 2 - Changes in Securities A one-for fifteen reverse stock split was implemented with respect to both Common Stock and Class B Common Stock following the annual meeting of the stockholders on August 23, 1995. These changes were effected by amendments to FBA's Certificate of Incorporation which became effective on September 1, 1995 and are reflected in the Restated Certificate of Incorporation which is attached to this Report as Exhibit 3(a). The reverse stock split reduced the overall number of shares of authorized and outstanding Common Stock and Class B Common Stock by a factor of fifteen, with each resulting share representing a proportionately larger interest in FBA. No fractional shares were issued and holders of fewer than fifteen shares of Common Stock, prior to the reverse stock split, received cash in lieu of new shares. First Banks, as the owner of all of the 37.5 million shares of Class B Common Stock outstanding prior to the reverse stock split, received 2.5 million new shares of Class B Common Stock as a result of this change, which did not affect the relationship between the Common Stock and the Class B Common Stock. Item 4 - Submission of Matters to a Vote of Security Holders On August 23, 1995, FBA held its annual meeting of shareholders (Annual Meeting) at which time the stockholders elected six directors and also acted on two other proposals. The six directors were elected with the following vote totals:
For Withheld Broker Non-Votes --- -------- ---------------- Allen H. Blake 53,722,367 1,504,235 3,037,423 Charles A. Crocco, Jr. 53,851,055 1,375,547 3,037,423 James F. Dierberg 53,822,995 1,403,607 3,037,423 Edward T. Story, Jr. 53,882,356 1,344,246 3,037,423 Mark T. Turkcan 53,714,246 1,512,356 3,037,423 Donald W. Williams 53,773,821 1,452,781 3,037,423
-13- 15 The following matters were also voted on at the Annual Meeting, with the voting results indicated:
Withheld -------- Proposal For Against Abstentions Broker Non-Votes - -------- --- ------- ----------- ---------------- Approval to change the name of the corporation from "BancTEXAS Group Inc." to "First Banks America, Inc." 53,996,997 1,069,977 159,628 3,037,423
Withheld -------- Proposal For Against Abstentions Broker Non-Votes - -------- --- ------- ----------- ---------------- Approval of reverse stock split whereby each 15 shares of Common Stock or Class B Common Stock will be converted into one share of Common or Class B Common, respectively. 52,181,962 2,360,341 684,299 3,037,423
Item 6 - Exhibits These exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.
Exhibit Number Description - ------ ----------- 3(a) Restated Certificate of Incorporation 27 Article 9 - Financial Data Schedule (EDGAR only)
-14- 16 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 BANKS AMERICA, INC. Registrant Date: November 14, 1995 By: /s/ James F. Dierberg ---------------------------------- James F. Dierberg Chairman, President and Chief Executive Officer Date: November 14, 1995 By: /s/ Allen H. Blake ---------------------------------- Allen H. Blake Vice President, Chief Financial Officer and Secretary (Principal Financial Officer) -15- EX-3.(A) 2 RESTATED CERTIFICATE OF INCORPORATION 1 RESTATED CERTIFICATE OF INCORPORATION OF FIRST BANKS AMERICA, INC. Pursuant to the provisions of Section 245 of the General Corporation Law of the State of Delaware, the undersigned, First Banks America, Inc., a Delaware corporation (the "Corporation"), incorporated on January 25, 1978, hereby amends and restates its Restated Certificate of Incorporation as follows: 1. The present name of the corporation is First Banks America, Inc. The name under which the corporation was originally organized was Commerce Southwest Inc. 2. This Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Section 245 of the General Corporation Law of the State of Delaware. Amendments to the Restated Certificate of Incorporation of the Corporation were adopted by the Corporation's stockholders on August 23, 1995. The Board of Directors, by resolution, authorized the preparation of this Restated Certificate of Incorporation, which restates and integrates the aforesaid amendments but does not further amend the Corporation's Restated Certificate of Incorporation as duly filed with the Secretary of State, there being no discrepancy between the provision of such Restated Certificate of Incorporation, as amended, and the provisions of this Restated Certificate of Incorporation. 3. The Certificate of Incorporation of the Corporation is hereby restated in its entirety to read as follows: FIRST: The name of the Corporation is First Banks ----- America, Inc. SECOND: The address of its registered office in the ------ State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in ----- any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH: (A) The total number of shares of all classes ------ of capital stock which the Corporation shall have authority to issue is thirteen million six hundred sixty-six thousand six hundred sixty-six (13,666,666) shares consisting of (a) three million (3,000,000) shares of a class designated as Preferred Stock, par value $1.00 per share ("Preferred Stock"), (b) six million six hundred sixty-six thousand six hundred sixty-six (6,666,666) shares of a class designated Common Stock, par value $0.15 per share ("Common Stock"), and (c) four million (4,000,000) shares 2 of a class designated Class B Common Stock, par value $0.15 per share ("Class B Common Stock"). (B) The designations and the powers, preferences, rights, qualifications, limitations, and restrictions of the Preferred Stock, the Common Stock, and the Class B Common Stock are as follows: 1. Provisions Relating to the Preferred Stock. Shares of Preferred Stock may be issued in one or more series as determined from time to time by the Board of Directors. All shares of any one series of Preferred Stock will be identical, except as to the dates of issue and the dates from which dividends on shares of the series issued on different dates will cumulate, if dividends on the shares of such series are cumulative. Authority is hereby expressly granted to the Board of Directors to authorize the issuance of one or more series of Preferred Stock, and to fix by one or more resolutions providing for the issuance of each such series the voting powers, designations, preferences and relative, participating, optional, redemption, conversion, exchange or other special rights, qualifications, limitations or restrictions of such series, and the number of shares in such series, to the full extent now or hereafter permitted by law. 2. Provisions Relating to the Common Stock and the Class B Common Stock. (a) General. Except as otherwise provided herein, or as otherwise provided by applicable law, all shares of Common Stock and Class B Common Stock shall have identical rights and privileges in every respect. (b) Voting. The Common Stock and the Class B Common Stock shall each be fully voting stock entitled to one vote per share with respect to the election of directors and for all other purposes. The holders of Common Stock and Class B Common Stock shall, unless otherwise required by law or by another provision of this Certificate of Incorporation, vote as a single class on all matters. In all elections for directors of the Corporation, each stockholder shall have the right to cast as many votes in the aggregate as shall equal the number of voting shares held by such stockholder in the Corporation, multiplied by the number of directors to be elected by the class to which such stockholder belongs at such election, and each stockholder may cast the whole number of votes, either in person or by proxy, for one candidate or distribute them among two or more candidates. (c) Dividends. Subject to the limitations prescribed herein, holders of Common Stock and Class B Common Stock shall participate equally in any dividends (whether payable in cash, stock or property) when and as declared by the -2- 3 Board of Directors of the Corporation out of the assets of the Corporation legally available therefor and the Corporation shall treat the Common Stock and Class B Common Stock identically in respect of any subdivisions or combinations (for example, if the Corporation effects a two-for-one stock split with respect to the Common Stock, it shall at the same time effect a two-for-one stock split with respect to the Class B Common Stock); provided, however, that (i) with respect to dividends payable in cash by the Corporation, the holders of Class B Common Stock shall participate equally per share only if and to the extent such cash dividends exceed $0.45 per share on the Common Stock per calendar year (for example, if the Board of Directors declares and the Corporation pays a dividend of $0.75 per share of Common Stock for a given calendar year, holders of Class B Common Stock shall be entitled to a dividend of $0.30 per share); and (ii) dividends payable in shares of Common Stock (or rights to subscribe for or purchase shares of Common Stock or securities or indebtedness convertible into shares of Common Stock) shall be paid only on shares of Common Stock and dividends payable in shares of Class B Common Stock (or rights to subscribe for or purchase shares of Class B Common Stock or securities or indebtedness convertible into shares of Class B Common Stock) shall be paid only on shares of Class B Common Stock (for example, if the Board of Directors declares and the Corporation pays a five percent (5%) stock dividend on the Common Stock, payable in shares of Common Stock, at the same time the Board of Directors shall declare and the Corporation shall pay a five percent (5%) stock dividend on the Class B Common Stock payable in shares of Class B Common Stock). (d) Liquidation. In the event the Corporation is liquidated, dissolved or wound up, whether voluntarily or involuntarily, the holders of the Common Stock and the Class B Common Stock shall participate equally in any distribution. (e) Voluntary Conversion of Class B Common Stock. (i) Conversion Rights. Each share of Class B Common Stock may be converted into one (1) share of Common Stock at the option of any holder thereof at any time after the fifth (5th) anniversary of the date of its issuance by the Corporation. For the foregoing purpose, a share of Class B Common Stock issued as a stock dividend or pursuant to a stock split, reclassification or other combination, shall be deemed to have been issued on the date of the share of Class B Common Stock with respect to which it is so issued. (ii) Conversion Procedures. Any holder of Class B Common Stock desiring to exercise such holder's option to convert such Class B Common Stock in accordance with the foregoing shall surrender the certificate or certificates representing the Class B Common Stock to be converted, duly endorsed to the Corporation or in blank, at the principal executive office of the Corporation, and shall give written notice to the Corporation at such office that such holder elects to convert the number of shares represented by such certificate or certificates, or a -3- 4 specified number thereof. As promptly as practicable after the surrender for conversion of any Class B Common Stock, the Corporation shall execute and deliver or cause to be executed and delivered to the holder of such Class B Common Stock certificates representing the shares of Common Stock issuable upon such conversion. In case any certificate or certificates representing shares of Class B Common Stock shall be surrendered for conversion for only a part of the shares represented thereby, the Corporation shall execute and deliver to the holders of the certificate or certificates for shares of Class B Common Stock so surrendered a new certificate or certificates representing the shares of Class B Common Stock not converted, dated the same date as the certificate or certificates representing the Common Stock. Shares of the Class B Common Stock converted as aforesaid shall be deemed to have been converted immediately prior to the close of business on the date such shares are duly surrendered for conversion, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date. (iii) Recapitalization, Consolidation, or Merger of the Corporation. In the event that the Corporation shall be recapitalized, consolidated with, or merged with or into any other corporation (a "Reorganization") and the terms thereof shall provide (i) that the Class B Common Stock shall remain outstanding after such Reorganization and (ii) for any change in or conversion of the Common Stock, then the terms of such Reorganization shall include a provision to the effect that each share of Class B Common Stock after such Reorganization shall thereafter be entitled to receive upon conversion the same kind and amount of securities or assets as shall be distributable upon such Reorganization with respect to one share of Common Stock. (iv) Reservation of Shares. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of Class B Common Stock as herein provided, such number of shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Class B Common Stock and shall take all such corporate action as may be necessary to assure that such shares of Common Stock may be validly and legally issued upon conversion of all of the outstanding shares of Class B Common Stock; and if, at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of the Class B Common Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. -4- 5 (v) Retirement of Shares. Shares of Class B Common Stock which have been issued and have been converted into Common Stock, repurchased, or reacquired in any other manner by the Corporation shall not be reissued. (f) Mandatory Conversion of Class B Common Stock. If, at any time while there are shares of Class B Common Stock issued and outstanding, it shall be determined by the Board of Directors, in its sole discretion, that legislation or regulations are enacted or any judicial or administrative determination is made which would prohibit the listing, quotation or trading of the Common Stock on the New York Stock Exchange or the National Association of Securities Dealers Automated Quotation System, or would otherwise have a material adverse effect on the Corporation, in any such case due to the Corporation having more than one class of common shares outstanding, then the Board of Directors may by resolution convert all outstanding shares of Class B Common Stock into shares of Common Stock on a share-for-share basis. To the extent practicable, notice of such conversion of Class B Common Stock specifying the date fixed for said conversion shall be mailed, postage pre-paid, at least ten (10) days but not more than thirty (30) days prior to said conversion date to the holders of record of Common Stock and Class B Common Stock at their respective addresses as the same shall appear on the books of the Corporation; provided, however, that no failure or inability to provide such notice shall limit the authority or ability of the Board of Directors to convert all outstanding shares of Class B Common Stock into shares of Common Stock. Immediately prior to the close of business on said conversion date (or, if said conversion date is not a business day, on the next succeeding business day) each outstanding share of Class B Common Stock shall thereupon automatically be converted into a share of Common Stock and each certificate theretofore representing shares of Class B Common Stock shall thereupon and thereafter represent a like number of shares of Common Stock. (g) Class Voting Under Certain Circumstances. None of the provisions hereof affecting the powers, preferences, rights, qualifications, limitations or restrictions of the Class B Common Stock may be amended or repealed unless, in addition to any other vote required by law or this Certificate of Incorporation, such amendment shall be approved by the affirmative vote of the holders of a majority of the shares of the Common Stock then outstanding, voting as a separate class. 3. General. Subject to the foregoing provisions of this Certificate of Incorporation, the Corporation may issue shares of its Preferred Stock, Common Stock, and Class B Common Stock from time to time for such consideration (not less than the par value thereof) as may be fixed by the Board of Directors of the Corporation, which is expressly authorized to fix the same in its absolute and uncontrolled discretion, subject to the foregoing conditions. Shares so issued for which the consideration shall have been paid or delivered to the Corporation shall be deemed fully paid stock and shall not be liable to any further call or assessment thereon, and the holders of such shares shall not be liable for any further payments in respect of such shares. -5- 6 FIFTH: The Corporation shall have perpetual existence. ----- SIXTH: The number of directors of the Corporation shall ----- be fixed in the By-Laws. SEVENTH: The Board of Directors of the Corporation ------- shall have power to make, alter or repeal the By-Laws of the Corporation only with the prior approval of the holders of a majority of the shares of Class B Common Stock, subject to such restrictions upon the exercise of such power as may be imposed by the stockholders in any By-Laws adopted by them from time to time. EIGHTH: The Corporation reserves the right to amend, ------ alter, change or repeal any provision contained in the Certificate of Incorporation or any amendment thereof in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. NINTH: (A) Whereby under the laws of the State of ----- Delaware a vote of stockholders is required to approve or authorize any of the transactions set forth below, then the affirmative vote or consent of 75% of the capital stock of this Corporation entitled to vote in elections of directors, voting as a single class, shall be required to authorize or approve such transactions: (1) a merger or consolidation with or into any other corporation, or (2) any sale, lease or exchange of all or substantially all of the property and assets of this Corporation to any other corporation, person or other entity, or (3) any purchase or lease of all or substantially all of the assets of any corporation, person or other entity by this Corporation, or (4) any combination of the outstanding shares of Common Stock of this Corporation into a smaller number of shares, or if as of the record date for the determination of stockholders entitled to notice thereof and to vote thereon or consent thereto (i) such other corporation, person or entity which is a party to a transaction described in clauses (1), (2) or (3) above is the beneficial owner, directly or indirectly, of at least 5% of the total outstanding shares of stock of this Corporation entitled to vote in elections of directors, considered for this purpose as one class, or (ii) any combination of the outstanding shares of Common Stock into a smaller number of shares as described in clause (4) above is proposed, directly or indirectly, by a person, corporation or entity which is the beneficial owner, directly or indirectly, of at least 5% of the total outstanding shares of stock of this Corporation entitled to vote in elections of directors, considered for this purpose as one class. Such affirmative vote or consent shall be in addition to the vote or consent of the holders of the stock of this Corporation -6- 7 otherwise required by law or any agreement between this Corporation and any national securities exchange. (B) For purposes of this Article Ninth any corporation, person or other entity shall be deemed to be the beneficial owner of any shares of stock of this Corporation, (1) which it owns directly, whether or not of record, or (2) which it has the right to acquire pursuant to any agreement or understanding or upon exercise of conversion rights, warrants, options or otherwise, or (3) which are beneficially owned, directly or indirectly (including shares deemed to be owned through application of clause (2) above), by any affiliate (a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with any such corporation, person or other entity) or associate (any corporation or organization of which such person is an officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of any class of equity security; any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and any relative or spouse of such person or any relative of such spouse, who has the same home as such person or who is a director or officer of the corporation or any of its parents or subsidiaries), or (4) which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (2) above), by any other corporation, person or entity with which it or its affiliate or associates (as such terms are defined in clause (3) above) has any agreement or arrangement or understanding for the purpose of acquiring, holding, voting or disposing of stock of this Corporation. For the purposes of this Article Ninth, the total outstanding shares of any class of stock of this Corporation shall be deemed to include shares owned through the application of clauses (B)(2), (3) and (4) above for the purposes of calculating the percentage of ownership of such corporation, person, or other entity, but shall not be deemed to include any other shares which may be issuable pursuant to any agreement or upon exercise of conversion rights, warrants, options or otherwise. (C) The Board of Directors shall have the power and duty to determine for the purpose of this Article Ninth on the basis of information known to this Corporation, whether (1) such other corporation, person or other entity beneficially owns more than 5% of the total outstanding shares of stock of this Corporation entitled to vote in elections of directors, -7- 8 (2) a corporation, person, or entity is an "affiliate" or "associate" (as defined in paragraph (B) above) of another, and (3) the memorandum of understanding referred to in paragraph (D)(1) below is substantially consistent with the transaction covered thereby. Any such determination shall be conclusive and binding for all purposes of this Article Ninth. (D) The provisions of this Article Ninth shall not apply to (1) any merger or similar transaction with any corporation, if the Board of Directors of this Corporation has approved a memorandum of understanding with such other corporation with respect to such transaction prior to the time that such other corporation shall have become a beneficial owner of 5% or more of the total outstanding shares of stock of this Corporation entitled to vote in elections of directors; or (2) any merger or consolidation of this Corporation with, or any sale or lease to this Corporation or any subsidiary thereof of any assets of, or any sale or lease by this Corporation or any subsidiary thereof of any assets to, any corporation of which a majority of the outstanding shares of all classes of stock entitled to vote in elections of directors of such corporation is owned of record or beneficially by this Corporation and its subsidiaries. (E) Except as may be otherwise provided by this Article Ninth, or required by statute, an agreement of merger or consolidation may be approved by a majority vote of the shares issued and outstanding, taken at a meeting called for the purpose of such approval. (F) Notwithstanding any other provision of this Certificate of Incorporation or by the By-Laws of this Corporation (and in addition to any other vote that may be required by law, this Certificate of Incorporation or the By-Laws of this Corporation) the affirmative vote of 75% of the capital stock of this Corporation entitled to vote in elections of directors, voting as a single class, shall be required to amend, alter, change, or repeal this Article Ninth. TENTH: No director shall be personally liable to the ----- Corporation or any stockholder for monetary damages for breach of fiduciary duty as a director, except for any matter in respect of which such director shall be liable under Section 174 of the Delaware General Corporation Law or any amendment thereto or successor provision thereto or shall be liable by reason that, in addition to any and all other requirements for such liability, he (i) shall have breached his duty of loyalty to the Corporation or its stockholders, (ii) shall not have acted in good faith, (iii) shall have acted in a manner involving intentional -8- 9 misconduct or a knowing violation of law or, in failing to act, shall have acted in a manner involving intentional misconduct or a knowing violation of law or (iv) shall have derived an improper personal benefit. Neither the amendment nor repeal of Article Tenth, nor the adoption of any provision of the Certificate of Incorporation inconsistent with this Article Tenth, shall eliminate or reduce the effect of this Article Tenth in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article Tenth, would accrue or arise prior to such amendment, repeal or adoption of an inconsistent provision. 4. This Restated Certificate of Incorporation shall be effective on August 31, 1995. IN WITNESS WHEREOF, First Banks America, Inc. has caused this Certificate to be duly executed this 23th day of August, 1995. First Banks America, Inc. By: /s/James F. Dierberg --------------------- James F. Dierberg Chairman of the Board of Directors, Chief Executive Officer and President ATTEST: By: /s/Allen H. Blake ------------------ Allen H. Blake Secretary -9- EX-27 3 ARTICLE 9 FINANCIAL DATA SCHEDULE
9 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 11,187 705 0 0 72,931 0 0 204,645 (5,953) 306,744 242,075 22,825 5,714 0 0 0 584 39,229 306,744 4,472 1,050 69 5,591 2,331 2,933 2,658 4,425 0 450 (3,780) (2,180) 0 0 (2,719) (.66) (.66) 7.91 545 6,452 941 4,220 2,756 (2,832) 504 (5,953) (5,953) 0 0
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