-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, COxTyP7PBjakdCzOIxwOexn73zXezZmijs012NgLYESSG/78dnywsNw1d60UR7eF 9Gr6UZtQ5qzDbshsrfVvfA== 0000950114-94-000044.txt : 19940316 0000950114-94-000044.hdr.sgml : 19940316 ACCESSION NUMBER: 0000950114-94-000044 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 16 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOATMENS BANCSHARES INC /MO CENTRAL INDEX KEY: 0000040454 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 430672260 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-03750 FILM NUMBER: 94516033 BUSINESS ADDRESS: STREET 1: 800 MARKET ST STREET 2: 1 BOATMENS PLZ CITY: ST LOUIS STATE: MO ZIP: 63101 BUSINESS PHONE: 3144666000 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL BANCSHARES CORP DATE OF NAME CHANGE: 19860414 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL CONTRACT CORP DATE OF NAME CHANGE: 19691215 10-K 1 1993 FORM 10-K 1 =============================================================================== FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1993 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _____________ to ____________________ Commission file number 1-3750 ----------------- BOATMEN'S BANCSHARES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MISSOURI 43-0672260 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) ONE BOATMEN'S PLAZA, 800 MARKET STREET, ST. LOUIS, MISSOURI 63101 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (314) 466-6000 ----------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EXCHANGE ON TITLE OF EACH CLASS WHICH REGISTERED ------------------- ------------------- None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, $1.00 PAR VALUE (TITLE OF CLASS) CONVERTIBLE SUBORDINATED DEBENTURES, 6.25%, DUE 2011 (TITLE OF CLASS) ----------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / / Indicate the number of shares outstanding of each of the registrant's classes of common stock:
NUMBER OF SHARES OUTSTANDING CLASS OF COMMON STOCK AS OF MARCH 8, 1994 --------------------- ---------------------------- $1 Par Value 104,197,976
The aggregate market value of registrant's common stock (based upon the closing trade price on March 8, 1994) held by non-affiliates was approximately $2,889,800,000. DOCUMENTS INCORPORATED BY REFERENCE (1) Portions of registrant's Annual Report to Shareholders for the fiscal year ended December 31, 1993 (Part I, Part II, and Part IV). (2) Portions of registrant's Proxy Statement filed for its Annual Meeting of Shareholders scheduled for April 26, 1994 (Part III). =============================================================================== 2 PART I ITEM 1. BUSINESS BOATMEN'S BANCSHARES, INC. ("CORPORATION") The Corporation was incorporated under the laws of the State of Missouri in June, 1946 and was known as General Bancshares Corporation until the time of its merger with Boatmen's Bancshares, Inc. on March 29, 1986. The Corporation's principal office is located in St. Louis, Missouri where its largest subsidiary, The Boatmen's National Bank of St. Louis ("Boatmen's Bank"), is located. The Corporation directly owns substantially all of the capital stock of 49 subsidiary banks, a trust company, a mortgage banking company, a credit life insurance company, an insurance agency and a credit card bank. The subsidiary banks operate from approximately 425 banking offices and 350 off-site automated teller machine locations in Missouri, New Mexico, Oklahoma, Iowa, Texas, Illinois, Arkansas, Tennessee and Kansas. The business of the Corporation consists primarily of the ownership, supervision and control of its subsidiaries. The Corporation provides its subsidiaries with advice, counsel and specialized services in various fields of financial and banking policy and operations. The Corporation also engages in negotiations designed to lead to the acquisition of other banks and closely related businesses. Based on total assets as of December 31, 1993, the Corporation was the largest bank holding company headquartered in the State of Missouri and among the 30 largest bank holding companies in the United States. There are numerous bank holding companies and groupings of banks located throughout the Corporation's markets which offer substantial competition in the acquisition and operation of banks and non-bank financial institutions. The Corporation's subsidiaries encounter substantial competition in all of their banking and related activities, and its banking subsidiaries face increasing competition from various non-banking financial institutions that are not subject to the same geographic and other regulatory restraints applicable to banks. On November 6, 1993, the Corporation entered into a definitive agreement to acquire Woodland Bancorp, Inc., a one bank holding company based in Tulsa, Oklahoma, which had consolidated assets of approximately $64 million at December 31, 1993. Woodland Bank, which operates from one office in Tulsa and has plans to open two additional branches, will be merged into Boatmen's First National Bank of Oklahoma upon completion of the acquisition on March 31, 1994. The information under the caption Acquisition Overview on pages 18, 19 and the top of page 20 and Table 2 on page 18 of the Corporation's Annual Report to Shareholders for the year ended December 31, 1993, is incorporated herein by reference. Banking Operations The following table summarizes the banking operations for each state in which the Corporation has banking locations.
12/31/93 12/31/93 12/31/93 ASSETS LOANS DEPOSITS -------- -------- -------- (DOLLARS IN MILLIONS) Missouri........................................................ $15,764 $8,833 $12,009 New Mexico...................................................... 3,262 1,458 2,784 Oklahoma........................................................ 1,780 945 1,534 Texas........................................................... 1,556 773 1,152 Iowa............................................................ 1,215 640 1,026 Illinois........................................................ 977 614 856 Arkansas........................................................ 907 396 753 Tennessee....................................................... 689 612 579 Kansas.......................................................... 181 76 150
3 Trust Operations The Corporation provides a wide range of trust services to both individuals and institutions through Boatmen's Trust Company and the trust departments of certain of its subsidiary banks. Its trust operations rank among the 15 largest providers of trust services in the United States, with total trust assets of $71.1 billion at December 31, 1993, including $34.1 billion under management. Other Non-Bank Subsidiaries The Corporation's other non-bank subsidiaries include: (1) a mortgage banking company, whose business is the origination and servicing of real estate mortgage loans for the account of long-term investors and the servicing of real estate loans originated by its affiliate banks; (2) a credit life insurance company which insures or reinsures credit life and accident and health insurance written by the Corporation's subsidiary banks; (3) an insurance agency; and (4) a credit card bank. Regulation and Supervision As a bank holding company, the Corporation is subject to regulation pursuant to the Bank Holding Company Act of 1956 (the "Act"), which is administered by the Board of Governors of the Federal Reserve System (the "Board"). A bank holding company must obtain Board approval before acquiring, directly or indirectly, ownership or control of any voting shares of a bank or bank holding company if, after such acquisition, it would own or control more than 5% of such shares. Board approval must also be obtained before any bank holding company acquires all or substantially all of the assets of another bank or bank holding company or merges or consolidates with another bank holding company. Furthermore, any acquisition by a bank holding company of more than 5% of the voting shares, or of all or substantially all of the assets, of a bank located in another state may not be approved by the Board unless the laws of the second state specifically authorize such an acquisition. Legislation was enacted in Missouri during 1986 which authorized bank holding companies domiciled in contiguous states to acquire Missouri banks and bank holding companies provided their home states have similar laws. All of the eight contiguous states have passed similar legislation. The Act also prohibits a bank holding company, with certain limited exceptions, from acquiring or retaining direct or indirect ownership or control of more than 5% of the voting shares of any company which is not a bank or a bank holding company, or from engaging in any activities other than those of banking, managing or controlling banks, or providing services for its subsidiaries. The principal exceptions to these prohibitions involve certain activities which the Board has determined to be closely related to the business of banking or managing or controlling banks. A bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with the extension of credit, with limited exemptions. Subsidiary banks of a bank holding company are also subject to certain restrictions imposed by the Federal Reserve Act on any extensions of credit to the bank holding company or any of its subsidiaries, or investment in the stock or other securities thereof, and on the taking of such stocks or securities as collateral for loans. The Board possesses cease and desist powers over bank holding companies if their actions represent unsafe or unsound practices or violations of law. In August, 1989, the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") was enacted. FIRREA allows bank holding companies to acquire healthy savings institutions, removing certain restrictions on operations of such institutions. Acquired savings institutions may now be operated as separate savings subsidiaries, converted to bank charters or merged into existing bank subsidiaries, subject to certain requirements. FIRREA also contains a "cross-guarantee" provision which could result in depository institutions being assessed for losses incurred by the FDIC in the assistance provided to, or the failure of, an affiliated depository institution. On December 16, 1988, the Board adopted final risk-based capital guidelines for use in its examination and supervision of bank holding companies and banks. The guidelines have three main goals: (1) to make regulatory capital requirements more sensitive to differences in risk profiles among banking organizations; (2) 2 4 to take off-balance sheet risk exposures into explicit account in assessing capital adequacy; and (3) to minimize disincentives to holding liquid, low-risk assets. A bank holding company's ability to pay dividends and expand its business through the acquisition of new banking or non-banking subsidiaries could be restricted if its capital falls below levels established by these guidelines. The risk-based capital ratios were fully implemented by the end of 1992. In 1991, the Board required bank holding companies and banks to adhere to another capital guideline referred as the Tier 1 leverage ratio. This guideline places a constraint on the degree to which a banking institution can leverage its equity capital base. The Corporation substantially exceeds the requirements of these capital guidelines. In December, 1991, the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") was enacted. FDICIA, among other things, identifies the following capital standards for depository institutions: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. A depository institution is well capitalized if it significantly exceeds the minimum level required by regulation for each relevant capital measure, adequately capitalized if it meets each such measure, undercapitalized if it fails to meet any such measure, significantly undercapitalized if it is significantly below any such measure, and critically undercapitalized if it fails to meet any critical capital level set forth in the regulations. FDICIA requires a bank that is determined to be undercapitalized to submit a capital restoration plan, and the bank's holding company must guarantee that the bank will meet its capital plan, subject to certain limitations. FDICIA also prohibits banks from making any capital distribution or paying any management fee if the bank would thereafter be undercapitalized. The Corporation's bank subsidiaries currently meet the well capitalized standards. FDICIA grants the FDIC authority to impose special assessments on insured depository institutions to repay FDIC borrowings from the United States Treasury or other sources and to establish semiannual assessment rates on Bank Insurance Fund ("BIF") member banks so as to maintain the BIF at the designated reserve ratio defined in FDICIA. FDICIA also required the FDIC to implement a risk-based insurance assessment system pursuant to which the premiums paid by a depository institution will be based on the probability that the BIF will incur a loss in respect of such institution. The FDIC has adopted a deposit insurance assessment system that places each insured institution in one of nine risk categories based on the level of its capital, evaluation of its risk by its primary state or federal supervisor, statistical analysis and other information. In 1994, deposit insurance premiums will range between 23 cents and 31 cents per $100 of domestic deposits. The Corporation's national bank subsidiaries are subject to supervision by the Comptroller of the Currency. The Arkansas federal savings bank is subject to supervision by the Office of Thrift Supervision. The FDIC has primary federal supervisory responsibility for the Corporation's state banks, with the exception of three state banks that are members of the Federal Reserve System. The Corporation's state banks and trust company are also subject to supervision by the bank supervisory authorities in their respective states. Various federal and state laws and regulations apply to many aspects of the operations of the Corporation's subsidiary banks, including interest rates paid on deposits and loans, investments, mergers and acquisitions and the establishment of branch offices and facilities. The payment of dividends by the Corporation's subsidiary banks, which is the Corporation's principal source of income, is also subject to certain statutory restrictions and to regulation by governmental agencies. Statistical Disclosure Pages 17 through 47 and footnote number 11 on page 57 of the Corporation's Annual Report to Shareholders for the year ended December 31, 1993, are incorporated herein by reference. The statistical data contained therein reflect the restatement of prior period data for the acquisition of First Amarillo Bancorporation, Inc. on November 30, 1993 using the pooling of interests accounting method. ITEM 2. PROPERTIES The Corporation's headquarters building, Boatmen's Plaza, is located in downtown St. Louis, Missouri. Through a joint venture, Boatmen's Bank owns a one-half undivided interest in two-thirds of the building. On December 31, 1981, Boatmen's Bank entered into a lease agreement for approximately 60 percent of the 3 5 building for a term of 30 years. This long-term lease obligation was capitalized in accordance with Statement of Financial Accounting Standards No. 13. The principal office of Boatmen's Trust Company was purchased on January 4, 1994. The Corporation's principal banking offices in Oklahoma, Iowa and Tennessee are leased under long-term leases. The principal banking offices in New Mexico, Illinois, Arkansas and Texas are owned. The majority of the other banking offices are owned by the respective subsidiary banks. In the opinion of management, the physical properties of the Corporation and its subsidiaries are suitable and adequate and are being fully utilized. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. EXECUTIVE OFFICERS OF THE CORPORATION The following sets forth certain information regarding the executive officers of the Corporation:
POSITIONS WITH OFFICER NAME AGE CORPORATION SINCE ---- --- -------------- ------- Andrew B. Craig, III............................ 62 Chairman of the Board, President 1985 and Chief Executive Officer Samuel B. Hayes, III............................ 57 Vice Chairman and Director 1988 John Peters MacCarthy........................... 60 Vice Chairman and Director 1988 John M. Brennan................................. 58 Executive Vice President 1977 J. Robert Brubaker.............................. 58 Executive Vice President and Senior 1987 Operations Officer Gregory L. Curl................................. 45 Executive Vice President 1982 Alfred S. Dominick, Jr. ........................ 48 Executive Vice President 1992 Retail Banking James W. Kienker................................ 47 Executive Vice President and 1979 Chief Financial Officer Phillip E. Peters............................... 54 Executive Vice President and 1988 Chief Investment Officer Philip N. McCarty............................... 55 Senior Vice President and Secretary 1970
There are no family relationships between any of the named persons. Each executive officer is elected by the Board of Directors to serve until the close of the next annual meeting of the shareholders following his election and until the election of his successor. No executive officer of the Corporation was selected to his position pursuant to any arrangement or understanding with any other person. Each executive officer has held the same position or another executive position with the Corporation or Boatmen's Bank during the past five years, except as follows: Mr. Dominick was Executive Vice President of Bank One, Dallas, Texas from March 1990 until joining the Corporation on August 4, 1992. Prior to Bank One, Mr. Dominick was a partner in Dominick/Frerichs Associates Ltd. (a bank consulting firm) from February, 1989 to March 1990. Mr. Dominick was Senior Vice President of Shawmut Bank, Boston, Massachusetts from 1974 until February, 1989. 4 6 PART II ITEM 5. MARKET FOR THE CORPORATION'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Footnote number 21 on page 62 and page 65 of the Corporation's Annual Report to Shareholders for the year ended December 31, 1993, are incorporated herein by reference. The last trade price for the Corporation's common stock on March 8, 1994, was $28.00. ITEM 6. SELECTED FINANCIAL DATA Page 17 of the Corporation's Annual Report to Shareholders for the year ended December 31, 1993, is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Pages 17 through 39 of the Corporation's Annual Report to Shareholders for the year ended December 31, 1993, are incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements together with the report thereon of Ernst & Young on pages 48 through 63 and the supplementary quarterly information on page 39 and pages 40 through 43 of the Corporation's Annual Report to Shareholders for the year ended December 31, 1993, are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATION The information under the item captioned Election of Directors and Information With Respect to Directors and Executive Officers in the Corporation's Proxy Statement filed for its Annual Meeting of Shareholders scheduled for April 26, 1994, is incorporated herein by reference. The required information regarding the Corporation's executive officers is contained in PART I in the item captioned Executive Officers of the Corporation. ITEM 11. EXECUTIVE COMPENSATION The information under the caption Executive Compensation on pages 10 through the graph on page 17 in the Corporation's Proxy Statement filed for its Annual Meeting of Shareholders scheduled for April 26, 1994, is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information under the table captioned Amount and Nature of Beneficial Ownership and the caption Security Ownership of Management in the Corporation's Proxy Statement filed for its Annual Meeting of Shareholders scheduled for April 26, 1994, is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information under the caption Certain Transactions in the Corporation's Proxy Statement filed for its Annual Meeting of Shareholders scheduled for April 26, 1994, is incorporated herein by reference. 5 7 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K The following financial statements of the Corporation and its consolidated subsidiaries, and the accountants' report thereon, are incorporated herein by reference. Consolidated Financial Statements Balance Sheets-December 31, 1993 and 1992. Statements of Income-Years ended December 31, 1993, 1992 and 1991. Statements of Changes in Stockholders' Equity-Years ended December 31, 1993, 1992 and 1991. Statements of Cash Flows-Years Ended December 31, 1993, 1992 and 1991. Notes to Consolidated Financial Statements. Financial Statement Schedules All required schedules for the Corporation and its subsidiaries have been included in the consolidated financial statements or related notes thereto. The following exhibits are incorporated herein by reference (a): Exhibit 3(a) - Restated Articles of Incorporation of the Corporation. Exhibit 3(b) - Amended By-laws of the Corporation. Exhibit 4 - Rights Agreement dated as of August 14, 1990. Exhibit 4(a) - Amendment dated as of January 26, 1993 to Rights Agreement dated as of August 14, 1990. Note: No long-term debt instrument issued by the Corporation exceeds 10% of the consolidated total assets of the Corporation and its subsidiaries. In accordance with paragraph 4(iii) of Item 601 of Regulation S-K, the Corporation will furnish to the Commission upon request copies of long-term debt instruments and related agreements. Exhibit 10(c) - Boatmen's Bancshares, Inc. Amended 1981 Incentive Stock Option Plan, Exhibit 10(h) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1986. Exhibit 10(d) - Boatmen's Bancshares, Inc. Amended 1982 Long-Term Incentive Plan, Exhibit 10(d) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1992. Exhibit 10(e) - Boatmen's Bancshares, Inc. 1987 Non-Qualified Stock Option Plan, Exhibit 10(e) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1992. Exhibit 10(f) - Employment Agreement dated February 1, 1992, between Boatmen's Sunwest, Inc., a subsidiary of the Corporation, and Ike Kalangis, Exhibit 10(f) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1992. Exhibit 10(g) - Centerre Executive Retirement Program, Exhibit 10(c)(6) to Centerre Bancorporation's Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 0-3909) for the fiscal year ended December 31, 1983. 6 8 Exhibit 10(h) - Amendment dated as of January 1, 1988, to Centerre Executive Retirement Program, Exhibit 10(m) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988. Exhibit 10(i) - Second Amendment dated as of January 1, 1988, to Centerre Executive Retirement Program, Exhibit 10(n) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988. Exhibit 10(j) - Third Amendment dated March 31, 1989, effective as of December 9, 1988, to Centerre Executive Retirement Program, Exhibit 10(m) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989. Exhibit 10(k) - Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(c)(9) to Centerre Bancorporation's Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 0-3909) for the fiscal year ended December 31, 1985. Exhibit 10(l) - Amendment dated as of January 1, 1987, to Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(p) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988. Exhibit 10(m) - Second Amendment dated as of January 1, 1988, to Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(q) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988. Exhibit 10(n) - Third Amendment dated as of January 1, 1986, to Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(r) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988. Exhibit 10(o) - Fourth Amendment dated December 13, 1988, to Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(r) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989. Exhibit 10(p) - Centerre Bancorporation Deferred Compensation Plan for Directors, Exhibit 10(c)(10) to Centerre Bancorporation's Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 0-3909) for the fiscal year ended December 31, 1986. Exhibit 10(q) - Amendment dated as of January 1, 1988, to Centerre Bancorporation Deferred Compensation Plan for Directors, Exhibit 10(t) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988. Exhibit 10(r) - Amendment No. 2 dated February 14, 1989, to Centerre Bancorporation Deferred Compensation Plan for Directors, Exhibit 10(x) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989. Exhibit 10(s) - Amendment No. 3 dated August 8, 1989, to Centerre Bancorporation Deferred Compensation Plan for Directors and adoption by Boatmen's Bancshares, Inc. of Centerre Bancorporation Deferred Compensation Plan for Directors, Exhibit 10(y) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange 7 9 Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989. Exhibit 10(t) - Amendment No. 4 dated November 14, 1989, as of August 8, 1989, to Boatmen's Deferred Compensation Plan for Directors, Exhibit 10(z) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989. Exhibit 10(u) - Boatmen's Executive Deferred Compensation Plan dated August 8, 1989, effective January 1, 1990, Exhibit 10(aa) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989. Exhibit 10(x) - Boatmen's Supplemental Retirement Participation Agreement dated August 8, 1989, between the Corporation and Samuel B. Hayes, III, Exhibit 10(dd) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989. Exhibit 10(y) - Boatmen's Supplemental Retirement Participation Agreement dated August 8, 1989, between the Corporation and John Peters MacCarthy, Exhibit 10(ee) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989. Exhibit 10(bb) - Boatmen's Bancshares, Inc. 1991 Incentive Stock Option Plan, Exhibit 10(dd) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1991. Exhibit 10(cc) - Boatmen's Bancshares, Inc. 1992 Annual Incentive Bonus Plan, Exhibit 10(ee) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1991. Exhibit 10(dd) - Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan, Exhibit A to Boatmen's Bancshares, Inc.'s S-8 Registration Statement (No. 33-55186). Exhibit 10(ee) - Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan, Exhibit A to Boatmen's Bancshares, Inc.'s S-8 Registration Statement (No. 33-55110). Exhibit 10(ff) - Fifth Amendment dated November 10, 1992 to Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(ii) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1992. Exhibit 10(gg) - Supplemental Executive Retirement Plan of Boatmen's Sunwest, Inc., a subsidiary of the Corporation, Exhibit (jj) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1992. 8 10 The following exhibits are submitted herewith: Exhibit 10(a) - Amended Employment Agreement dated November 9, 1993, between the Corporation and Andrew B. Craig, III. Exhibit 10(b) - Amended Employment Agreement dated November 9, 1993, between the Corporation and Samuel B. Hayes, III. Exhibit 10(v) - Boatmen's Supplemental Retirement Plan dated November 9, 1993. Exhibit 10(w) - Boatmen's Supplemental Retirement Participation Agreement dated August 4, 1993, between the Corporation and Andrew B. Craig, III. Exhibit 10(z) - Boatmen's Supplemental Retirement Participation Agreement dated November 9, 1993, between the Corporation and Ike Kalangis. Exhibit 10(aa) - Letter agreement dated November 9, 1993, between the Corporation and John Peters MacCarthy. Exhibit 13 - Portions of the Annual Report to Shareholders for the year ended December 31, 1993. Exhibit 21 - Subsidiaries of the Corporation. Exhibit 23 - Independent Auditors' Consent of Ernst & Young. Exhibit 23(a) - Independent Auditors' Consent of KPMG Peat Marwick. Exhibit 23(b) - Independent Auditors' Consent of KPMG Peat Marwick. Exhibit 23(c) - Independent Auditors' Consent of KPMG Peat Marwick. Exhibit 99 - Independent Auditors' Report of KPMG Peat Marwick. Exhibit 99(a) - Independent Auditors' Report of KPMG Peat Marwick. Exhibit 99(b) - Independent Auditors' Report of KPMG Peat Marwick. [FN] - ----- (a) The exhibits included under Exhibit 10 constitute all management contracts, compensatory plans and arrangements required to be filed as an exhibit to this form pursuant to Item 14(c) of this report. On December 7, 1993, the Corporation filed a Current Report on Form 8-K reporting on the November 30, 1993, acquisition of First Amarillo Bancorporation, Inc. For the purposes of complying with the amendments to the rules governing Form S-8 (effective July 13, 1990) under the Securities Act of 1933, the Corporation hereby undertakes as follows, which undertaking shall be incorporated by reference into the Corporation's Registration Statements on Form S-8 Nos. 33-15714 (filed July 10, 1987), 33-15715 (filed July 10, 1987), 33-25945 (filed December 23, 1988), 33-25946 (filed December 23, 1988), 33-37862 (filed November 16, 1990), 33-44546 (filed December 17, 1991), 33-46730 (filed April 1, 1992), 33-55186 (filed November 27, 1992), 33-55110 (filed November 27, 1992), 33-50451 (filed September 30, 1993), 33-51635 (filed December 21, 1993) and 33-51637 (filed December 21, 1993). Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Corporation pursuant to the foregoing provisions, or otherwise, the Corporation has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Corporation of expenses incurred or paid by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Corporation will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 9 11 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BOATMEN'S BANCSHARES, INC. ........................................ (Registrant) By ANDREW B. CRAIG, III .......................................... Andrew B. Craig, III, Chairman of the Board, President and Chief Executive Officer (principal executive officer) By JAMES W. KIENKER ------------------------------------------ James W. Kienker, Executive Vice President and Chief Financial Officer (principal financial and accounting officer) Date: March 8, 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Corporation and in the capacities and on the date indicated.
SIGNATURES TITLES DATE ---------- ------ ---- ANDREW B. CRAIG, III Chairman of the Board, President and March 8, 1994 ------------------------------------------ Chief Executive Officer Andrew B. Craig, III SAMUEL B. HAYES, III Vice Chairman and Director March 8, 1994 ------------------------------------------ Samuel B. Hayes, III JOHN PETERS MACCARTHY Vice Chairman and Director March 8, 1994 ------------------------------------------ John Peters MacCarthy RICHARD L. BATTRAM Director March 8, 1994 ------------------------------------------ Richard L. Battram B. A. BRIDGEWATER, JR. Director March 8, 1994 ------------------------------------------ B. A. Bridgewater, Jr. WILLIAM E. CORNELIUS Director March 8, 1994 ------------------------------------------ William E. Cornelius ILUS W. DAVIS Director March 8, 1994 ------------------------------------------ Ilus W. Davis MICHAEL G. FITT Director March 8, 1994 ------------------------------------------ Michael G. Fitt JOHN E. HAYES, JR. Director March 8, 1994 ------------------------------------------ John E. Hayes, Jr. 10 12 SIGNATURES TITLES DATE ---------- ------ ---- IKE KALANGIS ------------------------------------------ Ike Kalangis Director March 8, 1994 LEE M. LIBERMAN Director March 8, 1994 ------------------------------------------ Lee M. Liberman WILLIAM E. MARITZ Director March 8, 1994 ------------------------------------------ William E. Maritz ANDREW E. NEWMAN Director March 8, 1994 ------------------------------------------ Andrew E. Newman Director March , 1994 ------------------------------------------ Jerry E. Ritter WILLIAM P. STIRITZ Director March 8, 1994 ------------------------------------------ William P. Stiritz Director March , 1994 ------------------------------------------ Albert E. Suter DWIGHT D. SUTHERLAND Director March 8, 1994 ------------------------------------------ Dwight D. Sutherland THEODORE C. WETTERAU Director March 8, 1994 ------------------------------------------ Theodore C. Wetterau
11 13
INDEX TO EXHIBITS NUMBER EXHIBIT PAGE ------ ------- ---- 3(a) The Corporation's Restated Articles of Incorporation as adopted by its Board of Directors on May 12, 1992, Exhibit 3(a) to Boatmen's Bancshares, Inc.'s S-3 Registration Statement (File No. 33-48528) is incorporated herein by reference................................................ * 3(b) The Corporation's Amended By-laws as adopted by its Board of Directors on April 27, 1993, Exhibit 3(b) to Boatmen's Bancshares, Inc.'s S-4 Registration Statement (File No. 33-50159) is incorporated herein by reference................................................................. * 4 Conformed copy of Rights Agreement dated as of August 14, 1990, Exhibits 1 and 2 to Registration Statement on Form 8-A is incorporated herein by reference..................................................................................... * 4(a) Amendment dated as of January 26, 1993 to Rights Agreement dated August 14, 1990, is incorporated herein by reference.............................................................................. * 10(a) Amended Employment Agreement dated November 9, 1993, between the Corporation and Andrew B. Craig, III.............................................................................................. 10(b) Amended Employment Agreement dated November 9, 1993, between the Corporation and Samuel B. Hayes, III....................................................................................... 10(c) Boatmen's Bancshares, Inc. Amended 1981 Incentive Stock Option Plan, Exhibit 10(h) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1986, is incorporated herein by reference......... * 10(d) Boatmen's Bancshares, Inc. Amended 1982 Long Term Incentive Plan, Exhibit 10(d) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1992, is incorporated herein by reference......... * 10(e) Boatmen's Bancshares, Inc. 1987 Non-Qualified Stock Option Plan, Exhibit 10(e) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1992, is incorporated herein by reference......... * 10(f) Employment Agreement dated February 1, 1992, between Boatmen's Sunwest, Inc., a subsidiary of the Corporation, and Ike Kalangis, Exhibit 10(f) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1992, is incorporated herein by reference........................................... * 10(g) Centerre Executive Retirement Program, Exhibit 10(c)(6) to Centerre Bancorporation's Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 0-3909) for the fiscal year ended December 31, 1983, is incorporated herein by reference................................ * 10(h) Amendment dated as of January 1, 1988, to Centerre Executive Retirement Program, Exhibit 10(m) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988, is incorporated herein by reference........................................................................................ * 14 INDEX TO EXHIBITS (CONTINUED) NUMBER EXHIBIT PAGE ------ ------- ---- 10(i) Second Amendment dated as of January 1, 1988, to Centerre Executive Retirement Program, Exhibit 10(n) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988, is incorporated herein by reference..................................................................................... * 10(j) Third Amendment dated March 31, 1989, effective as of December 9, 1988, to Centerre Bancorporation Executive Retirement Program, Exhibit 10(m) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989, is incorporated herein by reference................................ * 10(k) Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(c)(9) to Centerre Bancorporation's Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 0-3909) for the fiscal year ended December 31, 1985, is incorporated herein by reference......... * 10(l) Amendment dated as of January 1, 1987, to Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(p) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988, is incorporated herein by reference................................................................. * 10(m) Second Amendment dated as of January 1, 1988, to Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(q) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988, is incorporated herein by reference........................................................ * 10(n) Third Amendment dated as of January 1, 1986, to Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(r) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988, is incorporated herein by reference........................................................ * 10(o) Fourth Amendment dated December 13, 1988, to Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(r) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989, is incorporated herein by reference........................................................ * 10(p) Centerre Bancorporation Deferred Compensation Plan for Directors, Exhibit 10(c)(10) to Centerre Bancorporation's Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 0-3909) for the fiscal year ended December 31, 1986, is incorporated herein by reference......... * 10(q) Amendment dated as of January 1, 1988, to Centerre Bancorporation Deferred Compensation Plan for Directors, Exhibit 10(t) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1988, is incorporated herein by reference.............................................................. * 10(r) Amendment No. 2 dated February 14, 1989, to Centerre Bancorporation Deferred Compensation Plan for Directors, Exhibit 10(x) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989, is incorporated herein by reference.............................................................. * 15 INDEX TO EXHIBITS (CONTINUED) NUMBER EXHIBIT PAGE ------ ------- ---- 10(s) Amendment No. 3 dated August 8, 1989, to Centerre Bancorporation Deferred Compensation Plan for Directors and adoption by Boatmen's Bancshares, Inc. of Centerre Bancorporation Deferred Compensation Plan for Directors, Exhibit 10(y) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989, is incorporated herein by reference........................................... * 10(t) Amendment No. 4 dated November 14, 1989, as of August 8, 1989, to Boatmen's Deferred Compensation Plan for Directors, Exhibit 10(z) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989, is incorporated herein by reference........................................................ * 10(u) Boatmen's Executive Deferred Compensation Plan dated August 8, 1989, effective January 1, 1990, Exhibit 10(aa) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989, is incorporated herein by reference................................................................. * 10(v) Boatmen's Supplemental Retirement Plan dated November 9, 1993.................................... 10(w) Boatmen's Supplemental Retirement Participation Agreement dated August 4, 1993, between the Corporation and Andrew B. Craig, III............................................................. 10(x) Boatmen's Supplemental Retirement Participation Agreement dated August 8, 1989, between the Corporation and Samuel B. Hayes, III, Exhibit 10(dd) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989, is incorporated herein by reference................................ * 10(y) Boatmen's Supplemental Retirement Participation Agreement dated August 8, 1989, between the Corporation and John Peters MacCarthy, Exhibit 10(ee) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1989, is incorporated herein by reference................................ * 10(z) Boatmen's Supplemental Retirement Participation Agreement dated November 9, 1993, between the Corporation and Ike Kalangis..................................................................... 10(aa) Letter agreement dated November 9, 1993, between the Corporation and John Peters MacCarthy....... 10(bb) Boatmen's Bancshares, Inc. 1991 Incentive Stock Option Plan, Exhibit 10(dd) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1991, is incorporated herein by reference......... * 10(cc) Boatmen's Bancshares, Inc. 1992 Annual Incentive Bonus Plan, Exhibit 10(ee) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1991, is incorporated herein by reference......... * 10(dd) Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan, Exhibit A to Boatmen's Bancshares, Inc.'s S-8 Registration Statement (No. 33-55186), is incorporated herein by reference. * 16 INDEX TO EXHIBITS (CONTINUED) NUMBER EXHIBIT PAGE ------ ------- ---- 10(ee) Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan, Exhibit A to Boatmen's Bancshares, Inc.'s S-8 Registration Statement (No. 33-55110) is incorporated herein by reference. * 10(ff) Fifth Amendment dated November 10, 1992 to Centerre Bancorporation Executive Deferred Compensation Plan, Exhibit 10(ii) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1992, is incorporated herein by reference........................................................ * 10(gg) Supplemental Executive Retirement Plan of Boatmen's Sunwest, Inc., a subsidiary of the Corporation, Exhibit (jj) to Boatmen's Bancshares, Inc.'s Annual Report to the Securities and Exchange Commission on Form 10-K (File No. 1-3750) for the fiscal year ended December 31, 1992, is incorporated herein by reference.............................................................. * 13 Portions of the Annual Report to Shareholders for the year ended December 31, 1993...............
GRAPHICS APPENDIX CROSS REFERENCE TO PAGE OF OMITTED CHARTS ANNUAL REPORT -------------- --------------- 1. Return on Equity............................................................. Page 17 2. Return on Assets............................................................. Page 17 3. Earnings per Share........................................................... Page 17 4. Asset Growth................................................................. Page 18 5. Equity Growth................................................................ Page 18 6. Net Interest Margin.......................................................... Page 22 7. Quarterly Net Interest Margin................................................ Page 22 8. Average Earning Asset Mix.................................................... Page 25 9. Funding Mix.................................................................. Page 25 10. Noninterest Income........................................................... Page 29 11. Noninterest Expense.......................................................... Page 30 12. Loan Portfolio............................................................... Page 31 13. Loan Loss Experience......................................................... Page 33 14. Loan Reserve Coverage........................................................ Page 35 15. Nonperforming Assets......................................................... Page 35 16. Risk-Based Capital........................................................... Page 38
The above listed charts were omitted from the EDGAR version of Exhibit 13; however, the information depicted in the charts was adequately discussed and/or displayed in tabular format within the Management's Discussion and Analysis section of the Annual Report. 21 Subsidiaries of the Corporation.................................................................. 23 Independent Auditors' Consent of Ernst & Young................................................... 23(a) Independent Auditors' Consent of KPMG Peat Marwick............................................... 23(b) Independent Auditors' Consent of KPMG Peat Marwick............................................... 23(c) Independent Auditors' Consent of KPMG Peat Marwick............................................... 99 Independent Auditors' Report of KPMG Peat Marwick................................................ 99(a) Independent Auditors' Report of KPMG Peat Marwick................................................ 99(b) Independent Auditors' Report of KPMG Peat Marwick................................................ - ----- *Incorporated by reference.
EX-10.1 2 MATERIAL CONTRACT 1 Exhibit 10(a) AMENDED EMPLOYMENT AGREEMENT This is an Amended Employment Agreement made as of November 9, 1993, by and between Boatmen's Bancshares, Inc. (the "Company") and Andrew B. Craig, III ("Employee"). WHEREAS, the Company and Employee entered into an Employment Agreement as of January 28, 1985, amended it as of December 13, 1988, and August 8, 1989, and now desire to amend that Employment Agreement, as so amended, in its entirety; NOW THEREFORE, in consideration of the mutual promises contained herein, and intending on being legally bound, the parties hereto agree that their Amended Employment Agreement ("Agreement") shall be in its entirety as follows: 1. Term. Subject to the provisions for termination as hereinafter provided, ---- the term of this Agreement commenced on January 28, 1985, and shall terminate on March 31, 1996. 2. Duties. Employee shall serve as Chief Executive Officer of the Company ------ or a senior officer as the Board of Directors of the Company shall determine from time to time. Employee shall devote his full time and attention and best efforts to the performance of such duties. 3. Compensation. For all services rendered by Employee under this agreement, ------------ the Company shall pay or cause Employee to be paid a base compensation of at least Six Hundred Thousand Dollars ($600,000) per year and such increased base compensation as the Board of Directors may authorize at their discretion from time to time. Employee's base compensation for purposes of this Agreement shall include such increased base compensation and in no event shall such base compensation be reduced during the term of this Agreement. The Company may also pay Employee incentive compensation in such amounts as the Compensation Committee or the Board of Directors shall determine. 4. Payment on Death. In the event of the Employee's death during the term ---------------- of this Agreement, a renewal thereof, or when payments are being made pursuant to Paragraph 10 hereof, the Company shall pay to the designated beneficiaries of Employee the compensation which would otherwise be payable to Employee up to the end of the month in which his death occurs. 5. Retirement Benefits. Employee's retirement benefits shall not be less ------------------- than those that would be provided him under the terms of the Boatmen's Bancshares, Inc. Retirement Plan for Employees and the Boatmen's Supplemental Retirement Plan in effect as of November 9, 1993, or as such benefits shall be increased, whether or not such benefits shall be decreased or eliminated. The obligations of the Company pursuant to this paragraph shall survive the termination of this Agreement. 2 6. Rights Under Other Plans. The Company and Employee agree that nothing ------------------------ contained herein is intended to or shall be deemed to affect any of Employee's rights as a participant under any retirement, stock option or purchase, insurance, bonus or similar plan of the Company now or hereafter in effect. 7. Assignment. The rights and obligations of the Company under this ---------- Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. Employee's rights and obligations under this Agreement shall be non-assignable. 8. Termination of this Agreement. ----------------------------- (a) The Company may terminate the employment of the Employee with or without cause prior to the expiration of this Agreement. In such event, this Agreement shall be terminated, except that the Company shall (i) continue to pay Employee the base compensation for the full term of this Agreement pursuant to Paragraph 3 of this Agreement, (ii) provide retirement benefits pursuant to Paragraph 5 of this Agreement accrued through the effective date of the termination and (iii) continue to have the obligations set forth in Paragraph 10 of this Agreement. (b) Voluntary termination of employment by the Employee shall terminate this Agreement in its entirety except as provided in Paragraphs 5 and 10 hereof. 9. Termination in the Event of an Act of Dishonesty. The obligation of the ------------------------------------------------ Company to pay compensation and supplemental retirement and death benefits to Employee as specified in Paragraphs 3, 4, 5, 8, and 10 of this agreement shall not exist if Employee has been terminated as a result of an act of dishonesty on his part involving a shortage, loss or theft of funds or property of the Company or its affiliates. 10. Termination after Change of Control. If the employment of Employee by ----------------------------------- the Company is terminated by the Company, except under paragraph 9 of this Agreement, prior to his sixty-fifth birthday and either during the six months before or the three years after a "Change of Control", as such term is defined in the Boatmen's Supplemental Retirement Plan in effect as of November 9, 1993, or by Employee prior to his sixty-fifth birthday and either during the six months before or the year after a "Change of Control," Employee shall receive at a minimum the base compensation set forth in Paragraph 3 of this Agreement for a period of three (3) years from the date of such termination or until his sixty-fifth birthday, whichever period is shorter. Any amounts payable pursuant to Paragraph 8(a)(i) of this Agreement or similar provisions of later employment agreements between the Company and Employee shall be applied against this obligation, so that termination payments of base compensation under this Paragraph 10 shall be made only to the extent they may exceed those paid under Paragraph 8(a)(i). 2 3 The obligations of the Company as set forth in this Paragraph 10 shall (i) survive the termination of this Agreement, (ii) survive the termination of any later employment agreements between Employee and the Company and (iii) remain in full force and effect even if the employment of Employee by the Company becomes an employment at will as opposed to an employment for a fixed term. 11. Entire Agreement. This instrument contains the entire agreement of the ---------------- parties. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought. BOATMEN'S BANCSHARES, INC. By /s/ PHILIP N. MCCARTY ---------------------------------- /s/ ANDREW B. CRAIG, III ---------------------------------- ANDREW B. CRAIG, III 3 EX-10.2 3 MATERIAL CONTRACT 1 Exhibit 10(b) AMENDED EMPLOYMENT AGREEMENT This is an Amended Employment Agreement made as of November 9, 1993, by and between Boatmen's Bancshares, Inc. (the "Company") and Samuel B. Hayes, III ("Employee"). WHEREAS, the Company and Employee entered into an Employment Agreement as of November 1, 1986, amended it as of August 8, 1989, and November 14, 1989, and now desire to amend that Employment Agreement, as so amended, in its entirety; NOW THEREFORE, in consideration of the mutual promises contained herein, and intending on being legally bound, the parties hereto agree that their Amended Employment Agreement ("Agreement") shall be in its entirety as follows: 1. Term. Subject to the provisions for termination as hereinafter provided, ---- the term of this Agreement commenced on November 1, 1986, and shall terminate on December 31, 1996. 2. Duties. Employee shall serve as Vice Chairman of the Company and ------ President and Chief Executive Officer of the Company's subsidiary, The Boatmen's National Bank of St. Louis, or a senior officer as the Board of Directors of the Company shall determine from time to time. Employee shall devote his full time and attention and best efforts to the performance of such duties. 3. Compensation. For all services rendered by Employee under this agreement, ------------ the Company shall pay or cause Employee to be paid a base compensation of at least Four Hundred Fifty Thousand Six Hundred Forty Dollars ($450,640) per year and such increased base compensation as the Board of Directors may authorize at their discretion from time to time. Employee's base compensation for purposes of this Agreement shall include such increased base compensation and in no event shall such base compensation be reduced during the term of this Agreement. The Company may also pay Employee incentive compensation in such amounts as the Compensation Committee or the Board of Directors shall determine. 4. Payment on Death. In the event of the Employee's death during the term ---------------- of this Agreement, a renewal thereof, or when payments are being made pursuant to Paragraph 10 hereof, the Company shall pay to the designated beneficiaries of Employee the compensation which would otherwise be payable to Employee up to the end of the month in which his death occurs. 5. Retirement Benefits. Employee's retirement benefits shall not be less ------------------- than those that would be provided him under the terms of the Boatmen's Bancshares, Inc. Retirement Plan for Employees and the Boatmen's Supplemental Retirement Plan in effect as of November 9, 1993, or as such benefits shall be increased, whether or not such benefits shall be decreased or eliminated. The obligations of 2 the Company pursuant to this paragraph shall survive the termination of this Agreement. 6. Rights Under Other Plans. The Company and Employee agree that nothing ------------------------ contained herein is intended to or shall be deemed to affect any of Employee's rights as a participant under any retirement, stock option or purchase, insurance, bonus or similar plan of the Company now or hereafter in effect. 7. Assignment. The rights and obligations of the Company under this ---------- Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. Employee's rights and obligations under this Agreement shall be non-assignable. 8. Termination of this Agreement. ----------------------------- (a) The Company may terminate the employment of the Employee with or without cause prior to the expiration of this Agreement. In such event, this Agreement shall be terminated, except that the Company shall (i) continue to pay Employee the base compensation for the full term of this Agreement pursuant to Paragraph 3 of this Agreement, (ii) provide retirement benefits pursuant to Paragraph 5 of this Agreement accrued through the effective date of the termination and (iii) continue to have the obligations set forth in Paragraph 10 of this Agreement. (b) Voluntary termination of employment by the Employee shall terminate this Agreement in its entirety except as provided in Paragraphs 5 and 10 hereof. 9. Termination in the Event of an Act of Dishonesty. The obligation of the ------------------------------------------------ Company to pay compensation and supplemental retirement and death benefits to Employee as specified in Paragraphs 3, 4, 5, 8, and 10 of this agreement shall not exist if Employee has been terminated as a result of an act of dishonesty on his part involving a shortage, loss or theft of funds or property of the Company or its affiliates. 10. Termination after Change of Control. If the employment of Employee by ----------------------------------- the Company is terminated by the Company, except under paragraph 9 of this Agreement, prior to his sixty-fifth birthday and either during the six months before or the three years after a "Change of Control", as such term is defined in the Boatmen's Supplemental Retirement Plan in effect as of November 9, 1993, or by Employee prior to his sixty-fifth birthday and either during the six months before or the year after a "Change of Control," Employee shall receive at a minimum the base compensation set forth in Paragraph 3 of this Agreement for a period of three (3) years from the date of such termination or until his sixty-fifth birthday, whichever period is shorter. Any amounts payable pursuant to Paragraph 8(a)(i) of this Agreement or similar provisions of later employment agreements between the Company and Employee shall be 2 3 applied against this obligation, so that termination payments of base compensation under this Paragraph 10 shall be made only to the extent they may exceed those paid under Paragraph 8(a)(i). The obligations of the Company as set forth in this Paragraph 10 shall (i) survive the termination of this Agreement, (ii) survive the termination of any later employment agreements between Employee and the Company and (iii) remain in full force and effect even if the employment of Employee by the Company becomes an employment at will as opposed to an employment for a fixed term. 11. Entire Agreement. This instrument contains the entire agreement of the ---------------- parties. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought. BOATMEN'S BANCSHARES, INC. By /s/ A. B. CRAIG, III ---------------------------------- /s/ SAMUEL B. HAYES, III ---------------------------------- SAMUEL B. HAYES, III 3 EX-10.3 4 MATERIAL CONTRACT 1 Exhibit 10(v) PLAN DOCUMENT - ----------------------------------------------------------------------------- WHEREAS, Boatmen's Bancshares, Inc., a Missouri corporation, (the "Corporation") desires to provide certain key executive employees of the Corporation and its subsidiaries with supplemental benefits in addition to those benefits provided under the Boatmen's Bancshares, Inc. Retirement Plan for Employees. Therefore, the Boatmen's Supplemental Retirement Plan, adopted effective as of August 8, 1989, is hereby amended, effective November 9, 1993, to read in its entirety as follows: ARTICLE I DEFINITIONS Except as otherwise specified herein or in a Participant's Participation Agreement, all capitalized terms shall have the same meanings as such terms have under the Boatmen's Bancshares, Inc. Retirement Plan for Employees. Section 1.1. "Board of Directors" means the Board of Directors of Boatmen's Bancshares, Inc. Section 1.2. "Cause" means conduct of the Participant which is finally adjudged to be knowingly fraudulent, deliberately dishonest or willful misconduct. The Compensation Committee of the Corporation shall have sole and uncontrolled discretion with respect to the application of the provisions of this Section 1.2 and any determination shall be conclusive and binding upon the Participant and all other persons. Section 1.3. "Change of Control" means any of the following events: (a) any individual, corporation (other than the Corporation), partnership, trust, association, pool, syndicate, or any other entity or any group of persons acting in concert becomes the beneficial owner, as that concept is defined in Rule 13d-3 promulgated by the SEC under the Securities Exchange Act of 1934, of securities of the Corporation possessing twenty percent (20%) or more of the voting power for the election of directors of the Corporation; (b) there shall be consummated any consolidation, merger or other business combination involving the Corporation or the securities of the Corporation in which holders of voting securities of the Corporation immediately prior to such consummation own, as a group, immediately after such consummation, voting securities of the Corporation (or, if the Corporation does not survive such transaction, voting securities of the corporation surviving such transaction) having less than fifty percent (50%) of the total voting power in an election of directors of the Corporation (or such other surviving corporation); (c) during any period of two consecutive years, individuals who at the beginning of such period constitute the Directors of the Corporation cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by the Corporation's shareholders, of each new Director of the Corporation was approved by a vote of at least two-thirds of the Directors of the Corporation then still in office who were Directors of the Corporation at the beginning of any such period; (d) removal by the stockholders of all or any of the incumbent Directors of the Corporation other than a removal for Cause; and (e) there shall be consummated any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Corporation (on a consolidated basis) to a party which is not controlled by or under common control with the Corporation. Section 1.4. "Code" means the Internal Revenue Code of 1986, as amended. 3 2 Section 1.5. "Committee" means the Boatmen's Bancshares, Inc. Compensation Committee. Section 1.6. "Corporation" means Boatmen's Bancshares, Inc. Section 1.7. "Employee" means any person employed by the Corporation or any of its subsidiaries. Section 1.8. "Participant" means any Employee who is selected for participation in the Plan by the Committee as provided in Article II. Section 1.9. "Plan" means the Boatmen's Supplemental Retirement Plan as set forth herein and as the same may be amended from time to time. Section 1.10. "Retirement Plan" means the Boatmen's Bancshares, Inc. Retirement Plan for Employees. ARTICLE II PARTICIPATION Section 2.1. Subject to the provisions of Section 2.2, the Committee shall have exclusive power to designate the Employees who will participate in the Plan. Section 2.2. Participation in the Plan shall be limited to a select group of Employees of the Corporation and its subsidiaries who are management or highly compensated Employees within the meaning of Section 201(2) of the Employee Retirement Income Security Act of 1974, as amended. Section 2.3. Each Employee selected to participate in the Plan by the Committee shall indicate his agreement to the terms of the Plan by executing a Participation Agreement, a form of which is attached hereto as Exhibit A. By means of paragraph 4 of the Participation Agreement, an Employee and the Corporation may agree to vary the terms of the Plan as to such Employee. ARTICLE III BENEFITS Section 3.1. Except in the case of termination for Cause, in which event no benefit shall be payable under the Plan, if a Participant's employment with the Corporation or one of its subsidiaries is terminated (a) by Disability, (b) within one (1) year after a Change in Control, or (c) after the Participant has completed five (5) years of Vesting Service, the Corporation shall pay to the Participant, in the manner provided in Article V, a benefit equal to the excess of the benefit in (i) over the benefit in (ii) described below: (i) the benefit which the Participant would be entitled to receive under the Retirement Plan (based upon the terms of the Retirement Plan then in effect but without giving effect to any qualified domestic relations order, as defined in Section 414(p) of the Code) upon the Participant's termination of employment and if the benefit under the Retirement plan were computed 4 3 (a) including in Earnings for Retirement Plan purposes incentive compensation; and (b) without giving effect to the limitations then currently imposed by Section 415 of the Code, the limitations of Section 1.401(a)(4)-5(b) of the Income Tax Regulations or their successors, or the limitations under Section 401(a)(17) of the Code; (ii) the benefit which the Participant would be entitled to receive under the Retirement Plan (but without giving effect to any qualified domestic relations order, as defined in Section 414(p) of the Code) upon the Participant's termination of employment, if such benefit were computed without giving effect to the limitation then currently imposed by Section 1.401(a)(4)-5(b) of the Income Tax Regulations or its successor. Section 3.2. For purposes of Section 3.1(i), a Participant whose employment has terminated for reasons other than death or Disability within one (1) year after a Change in Control and who is not otherwise entitled to receive a benefit under the Retirement Plan shall be deemed to be entitled to receive a benefit under the Retirement Plan based upon the formula set forth in the Retirement Plan. ARTICLE IV DEATH BENEFITS Section 4.1. If the spouse of a Participant is entitled to receive a benefit under the Retirement Plan upon the death of the Participant then such spouse will be entitled to receive a death benefit under this Plan calculated pursuant to the formula set forth in Article III. ARTICLE V PAYMENT OF BENEFITS Section 5.1. Payment of benefits under the Plan will be made in the same manner and at the same time as benefit payments to the Participant or his spouse under the Retirement Plan. ARTICLE VI CLAIMS Section 6.1. If a claim for benefits under the Plan is denied, the Committee will provide a written notice of the denial setting forth the specific reasons for the denial, a description of any additional material or information necessary for a claimant to perfect a claim, and an explanation of why such material or information is necessary and appropriate information as to the steps to be taken for the claim to be submitted for review. A claimant may request a review of a denial. Such requests should be submitted to the Committee, in writing, within 60 days after receipt of the denial notice stating the reasons for requesting the review. A claimant may review pertinent documents and submit issues and comments in writing. A decision will be made on the review of the denial of a claim not later than 60 days after the Committee's receipt of a request for review unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible but not 5 4 later than 120 days after receipt of a request for review. The decision on review will be in writing to the claimant and shall include specific reasons for the decision. ARTICLE VII AMENDMENT AND TERMINATION Section 7.1. The Board of Directors may amend or terminate the Plan at any time; provided, however, that no such amendment or termination shall have the effect of depriving Participants of rights accrued under the Plan as of the date of such amendment or termination. ARTICLE VIII ADMINISTRATION Section 8.1. The Plan shall be administered by the Committee in accordance with its terms, for the exclusive benefit of Participants. The powers and duties of the Committee shall be similar to those powers and duties granted to the Plan Administrator of the Retirement Plan. In addition, the Committee, in its sole discretion, shall have the power to accelerate the payment of benefits under the Plan to any Participant or spouse. Any interpretation or construction of Plan terms or any determination by the Committee with respect to Plan benefits, etc., shall be conclusive and binding with respect to Participants and all other persons. ARTICLE IX MISCELLANEOUS Section 9.1. Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall give the Participant the right to be retained in the employ of the Corporation or its subsidiaries or interfere with the right of the Corporation or its subsidiaries to discharge the Participant at any time, nor shall it give the Corporation or its subsidiaries the right to require the Participant to remain in their employ or interfere with the Participant's right to terminate his employment at any time. Section 9.2. No benefit payable at any time under this Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment or encumbrance of any kind. Section 9.3. All rights hereunder shall be governed by and construed according to the laws of the State of Missouri, except to the extent such laws are preempted by the laws of the United States of America. In the event any provision of this Plan is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan. Section 9.4 Nothing contained in this Plan shall create or be construed to create a trust of any kind or a fiduciary relationship between the Corporation or its subsidiaries and the Participant or any other person. To the extent that any person acquires the right to receive payment from the Corporation under this Plan, such right shall be no greater than the right of any unsecured general creditor of the Corporation. 6 5 Section 9.5. The terms of this Plan shall be binding upon and inure to the benefit of the Corporation, its successors and assigns, and the Participant and his heirs and legal representatives. Section 9.6. If a Participant becomes entitled to a distribution of benefits under the Plan, and if at such time the Participant has outstanding any debt, obligation, or other liability representing an amount owing to the Corporation or its subsidiaries, then the Corporation may offset such amount so owing against the amount of benefits otherwise distributable. Such determination shall be made by the Committee. Section 9.7. The Corporation shall, to the extent permitted by law, have the right to deduct from any payments of any kind with respect to the benefit otherwise due to the Participant any Federal, state or local taxes of any kind required by law to be withheld from such payments. 7 6 EXHIBIT A BOATMEN'S SUPPLEMENTAL RETIREMENT PLAN PARTICIPATION AGREEMENT THIS AGREEMENT is made as of ----------------, 19--- between Boatmen's Bancshares, Inc. ("Corporation") and --------------------- ("Participant"). The Corporation and the Participant mutually agree as follows: 1. The Participant has received a copy of the Boatmen's Supplemental Retirement Plan ("Plan") and has read and understands the Plan. 2. By completion of this Agreement, the Participant agrees to comply with the terms of the Plan in all respects. 3. All provisions of the Plan are hereby made a part of this Agreement. 4. The following special provisions are applicable to the Participant's participation in the Plan: ----------------------------------- - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- BOATMEN'S BANCSHARES, INC. By: ------------------------------------ --------------------------- Date ------------------------------------ --------------------------- Participant Date 8 EX-10.4 5 MATERIAL CONTRACT 1 Exhibit 10(w) BOATMEN'S SUPPLEMENTAL RETIREMENT PLAN PARTICIPATION AGREEMENT THIS AGREEMENT is made as of August 4, 1993, between Boatmen's Bancshares, Inc. ("Corporation") and Andrew B. Craig, III ("Participant"). The Corporation and the Participant mutually agree as follows: 1. The Participant has received a copy of the Boatmen's Supplemental Retirement Plan ("Plan") and has read and understands the Plan. 2. By completion of the Agreement, the Participant agrees to comply with the terms of the Plan in all respects. 3. All provisions of the Plan are hereby made a part of the Agreement. 4. The following special provisions are applicable to the Participant's participation in the Plan: For purposes of Section 3.1(i), the participant shall receive the greater of: a) thirty-three and one-third (33.3) years of credited service at age 65; or b) the actual number of years of credited service accrued using an employment commencement date of March 1, 1971. BOATMEN'S BANCSHARES, INC. By: /s/ ARTHUR J. FLEISCHER 8-5-93 ------------------------- ---------- Date /s/ ANDREW B. CRAIG, III 8-5-93 ------------------------- ---------- Participant Date EX-10.5 6 MATERIAL CONTRACT 1 Exhibit 10(z) BOATMEN'S SUPPLEMENTAL RETIREMENT PLAN PARTICIPATION AGREEMENT THIS AGREEMENT is made as of August 4, 1993, between Boatmen's Bancshares, Inc. ("Corporation") and Ike Kalangis ("Participant"). The Corporation and the Participant mutually agree as follows: 1. The Participant has received a copy of the Boatmen's Supplemental Retirement Plan ("Plan") and has read and understands the Plan. 2. By completion of the Agreement, the Participant agrees to comply with the terms of the Plan in all respects. 3. All provisions of the Plan are hereby made a part of the agreement. 4. The Following Special provisions are applicable the Participant's participation in the Plan: Credited service date of July 28, 1992. 5. In consideration of my participation under the Boatmen's Supplemental Retirement Plan, I hereby waive any rights and benefits that I may have under the Sunwest Supplemental Benefit Retirement Plan. BOATMEN'S BANCSHARES, INC. By: /s/ ANDREW B. CRAIG, III 8-5-93 ------------------------- ---------- Date /s/ IKE KALANGIS 8-10-93 ------------------------- ---------- Participant Date EX-10.6 7 MATERIAL CONTRACT 1 Exhibit 10(aa) BOATMEN'S ONE BOATMEN'S PLAZA BANCSHARES, INC. 800 Market Street Post Office Box 236 St. Louis, Missouri 63166-0236 314 466-6000 November 9, 1993 Mr. John Peters McCarthy Chairman of the Board and Chief Executive Officer Boatmen's Trust Company 100 North Broadway P.O. Box 14737 St. Louis, MO 63178-4737 Dear Peter: You and Boatmen's Bancshares, Inc. ("Boatmen's") entered into an Employment Agreement on November 14, 1989 which expires on November 30 of this year. The purpose of this letter is to confirm that thereafter, upon your termination of employment with Boatmen's prior to your 63rd birthday, Boatmen's will pay to you or your estate or other designated beneficiary a lump sum equal to the amount of your then annual base salary. This payment will be in addition to all other salary and benefits payable to you. The payment will be made within 60 days of your termination of employment whether for disability, death or other termination. This letter will also confirm that you agree that, for a period of two years following termination of your employment, you will not, without the written consent of Boatmen's, engage in any business of, or enter into the employ of, or have any interest in, directly or indirectly, any other person, firm, corporation or other entity engaged in trust services and/or commercial banking with an office or facility in the State of Missouri or the State of Illinois. You acknowledge that damages at law will not adequately compensate Boatmen's for any breach by you of this agreement not to compete and that Boatmen's shall be entitled to equitable remedies (including, but not limited to, injunctive relief) in case of any breach, or to prevent a breach, of the covenant. If there is litigation involving this covenant and you are successfull in whole or in part in such litigation, Boatmen's will reimburse you for all of your legal fees and expenses. If the foregoing accurately reflects our understanding, please sign a copy of this letter below and return it to me. Very truly yours, BOATMEN'S BANCSHARES, INC. /s/ A. B. CRAIG, III --------------------------------------- Chairman and Chief Executive Officer /s/ JOHN PETERS MCCARTHY - -------------------------------- John Peters McCarthy EX-13 8 ANNUAL REPORT 1 1993 Financial Review Financial Commentary 17 Consolidated Quarterly Earnings Trend 40 Consolidated Quarterly Average Balance Sheet and Net Interest Margin 42 Consolidated Earnings Trend 44 Consolidated Average Balance Sheet and Net Interest Margin 46 Consolidated Balance Sheet 48 Consolidated Statement of Income 49 Consolidated Statement of Changes in Stockholders' Equity 50 Consolidated Statement of Cash Flows 51 Notes to Consolidated Financial Statements 52 Statement by Management 63 Report of Independent Auditors 63 Directors 64 Principal Officers 64 Corporate Information 65 16 Boatmen's Bancshares, Inc. 2 FINANCIAL COMMENTARY - ------------------------------------------------------------------------------ The following financial data have been restated to reflect the 1993 acquisition of First Amarillo Bancorporation, Inc. which was accounted for as a pooling of interests. The historical trends reflected in the restated financial information presented below are not reflective of anticipated future results. - --------------------------------------------------------------------------------------------------------------------------
Table 1: Summary of Selected Financial Data (in millions except per share data) 1993 1992 1991 1990 1989 - -------------------------------------------------------------------------------------------------------------------------- Earnings Net interest income $ 981.6 $877.7 $742.5 $655.8 $629.6 Fully taxable equivalent (FTE) adjustment(1) 35.6 35.9 38.6 41.8 47.0 Net interest income (FTE) basis 1,017.2 913.6 781.1 697.6 676.6 Provision for loan losses 60.2 136.6 114.7 119.5 93.3 Noninterest income 493.3 452.1 355.7 297.0 276.9 Noninterest expense 950.4 871.9 752.4 652.0 605.4 Net income 317.4 228.7 171.2 145.0 164.1 - -------------------------------------------------------------------------------------------------------------------------- Financial Position (at year end) Total assets $26,654.0 $24,280.9 $23,002.7 $22,795.1 $19,541.0 Loans 14,825.9 13,110.9 12,316.3 11,924.2 11,593.1 Reserve for loan losses 341.1 302.0 252.3 228.9 198.6 Deposits 20,909.0 19,684.8 18,060.1 18,119.0 14,963.6 Long-term debt 486.3 393.2 315.7 284.5 295.1 Equity 2,133.3 1,861.2 1,680.2 1,463.4 1,395.7 - -------------------------------------------------------------------------------------------------------------------------- Share Data(2) Net income per share $3.07 $2.29 $1.77 $1.58 $1.81 Dividends paid 1.15 1.09 1.07 1.06 1.02 Book value (year end) 20.49 18.20 16.94 15.84 15.42 Tangible book value (year end) 17.84 16.19 15.09 14.02 13.86 Shares outstanding (year end) 104.1 102.3 99.2 92.4 90.5 Average shares outstanding 103.5 100.0 96.9 91.7 89.5 - -------------------------------------------------------------------------------------------------------------------------- Selected Financial Ratios Return on assets 1.27% .99% .79% .73% .86% Return on total equity 15.99 12.95 10.78 10.13 11.98 Return on common equity 15.99 12.95 10.78 10.13 12.06 Net interest margin 4.56 4.40 4.05 3.96 4.03 Capital ratios: Equity to assets 8.00 7.67 7.30 6.42 7.14 Risk-based capital: Tier I capital 10.67 10.39 10.10 Total capital 14.42 13.75 13.17 Tier I leverage ratio 6.93 6.90 6.58 Nonperforming loans to total loans 1.17 1.96 2.54 3.18 2.67 Nonperforming assets to total loans and foreclosed property 1.90 2.92 3.92 3.93 3.38 Loan reserve to nonperforming loans 195.03 116.72 79.91 59.87 63.42 Net charge-offs to average loans .24 .80 .84 .76 1.00 - -------------------------------------------------------------------------------------------------------------------------- (1)The fully taxable equivalent adjustments are calculated using the Federal statutory tax rate. (2)Previously reported share data have been restated to reflect the two-for-one stock split which was declared on August 10, 1993 and paid on October 1, 1993.
[Return on Equity Graph] [Return on Asset Graph] [Earnings Per Share Graph] 1993 Annual Report 17 3 FINANCIAL COMMENTARY - ------------------------------------------------------------------------------ - -----------------------------------------------------------------------------------------------------------------------------------
Table 2: Acquisitions Accounting Date State Assets Price Shares issued(1) method - ----------------------------------------------------------------------------------------------------------------------------------- Completed Centerre Bancorporation 12/88 Missouri $ 5.0 billion $467 million stock 28.6 million Pooling RTC assisted-Community Federal S&L 12/90 Missouri 2.3 billion 27 million cash - Purchase First Interstate Bank of Oklahoma, N.A. 8/91 Oklahoma .9 billion 86 million cash - Purchase Founders Bancorporation, Inc. 3/92 Oklahoma .3 billion 34 million cash - Purchase Superior Federal Bank 3/92 Arkansas .7 billion - - Purchase RTC assisted-Home Federal S&L 3/92 Arkansas .1 billion 1 million cash - Purchase First Interstate of Iowa, Inc. 4/92 Iowa 1.2 billion 94 million stock 4.2 million Pooling FDIC assisted-Jackson Exchange Bank 5/92 Missouri .1 billion 1 million cash - Purchase Sunwest Financial Services, Inc. 10/92 New Mexico/Texas 3.4 billion 325 million stock 14.8 million Pooling Security Bank and 1st Bank of Catoosa in Tulsa 11/92 Oklahoma .2 billion 33 million cash - Purchase FDIC assisted-First City-El Paso 3/93 Texas .3 billion 14 million cash - Purchase FDIC assisted-Missouri Bridge Bank 4/93 Missouri 1.1 billion 16 million cash - Purchase RTC assisted-Cimarron Federal Savings 5/93 Oklahoma .4 billion 13 million cash - Purchase FCB Bancshares, Inc. 8/93 Kansas .2 billion 25 million cash - Purchase First Amarillo Bancorporation, Inc. 11/93 Texas .8 billion 192 million stock 5.9 million Pooling - ----------------------------------------------------------------------------------------------------------------------------------- Total assets of completed transactions $17.0 billion - ----------------------------------------------------------------------------------------------------------------------------------- Pending Woodland Bancorp, Inc. Oklahoma $ .1 billion $ 12 million stock .4 million Pooling - ----------------------------------------------------------------------------------------------------------------------------------- (1)Previously reported share data have been restated to reflect the two-for-one stock split which was declared on August 10, 1993 and paid on October 1, 1993.
Acquisition Overview The Corporation's assets have increased from $9.9 billion at December 31, 1987 to $26.7 billion at December 31, 1993, an average annual growth rate of 18%. During this period the Corporation has pursued a strategy of expansion within its natural trade territory through a combination of internal growth and acquisition activity. The acquisition program has three objectives: geographic diversification, growth in retail market share, and additional earnings generation capacity. The Corporation has made several sizeable acquisitions establishing dominant market positions in Missouri, New Mexico, and significant presences in southern Illinois, western Tennessee, Oklahoma, Arkansas and northern Texas. This growth has basically occurred in two distinct phases. The first phase concentrated on intramarket transactions to fully establish the Missouri cornerstone of the franchise and culminated with the Resolution Trust Corporation (RTC) assisted acquisition of Community Federal in 1990, a $2.3 billion thrift institution located in St. Louis. This acquisition provided the Corporation with a stable and low cost source of deposits and the opportunity to cross-sell services to a large new customer base at a low incremental cost. Deposits assumed totaled $2.3 billion and deposit retention approximated 75%. The Corporation completed another regulatory assisted transaction in Missouri in 1993 which added approximately $1.1 billion of assets to its Missouri franchise such that total assets in this state now approximate $16 billion. A more complete description of the Corporation's latest Missouri acquisition is provided below. The second phase of the acquisition program commenced in 1991 by expanding into markets in nearby states, thereby achieving a degree of geographic diversification on a reasonably synergistic basis. Over the last three years, acquisitions aggregating $8.5 billion in assets were consummated in Oklahoma, Arkansas, Iowa, Kansas, New Mexico and Texas. These transactions significantly changed the composition of the customer base whereby the Missouri-based banking segment now represents 60% of the Corporation's banking assets, down from 90% at year-end 1990. The Corporation's operations currently span nine states, with services delivered from over 400 branch locations and 350 off-premise ATM's. Prior period financial statements have been restated to reflect the 1993 acquisition of First Amarillo Bancorporation, Inc., which was accounted for as a pooling of interests. In addition, 10 acquisitions recorded under the purchase method of accounting were consummated during the last three years; therefore, the results of operations of these companies are included in the consolidated financial statements subsequent to the dates of acquisition and must be considered when reviewing the trended financial information. Additionally, [Asset Growth Graph] [Equity Growth Graph] 18 Boatmen's Bancshares, Inc. 4 - ------------------------------------------------------------------------------ because some of the acquisitions were of an intramarket nature, numerous nonrecurring merger costs were recognized in such transactions reflecting the geographical market overlap of customer bases, the conforming of methodologies for determining loan loss reserves, and the elimination of duplicate functions, facilities, equipment and systems. Much of the Corporation's emphasis during this period of expansion has focused primarily on realizing expense economies inherent in these intramarket acquisitions and improving the loan portfolios of the acquired companies. Oklahoma Acquisitions During the period August 1, 1991 through May 26, 1993, the Corporation completed four acquisitions in Oklahoma, such that assets in this state now total approximately $1.8 billion with services provided from 40 locations, half of which are in the Oklahoma City and Tulsa metropolitan areas. The Corporation's initial entry into Oklahoma occurred in 1991, with the acquisition of First Interstate Bank of Oklahoma, N.A., which at that time had assets of approximately $900 million and nine offices in the Oklahoma City metropolitan area. Subsequently, the Corporation completed two acquisitions of retail-oriented institutions in 1992, which added assets of approximately $500 million to its Oklahoma franchise for a combined purchase price of approximately $67 million. These institutions were merged into the Boatmen's First National Bank of Oklahoma to provide cost savings from operational efficiencies from these intra-market acquisitions. On May 26, 1993, the Corporation, through its Oklahoma and Arkansas subsidiaries, acquired 20 branches of the former Cimarron Federal Savings Association (Cimarron), in an RTC assisted transaction for $13.1 million in cash. Assets purchased, consisting primarily of cash and investment securities, and deposits assumed totaled approximately $430 million. Two locations, with deposits of approximately $60 million, became branches of the Corporation's Oklahoma bank, and the other 18 locations, primarily located in eastern Oklahoma, became branches of the Corporation's Arkansas thrift subsidiary, Superior Federal Bank (Superior), which is headquartered in Fort Smith, Arkansas. In the fourth quarter of 1993, the Corporation announced plans to acquire Woodland Bancorp, Inc. (Woodland), a retail banking organization with assets of approximately $65 million. Woodland is located in Tulsa, Oklahoma and completion of this acquisition is expected on March 31, 1994. Arkansas Acquisitions On March 20, 1992, the Corporation established a meaningful presence in Arkansas with the acquisition of Superior, the third largest financial institution in the state. Superior, with total assets now approximating $1.2 billion, was acquired in a transaction structured as a voluntary supervisory conversion, wherein the Corporation contributed $29 million in equity capital in exchange for 100% stock ownership. On March 27, 1992, the Corporation, through Superior, expanded its Arkansas presence by assuming approximately $120 million of deposits and five locations from a failed thrift in a regulatory assisted transaction with the RTC. The deposits were acquired for a premium of $1.3 million. In the second quarter of 1993, Superior's market position was further strengthened as a result of the aforementioned RTC assisted acquisition of Cimarron. Superior is heavily oriented to consumer business, and operates from 56 locations in two states, 38 of which are located in central and northwestern Arkansas, which includes Little Rock, Fort Smith, and Fayetteville, and 18 locations in eastern Oklahoma. Iowa Acquisition On April 1, 1992, the Corporation consummated the acquisition of First Interstate of Iowa, Inc. in a transaction which was accounted for as a pooling of interests, resulting in the issuance of approximately 4.2 million shares of common stock. First Interstate of Iowa, subsequently renamed Boatmen's Bancshares of Iowa, Inc. with approximately $1.2 billion in assets, is headquartered in Des Moines, Iowa and operates eight banks with 35 offices throughout the state. Approximately 45% of the banking assets are located in Des Moines, ranking Boatmen's second in market share in that city. New Mexico Acquisition The Corporation established a dominant position in New Mexico with the acquisition of Sunwest Financial Services, Inc. (Sunwest) on October 1, 1992. This transaction required the issuance of approximately 14.8 million shares of common stock and was accounted for as a pooling of interests. Sunwest, with approximately $3.4 billion in assets, is headquartered in Albuquerque, New Mexico and is the largest banking organization in the state, operating 12 banks with 72 offices and 123 off-premise ATM's. Texas Acquisitions On March 5, 1993, the Corporation, through its subsidiary bank, Sunwest Bank of El Paso, acquired First City's former bank in El Paso under an FDIC assisted transaction for $14 million in cash. This bank, with assets of approximately $340 million, was merged into the Sunwest Bank of El Paso providing intramarket operating efficiencies. As a result of this transaction, the Corporation's El Paso bank increased its asset size to approximately $510 million and has attained a significant market share in the El Paso metropolitan area. On November 30, 1993, the Corporation acquired First Amarillo Bancorporation, Inc. (Amarillo), in a transaction accounted for as a pooling of interests. Under terms of the agreement, the Corporation exchanged .912 shares of its common stock for each share of Amarillo, resulting in the issuance of approximately 5.9 million shares of common stock. Amarillo, with assets at December 31, 1993 of approximately $1.0 billion, is located in Amarillo, Texas and has the leading market share in this north Texas market. Missouri Acquisition On April 23, 1993, the Corporation, through its Kansas City bank, acquired Missouri Bridge Bank, N.A., the former Metro North State Bank and Merchants Bank under an assisted transaction with the FDIC. Boatmen's First National Bank of Kansas City acquired $1.1 billion of certain assets and assumed the same amount of deposit liabilities for a premium of $15.8 million. As a result of this transaction, the Corporation increased its assets in the Kansas City metropolitan area to $3.8 billion, further solidifying its leading position in this market. Assets purchased included loans of approximately $960 million and other assets totaling $180 million, consisting primarily of investment securities, cash and short-term investments. The Corporation retained eight of the bank's 15 branches and purchased the premises and equipment at fair market value. 1993 Annual Report 19 5 FINANCIAL COMMENTARY - ------------------------------------------------------------------------------ As part of the transaction, the Corporation entered into a five-year loss-sharing arrangement with the FDIC with respect to approximately $950 million in multi-family residential, commercial real estate, construction and commercial and industrial loans. For a more complete description of the loss-sharing arrangement, refer to the Segregated Assets section of this report. Kansas Acquisition On August 2, 1993, the Corporation consummated the acquisition of FCB Bancshares, Inc., a one-bank holding company located in Overland Park, Kansas with assets of approximately $185 million, for $25 million in cash. This acquisition represents the Corporation's initial entry into Kansas and is a natural extension of the Corporation's Kansas City franchise. Earnings Overview Net income in 1993 reached a record level, increasing 38.8% and totaling $317.4 million, compared to an increase of 33.6% in 1992 when net income totaled $228.7 million. Net income per share increased 34.1% to $3.07 compared to an increase of 29.4% in 1992. Net income in each of the last three years has been impacted to some extent by one-time acquisition-related charges from pooling acquisitions as summarized in Table 3. These acquisition-related charges consisted primarily of nonrecurring expenses for investment banking fees, severance and other compensation-related benefits, abandonment of equipment and software and, in 1992, also included charges to conform Sunwest's loan reserve, loan accrual and investment securities policies to those of the Corporation. Realignment of the securities portfolio at Sunwest in 1992 occurred over the last three quarters of that year resulting in the recognition of securities gains aggregating $24.3 million. A reconciliation of the quarterly earnings on a normalized basis is provided in Table 4. The record earnings in 1993 were reflected in other key performance ratios such as the return on assets and return on equity. The return on average assets was 1.27% in 1993 compared to .99% in 1992 and .79% in 1991. The return on equity was 15.99% in 1993 compared to 12.95% in 1992 and 10.78% in 1991. Net interest income, on a fully taxable equivalent basis, increased 11.3% in 1993 and 17.0% in 1992 primarily due to wider interest spreads and moderate increases in average earning assets. The net interest margin increased to 4.56% in 1993 compared to 4.40% in 1992 and 4.05% in 1991. Average earning assets increased 7.6% in 1993 and 7.5% in 1992 largely due to purchase acquisitions. Over the second half of 1993 the Corporation experienced narrower spreads primarily resulting from reinvestment of maturing securities into lower yielding securities. As a result, the net interest margin for the fourth quarter declined to 4.45% which is more reflective of the near-term anticipated trend. - ----------------------------------------------------------------------------------------------------------------------------------
Table 3: Pooling Acquisition-related Adjustments 1993-1991 Increase (Decrease) to Earnings 1993 1992 1991 (in millions except per share data) PRE-TAX AFTER-TAX Pre-tax After-tax Pre-tax After-tax - ---------------------------------------------------------------------------------------------------------------------------------- Provision for loan losses $ - $ - $(33.3) $(22.0) $ - $ - Other real estate writedowns - - (7.0) (4.6) - - - ---------------------------------------------------------------------------------------------------------------------------------- Total credit related adjustments - - (40.3) (26.6) - - Premises and equipment writedowns (0.9) (0.6) (3.1) (2.1) (1.2) (0.8) Other merger-related expenses (primarily investment banking fees, severance and other compensation-related benefits) (3.8) (3.2) (8.1) (7.0) (5.9) (4.4) - ---------------------------------------------------------------------------------------------------------------------------------- Total acquisition-related charges (4.7) (3.8) (51.5) (35.7) (7.1) (5.2) Securities gains - - 24.3 16.0 - - - ---------------------------------------------------------------------------------------------------------------------------------- Net acquisition-related adjustments $(4.7) $(3.8) $(27.2) $(19.7) $(7.1) $(5.2) - ---------------------------------------------------------------------------------------------------------------------------------- Per share $(.04) $(.20) $(.05) - ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Table 4: Reconciliation of 1993 and 1992 Quarterly Earnings 1993 1992 -------------------------------------------------------------------------------------- (in millions except per share data) 1ST 2ND 3RD 4TH FULL YEAR 1st 2nd 3rd 4th Full year - ---------------------------------------------------------------------------------------------------------------------------------- Net income before acquisition-related adjustments from pooling transactions $79.3 $79.7 $81.3 $80.9 $321.2 $58.0 $60.6 $65.2 $64.6 $248.4 Acquisition-related adjustments, net of tax (3.8) (3.8) 2.1 10.8 (32.6) (19.7) - ---------------------------------------------------------------------------------------------------------------------------------- Reported net income $79.3 $79.7 $81.3 $77.1 $317.4 $58.0 $62.7 $76.0 $32.0 $228.7 - ---------------------------------------------------------------------------------------------------------------------------------- Average shares outstanding 103.0 103.3 103.4 103.5 103.5 99.3 99.5 99.7 100.0 100.0 Earnings per share: Before effect of acquisition-related adjustments from pooling transactions $.77(1) $.77 $.78 $.79 $3.11 $.58 $.61 $.66 $.64 $2.49 As reported $.77(1) $.77 $.78 $.75 $3.07 $.58 $.63 $.76 $.32 $2.29 - ---------------------------------------------------------------------------------------------------------------------------------- (1) Includes $.06 per share due to recognition of a deferred tax asset at Amarillo.
20 Boatmen's Bancshares, Inc. 6 - ------------------------------------------------------------------------------ Noninterest income increased 9.1% in 1993 and 27.1% in 1992. Excluding the effect of purchase acquisitions and the large level of securities gains recognized at Sunwest in 1992, noninterest income increased 11.6% in 1993 and 11.4% in 1992 as all major core noninterest income categories increased over the prior year period. Noninterest expense increased 9.0% in 1993 and 15.9% in 1992. To a large extent, year-to-year noninterest expenses are noncomparable due to 10 purchase acquisitions consummated subsequent to August 1, 1991, and merger-related expenses stemming from three pooling acquisitions. Excluding these factors, noninterest expense increased 5.9% in 1993 and 7.4% in 1992. The provision for loan losses decreased 55.9% in 1993 and totaled $60.2 million compared to $136.6 million in 1992 and $114.7 million in 1991. The decrease in the provision for loan losses in 1993 reflected positive trends in asset quality, evidenced by a substantially lower level of actual loan losses, further declines in nonperforming loans and a continued downward trend in criticized loans designated by the Corporation's internal risk rating system. The provision for loan losses in 1992 included a special provision at Sunwest of $33.3 million to conform to the Corporation's loan reserve methods. Excluding the Sunwest special provision in the fourth quarter of 1992, the provision for loan losses declined for the ninth consecutive quarter and, for the full year 1993, decreased 41.8% compared to a decline of 9.9% in 1992. At December 31, 1993, the reserve coverage of nonperforming loans increased to 195.03% compared to 116.72% at December 31, 1992 and 79.91% at December 31, 1991. The loan reserve as a percentage of net loans was 2.30% at the end of 1993 and 1992, compared to 2.05% at December 31, 1991. Net loan charge-offs declined to $34.0 million, a decrease of $68.6 million or 66.9% from 1992 when charge-offs of $28 million were recognized at Sunwest to conform to the Corporation's loan reserve method. Net charge-offs as a percentage of average loans dropped to .24% compared to .80% in 1992 and .84% in 1991, with lower losses throughout all sectors of the portfolio. In the fourth quarter of 1993, the Corporation adopted Statement of Financial Accounting Standards No. 115 (SFAS No. 115) "Accounting for Certain Investments in Debt and Equity Securities." The adoption of SFAS No. 115 had no effect on earnings but increased year-end stockholders' equity by $42.3 million, as approximately $5.2 billion of securities were designated as available for sale and were marked to market. In the fourth quarter of 1992, the Corporation adopted two accounting pronouncements, Statement of Financial Accounting Standards No. 109 (SFAS No. 109) "Accounting for Income Taxes" and Statement of Financial Accounting Standards No. 106 (SFAS No. 106) "Employers' Accounting for Postretirement Benefits Other Than Pensions." The combined impact from adoption of the two pronouncements increased net income in 1992 by $.7 million. Presented in Table 5 is an income statement analysis expressed on a per share basis, summarizing the changes in earnings per share in 1993 and 1992. The Corporation consists of three major banking components: commercial and retail banking, trust services and a credit card operation. The earnings contribution from each component for 1993 and 1992 and the geographic distribution of assets are summarized in Tables 6 and 7. - ------------------------------------------------------------
Table 5: Earnings Per Share Analysis Per share '93 VS '92 '92 vs '91 - ------------------------------------------------------------ Net income prior period $2.29 $1.77 - ------------------------------------------------------------ Net interest income 1.04 1.40 Provision for loan losses .76 (.23) Noninterest income .41 .99 Noninterest expense (.79) (1.23) Income tax expense (.54) (.34) Impact of additional shares of common stock (.10) (.07) - ------------------------------------------------------------ Net increase .78 .52 - ------------------------------------------------------------ Net income current period $3.07 $2.29 - ------------------------------------------------------------
- ------------------------------------------------------------
Table 6: Earnings Contribution by Business Component Per share 1993 1992 - ------------------------------------------------------------ Commercial and retail banking operations $3.16 $2.26 Trust services .35 .35 Credit card .18 .18 Unallocated debt service, administrative overhead and nonbank services (.62) (.50) - ------------------------------------------------------------ Consolidated earnings per share $3.07 $2.29 - ------------------------------------------------------------
- ------------------------------------------------------------
Table 7: Asset Distribution % of December 31, 1993 (in billions) Assets total - ------------------------------------------------------------ Missouri $16.0 59.9% New Mexico 3.3 12.4 Oklahoma 1.8 6.7 Texas 1.6 6.0 Iowa 1.2 4.5 Illinois 1.0 3.7 Arkansas .9 3.4 Tennessee .7 2.6 Kansas .2 .8 - ------------------------------------------------------------ Total $26.7 100.0% - ------------------------------------------------------------
1993 Annual Report 21 7 FINANCIAL COMMENTARY - ------------------------------------------------------------------------------- NET INTEREST INCOME - ------------------------------------------------------------------------------- Table 8: Summary of Net Interest Income
Quarter -------------------------------------------------- % change from (in millions) First Second Third Fourth Year prior year - ---------------------------------------------------------------------------------------------------------------------- 1993 AVERAGE LOANS $13,127.9 $13,958.8 $14,373.7 $14,666.2 $14,036.8 10.1% AVERAGE EARNING ASSETS 21,306.9 22,080.5 22,680.5 23,190.7 22,320.8 7.6 NET INTEREST INCOME (FTE) 244.5 255.4 259.5 257.8 1,017.2 11.3 INTEREST RATE SPREAD 3.99% 4.05% 4.03% 3.88% 3.99% NET INTEREST MARGIN 4.59 4.63 4.58 4.45 4.56 - ---------------------------------------------------------------------------------------------------------------------- 1992 Average loans $12,352.0 $12,824.6 $12,819.3 $12,992.9 $12,748.0 7.2% Average earning assets 20,160.3 20,750.5 20,903.0 21,194.2 20,753.6 7.5 Net interest income (FTE) 214.2 228.8 232.8 237.8 913.6 17.0 Interest rate spread 3.55% 3.74% 3.81% 3.85% 3.74% Net interest margin 4.25 4.41 4.45 4.49 4.40 - --------------------------------------------------------------------------------------------------------------------- 1991 Average loans $11,805.5 $11,635.6 $11,918.8 $12,286.0 $11,888.2 1.6% Average earning assets 19,656.0 18,849.6 19,045.4 19,774.2 19,309.6 9.7 Net interest income (FTE) 188.8 190.3 197.3 204.7 781.1 12.0 Interest rate spread 3.02% 3.20% 3.29% 3.31% 3.21% Net interest margin 3.84 4.04 4.14 4.14 4.05 - ---------------------------------------------------------------------------------------------------------------------
Measured on a fully taxable equivalent basis, net interest income increased 11.3% in 1993 and 17.0% in 1992. These increases were primarily due to enhancement of the net interest margin attributable to wider interest rate spreads, coupled with a moderate increase in average earning assets. The wider interest rate spreads resulted from a sustained decline in liability funding rates during the 2 1/2 year period from December of 1990 through June of 1993 that continued to outpace the corresponding decline in earning asset yields. The Corporation lowered rates paid on retail deposits during this period at a faster pace than corresponding asset yields repriced, resulting in expansion of the interest margin to 4.56% in 1993 compared to 4.40% in 1992 and 4.05% in 1991. Average rates paid on deposits declined by 87 basis points in 1993 and 181 basis points in 1992 while earning asset yields fell by only 57 basis points in 1993 and 127 basis points in 1992. The ability to reduce retail deposit rates was due in some measure to the pricing discipline in relation to the market share the Corporation enjoys in many of its major markets. In addition, lending spreads improved as the surface spread between the prime rate and Federal funds averaged 300 basis points for 1993 compared to 260 basis points during 1992. As illustrated in Table 8, the Corporation experienced a steady improvement in the net interest margin throughout 1992 and the first half of 1993. However, an anticipated contraction in the margin was experienced over the second half of 1993 as maturing securities were reinvested in lower yielding securities resulting in a repricing of assets at a faster pace than interest bearing deposits. Accordingly, the net interest margin in the fourth quarter declined to 4.45%. This situation was common to the industry as a whole, which experienced a similar contraction in interest spreads. Based on the current interest rate outlook, the Corporation expects minor contraction in the net interest margin in the near term. [Net Interest Margin Graph] [Quarterly Net Interest Margin Graph] Average earning assets increased 7.6% in 1993 and 7.5% in 1992 primarily due to purchase acquisitions of retail-oriented institutions coupled with an expansion of 22 Boatmen's Bancshares, Inc. 8 - ------------------------------------------------------------------------------- the securities portfolio. Loans, the highest yielding earning asset, increased 10.1% in 1993 and as a percentage of average earning assets were 62.9% in 1993 compared to 61.4% in 1992. Held to maturity and available for sale securities, in the aggregate, increased 18.6% in 1993, representing 34.7% of average earning assets, up from 31.5% in 1992. This increase reflects redeployment of short-term money market instruments and funds received from regulatory assisted transactions to the securities portfolio. Interest rate risk is the degree to which market interest rate fluctuations can affect net interest income. The Corporation's objective in managing interest rate risk is to maintain a balanced mix of rate sensitive assets and liabilities on a one-year time horizon, although rate sensitivity can vary within the intervening time periods depending upon current business conditions and the interest rate outlook. An integral component of the Corporation's overall asset/liability management strategies is the management of interest rate risk through prudent use of derivative products, such as interest rate swaps. During 1993, the Corporation added new swap transactions with a notional amount of $1.2 billion while $.4 billion of swaps matured such that at December 31, 1993, the notional value of the swap portfolio totaled $1.9 billion, compared to $1.1 billion at December 31, 1992. These derivative instruments were primarily used to modify the interest rate sensitivity of subordinated debt, hedge basis risk by locking in spreads on prime based loans, alter the balance sheet sensitivity of acquired companies and modify the interest sensitivity of selected loan portfolio components. The average maturity of the interest rate swap portfolio at December 31, 1993 was approximately two years. These swaps increased net interest income by approximately $20 million in 1993, adding 10 basis points to the net interest margin, compared to $12 million or six basis points in 1992. Any future utilization of off-balance sheet financing techniques will be determined based upon the Corporation's overall interest rate sensitivity position and asset/liability management strategies, which are designed to limit interest rate risk exposure to no more than 5% of projected annual net income. This is monitored by periodic simulations of the Corporation's balance sheet using modeling techniques to monitor compliance with interest rate risk limits under alternative interest rate forecasts and measuring the resulting change in net income. At December 31, 1993, the Corporation's earnings at risk position was approximately 2%. This position is subject to change in response to the dynamics of the Corporation's balance sheet and general market conditions. Another means of monitoring interest rate risk is the interest sensitivity analysis appearing in Table 9. This analysis identifies the repricing characteristics of the balance sheet and resulting gap or difference between assets and liabilities repricing within and over given time periods. It should be noted, however, that the traditional gap analysis can provide an incomplete picture of a financial institution's interest rate risk position due to its inability to capture the sensitivity associated with prepayment risk, asymmetric pricing patterns for administered and retail deposit accounts and noninterest bearing funds volume. - ------------------------------------------------------------------------------------------------------------------------ Table 9: Rate Sensitivity At December 31, 1993
Interest sensitive within ------------------------------------------------------------------------------------------ 0-30 31-90 91-180 181-365 Total Over (in millions) days days days days one year one year Total - ------------------------------------------------------------------------------------------------------------------------ Earning assets Loans $6,548 $ 969 $ 862 $1,422 $ 9,801 $ 5,025 $14,826 Securities(1) 1,014 577 892 1,755 4,238 4,264 8,502 Other earning assets 480 480 480 - ------------------------------------------------------------------------------------------------------------------------ Total earning assets $8,042 $1,546 $1,754 $3,177 $14,519 $ 9,289 $23,808 - ------------------------------------------------------------------------------------------------------------------------ Sources of funds Retail savings and interest bearing transaction accounts(2) $3,206 $ 459 $ 688 $ 4,353 $ 4,420 $ 8,773 Time deposits 1,182 1,214 1,411 1,389 5,196 2,170 7,366 Federal funds purchased and other short-term borrowings(3) 2,841 2,841 2,841 Long-term debt and capital lease obligation 2 2 524 526 Noninterest-bearing, net(3) 4,302 4,302 Effect of interest rate swaps 600 285 284 100 1,269 (1,269) - ------------------------------------------------------------------------------------------------------------------------ Total sources of funds $7,829 $1,958 $2,383 $1,491 $13,661 $10,147 $23,808 - ------------------------------------------------------------------------------------------------------------------------ Period gap $ 213 $ (412) $ (629) $1,686 $ 858 $ (858) - ------------------------------------------------------------------------------------------------------------------------ Cumulative gap $ 213 $ (199) $ (828) $ 858 $ 858 - ------------------------------------------------------------------------------------------------------------------------ Cumulative gap as a percent of earning assets .9% (.8)% (3.5)% 3.6% 3.6% - ------------------------------------------------------------------------------------------------------------------------ (1) Includes held to maturity and available for sale securities. (2) A large percentage of the Corporation's administered-rate retail deposit accounts are considered to be somewhat insensitive to rising interest rates and, as such, are included in the over one-year time period. The rate and volume patterns of these deposits over the past ten years are considered in making this determination. (3) Includes short-term borrowings and net demand deposits adjusted to eliminate material fluctuations in daily deposit levels.
1993 Annual Report 23 9 FINANCIAL COMMENTARY - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Table 10: Rate/Volume Analysis
(in millions) 1993 1992 - --------------------------------------------------------------------------------------------------------------------------------- CHANGE DUE TO Change due to - --------------------------------------------------------------------------------------------------------------------------------- TOTAL CHANGE VOLUME(a) RATE(b) Total change Volume(a) Rate(b) - --------------------------------------------------------------------------------------------------------------------------------- Interest income, fully taxable equivalent basis - --------------------------------------------------------------------------------------------------------------------------------- Loans $ 32.4 $111.2 $(78.8) $(85.2) $ 85.7 $(170.9) Federal funds sold and securities purchased under resale agreements (36.0) (33.7) (2.3) (29.0) (.2) (28.8) Held to maturity securities: Taxable (17.5) 58.5 (76.0) 26.6 90.1 (63.5) Tax-exempt (8.7) (9.0) .3 (4.8) (4.6) .2 Available for sale securities 29.0 29.0 Trading securities (.6) (.6) (4.6) (4.1) (.5) Receivable due from Resolution Trust Corporation (29.0) (29.0) Short-term investments (.6) (.3) (.3) (5.1) (2.8) (2.3) ------ ------ Total interest income (2.0) 124.8 (126.8) (131.1) 133.3 (264.4) - --------------------------------------------------------------------------------------------------------------------------------- Interest expense - --------------------------------------------------------------------------------------------------------------------------------- Savings accounts (.7) 12.8 (13.5) (8.3) 16.8 (25.1) Interest-bearing transaction accounts (20.9) 21.9 (42.8) (43.1) 53.0 (96.1) Time deposits (79.3) (8.2) (71.1) (169.1) (39.0) (130.1) Federal funds purchased and other short-term borrowings (11.0) 1.7 (12.7) (46.4) (4.4) (42.0) Capital lease obligation (.1) (.1) Long-term debt 6.3 11.6 (5.3) 3.4 4.9 (1.5) ------ ------ Total interest expense (105.6) 46.6 (152.2) (263.6) 50.8 (314.4) - --------------------------------------------------------------------------------------------------------------------------------- Net interest income, fully taxable equivalent basis $103.6 $ 78.2 $ 25.4 $132.5 $ 82.5 $ 50.0 - --------------------------------------------------------------------------------------------------------------------------------- (a) Based on change in volume applied to prior year rate. (b) Based on change in rate applied to current year volume; therefore, effect of change in rate on change in volume has been attributed to change in rate.
24 Boatmen's Bancshares, Inc. 10 - ------------------------------------------------------------------------------- LIQUIDITY - ------------------------------------------------------------------------------- Table 11: Earning Assets And Sources Of Funds
(average balances in millions) 1993 1992 1991 - ---------------------------------------------------------------------------------------------------------------------- Earning Assets AMOUNT % OF TOTAL Amount % of total Amount % of total - ---------------------------------------------------------------------------------------------------------------------- Securities(1) $ 7,740.5 34.7% $ 6,527.0 31.5% $ 5,484.7 28.4% Money market investments 543.5 2.4 1,478.6 7.1 1,936.7 10.0 Loans: Commercial 7,771.9 34.8 6,871.4 33.1 6,471.8 33.5 Retail 6,264.9 28.1 5,876.6 28.3 5,416.4 28.1 - ---------------------------------------------------------------------------------------------------------------------- Total earning assets $22,320.8 100.0% $20,753.6 100.0% $19,309.6 100.0% - ---------------------------------------------------------------------------------------------------------------------- Sources of Funds - ---------------------------------------------------------------------------------------------------------------------- Net investable demand deposits $ 2,607.6 11.7% $ 2,201.2 10.6% $ 1,738.0 9.0% Retail core deposits: Savings 2,014.6 9.0 1,628.2 7.8 1,283.0 6.7 Transaction accounts 6,264.5 28.1 5,556.3 26.8 4,455.4 23.1 Time 6,691.6 30.0 6,782.1 32.7 6,977.0 36.1 - ---------------------------------------------------------------------------------------------------------------------- Total 14,970.7 67.1 13,966.6 67.3 12,715.4 65.9 - ---------------------------------------------------------------------------------------------------------------------- Total core deposits 17,578.3 78.8 16,167.8 77.9 14,453.4 74.9 Negotiable CD's 1,018.6 4.5 1,089.0 5.2 1,467.8 7.6 Federal funds purchased and other short-term borrowings 2,094.7 9.4 2,046.7 9.9 2,125.0 11.0 Capital 1,629.2 7.3 1,450.1 7.0 1,263.4 6.5 - ---------------------------------------------------------------------------------------------------------------------- Total sources of funds $22,320.8 100.0% $20,753.6 100.0% $19,309.6 100.0% - ---------------------------------------------------------------------------------------------------------------------- (1) Includes held to maturity and available for sale securities.
Liquidity represents the availability of funding to meet the obligations to depositors, borrowers, and creditors at a reasonable cost without adverse consequences. Accordingly, the Corporation's liquidity position is greatly influenced by its funding base and asset mix, which has undergone favorable changes in recent years primarily due to an increase in core deposits. Core deposits, which consist of investable checking account deposits and certain interest-bearing accounts, represent the Corporation's largest and most important funding source, as these deposits represent a more stable, lower cost source of funds. The Corporation's strategic efforts have recently focused on strengthening the consumer deposit base through both internal growth and deposits acquired through acquisitions, and the successful execution of this strategy is illustrated by the substantial increase achieved in core deposits over the last several years. Average core deposits increased 8.7% in 1993 to $17.6 billion compared to an 11.9% increase in 1992, and supported 78.8% of average earning assets in 1993, up from 77.9% in 1992 and 74.9% in 1991. Over the last 5 years core deposits have grown by an average annual rate of 10.4% compared to an average annual increase of 5.9% in earning assets. During this same period, average purchased funds declined by an annual rate of 8.3%. The core deposit base is supplemented by the Corporation's wholesale and correspondent banking activities which provide a natural access to short-term purchased funds, such as negotiable certificates of deposit and overnight surplus funds. These somewhat more volatile liabilities can be acquired when needed, principally from existing customers within the Corporation's natural trade territory. Accordingly, the Corporation enjoys stability in its liability gathering process and is not dependent on access to national money markets to finance daily banking operations. Due to the sizeable increase in core deposits, the Corporation has reduced its portfolio of purchased funds, which typically represent higher cost funding alterna- [Average Earning Asset Mix Graph] [Funding Mix, 1993 Graph] 1993 Annual Report 25 11 FINANCIAL COMMENTARY - ------------------------------------------------------------------------------- tives. Average purchased funds, including negotiable CD's, supported 13.9% of earning assets in 1993, compared to 15.1% in 1992 and 18.6% in 1991. The maturity distribution of time deposits $100,000 and over at December 31, 1993 and 1992 is summarized in Table 12. The Corporation also manages its liquidity position by maintaining adequate levels of liquid assets such as money market investments and available for sale securities. The available for sale securities at December 31, 1993 totaled $5.2 billion with unrealized net appreciation of approximately $69 million. Parent Company liquidity is maintained by cash flows stemming from divi- dends and fees collected from subsidiaries, complemented by an active com- mercial paper program and availability of credit totaling $100 million under a revolving credit agreement. Commercial paper borrowings averaged $61 million in 1993 and $50 million in 1992. Commercial paper proceeds are generally used to fund the Corporation's mortgage banking operations, with excess funds invested in short-term instruments. The variety of funding options and strong cash flow provides the Corporation flexibility in selecting funding alternatives most appropriate in the circumstances, thereby avoiding the necessity to access capital markets at inopportune times. Maintaining favorable debt ratings is critical to liquidity because it can affect the availability and cost of funds to the Corporation. The Parent Company's ability to access the capital markets on a cost-effective basis is indicated by its debt ratings, summarized in Table 13. The Corporation executed four major public financings over the last three years, involving the issuance of common stock and subordinated notes. In the second quarter of 1991, six million shares of common stock were sold with total proceeds of $111 million. In that same year, the Corporation also completed an offering of $50 million of 8 5/8% subordinated notes, maturing in 2003. In the fourth quarter of 1992, the Corporation issued $100 million of 7 5/8% subordinated notes maturing in 2004, and in the first quarter of 1993, $100 million of 6 3/4% subordinated notes maturing in 2003 were issued, representing the final tranche under a $200 million shelf registration statement filed with the Securities and Exchange Commission in 1992. The Corporation has outstanding a shelf registration providing for the issuance of up to $200 million of preferred stock. The Corporation's existing debt position is fairly moderate, and projected cash flows are adequate to service this debt without additional financing, given continued profitable operations by the Corporation's banking subsidiaries. Approximately $36 million of debt is scheduled to mature within the next two years. In 1993, Parent Company net cash provided from operations totaled $201 million which was available to pay dividends to shareholders and support other financing and investing activities. - ---------------------------------------------------------------------------- Table 12: Time Deposits $100,000 and Over
December 31 (in millions) 1993 1992 - ---------------------------------------------------------------------------- Maturing within three months $415.9 $ 623.7 Maturing after three months but within six months 166.6 216.6 Maturing after six months but within one year 180.5 189.9 Maturing after one year 193.0 165.8 - ---------------------------------------------------------------------------- Total $956.0 $1,196.0 - ----------------------------------------------------------------------------
- ---------------------------------------------------------------------------- Table 13: Debt Ratings
Standard Thomson Rating Agency Moody's & Poor's Bankwatch - ---------------------------------------------------------------------------- Boatmen's Bancshares, Inc. B 6 3/4% Subordinated notes due 2003 A-3 A- A 7 5/8% Subordinated notes due 2004 A-3 A- A 8 5/8% Subordinated notes due 2003 A-3 A- A 9 1/4% Subordinated notes due 2001 A-3 A- A 6 1/4% Convertible subordinated debentures due 2011 A-3 A- A Commercial paper P-1 A-1 TBW-1 The Boatmen's National Bank of St. Louis: B Short-term/long-term deposits P-1/Aa3 A-1/A+ TBW-1 Boatmen's First National Bank of Kansas City: B Short-term/long-term deposits A-1/A+ TBW-1 - ----------------------------------------------------------------------------
HELD TO MATURITY AND AVAILABLE FOR SALE SECURITIES On December 31, 1993, the Corporation adopted Financial Accounting Standards No. 115 (SFAS No. 115), "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires entities to classify debt and equity securities as either held to maturity, available for sale, or trading securities. Under SFAS No. 115, held to maturity securities are recorded at amortized cost, whereas available for sale securities and trading securities are carried at market value. SFAS No. 115 further requires that unrealized gains and losses on available for sale securities be reported, net of tax, as a separate component of stockholders' equity. Upon adoption of SFAS No. 115, the Corporation transferred approximately $5.2 billion of securities to the available for sale portfolio, resulting in an increase to stockholders' equity of $42.3 million due to the market value adjustment. At December 31, 1993, held to maturity securities totaled $3.3 billion and represented securities the Corporation has the intent and ability to hold to maturity. These securities consisted primarily of tax-exempt municipal bonds, seasoned and intermediate-term pass-through mortgage-backed securities, intermediate-term corporate bonds and collateralized mortgage obligations (CMO's) possessing very stable repayment tranches. Available for sale securities at December 31, 1993 totaled $5.2 billion and represented securities that may be sold to meet liquidity needs or in response to significant changes in interest rates or prepayment risks. These securities consisted primarily of adjustable rate mortgages, U.S. Treasury securities, pass-through mortgage-backed securities and short-term CMO's. For comparison purposes, much of the following discussion will refer to the held to maturity and available for sale securities in the aggregate, as the securities portfolio. At December 31, 1993, the securities portfolio 26 Boatmen's Bancshares, Inc. 12 - ------------------------------------------------------------------------------- totaled $8.5 billion, an increase of 19.5% from year-end 1992. Based on average balances, the securities portfolio increased 18.6% in 1993 and 19.0% in 1992. Average securities represented 34.7% of earning assets in 1993 compared to 31.5% in 1992 and 28.4% in 1991 as a higher proportion of investable funds has been directed to the securities portfolio, which to some extent is a by-product of the increases in funding sources stemming from regulatory assisted acquisitions. A predominant share of the securities growth occurred in the mortgage-backed securities component of the portfolio in both 1993 and 1992. Purchases of mortgage-backed securities, including CMO's, totaled $2.7 billion in 1993 and $2.6 billion in 1992. These securities were either obligations of United States Government agencies or carried double-A or triple-A credit ratings. As a matter of corporate policy, the Corporation restricts the purchase of mortgage-backed products to securities rated double-A or higher. While these securities earn spreads above alternative U.S. Treasury obligations and have improved the portfolio's overall yield, mortgage-backed securities can expose an institution to prepayment risk in a declining interest rate environment. The Corporation attempts to control prepayment risk by purchasing securities at prices near par value and limiting CMO purchases to well structured tranches that provide prepayment protection such as Planned Amortization Classes (PAC's). Premium amortization related to mortgage-backed securities increased in 1993 due to a higher level of mortgage-backed securities and an acceleration in prepayments resulting from the lower interest rate environment which fueled mortgage refinancings. The held to maturity securities net market value appreciation at December 31, 1993 was $83.3 million and included gross unrealized gains of $93.9 million and gross unrealized losses of $10.6 million. Market value appreciation at December 31, 1992 totaled $147.6 million, including gross unrealized gains of $170.6 million and gross unrealized losses of $23.0 million. Net securities gains totaled $2.8 million in 1993 compared to $31.9 million in 1992 when $24.3 million of gains were realized from the realignment of the Sunwest portfolio. - ----------------------------------------------------------------------------- Table 14: Ratings of State and Municipal Securities - -----------------------------------------------------------------------------
December 31, 1993 (in millions) Book Percent Moody's Ratings Value of Total - ----------------------------------------------------------------------------- Aaa $251.6 30.7% Aa1 46.4 5.7 Aa 141.4 17.3 A1 155.3 18.9 A 99.1 12.1 Below A rated 10.8 1.3 Not rated 114.6 14.0 - ----------------------------------------------------------------------------- Total $819.2 100.0% - -----------------------------------------------------------------------------
- ---------------------------------------------------------------------------- Table 15: Held to Maturity Securities
Amortized Cost - ---------------------------------------------------------------------------- December 31 (in millions) 1993 1992 1991 - ---------------------------------------------------------------------------- U.S. Treasury $ 231.1 $1,264.0 $2,087.3 Federal agencies: Mortgage-backed securities 1,666.3 2,626.3 897.4 Other agencies 320.5 1,288.8 1,402.1 - ---------------------------------------------------------------------------- Total U.S. Treasury and agencies 2,217.9 5,179.1 4,386.8 State and municipal 819.2 891.6 986.2 Other securities 287.7 581.4 575.9 - ---------------------------------------------------------------------------- Total $3,324.8 $6,652.1 $5,948.9 - ---------------------------------------------------------------------------- Market Value - ---------------------------------------------------------------------------- December 31 (in millions) 1993 1992 1991 - ---------------------------------------------------------------------------- U.S. Treasury $ 232.4 $1,302.8 $2,171.0 Federal agencies: Mortgage-backed securities 1,672.3 2,643.3 928.7 Other agencies 321.8 1,319.3 1,453.1 - ---------------------------------------------------------------------------- Total U.S. Treasury and agencies 2,226.5 5,265.4 4,552.8 State and municipal 893.2 947.6 1,025.8 Other securities 288.4 586.6 586.5 - ---------------------------------------------------------------------------- Total $3,408.1 $6,799.6 $6,165.1 - ----------------------------------------------------------------------------
The available for sale securities net appreciation at December 31, 1993 was $68.7 million including gross unrealized gains of $85.5 million and gross unrealized losses of $16.8 million. The amortized cost and market value of the held to maturity 1993 Annual Report 27 13 FINANCIAL COMMENTARY - ------------------------------------------------------------------------------- and available for sale securities are presented in Tables 15 and 16. The Corporation's banking subsidiaries did not hold obligations of any individual states or political subdivisions for which the aggregate book value exceeded 10% of stockholders' equity. At December 31, 1993, state and municipal securities totaled $819.2 million, of which 84.7% were rated A or better. The Corporation's portfolio at December 31, 1993 is summarized by quality rating in Table 14. The maturity distribution of held to maturity and available for sale securities at December 31, 1993, together with weighted average yields for each range of maturity, are provided in Table 17. Proceeds from the sale of held to maturity securities totaled approximately $43.4 million in 1993 and $755.4 million in 1992 representing less than .6% of the average securities portfolio in 1993 compared to 12% in 1992. Sales in 1992 were primarily the result of selling $670 million of U.S. Treasury related securities at Sunwest to conform to the Corporation's investment policies. - ---------------------------------------------------------------------------- Table 16: Available for Sale Securities(1)
Amortized Cost - ---------------------------------------------------------------------------- December 31 (in millions) 1993 1992 1991 - ---------------------------------------------------------------------------- U.S. Treasury $1,152.6 $259.3 Federal agencies: Mortgage-backed securities 3,582.2 194.3 46.9 Other agencies 33.8 2.5 49.3 - ---------------------------------------------------------------------------- Total U.S. Treasury and agencies 4,768.6 456.1 96.2 State and municipal 1.0 .9 Equity securities 22.4 Other securities 317.3 6.5 - ---------------------------------------------------------------------------- Total $5,108.3 $463.6 $ 97.1 - ---------------------------------------------------------------------------- Market Value - ---------------------------------------------------------------------------- December 31 (in millions) 1993 1992 1991 - ---------------------------------------------------------------------------- U.S. Treasury $1,195.8 $273.7 Federal agencies: Mortgage-backed securities 3,608.3 194.6 50.3 Other agencies 33.8 2.5 51.3 - ---------------------------------------------------------------------------- Total U.S. Treasury and agencies 4,837.9 470.8 101.6 State and municipal 1.0 .9 Equity securities 25.7 Other securities 313.4 6.6 - ---------------------------------------------------------------------------- Total $5,177.0 $478.4 $102.5 - ---------------------------------------------------------------------------- (1) Amounts at December 31, 1992 and 1991 represented debt securities designated as held for sale prior to adoption of SFAS No. 115.
- ---------------------------------------------------------------------------------------------------------------------- Table 17: Maturity Distribution
Within After One But After Five But After One Year Within Five Years Within Ten Years Ten Years - ---------------------------------------------------------------------------------------------------------------------- December 31, 1993 (in millions) Amount Yield Amount Yield Amount Yield Amount Yield - ---------------------------------------------------------------------------------------------------------------------- Held to maturity securities: U.S. Treasury $ 2.6 4.51% $ 224.5 4.87% $ 4.0 7.17% Federal agencies: Mortgage-backed securities 21.6 5.70 1,026.6 5.94 524.1 5.84 $ 94.0 4.89% Other agencies 56.2 4.08 241.9 5.39 22.4 5.73 - ---------------------------------------------------------------------------------------------------------------------- Total U.S. Treasury and agencies 80.4 4.53 1,493.0 5.69 550.5 5.85 94.0 4.89 State and municipal* 83.9 9.78 171.4 10.49 282.5 10.10 281.4 9.81 Other securities** 27.9 5.98 229.5 6.15 1.0 4.01 - ---------------------------------------------------------------------------------------------------------------------- Available for sale securities: U.S. Treasury $383.2 7.43% $ 812.6 6.60% Federal agencies: Mortgage-backed securities 425.6 4.38 2,417.0 5.51 $700.9 5.08% $ 64.8 5.08% Other agencies 33.8 3.57 - ---------------------------------------------------------------------------------------------------------------------- Total U.S. Treasury and agencies 808.8 5.82 3,263.4 5.76 700.9 5.08 64.8 5.08 Other securities** 55.2 4.48 258.2 5.11 - ---------------------------------------------------------------------------------------------------------------------- *Yields on tax-exempt obligations are computed on a tax equivalent basis, using a tax rate of 35%. **Excludes marketable equity securities, Federal Reserve Bank and Federal Home Loan Bank stock, which have no stated maturities.
28 Boatmen's Bancshares, Inc. 14 - ------------------------------------------------------------------------------- NONINTEREST INCOME - ---------------------------------------------------------------------------------------------------------------------- Table 18: Summary of Noninterest Income
% change - ---------------------------------------------------------------------------------------------------------------------- (in millions) 1993 1992 1991 `93-`92 `92-`91 - ---------------------------------------------------------------------------------------------------------------------- Trust fees $149.6 $138.0 $120.8 8.4% 14.2% Service charges 153.2 133.6 105.8 14.7 26.2 Credit card 47.3 38.4 29.8 23.1 28.7 Investment banking profits and fees 35.6 31.8 20.9 12.1 52.0 Mortgage banking operations 16.4 10.9 5.9 50.5 84.7 - ---------------------------------------------------------------------------------------------------------------------- Core business revenues 402.1 352.7 283.2 14.0 24.5 - ---------------------------------------------------------------------------------------------------------------------- Securities gains, net 2.8 31.9 3.9 (91.2) 729.4 Other 88.4 67.5 68.6 30.9 (1.6) - ---------------------------------------------------------------------------------------------------------------------- Other revenues 91.2 99.4 72.5 (8.3) 37.3 - ---------------------------------------------------------------------------------------------------------------------- Total noninterest income $493.3 $452.1 $355.7 9.1% 27.1% - ---------------------------------------------------------------------------------------------------------------------- As % of operating income (net interest income [FTE] plus noninterest income) 32.7% 33.1% 31.3% Revenue per full-time equivalent employee (in thousands) $108.1 $104.2 $92.3 - ----------------------------------------------------------------------------------------------------------------------
Noninterest income increased 9.1% in 1993 and 27.1% in 1992. Excluding the effect of purchase acquisitions and the securities gains recognized in 1992 at Sunwest, noninterest income increased 11.6% in 1993 and 11.4% in 1992, reflecting continued growth in core fee income sources such as trust fees, service charge income, credit card fees, investment banking profits and fees and mortgage banking operations. Recent strategic initiatives have emphasized the expansion of fee-based services as a means to stabilize the earnings stream and reduce the Corporation's exposure to interest rate and credit risk. As such, the Corporation has focused on increasing noninterest revenues, principally through expansion of its trust and retail lines of business. Noninterest income as a percentage of operating revenues was 32.7% in 1993 compared to 33.1% in 1992 (31.9% excluding securities gains at Sunwest) and 31.3% in 1991. Revenue per full-time employee increased 3.7% in 1993. Trust fees, the largest component of noninterest income, increased 8.4% in 1993 and 14.2% in 1992. Excluding purchase acquisitions, trust fees increased 6.5% in 1993 and 9.4% in 1992 primarily due to successful marketing programs aimed at generating new personal and institutional business relationships and growth in the market value of managed assets on which some fees are based. Trust assets under management totaled $34.1 billion at December 31, 1993, up from $32.8 billion at December 31, 1992 and $32.7 billion at December 31, 1991. Service charge income increased 14.7% in 1993 and followed a 26.2% increase in 1992. These increases reflect growth through recent purchase acquisitions, increased penetration of the retail market and higher fees on corporate customer accounts. Excluding purchase acquisitions, service charge income increased 9.0% in 1993 and 14.1% in 1992. Investment banking profits and fees increased 12.1% in 1993 and 52.0% in 1992, primarily due to continued growth in retail brokerage operations. The higher percentage increase in 1992 was primarily due to an expansion in the retail brokerage line of business in that year. The Corporation expects further increases in this source of revenue in subsequent periods through a planned expansion of its retail brokerage sales force in 1994. [Noninterest Income Graph] Credit card income increased 23.1% in 1993 and 28.7% in 1992 primarily due to greater transaction volume of merchant business, which is also reflected in the increase in credit card expense. Income from mortgage banking operations increased 50.5% in 1993 and 84.7% in 1992, reflecting the continued impact of declining interest rates which increased market gains on mortgage loans sold as well as mortgage loan originations and refinancings. Securities gains in 1993 totaled $2.8 million compared to $31.9 million in 1992 and $3.9 million in 1991. Gains recognized in 1992 were primarily attributable to the sale of $670 million of securities at Sunwest to conform to the Corporation's investment philosophy coupled with the sale of $96 million of securities that were designated as held for sale at year-end 1991. Other noninterest income increased 30.9% in 1993 compared to a 1.6% de- crease in 1992. Other noninterest income in 1993 included gains of approxi- mately $3.3 million from the sales of two private label credit card portfolios, segregated assets income of $7.4 million and increases in commitment and letter of credit fees. Other noninterest income in 1991 included a nonrecurring gain of $3.3 million due to renegotiation of a leveraged lease transaction and a gain of $3.4 million from disposition of a mortgage loan portfolio acquired in an RTC assisted transaction. 1993 Annual Report 29 15 FINANCIAL COMMENTARY - ------------------------------------------------------------------------------- NONINTEREST EXPENSE - ------------------------------------------------------------------------------------------------------------------------- Table 19: Summary of Noninterest Expense
% change - ------------------------------------------------------------------------------------------------------------------------- (in millions) 1993 1992 1991 `93-`92 `92-`91 - ------------------------------------------------------------------------------------------------------------------------- Staff expense $466.5 $416.3 $361.6 12.1% 15.1% Occupancy 69.4 64.5 55.0 7.7 17.1 Equipment 77.5 68.8 59.5 12.8 15.6 FDIC insurance 44.4 41.6 35.6 6.6 16.8 Credit card 35.2 25.6 17.1 37.8 49.2 Printing, postage, paper 38.0 35.5 32.6 7.0 8.9 Intangible amortization 30.6 16.1 12.4 90.1 29.8 Professional fees 20.5 19.4 16.6 5.7 16.9 Federal Reserve processing charges 10.0 9.5 8.1 5.3 17.3 Advertising 27.8 20.4 16.9 36.3 20.7 Communications 18.2 14.4 12.3 26.4 17.1 Foreclosed property costs, net (4.8) 26.3 23.8 (118.2) 10.6 Other 117.1 113.5 100.9 3.2 12.5 - ------------------------------------------------------------------------------------------------------------------------- Total noninterest expense $950.4 $871.9 $752.4 9.0% 15.9% - ------------------------------------------------------------------------------------------------------------------------- Efficiency ratio (noninterest expense as % of noninterest income and net interest income [FTE]) 62.9% 63.8% 66.2% Number of full-time equivalent employees at year end 14,370 13,409 12,712 Staff expense as % of total noninterest expense 49.1% 47.7% 48.1% - -------------------------------------------------------------------------------------------------------------------------
Noninterest expense increased 9.0% in 1993 and 15.9% in 1992. To a large extent, year-to-year noninterest expenses are noncomparable due to 10 purchase acquisitions consummated subsequent to August 1, 1991 and merger-related expenses stemming from three pooling acquisitions. Nonrecurring merger-related expenses from pooling acquisitions totaled $4.7 million in 1993, $18.2 million in 1992 and $7.1 million in 1991. Excluding the effect of purchase acquisitions and merger-related expenses from pooling acquisitions, operating expense increased 5.9% in 1993 and 7.4% in 1992. The efficiency ratio, a key indicator of the control of noninterest expense, improved in 1993 and 1992 as the rate of revenue growth outpaced the rate of expense increase. The efficiency ratio was 62.9% in 1993 compared to 63.8% in 1992 and 66.2% in 1991. The Corporation's intermediate goal is to reduce noninterest expense to below 60% of operating revenues. Staff expense, the largest component of noninterest expense, increased 12.1% in 1993 and 15.1% in 1992. Excluding the effect of purchase acquisitions, staff expense increased 8.8% in 1993, reflecting planned salary adjustments, increased costs of employee benefit programs, higher incentive compensation and increased staff. The Corporation's expense base in 1993 and 1992 also includes higher levels of post-retirement benefits expense due to adoption of SFAS No. 106 in 1992. The number of full-time equivalent employees increased 7.2% in 1993 and 5.5% in 1992 principally due to purchase acquisitions. At December 31, 1993, full-time equivalent employees increased to 14,370 from 12,712 two years ago. Equipment expense increased 12.8% in 1993 and 15.6% in 1992 primarily due to the purchase acquisitions and higher depreciation expense associated with new and upgraded computer systems and software. Occupancy expense in 1993 and 1992 reflects the additional branch facilities acquired in purchase acquisitions and in 1993, also includes an acceleration of amortization expense on the leasehold values of certain banking locations. Advertising expense increased 36.3% in 1993 and 20.7% in 1992 due to increased promotional activities associated with recent retail initiatives. [Noninterest Expense Graph] Foreclosed property costs declined $31.1 million or 118.2% in 1993 compared to an increase of 10.6% in 1992. The income in 1993 reflects gains of approximately $11 million on sales of foreclosed property, coupled with lower levels of writedowns required on remaining properties. Foreclosed property costs in 1992 and 1991 included increased administrative and legal costs of managing higher levels of other real estate acquired as a result of distressed economic conditions in commercial real estate markets, and writedowns on selected parcels of property in recognition of declines in market values subsequent to foreclosure. Foreclosed property costs in 1992 also included writedowns at Sunwest aggregating $7.0 million to conform to the Corporation's valuation methods. Amortization of goodwill and identified core deposit premiums increased to $30.6 million in 1993, from $16.1 million in 1992 and $12.4 million in 1991, due to the aforementioned purchase acquisitions consummated subsequent to August 1, 1991. In November 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112 (SFAS No. 112), "Employers' Accounting for Postemployment Benefits." This statement will require recognition of the cost to provide postemployment benefits on an accrual basis. Adoption of this pronouncement is required in 1994 and is not expected to have a material effect on the Corporation's results of operations. 30 Boatmen's Bancshares, Inc. 16 - ------------------------------------------------------------------------------- TAXES The Corporation's effective tax rate was 31.6% in 1993, 28.8% in 1992 and 26.0% in 1991. The increase in the Corporation's effective tax rate in 1993 reflects a decrease in the relative amount of tax-exempt income as a component of operating income. Tax expense in 1993 includes the effect of the 1% Federal tax increase mandated by the Omnibus Budget Reconciliation Act of 1993 which was more than offset by a corresponding increase in the Corporation's deferred tax asset, changes in the deductibility of certain intangibles, a favorable adjustment to deferred state taxes at the Corporation's New Mexico subsidiary and recognition of a deferred tax asset at Amarillo in the first quarter of 1993. The effective tax rate in 1992 reflects a reduction of income taxes at Amarillo due to utilization of prior years' operating losses and a benefit recognized by the Corporation upon its adoption of SFAS No. 109. On a prospective basis, the effective tax rate should more closely approximate the statutory rate, adjusted for normal operating items such as tax-exempt interest, goodwill amortization and other nondeductible expenses. LOAN PORTFOLIO - -------------------------------------------------------------------------------------------------------------------- Table 20: Summary of Loan Portfolio
December 31 (in millions) 1993 1992 1991 1990 1989 - -------------------------------------------------------------------------------------------------------------------- Commercial $ 7,490.7 $ 6,507.5 $ 6,278.0 $ 5,668.0 $ 5,559.5 Real estate mortgage 2,988.5 3,049.1 2,852.3 3,096.0 2,968.2 Real estate construction 558.0 416.5 455.5 597.0 646.3 Consumer 3,742.8 3,111.6 2,711.3 2,568.3 2,438.3 Lease financing 95.2 86.8 95.3 97.1 105.2 - -------------------------------------------------------------------------------------------------------------------- Total domestic loans 14,875.2 13,171.5 12,392.4 12,026.4 11,717.5 Foreign loans 18.0 11.9 12.7 10.6 9.2 - -------------------------------------------------------------------------------------------------------------------- Total loans, before deduction of unearned income 14,893.2 13,183.4 12,405.1 12,037.0 11,726.7 Less unearned income 67.3 72.5 88.8 112.8 133.6 - -------------------------------------------------------------------------------------------------------------------- Total loans, net of unearned income $14,825.9 $13,110.9 $12,316.3 $11,924.2 $11,593.1 - --------------------------------------------------------------------------------------------------------------------
The majority of the Corporation's loans are made within its natural midwestern trade territory, and the portfolio is highly diversified. There are no concentrations of credit to any borrower or industry in excess of 5% of total loans, and the portfolio is well balanced between wholesale and consumer lending. At December 31, 1993, loans totaled $14.8 billion, an increase of 13.1% over the same period of last year. Based on average balances, loans increased 10.1% in 1993 and 7.2% in 1992. The growth experienced in 1993 was principally the result of recent purchase acquisitions coupled with internal loan growth within the retail sector, whereas the 1992 growth was largely the result of acquisitions. Excluding purchase acquisitions, loans increased 6.8% in 1993, and were led by a 16.8% increase in consumer loans. Consumer loan growth stepped up over the second half of the year, largely the result of increased retail penetration of consumer products, coupled with an expansion in consumer spending. The portfolio mix has undergone a favorable shift in recent years in that business development efforts have focused on expanding the middle-market commercial and consumer sectors, which has been complemented by acquisitions of retail oriented institutions. At December 31, 1993 and 1992, middle-market commercial and consumer loans represented approximately 48% of the loan portfolio compared to 44.3% at December 31, 1991. Commercial real estate and real estate construction loans represented 20.8% of total loans at December 31, 1993 compared to 19.3% at December 31, 1992. Excluding purchase acquisitions, the commercial real estate related loan portfolio increased by approximately $186 million in 1993 compared to a decline of approximately $100 million in 1992. The Corporation closely monitors the composition and quality of the real estate portfolio to ensure that significant credit concentrations do not exist within this portfolio. The portfolio is geographically dispersed primarily in areas where the Corporation has a direct banking presence and is widely diversified between residential construction, office and retail properties and land acquisition and development loans. Real estate loans are generally secured by the underlying property at a 75% to 80% loan to appraisal value ratio and are typically supported by guarantees from project developers. Additional collateral may be required on a project-by-project basis depending on management's credit evaluation of the borrower. Office vacancy rates in the Corporation's largest markets are in line with national averages, and over the last half of 1993, real estate activity in many of the Corporation's markets showed signs of improvement. [Loan Portfolio Graph] The Corporation has limited foreign loan exposure and its portfolio of highly leveraged transaction loans (HLT's) is minimal, at .6% of total loans at December 31, 1993. Table 20 displays the components of the loan portfolio under standard financial reporting definitions. Management also 1993 Annual Report 31 17 FINANCIAL COMMENTARY - ------------------------------------------------------------------------------- reviews the diversification of the portfolio using internally developed standards and definitions as summarized in Table 21. The commercial and real estate construction loan portfolio maturity distribution at December 31, 1993, under standard financial reporting definitions, is summarized in Table 22. Commercial and real estate construction loans due after one year totaled $3.7 billion of which $1.9 billion have floating or adjustable rates. LOAN QUALITY The provision for loan losses decreased 55.9% in 1993 and totaled $60.2 million compared to $136.6 million in 1992 and $114.7 million in 1991. The decrease in the provision for loan losses in 1993 was reflected in positive trends in asset quality, evidenced by a substantially lower level of actual loan losses, further declines in nonperforming loans and a continued downward trend in criticized loans. The provision for loan losses in 1992 included a special provision at Sunwest of $33.3 million to conform to the Corporation's loan reserve methods. Excluding the Sunwest charge, the provision for loan losses decreased 41.8% in 1993 and 9.9% in 1992. This sustained improvement is evident in the Corporation's asset quality measures. At December 31, 1993, the reserve coverage of nonperforming loans increased to 195.03% compared to 116.72% at December 31, 1992 and 79.91% at December 31, 1991. The loan reserve as a percentage of net loans was 2.30% at the end of 1993 and 1992, compared to 2.05% at December 31, 1991. Consistent with the decreases in nonperforming loans and the provision for loan losses, net loan charge-offs declined to $34.0 million, a decrease of $68.6 million or 66.9% from 1992, reflecting lower losses throughout all sectors of the portfolio. Net charge-offs as a percentage of average loans dropped to .24% compared to .80% in 1992 and .84% in 1991. Net charge-offs in 1992 included charge-offs at Sunwest of approximately $28 million to conform to the Corporation's loan reserve methodology. Exclusive of the special charge-off at Sunwest, the 1992 net loan charge-off ratio would have been .59%. The reserve for loan losses represents the aggregate reserves of the Corporation's banking subsidiaries. Loans which are determined to be uncollectible are charged against the reserve and recoveries of loans which were previously charged off are credited to the reserve. The charge-off policy of the Corporation's banking subsidiaries varies with respect to the category of and specific circumstances surrounding each loan under consideration. The Corporation's general policy with respect to consumer loans is to charge off all such loans when deemed to be uncollectible or 120 days past due, whichever comes first. With respect to commercial, real estate, and other loans, charge-offs are made on the basis of management's ongoing evaluation of nonperforming and criticized loans. In addition, loans which are classified as "loss" in regulatory examinations are charged off. - ------------------------------------------------------------------------------------------- Table 21: Composition of Loan Portfolio
1993 1992 1991 - ------------------------------------------------------------------------------------------- % OF % Of % Of TOTAL Total Total December 31 (in millions) AMOUNT LOANS Amount Loans Amount Loans - ------------------------------------------------------------------------------------------- Real estate: 1-4 family residential $ 2,970.6 20.0% $ 2,656.6 20.2% $ 2,469.8 19.9% Land acquisition 168.8 1.1 108.3 .8 126.5 1.0 Residential construction 181.2 1.2 117.9 .9 128.1 1.0 Commercial construction 208.0 1.4 190.3 1.4 200.9 1.6 Commercial real estate 2,446.6(1) 16.4 1,984.1 15.1 1,900.9 15.3 Mini-perms 107.2 .7 148.9 1.1 165.3 1.4 - ------------------------------------------------------------------------------------------- Total real estate 6,082.4 40.8 5,206.1 39.5 4,991.5 40.2 Commercial loans to Fortune 1,000 companies and other large corporate borrowers 662.5 4.5 666.3 5.0 830.3 6.7 Middle market commercial 3,359.9 22.6 3,194.8 24.2 2,792.0 22.5 Highly leveraged transactions (HLT's) 91.0 .6 88.7 .7 157.0 1.3 Bank stock loans 226.4 1.5 238.6 1.8 269.8 2.2 Agriculture 615.0 4.1 578.6 4.4 545.2 4.4 Consumer: Home equity 363.1 2.4 353.7 2.7 329.8 2.6 Credit card 457.3 3.1 378.3 2.9 371.2 3.0 Installment 2,922.4 19.6 2,379.6 18.0 2,010.3 16.2 - ------------------------------------------------------------------------------------------- Total consumer 3,742.8 25.1 3,111.6 23.6 2,711.3 21.8 Lease financing 95.2 .7 86.8 .7 95.3 .8 Foreign 18.0 .1 11.9 .1 12.7 .1 - ------------------------------------------------------------------------------------------- Total loans $14,893.2 100.0% $13,183.4 100.0% $12,405.1 100.0% - ------------------------------------------------------------------------------------------- (1) Includes approximately $240 million of commercial real estate loans covered by the FDIC loss-sharing agreement related to the acquisition of Missouri Bridge Bank, N.A.
- ------------------------------------------------------------------------------------------- Table 22: Commercial and Real Estate Construction Maturity Distribution
December 31, 1993 Over 1 Year (in millions) One Year or Less Through 5 Years Over 5 Years Total - ----------------------------------------------------------------------------------------------- Commercial $3,977.9 $2,744.4 $768.4 $7,490.7 Real estate construction 371.4 147.4 39.2 558.0 - ----------------------------------------------------------------------------------------------- $4,349.3 $2,891.8 $807.6 $8,048.7 - -----------------------------------------------------------------------------------------------
The provision for loan losses is sufficient to provide for current loan losses and maintain the reserve at an adequate level commensurate with management's evaluation of the risk inherent in the loan portfolio. In order to identify potential risks in the loan portfolios of the subsidiary banks, detailed information is obtained from the following sources: - All individual loans (other than 1-4 family residential and consumer loans) have a designated internal risk rating. For those which contain other than the normal risk of collectibility, the ratings correspond to the classi- fications utilized by the regulatory agencies for criticized loans (Special Mention, Substandard, Doubtful, Loss). Criticized loan totals 32 Boatmen's Bancshares, Inc. 18 and the trend thereof are reviewed monthly for all banking subsidiaries; - Monthly reports prepared by each subsidiary bank's senior management personnel which contain information on the overall characteristics of the subsidiary's loan portfolio and analyses of specific loans requiring special attention, including nonperforming and certain criticized loans; - Quarterly reviews of selected individual loans and loan concentrations of the larger banking subsidiaries by senior credit administration personnel of the Corporation; - Examination of the loan portfolio by Federal and State regulatory agencies; and - Examinations and reviews by the Corporation's independent auditors and internal loan review personnel. The data collected from these sources are evaluated with regard to current national and local economic trends, prior loss history, underlying collateral values, credit concentrations, industry risk, degree of off-balance sheet risk, and the opinion of the subsidiary bank and corporate management. An estimate of potential future loss on specific loans is developed in conjunction with an overall risk evaluation of the total loan portfolio. In addition, another key statistical measure used by management in establishing loan reserves is the reserve coverage of nonperforming loans. As a matter of general policy, the Corporation's objective is to maintain the loan reserve at levels above 100% of nonperforming loans, although temporary deviations from this standard may occur as situations warrant. Pursuant to this process, it is management's opinion that the aggregate reserves of the Corporation's banking subsidiaries are currently sufficient to provide for potential losses in the Corporation's loan portfolio. [Loan Loss Experience Graph] The loan reserve allocation provided in Table 23 is based primarily on analysis of prior loss experience and present and anticipated volume levels by individual categories, and on management's evaluation of prevailing economic conditions as they may affect segments of the portfolio. Accordingly, since each of these criteria is subject to change, the allocation of the reserve is not necessarily indicative of the trend of future loan losses in any particular loan category. In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 114 (SFAS No. 114), "Accounting by Creditors for Impairment of a Loan." This statement will require that certain impaired loans be measured based on either the present value of expected future cash flows discounted at the loan's effective rate, the market price of the loan, or fair value of the underlying collateral if the loan is collateral dependent. Adoption of this pronouncement is required in 1995 and, at present, is not expected to have a material effect on the Corporation's reported financial results. - ----------------------------------------------------------------------------------------------------------------------------------- Table 23: Loan Reserve Allocation
December 31 - ----------------------------------------------------------------------------------------------------------------------------------- 1993 1992 1991 1990 1989 - ----------------------------------------------------------------------------------------------------------------------------------- LOANS Loans Loans Loans Loans AS % OF as % of as % of as % of as % of LOAN TOTAL Loan Total Loan Total Loan Total Loan Total (amounts in millions) RESERVE LOANS Reserve Loans Reserve Loans Reserve Loans Reserve Loans - ------------------------------------------------------------------------------------------------------------------------------------ Domestic: Commercial $194.7 50.3% $172.0 49.4% $142.8 50.6% $129.2 47.1% $112.4 47.4% Real estate mortgage 39.2 20.1 37.9 23.1 30.6 23.0 29.0 25.7 21.7 25.3 Real estate construction 32.1 3.8 29.2 3.2 22.5 3.7 18.0 5.0 15.2 5.5 Consumer 40.6 25.1 35.0 23.6 29.8 21.8 27.7 21.3 27.4 20.8 Lease financing 1.0 .6 .6 .6 .5 .8 .6 .8 .5 .9 Not allocated 33.5 27.3 26.1 24.4 21.4 - ------------------------------------------------------------------------------------------------------------------------------------ Total domestic 341.1 99.9 302.0 99.9 252.3 99.9 228.9 99.9 198.6 99.9 Foreign .1 .1 .1 .1 .1 - ----------------------------------------------------------------------------------------------------------------------------------- Total reserve for loan losses $341.1 100.0% $302.0 100.0% $252.3 100.0% $228.9 100.0% $198.6 100.0% - ------------------------------------------------------------------------------------------------------------------------------------
1993 Annual Report 33 19 FINANCIAL COMMENTARY - ------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- Table 24: Summary of Reserve for Loan Losses
(in millions) 1993 1992 1991 1990 1989 - --------------------------------------------------------------------------------------------------------------------- Balance, beginning of year $302.0 $252.3 $228.9 $198.6 $219.5 Loans charged off: Domestic: Commercial (32.7) (50.2) (40.4) (46.3) (56.3) Real Estate: Commercial real estate (7.5) (35.7) (23.8) (24.3) (10.5) Construction (1.3) (9.8) (15.8) (5.8) (5.0) 1-4 family residential (3.8) (6.7) (5.4) (4.3) (2.6) Consumer (28.9) (34.6) (42.2) (37.8) (33.7) Foreign (34.3) - --------------------------------------------------------------------------------------------------------------------- Total charge-offs (74.2) (137.0) (127.6) (118.5) (142.4) - --------------------------------------------------------------------------------------------------------------------- Recoveries on loans previously charged off: Domestic: Commercial 20.0 16.8 9.7 11.7 13.6 Real estate: Commercial real estate 5.8 3.1 2.3 1.1 1.4 Construction 1.6 .7 1.7 .2 .2 1-4 family residential 1.1 1.0 .7 .7 .5 Consumer 11.7 12.8 13.2 13.9 11.5 Foreign 1.7 1.0 - --------------------------------------------------------------------------------------------------------------------- Total recoveries 40.2 34.4 27.6 29.3 28.2 - --------------------------------------------------------------------------------------------------------------------- Net charge-offs (34.0) (102.6) (100.0) (89.2) (114.2) - --------------------------------------------------------------------------------------------------------------------- Provision for loan losses 60.2 136.6 114.7 119.5 93.3 Reserves of purchased subsidiaries 12.9 15.7 8.7 - --------------------------------------------------------------------------------------------------------------------- Balance, end of year $341.1 $302.0 $252.3 $228.9 $198.6 - --------------------------------------------------------------------------------------------------------------------- Loan reserve at end of year: % of net loans at year end 2.30% 2.30% 2.05% 1.92% 1.71% % of nonperforming loans 195.03 116.72 79.91 59.87 63.43 Multiple of net charge-offs 10.04x 2.94x 2.52x 2.57x 1.74x Net charge-offs during year: % of net loans at year end .23% .78% .81% .75% .98% % of net loans (average) .24 .80 .84 .76 1.00 % of reserve at year end 9.96 33.97 39.62 38.96 57.50 - ---------------------------------------------------------------------------------------------------------------------
34 Boatmen's Bancshares, Inc. 20 - ------------------------------------------------------------------------------- NONPERFORMING ASSETS Management has followed a policy of discontinuing the accrual of interest on loans when full collectibility of principal or interest on any loan is doubtful. Nonaccrual loans are reduced by the direct application of actual interest receipts to loan principal, for accounting purposes only. If the principal amount of the loan is well collateralized, then cash basis interest income on such loans may be recognized in periods in which actual payments are received. Gross interest income that would have been recorded in 1993, if all nonaccrual loans had been current in accordance with original terms, amounted to $12.4 million. Actual interest recorded amounted to $2.9 million. Nonperforming assets, which include nonperforming loans and foreclosed property, declined steadily throughout 1993 to their lowest levels in several years. At December 31, 1993, nonperforming assets totaled $285.5 million, a decrease of $103.0 million or 26.5% from December 31, 1992, following a 21.3% decrease in 1992. The steady decline in nonperforming assets is reflected in the improvement in the Corporation's asset quality measures. As a percent of total loans and foreclosed property, nonperforming assets declined below the 2.0% level to 1.90% at December 31, 1993, compared to 2.92% at December 31, 1992 and 3.92% at December 31, 1991. Nonperforming asset levels trended downward in each quarter during 1993 and 1992, reflecting a reduction due to improved economic conditions and effective loan administration and workout procedures. Table 25 summarizes nonperforming assets by major banking unit/geographic location and illustrates the broad-based improvement achieved. [Loan Reserve Coverage Graph] - --------------------------------------- Table 25: Nonperforming Assets by Banking Unit
December 31 (in millions) 1993 1992 1991 - --------------------------------------- Missouri $171.4 $229.9 $295.2 New Mexico 53.4 90.0 118.2 Oklahoma 14.3 16.3 2.5 Texas 13.7 22.3 36.4 Iowa 7.2 10.2 16.7 Illinois 7.1 9.8 15.5 Arkansas 4.0 5.9 Tennessee 6.8 4.1 8.9 Kansas 7.6 - --------------------------------------- Total $285.5 $388.5 $493.4 - ---------------------------------------
- --------------------------------------- Table 26: Foreclosed Property
December 31, 1993 (in millions) Property Type Amount % of total - --------------------------------------- Land $ 26.4 23.9% Lodging 37.1 33.5 Office 26.2 23.7 Warehouse 1.7 1.5 Multifamily 1.0 .9 Retail 1.6 1.5 Residential 5.0 4.5 Agriculture related 8.0 7.2 Other 3.6 3.3 - --------------------------------------- Total $110.6 100.0% - ---------------------------------------
Nonperforming loans represented 1.17% of total loans at December 31, 1993 compared to 1.96% at December 31, 1992 and 2.54% at December 31, 1991. The decline in nonperforming loans in 1993 was primarily attributable to a $75.9 million decrease in nonaccrual loans. Foreclosed property declined $19.1 million from 1992 as property sales exceeded transfers to foreclosed status. As part of management's overall portfolio analysis, ongoing credit quality reviews are performed to evaluate risk inherent in the portfolio and potential risk that may develop in the future. A critical element in assessing portfolio risk is the level of criticized loans. The Corporation's internal risk rating system designates specific credits as criticized loans, which include all nonperforming loans and other loans which contain features presenting more than the normal risk of collectibility. Criticized and classified assets from regulatory examinations are an integral component of the Corporation's internal risk rating system. As displayed in Table 27, criticized loans declined to $762.6 million or 5.12% of loans at December 31, 1993 compared to 7.09% of loans at December 31, 1992. Management carefully analyzes changes and trends in both nonperforming and criticized loans in assessing the risk characteristics of the loan portfolio. Several communities throughout the Corporation's markets in the Midwest, including Iowa, Illinois and Missouri, experienced severe flooding during the second and third quarters of 1993. There were no significant changes in asset quality measures as a result of this natural disaster. [Nonperforming Assets Graph] 1993 Annual Report 35 21 - ------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------- Table 27: Loans Designated as Criticized Loans by Internal Risk Rating System
Criticized Loans - ---------------------------------------------------------------------------------------------------------------------- (in millions) Nonperforming Performing Total - ---------------------------------------------------------------------------------------------------------------------- 1992 - ---------------------------------------------------------------------------------------------------------------------- March 31 $314.3 $743.1 $1,057.4 June 30 285.6 772.1 1,057.7 September 30 285.0 761.0 1,046.0 December 31 258.8 676.5 935.3 - ---------------------------------------------------------------------------------------------------------------------- As % of loans at December 31, 1992 1.96% 5.13% 7.09% - ---------------------------------------------------------------------------------------------------------------------- 1993 - ---------------------------------------------------------------------------------------------------------------------- March 31 $226.5 $653.6 $ 880.1 June 30 190.6 610.2 800.8 September 30 187.2 608.2 795.4 December 31 174.9 587.7 762.6 - ---------------------------------------------------------------------------------------------------------------------- As % of loans at December 31, 1993 1.17% 3.95% 5.12% - ----------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------- Table 28:Nonperforming Assets
December 31 (in millions) 1993 1992 1991 1990 1989 - -------------------------------------------------------------------------------------------------------------------- Nonperforming loans: Nonaccrual $142.9 $218.8 $269.8 $312.7 $201.6 Restructured 14.8 22.1 25.6 42.2 56.5 Past due 90 days or more 17.2 17.9 20.3 27.4 55.0 - -------------------------------------------------------------------------------------------------------------------- Total nonperforming loans 174.9 258.8 315.7 382.3 313.1 - -------------------------------------------------------------------------------------------------------------------- Foreclosed property 110.6 129.7 177.7 94.6 86.7 - -------------------------------------------------------------------------------------------------------------------- Total nonperforming assets $285.5 $388.5 $493.4 $476.9 $399.8 - -------------------------------------------------------------------------------------------------------------------- Ratios - -------------------------------------------------------------------------------------------------------------------- Total nonperforming loans as % of total loans 1.17% 1.96% 2.54% 3.18% 2.67% Nonperforming assets as % of total loans and foreclosed property 1.90 2.92 3.92 3.93 3.38 Nonperforming assets as % of total assets 1.07 1.60 2.14 2.09 2.05 Loan reserve as % of nonperforming loans 195.03 116.72 79.91 59.87 63.43 - --------------------------------------------------------------------------------------------------------------------
SEGREGATED ASSETS As part of the regulatory assisted acquisition of Missouri Bridge Bank, N.A. on April 23, 1993, the Corporation entered into a five-year loss-sharing arrangement with the FDICwith respect to approximately $950 million in multi-family residential, commercial real estate, construction and commercial and industrial loans. During the five-year period, the FDIC will reimburse the Corporation for 80 percent of the first $92.0 million of net charge-offs on these loans, after which the FDIC will increase its reimbursement coverage to 95 percent of additional charge-offs. During this period and for two years thereafter, the Corporation is obligated to pay the FDIC 80 percent of all recoveries on charged-off loans. The Corporation has designated certain loans covered under the loss-sharing arrangement which possess more than the normal risk of collectibility as segregated assets. At December 31, 1993, segregated assets totaled $248.2 million, net of an $18.4 million credit valuation allowance and are classified as other assets for reporting purposes. At December 31, 1993, segregated assets consisted of $69.5 million of commercial loans, $40.7 million of industrial revenue bond loans and $156.4 million of commercial real estate related loans. All other loans covered under the loss sharing arrangement are included in the loan portfolio and totaled $450.7 million at December 31, 1993. Net charge-offs of $8.6 million, representing the Corporation's share of losses on the segregated asset pool, were recognized subsequent to the April 23, 1993 acquisition. The valuation allowance represents the Corporation's share of estimated losses upon ultimate liquidation of the portfolio. The Corporation's primary purpose in managing a portfolio of this nature is to provide ongoing collection and control activities on behalf of the FDIC. Accordingly, these assets do not represent loans made in the ordinary course of business and, due to the underlying nature of this liquidating asset pool, are excluded from the Corporation's nonperforming asset statistics. At December 31, 1993, $230.9 million of segregated assets were accorded classification treatment consistent with nonaccrual reporting, $.6 million represented foreclosed property, and the balance of $35.1 million was past due 90 days or more. The Corpora- 36 Boatmen's Bancshares, Inc. 22 - ------------------------------------------------------------------------------- tion's operating results and cash flow position are not expected to be materially affected by the ongoing collection activities associated with managing the loans subject to the loss sharing arrangement. Segregated asset income totaled $7.4 million in 1993. A summary of activity regarding segregated assets is provided in Table 29. - ------------------------------------------------------------------------------------ Table 29: Segregated Assets
Principal Allowance Principal Year ended December 31, 1993 balance for losses balance, net - ------------------------------------------------------------------------------------ Segregated assets identified upon acquisition $312.0 $27.0 $285.0 Charge-offs (52.1) (10.4) Recoveries 1.8 Transfers to segregated assets 36.5 Payments on segregated assets (29.8) - ------------------------------------------------------------------------------------ Segregated assets, end of period $266.6 $18.4 $248.2 - ------------------------------------------------------------------------------------
CAPITAL RESOURCES - -------------------------------------------------------------------------------------------------------------------- Table 30: Capital Structure
December 31 (in millions) 1993 1992 1991 1990 1989 - -------------------------------------------------------------------------------------------------------------------- Long-term debt $ 486.3 $ 393.2 $ 315.7 $ 284.5 $ 295.1 Stockholders' equity 2,133.3 1,861.2 1,680.2 1,463.4 1,395.7 - -------------------------------------------------------------------------------------------------------------------- Total capitalization $2,619.6 $2,254.4 $1,995.9 $1,747.9 $1,690.8 - -------------------------------------------------------------------------------------------------------------------- Tangible equity $1,858.0 $1,655.3 $1,496.9 $1,295.5 $1,253.0 - -------------------------------------------------------------------------------------------------------------------- Ratios - -------------------------------------------------------------------------------------------------------------------- Equity/assets 8.00% 7.67% 7.30% 6.42% 7.14% Tangible equity/assets 7.04 6.88 6.56 5.73 6.46 Long-term debt as % of total capitalization 18.56 17.44 15.82 16.28 17.45 Double leverage 110.37 110.84 108.78 113.32 114.48 Dividends paid, in thousands (for the year): Preferred $ 86 $ 88 $ 91 $ 100 $ 2,854 Common 112,129 86,130 80,996 84,976 74,074 Total dividends as % of net income 35.4% 37.7% 47.4% 58.7% 46.9% - --------------------------------------------------------------------------------------------------------------------
The Corporation continues to rank among the most strongly capitalized bank holding companies in the country and the Corporation's strong capital position and overall financial strength provide a good base for future asset growth. The Corporation continued to strengthen its capital position in 1993 through record earnings, the conversion of debt to equity, and the issuance of $100 million of subordinated debentures. The cornerstone of the Corporation's capital structure is its common equity, which represents 81.4% of total capitalization at December 31, 1993. At December 31, 1993, stockholders' equity totaled $2.1 billion, an increase of 14.6% from 1992. The equity to asset ratio increased to 8.00% compared to 7.67% at December 31, 1992, and 7.30% at December 31, 1991. In the third quarter of 1992, the Corporation filed two shelf registration statements with the Securities and Exchange Commission providing for the issuance of up to $200 million of subordinated debt securities and $200 million of preferred stock. On October 1, 1992, the Corporation issued $100 million of 7 5/8% subordinated notes due October 1, 2004, and the final tranche under the debt shelf registration was completed on March 18, 1993 with the issuance of $100 million of 6 3/4% subordinated debentures. Proceeds from the debt offerings were used primarily to fund acquisitions and for other corporate purposes, such as retirement of higher-rate debt. In 1993, the Corporation exercised its option to prepay approximately $14 million of convertible subordinated debt at its Iowa subsidiary, resulting in the issuance of approximately 1.0 million shares of common stock as noteholders elected to convert debt to equity prior to the prepayment date. Also in 1993, the Corporation called, at par, approximately $10.0 million of 10% convertible subordinated debentures at Amarillo. An important measure of capital adequacy of a banking institution is its risk-based capital ratios, which represent the primary capital standards for regulatory purposes. The Corporation's risk-based capital ratios of 10.67% for Tier I and 14.42% for total capital substantially exceed the regulatory required minimums. An additional measure of capital, referred to as the Tier I leverage ratio, places a constraint on the degree to which a banking institution can leverage its equity capital base. At December 31, 1993, the Corporation's Tier I leverage ratio was 6.93%, well in excess of required minimums. The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) established rating categories for all FDIC insured institutions ranging from "well capitalized" to "critically undercapitalized." The ratings combine capital measures in addition to the level of regulatory supervision received by an individual financial institution. At December 31, 1993, all of the Corporation's banking subsidiaries met the capital criteria required by the well capitalized definition. FDICIA mandated other changes to risk-based capital rules that may become effective in 1994, notably the requirement to incorporate interest rate risk into the risk-based capital computation. As proposed, this change is not expected to have a material effect on the Corporation's capital requirements. The Federal Reserve Board and other regulatory agencies are proposing other amendments to existing risk-based and leverage capital guidelines to include the unrealized appreciation/depreciation on available for sale 1993 Annual Report 37 23 FINANCIAL COMMENTARY - ------------------------------------------------------------------------------- securities in Tier I capital. The Corporation believes it would be more appropriate to exclude the unrealized appreciation/depreciation from Tier I as inclusion could introduce volatility in capital levels which is inconsistent with the managerial concept of longer-term capital planning. At December 31, 1993, had the Corporation included the unrealized net appreciation in Tier I capital, the Tier I risk-based capital ratio would have been 10.92% and the Tier I leverage ratio would have been 7.08%. A two-for-one stock split, effected as a 100% stock dividend, was declared on August 10, 1993 to stockholders of record at the close of business on August 31, 1993 and paid on October 1, 1993. [Risk-Based Capital Graph] - ------------------------------------------------------------------------------- Table 31: Intangible Assets
December 31 (in millions) 1993 1992 1991 - ------------------------------------------------------------------------------- Goodwill--Parent Company $ 95.3 $100.8 $106.3 - ------------------------------------------------------------------------------- Subsidiaries: Goodwill 118.3 65.2 41.8 Core deposit premium 53.3 34.6 32.6 Credit card premium 3.5 1.5 1.9 Purchased mortgage servicing rights 4.9 3.8 .7 - ------------------------------------------------------------------------------- 180.0 105.1 77.0 - ------------------------------------------------------------------------------- Total intangible assets $275.3 $205.9 $183.3 - -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------- Table 32:Risk-Based Capital
December 31 (in millions) 1993 1992 1991 - --------------------------------------------------------------------------------- Tier I capital: Stockholders' equity $ 2,133.3 $ 1,861.2 $ 1,680.2 Minority interest .7 1.0 1.4 Intangible assets: Goodwill (213.6) (166.0) (148.1) Core deposit premium (53.3) (34.6) (32.6) Unrealized net appreciation, available for sale securities (42.3) - --------------------------------------------------------------------------------- Total Tier I 1,824.8 1,661.6 1,500.9 - --------------------------------------------------------------------------------- Tier II capital: Allowable reserve for loan losses 215.3 199.9 185.8 Qualifying long-term debt 425.2 337.0 269.1 - --------------------------------------------------------------------------------- Total Tier II 640.5 536.9 454.9 - --------------------------------------------------------------------------------- Total capital $ 2,465.3 $ 2,198.5 $ 1,955.8 - --------------------------------------------------------------------------------- Risk-adjusted assets $17,098.0 $15,988.4 $14,855.0 - --------------------------------------------------------------------------------- Risk-based capital ratios: Tier I 10.67% 10.39% 10.10% - --------------------------------------------------------------------------------- Total 14.42% 13.75% 13.17% - --------------------------------------------------------------------------------- Tier I Leverage ratio 6.93% 6.90% 6.58% - ---------------------------------------------------------------------------------
38 Boatmen's Bancshares, Inc. 24 - ------------------------------------------------------------------------------- QUARTERLY DATA - ---------------------------------------------------------------------------------------------------------------------- Table 33: Summary of Fourth Quarter Earnings
FOURTH QUARTER - ---------------------------------------------------------------------------------------------------------------------- (in millions) 1993 1992 % change - ---------------------------------------------------------------------------------------------------------------------- Net interest income $248.7 $229.1 8.6% Provision for loan losses 11.9 55.2 (78.6) - ---------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 236.8 173.9 36.2 Noninterest income 131.9 116.9 12.8 Noninterest expense 253.8 246.4 3.0 - ---------------------------------------------------------------------------------------------------------------------- Income before income taxes 114.9 44.4 158.8 Income tax expense 37.8 12.3 206.3 - ---------------------------------------------------------------------------------------------------------------------- Net income $ 77.1 $ 32.1 140.5% - ---------------------------------------------------------------------------------------------------------------------- Net income per share $.75 $.32 134.4% - ---------------------------------------------------------------------------------------------------------------------- Dividends declared per share $.31 $.28 10.7% - ----------------------------------------------------------------------------------------------------------------------
Net income in the fourth quarter totaled $77.1 million, an increase of 140.5% over the fourth quarter of 1992. Net income per share was $.75, an increase of 134.4%. Both periods were impacted by one-time merger-related charges from pooling acquisitions which totaled $3.8 million (after-tax) in the fourth quarter of 1993 and $32.6 million (after-tax) in the same period of 1992. Excluding the acquisition-related charges, net income in the fourth quarter of 1993 totaled $80.9 million compared to $64.6 million in the year-ago period, an increase of 25.0%. On a per share basis, net income would have been $.79 compared to $.64 in the fourth quarter of 1992. This increase was consistent with full-year results and reflected a higher level of net interest income and noninterest income, as well as a lower provision for loan losses, which was offset in part by higher noninterest expense. Net interest income increased 8.6% over the fourth quarter of 1992 primarily due to an increase in earning assets which was partially offset by a decline in the net interest margin. Average earning assets increased 9.4% primarily due to purchase acquisitions. The net interest margin was 4.45%, down slightly from 4.49% a year ago and 4.58% in the third quarter of 1993. The contraction in the net interest margin was primarily due to reinvesting of maturing securities into lower yielding securities resulting in a repricing of these assets at a slightly faster pace than the repricing of interest bearing deposits. The provision for loan losses declined to $11.9 million in the fourth quarter of 1993 compared to $55.2 million a year ago when the provision included a $33.3 million charge to conform Sunwest to the Corporation's loan reserve policies. Excluding the $33.3 million special provision at Sunwest, the provision for loan losses decreased 45% from the fourth quarter of last year due to the aforementioned sustained improvement in credit quality experienced throughout 1993. Net charge-offs in the fourth quarter declined to $12.5 million compared to $46.8 million in the same period of last year when net charge-offs included approximately $28 million of charge-offs at Sunwest to conform policies to the Corporation's loan valuation methods. Noninterest income increased 12.8% over the fourth quarter of last year, reflecting continued growth in all major categories such as trust fees, service charge income, credit card income, and investment banking profits and fees. Excluding the effect of purchase acquisitions and securities gains, noninterest income increased 9.1%. Noninterest expense totaled $253.8 million, an increase of 3.0% over the fourth quarter of 1992. Noninterest expense in the fourth quarter of 1993 and 1992 included nonrecurring merger-related expenses stemming from two pooling acquisitions. Amarillo merger-related expenses in the fourth quarter of 1993 totaled $4.7 million and the Sunwest acquisition-related expenses totaled approximately $18.2 million. In both acquisitions, these expenses consisted primarily of investment banking fees, compensation-related matters and fixed asset write-offs. The Sunwest acquisition also included foreclosed property writedowns of $7.0 million. Excluding the merger-related expenses from pooling acquisitions and the impact of purchase acquisitions, noninterest expense increased 4.2% in the fourth quarter of 1993. 1993 Annual Report 39 25 CONSOLIDATED QUARTERLY EARNINGS TREND - --------------------------------------------------------------------------------------------------------------------------
1993 - -------------------------------------------------------------------------------------------------------------------------- (in thousands) FOURTH QUARTER Third Quarter Second Quarter First Quarter - -------------------------------------------------------------------------------------------------------------------------- Interest income Interest and fees on loans $289,669 $289,148 $281,000 $267,093 Interest on short-term investments 257 405 509 826 Interest on Federal funds sold and securities purchased under resale agreements 2,380 1,936 3,161 5,884 Interest on held to maturity securities Taxable 92,383 96,537 97,569 94,789 Tax-exempt 13,907 14,366 14,745 15,363 - -------------------------------------------------------------------------------------------------------------------------- Total interest on held to maturity securities 106,290 110,903 112,314 110,152 Interest on available for sale securities 7,169 7,258 7,360 7,270 Interest on trading securities 1,063 429 493 585 - -------------------------------------------------------------------------------------------------------------------------- Total interest income 406,828 410,079 404,837 391,810 - -------------------------------------------------------------------------------------------------------------------------- Interest expense Interest on deposits 128,331 133,406 135,096 132,011 Interest on Federal funds purchased and other short-term borrowings 19,126 16,014 12,688 14,539 Interest on capital lease obligation 965 964 965 964 Interest on long-term debt 9,704 9,542 9,391 8,268 - -------------------------------------------------------------------------------------------------------------------------- Total interest expense 158,126 159,926 158,140 155,782 - -------------------------------------------------------------------------------------------------------------------------- Net interest income 248,702 250,153 246,697 236,028 Provision for loan losses 11,853 13,040 15,918 19,373 - -------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 236,849 237,113 230,779 216,655 - -------------------------------------------------------------------------------------------------------------------------- Noninterest income Trust fees 37,895 38,723 37,952 35,010 Service charges 41,250 39,173 37,770 35,008 Credit card 12,857 12,663 11,602 10,157 Investment banking profits and fees 8,657 9,546 8,895 8,502 Securities gains, net 1,753 250 736 68 Other 29,481 29,541 25,387 20,375 - -------------------------------------------------------------------------------------------------------------------------- Total noninterest income 131,893 129,896 122,342 109,120 - -------------------------------------------------------------------------------------------------------------------------- Noninterest expense Staff 119,147 120,336 115,763 111,234 Net occupancy 17,140 19,072 16,913 16,304 Equipment 21,132 19,704 18,589 18,102 FDIC insurance 11,381 11,232 10,803 10,969 Credit card 9,981 9,400 8,700 7,124 Foreclosed property costs, net (1,235) 83 (2,048) (1,590) Other 76,255 68,475 64,185 53,270 - -------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 253,801 248,302 232,905 215,413 - -------------------------------------------------------------------------------------------------------------------------- Income before income tax expense 114,941 118,707 120,216 110,362 Income tax expense 37,819 37,379 40,493 31,116 - -------------------------------------------------------------------------------------------------------------------------- Net income $ 77,122 $ 81,328 $ 79,723 $ 79,246 - -------------------------------------------------------------------------------------------------------------------------- Net income per share $.75 $.78 $.77 $.77 - -------------------------------------------------------------------------------------------------------------------------- Dividends declared per share $.31 $.31 $.28 $.28 - -------------------------------------------------------------------------------------------------------------------------- Returns Return on assets 1.18% 1.28% 1.29% 1.34% Return on total equity 14.91 16.15 16.26 16.75 Return on common equity 14.90 16.15 16.25 16.75 - -------------------------------------------------------------------------------------------------------------------------- Previously reported data for Boatmen's Bancshares, Inc., prior to restatement for the acquisition accounted for as a pooling of interests: - -------------------------------------------------------------------------------------------------------------------------- Net income $77,946 $76,206 $70,292 - -------------------------------------------------------------------------------------------------------------------------- Net income per share $.80 $.78 $.72 - -------------------------------------------------------------------------------------------------------------------------- 40 Boatmen's Bancshares, Inc. 26 - -------------------------------------------------------------------------------------------------------------------------- 1992 - -------------------------------------------------------------------------------------------------------------------------- (in thousands) Fourth Quarter Third Quarter Second Quarter First Quarter - -------------------------------------------------------------------------------------------------------------------------- Interest income Interest and fees on loans $268,091 $270,975 $280,070 $276,317 Interest on short-term investments 1,080 407 412 749 Interest on Federal funds sold and securities purchased under resale agreements 8,651 12,195 13,018 15,495 Interest on held to maturity securities Taxable 97,113 100,261 102,159 99,249 Tax-exempt 15,834 16,038 16,747 17,076 - -------------------------------------------------------------------------------------------------------------------------- Total interest on held to maturity securities 112,947 116,299 118,906 116,325 Interest on available for sale securities Interest on trading securities 722 750 677 1,163 - -------------------------------------------------------------------------------------------------------------------------- Total interest income 391,491 400,626 413,083 410,049 - -------------------------------------------------------------------------------------------------------------------------- Interest expense Interest on deposits 138,303 151,237 166,178 173,937 Interest on Federal funds purchased and other short-term borrowings 14,554 17,000 18,945 22,849 Interest on capital lease obligation 982 983 982 982 Interest on long-term debt 8,541 7,308 7,309 7,443 - -------------------------------------------------------------------------------------------------------------------------- Total interest expense 162,380 176,528 193,414 205,211 - -------------------------------------------------------------------------------------------------------------------------- Net interest income 229,111 224,098 219,669 204,838 Provision for loan losses 55,269 26,062 27,604 27,691 - -------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 173,842 198,036 192,065 177,147 - -------------------------------------------------------------------------------------------------------------------------- Noninterest income Trust fees 35,325 34,844 34,113 33,701 Service charges 35,965 34,415 32,051 31,137 Credit card 10,314 9,773 9,664 8,666 Investment banking profits and fees 8,234 8,278 7,673 7,568 Securities gains, net 4,713 16,976 5,113 5,146 Other 22,380 19,216 19,914 16,903 - -------------------------------------------------------------------------------------------------------------------------- Total noninterest income 116,931 123,502 108,528 103,121 - -------------------------------------------------------------------------------------------------------------------------- Noninterest expense Staff 107,301 105,241 103,785 99,951 Net occupancy 16,972 17,210 15,654 14,641 Equipment 19,130 17,332 16,568 15,725 FDIC insurance 10,659 10,391 10,485 10,084 Credit card 7,338 6,302 6,204 5,708 Foreclosed property costs, net 10,000 4,531 6,415 5,392 Other 74,963 51,197 52,304 50,445 - -------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 246,363 212,204 211,415 201,946 - -------------------------------------------------------------------------------------------------------------------------- Income before income tax expense 44,410 109,334 89,178 78,322 Income tax expense 12,347 33,355 26,495 20,321 - -------------------------------------------------------------------------------------------------------------------------- Net income $ 32,063 $ 75,979 $ 62,683 $ 58,001 - -------------------------------------------------------------------------------------------------------------------------- Net income per share $.32 $.76 $.63 $.58 - -------------------------------------------------------------------------------------------------------------------------- Dividends declared per share $.28 $.28 $.27 $.27 - -------------------------------------------------------------------------------------------------------------------------- Returns Return on assets .54% 1.31% 1.09% 1.03% Return on total equity 7.00 16.98 14.40 13.64 Return on common equity 7.00 16.97 14.39 13.64 - -------------------------------------------------------------------------------------------------------------------------- Previously reported data for Boatmen's Bancshares, Inc., prior to restatement for the acquisition accounted for as a pooling of interests: - -------------------------------------------------------------------------------------------------------------------------- Net income $28,227 $72,822 $59,152 $55,292 - -------------------------------------------------------------------------------------------------------------------------- Net income per share $.29 $.76 $.62 $.58 - --------------------------------------------------------------------------------------------------------------------------
1993 Annual Report 41 27 CONSOLIDATED QUARTERLY AVERAGE BALANCE SHEET AND NET INTEREST MARGIN - -----------------------------------------------------------------------------------------------------------------------------------
(dollars in millions) 1993 - ------------------------------------------------------------------------------------------------------------------------------------ FOURTH QUARTER Third Quarter Second Quarter - ----------------------------------------------------------------------------------------------------------------------------------- INCOME/ YIELDS/ Income/ Yields/ Income/ Yields/ Assets BALANCE EXPENSE RATES Balance Expense Rates Balance Expense Rates - ----------------------------------------------------------------------------------------------------------------------------------- Loans, net of unearned income $14,666.2 $291.6 7.95% $14,373.7 $290.5 8.09% $13,958.8 $282.5 8.10% Short-term investments 31.2 .2 3.29 48.7 .4 3.33 60.7 .5 3.36 Federal funds sold and securities purchased under resale agreements 297.9 2.4 3.20 245.3 1.9 3.16 407.6 3.2 3.10 Held to maturity securities: Taxable 6,799.5 92.4 5.43 6,652.5 96.5 5.80 6,256.2 97.6 6.24 Tax-exempt 841.0 21.0 10.00 844.5 22.3 10.55 865.0 21.8 10.10 - ----------------------------------------------------------------------------------------------------------------------------------- Total held to maturity securities 7,640.5 113.4 5.94 7,497.0 118.8 6.34 7,121.2 119.4 6.71 Available for sale securities 469.2 7.2 6.11 479.9 7.3 6.05 489.3 7.3 6.02 Trading securities 85.7 1.1 5.13 35.9 .5 5.30 42.9 .6 5.03 - ------------------------------------------------------------------------------------------------------------------------------------ Total earning assets 23,190.7 415.9 7.17 22,680.5 419.4 7.40 22,080.5 413.5 7.49 Less reserve for loan losses (344.9) (339.3) (329.2) Cash and due from banks 1,720.4 1,619.6 1,613.5 All other assets 1,466.7 1,479.4 1,317.8 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets $26,032.9 $25,440.2 $24,682.6 - ----------------------------------------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity - ------------------------------------------------------------------------------------------------------------------------------------ Retail savings deposits and interest-bearing transaction accounts $ 8,601.0 $ 51.3 2.38% $ 8,470.3 $ 52.3 2.47% $ 8,226.1 $ 50.9 2.48% Time deposits 7,538.8 77.0 4.09 7,827.3 81.1 4.15 7,922.8 84.2 4.25 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 16,139.8 128.3 3.18 16,297.6 133.4 3.27 16,148.9 135.1 3.35 Federal funds purchased and other short-term borrowings 2,579.6 19.1 2.97 2,148.3 16.0 2.98 1,740.7 12.7 2.92 Capital lease obligation 39.3 1.0 9.72 39.5 1.0 9.72 39.7 .9 9.72 Long-term debt 487.8 9.7 7.96 471.4 9.5 8.10 475.2 9.4 7.90 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing liabilities 19,246.5 158.1 3.29 18,956.8 159.9 3.37 18,404.5 158.1 3.44 Demand deposits 4,560.9 4,298.5 4,142.0 All other liabilities 154.7 169.8 173.3 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 23,962.1 23,425.1 22,719.8 Redeemable preferred stock 1.2 1.2 1.2 Total stockholders' equity 2,069.6 2,013.9 1,961.6 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $26,032.9 $25,440.2 $24,682.6 - ----------------------------------------------------------------------------------------------------------------------------------- Interest rate spread 3.88% 4.03% 4.05% Effect of noninterest-bearing funds .57 .55 .58 - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income/margin $257.8 4.45% $259.5 4.58% $255.4 4.63% - ----------------------------------------------------------------------------------------------------------------------------------- Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis. Interest income and yields are presented on a fully-taxable equivalent basis using the Federal statutory income tax rate, net of nondeductible interest expense. Such adjustments by earning asset category are as follows: Loans $1.9 $1.4 $1.5 Tax-exempt held to maturity securities 7.1 7.9 7.1 Trading securities .1 .1 - ------------------------------------------------------------------------------------------------------------------------------------ Total $9.1 $9.3 $8.7 - ----------------------------------------------------------------------------------------------------------------------------------- 42 Boatmen's Bancshares, Inc. 28 - ------------------------------------------------------------------------------------------------------------------------------------ (dollars in millions) 1993 - ------------------------------------------------------------------------------------------------------------------------------------ First Quarter Fourth Quarter - ----------------------------------------------------------------------------------------------------------------------------------- Income/ Yields/ Income/ Yields/ Assets Balance Expense Rates Balance Expense Rates - ----------------------------------------------------------------------------------------------------------------------------------- Loans, net of unearned income $13,127.9 $268.2 8.17% $12,992.9 $269.3 8.29% Short-term investments 100.4 .8 3.29 126.7 1.1 3.41 Federal funds sold and securities purchased under resale agreements 776.1 5.9 3.03 1,092.3 8.7 3.17 Held to maturity securities: Taxable 5,865.4 94.8 6.46 6,018.7 97.1 6.45 Tax-exempt 890.7 22.7 10.20 915.3 23.3 10.18 - ----------------------------------------------------------------------------------------------------------------------------------- Total held to maturity securities 6,756.1 117.5 6.96 6,934.0 120.4 6.95 Available for sale securities 497.0 7.3 5.85 Trading securities 49.4 .6 5.09 48.3 .7 5.98 - ------------------------------------------------------------------------------------------------------------------------------------ Total earning assets 21,306.9 400.3 7.51 21,194.2 400.2 7.55 Less reserve for loan losses (310.0) (300.8) Cash and due from banks 1,547.3 1,566.7 All other assets 1,144.4 1,147.7 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets $23,688.6 $23,607.8 - ----------------------------------------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity - ------------------------------------------------------------------------------------------------------------------------------------ Retail savings deposits and interest-bearing transaction accounts $ 7,808.2 $ 49.7 2.55% $ 7,529.2 $ 49.6 2.64% Time deposits 7,550.9 82.3 4.36 7,732.4 88.7 4.59 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 15,359.1 132.0 3.44 15,261.6 138.3 3.62 Federal funds purchased and other short-term borrowings 1,902.0 14.5 3.06 1,857.4 14.6 3.13 Capital lease obligation 39.9 1.0 9.72 40.2 1.0 9.72 Long-term debt 389.9 8.3 8.48 397.6 8.5 8.59 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing liabilities 17,690.9 155.8 3.52 17,556.8 162.4 3.70 Demand deposits 3,923.7 4,026.1 All other liabilities 180.5 192.8 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 21,795.1 21,775.7 Redeemable preferred stock 1.2 1.2 Total stockholders' equity 1,892.3 1,830.9 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $23,688.6 $23,607.8 - ----------------------------------------------------------------------------------------------------------------------------------- Interest rate spread 3.99% 3.85% Effect of noninterest-bearing funds .60 .64 - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income/margin $244.5 4.59% $237.8 4.49% - ----------------------------------------------------------------------------------------------------------------------------------- Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis. Interest income and yields are presented on a fully-taxable equivalent basis using the Federal statutory income tax rate, net of nondeductible interest expense. Such adjustments by earning asset category are as follows: Loans $1.1 $1.2 Tax-exempt held to maturity securities 7.4 7.5 Trading securities - ------------------------------------------------------------------------------------------------------------------------------------ Total $8.5 $8.7 - ----------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- (dollars in millions) 1992 - ------------------------------------------------------------------------------------------------------------------------------------ Third Quarter Second Quarter First Quarter - ----------------------------------------------------------------------------------------------------------------------------------- Income/ Yields/ Income/ Yields/ Income/ Yields/ Assets Balance Expense Rates Balance Expense Rates Balance Expense Rates - ----------------------------------------------------------------------------------------------------------------------------------- Loans, net of unearned income $12,819.3 $272.2 8.49% $12,824.6 $281.4 8.78% $12,352.0 $277.6 8.99% Short-term investments 43.9 .4 3.71 40.4 .4 4.08 66.5 .7 4.51 Federal funds sold and securities purchased under resale agreements 1,439.7 12.2 3.39 1,358.4 13.0 3.83 1,530.2 15.5 4.05 Held to maturity securities: Taxable 5,623.7 100.3 7.13 5,519.2 102.2 7.40 5,149.4 99.2 7.71 Tax-exempt 926.9 23.5 10.16 964.6 24.5 10.18 985.6 25.1 10.18 - ----------------------------------------------------------------------------------------------------------------------------------- Total held to maturity securities 6,550.6 123.8 7.56 6,483.8 126.7 7.82 6,135.0 124.3 8.11 Available for sale securities Trading securities 49.5 .7 6.06 43.3 .7 6.25 76.6 1.3 6.60 - ------------------------------------------------------------------------------------------------------------------------------------ Total earning assets 20,903.0 409.3 7.83 20,750.5 422.2 8.14 20,160.3 419.4 8.32 Less reserve for loan losses (284.2) (279.2) (261.8) Cash and due from banks 1,450.0 1,450.0 1,524.0 All other assets 1,148.8 1,185.6 1,141.8 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets $23,217.6 $23,106.9 $22,564.3 - ----------------------------------------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity - ------------------------------------------------------------------------------------------------------------------------------------ Retail savings deposits and interest-bearing transaction accounts $ 7,239.9 $ 53.2 2.94% $ 7,183.2 $ 61.2 3.41% $ 6,781.2 $ 62.6 3.69% Time deposits 7,931.9 98.0 4.94 8,048.1 105.0 5.22 7,773.2 111.3 5.73 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 15,171.8 151.2 3.99 15,231.3 166.2 4.36 14,554.4 173.9 4.78 Federal funds purchased and other short-term borrowings 2,029.5 17.0 3.35 2,011.6 18.9 3.77 2,290.7 22.9 3.99 Capital lease obligation 40.3 1.0 9.72 40.4 1.0 9.72 40.6 1.0 9.72 Long-term debt 305.3 7.3 9.57 308.8 7.3 9.47 313.1 7.4 9.51 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest-bearing liabilities 17,546.9 176.5 4.02 17,592.1 193.4 4.40 17,198.8 205.2 4.77 Demand deposits 3,698.1 3,591.7 3,475.9 All other liabilities 181.2 180.6 187.5 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 21,426.2 21,364.4 20,862.2 Redeemable preferred stock 1.3 1.3 1.3 Total stockholders' equity 1,790.1 1,741.2 1,700.8 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $23,217.6 $23,106.9 $22,564.3 - ----------------------------------------------------------------------------------------------------------------------------------- Interest rate spread 3.81% 3.74% 3.55% Effect of noninterest-bearing funds .64 .67 .70 - ------------------------------------------------------------------------------------------------------------------------------------ Net interest income/margin $232.8 4.45% $228.8 4.41% $214.2 4.25% - ----------------------------------------------------------------------------------------------------------------------------------- Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis. Interest income and yields are presented on a fully-taxable equivalent basis using the Federal statutory income tax rate, net of nondeductible interest expense. Such adjustments by earning asset category are as follows: Loans $1.2 $1.3 $1.3 Tax-exempt held to maturity securities 7.5 7.8 8.0 Trading securities .1 - ------------------------------------------------------------------------------------------------------------------------------------ Total $8.7 $9.1 $9.4 - -----------------------------------------------------------------------------------------------------------------------------------
1993 Annual Report 43 29 CONSOLIDATED EARNINGS TREND - -----------------------------------------------------------------------------------------------------------------------------------
(in thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------------------------------------------------------ Interest income Interest and fees on loans $1,126,910 $1,095,453 $1,178,849 Interest on short-term investments 1,997 2,648 7,736 Interest on Federal funds sold and securities purchased under resale agreements 13,361 49,359 78,400 Interest on held to maturity securities Taxable 381,278 398,782 372,218 Tax-exempt 58,381 65,695 69,677 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest on held to maturity securities 439,659 464,477 441,895 Interest on available for sale securities 29,057 Interest on trading securities 2,570 3,312 7,812 Interest on receivable due from Resolution Trust Corporation 28,955 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest income 1,613,554 1,615,249 1,743,647 - ------------------------------------------------------------------------------------------------------------------------------------ Interest expense Interest on savings deposits 53,431 54,062 62,335 Interest on interest-bearing transaction accounts 150,729 171,582 214,641 Interest on time deposits 324,684 404,011 573,110 Interest on Federal funds purchased and other short-term borrowings 62,367 73,348 119,787 Interest on capital lease obligation 3,858 3,929 3,994 Interest on long-term debt 36,905 30,601 27,248 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest expense 631,974 737,533 1,001,115 - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income 981,580 877,716 742,532 Provision for loan losses 60,184 136,626 114,658 - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 921,396 741,090 627,874 - ----------------------------------------------------------------------------------------------------------------------------------- Noninterest income Trust fees 149,580 137,983 120,806 Service charges 153,201 133,568 105,816 Credit card 47,279 38,417 29,848 Investment banking profits and fees 35,600 31,753 20,892 Securities gains, net 2,807 31,948 3,852 Other 104,784 78,413 74,490 - ------------------------------------------------------------------------------------------------------------------------------------ Total noninterest income 493,251 452,082 355,704 - ------------------------------------------------------------------------------------------------------------------------------------ Noninterest expense Staff 466,480 416,278 361,628 Net occupancy 69,429 64,477 55,041 Equipment 77,527 68,755 59,454 FDIC insurance 44,385 41,619 35,640 Credit card 35,205 25,552 17,129 Other 257,395 255,247 223,475 - ----------------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 950,421 871,928 752,367 - ----------------------------------------------------------------------------------------------------------------------------------- Income before income tax expense 464,226 321,244 231,211 Income tax expense 146,807 92,518 60,013 - ----------------------------------------------------------------------------------------------------------------------------------- Net income $ 317,419 $ 228,726 $ 171,198 - ----------------------------------------------------------------------------------------------------------------------------------- Net income per share $3.07 $2.29 $1.77 - ----------------------------------------------------------------------------------------------------------------------------------- Dividends declared per share $1.18 $1.10 $1.07 - ------------------------------------------------------------------------------------------------------------------------------------ Returns Return on assets 1.27% .99% .79% Return on equity 15.99 12.95 10.78 Return on common equity 15.99 12.95 10.78 - ----------------------------------------------------------------------------------------------------------------------------------- 44 Boatmen's Bancshares, Inc. 30 - ----------------------------------------------------------------------------------------------------------------------------------- (in thousands) 1990 1989 1988 - ------------------------------------------------------------------------------------------------------------------------------------ Interest income Interest and fees on loans $1,260,389 $1,265,182 $1,137,213 Interest on short-term investments 6,249 6,496 26,159 Interest on Federal funds sold and securities purchased under resale agreements 80,311 111,730 106,337 Interest on held to maturity securities Taxable 312,369 247,023 231,030 Tax-exempt 74,245 70,359 66,069 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest on held to maturity securities 386,614 317,382 297,099 Interest on available for sale securities Interest on trading securities 4,029 3,854 3,826 Interest on receivable due from Resolution Trust Corporation 5,359 - ------------------------------------------------------------------------------------------------------------------------------------ Total interest income 1,742,951 1,704,644 1,570,634 - ------------------------------------------------------------------------------------------------------------------------------------ Interest expense Interest on savings deposits 48,330 48,325 52,230 Interest on interest-bearing transaction accounts 208,649 214,972 207,117 Interest on time deposits 603,598 582,781 496,038 Interest on Federal funds purchased and other short-term borrowings 194,418 195,436 156,060 Interest on capital lease obligation 4,042 4,106 4,155 Interest on long-term debt 28,113 29,421 28,216 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest expense 1,087,150 1,075,041 943,816 - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income 655,801 629,603 626,818 Provision for loan losses 119,448 93,248 111,670 - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 536,353 536,355 515,148 - ----------------------------------------------------------------------------------------------------------------------------------- Noninterest income Trust fees 107,469 106,792 91,753 Service charges 85,430 76,872 74,571 Credit card 28,790 27,064 27,800 Investment banking profits and fees 11,925 9,722 11,570 Securities gains, net 3,221 250 1,995 Other 60,167 56,199 55,861 - ------------------------------------------------------------------------------------------------------------------------------------ Total noninterest income 297,002 276,899 263,550 - ------------------------------------------------------------------------------------------------------------------------------------ Noninterest expense Staff 329,906 315,834 324,590 Net occupancy 46,827 45,042 46,133 Equipment 57,487 56,729 56,459 FDIC insurance 17,371 11,218 12,428 Credit card 16,412 16,385 15,720 Other 183,959 160,218 209,244 - ----------------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 651,962 605,426 664,574 - ----------------------------------------------------------------------------------------------------------------------------------- Income before income tax expense 181,393 207,828 114,124 Income tax expense 36,363 43,695 15,939 - ----------------------------------------------------------------------------------------------------------------------------------- Net income $ 145,030 $ 164,133 $ 98,185 - ----------------------------------------------------------------------------------------------------------------------------------- Net income per share $1.58 $1.81 $1.09 - ----------------------------------------------------------------------------------------------------------------------------------- Dividends declared per share $1.06 $1.03 $1.00 - ------------------------------------------------------------------------------------------------------------------------------------ Returns Return on assets .73% .86% .52% Return on equity 10.13 11.98 7.47 Return on common equity 10.13 12.06 7.44 - -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
(in thousands) % change 1993 % change 1992 5-year annual compound 1989-1993 - ------------------------------------------------------------------------------------------------------------------------------------ Interest income Interest and fees on loans 2.9% (7.1)% (.2)% Interest on short-term investments (24.6) (65.8) (40.2) Interest on Federal funds sold and securities purchased under resale agreements (72.9) (37.0) (34.0) Interest on held to maturity securities Taxable (4.4) 7.1 10.5 Tax-exempt (11.1) (5.7) (2.4) - ----------------------------------------------------------------------------------------------------------------------------------- Total interest on held to maturity securities (5.3) 5.1 8.2 Interest on available for sale securities Interest on trading securities (22.4) (57.6) (7.6) Interest on receivable due from Resolution Trust Corporation - ------------------------------------------------------------------------------------------------------------------------------------ Total interest income (.1) (7.4) .5 - ------------------------------------------------------------------------------------------------------------------------------------ Interest expense Interest on savings deposits (1.2) (13.3) .5 Interest on interest-bearing transaction accounts (12.2) (20.1) (6.2) Interest on time deposits (19.6) (29.5) (8.1) Interest on Federal funds purchased and other short-term borrowings (15.0) (38.8) (16.8) Interest on capital lease obligation (1.8) (1.6) (1.5) Interest on long-term debt 20.6 12.3 5.5 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest expense (14.3) (26.3) (7.7) - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income 11.8 18.2 9.4 Provision for loan losses (55.9) 19.2 (11.6) - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 24.3 18.0 12.3 - ----------------------------------------------------------------------------------------------------------------------------------- Noninterest income Trust fees 8.4 14.2 10.3 Service charges 14.7 26.2 15.5 Credit card 23.1 28.7 11.2 Investment banking profits and fees 12.1 52.0 25.2 Securities gains, net (91.2) 729.4 7.1 Other 33.6 5.3 13.4 - ------------------------------------------------------------------------------------------------------------------------------------ Total noninterest income 9.1 27.1 13.4 - ------------------------------------------------------------------------------------------------------------------------------------ Noninterest expense Staff 12.1 15.1 7.5 Net occupancy 7.7 17.1 8.5 Equipment 12.8 15.6 6.5 FDIC insurance 6.6 16.8 29.0 Credit card 37.8 49.2 17.5 Other .8 14.2 4.2 - ----------------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 9.0 15.9 7.4 - ----------------------------------------------------------------------------------------------------------------------------------- Income before income tax expense 44.5 38.9 32.4 Income tax expense 58.7 54.2 55.9 - ----------------------------------------------------------------------------------------------------------------------------------- Net income 38.8% 33.6% 26.4% - ----------------------------------------------------------------------------------------------------------------------------------- Net income per share 34.1% 29.4% 23.1% - ----------------------------------------------------------------------------------------------------------------------------------- Dividends declared per share 7.3% 2.8% 3.4% - ------------------------------------------------------------------------------------------------------------------------------------ Returns Return on assets Return on equity Return on common equity - -----------------------------------------------------------------------------------------------------------------------------------
1993 Annual Report 45 31 CONSOLIDATED AVERAGE BALANCE SHEET AND NET INTEREST MARGIN - -----------------------------------------------------------------------------------------------------------------------------------
(dollars in millions) 1993 1992 1991 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME/ YIELDS/ Income/ Yields/ Income/ Yields/ Assets BALANCE EXPENSE RATES Balance Expense Rates Balance Expense Rates - ----------------------------------------------------------------------------------------------------------------------------------- Loans, net of unearned income $14,036.8 $1,132.8 8.07% $12,748.0 $1,100.4 8.63% $11,888.2 $1,185.6 9.97% Short-term investments 60.0 2.0 3.33 69.5 2.6 3.81 109.1 7.7 7.09 Federal funds sold and securities purchased under resale agreements 429.9 13.4 3.11 1,354.7 49.4 3.64 1,359.2 78.4 5.77 Held to maturity securities: Taxable 6,396.7 381.3 5.96 5,579.1 398.8 7.15 4,492.3 372.2 8.29 Tax-exempt 860.1 87.8 10.21 947.9 96.5 10.18 992.4 101.3 10.21 - ----------------------------------------------------------------------------------------------------------------------------------- Total held to maturity securities 7,256.8 469.1 6.46 6,527.0 495.3 7.59 5,484.7 473.5 8.63 Available for sale securities 483.7 29.0 6.01 Trading securities 53.6 2.8 5.12 54.4 3.4 6.27 110.5 8.0 7.25 Receivable due from Resolution Trust Corporation 357.9 29.0 8.09 - ----------------------------------------------------------------------------------------------------------------------------------- Total earning assets 22,320.8 1,649.1 7.39 20,753.6 1,651.1 7.96 19,309.6 1,782.2 9.23 Less reserve for loan losses (331.0) (281.6) (243.9) Cash and due from banks 1,625.7 1,497.7 1,412.9 Property and equipment 443.2 417.9 386.1 All other assets 910.1 738.1 702.7 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets $24,968.8 $23,125.7 $21,567.4 - ----------------------------------------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity - ----------------------------------------------------------------------------------------------------------------------------------- Savings deposits $ 2,014.6 $ 53.4 2.65% $ 1,628.2 $ 54.1 3.32% $ 1,283.0 $ 62.3 4.86% Interest-bearing transaction accounts 6,264.5 150.7 2.41 5,556.3 171.6 3.09 4,455.4 214.6 4.82 Time deposits 7,710.2 324.7 4.21 7,871.1 404.0 5.13 8,444.8 573.2 6.79 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 15,989.3 528.8 3.31 15,055.6 629.7 4.18 14,183.2 850.1 5.99 Federal funds purchased and other short-term borrowings 2,094.7 62.3 2.98 2,046.7 73.3 3.58 2,125.0 119.8 5.64 Capital lease obligation 39.6 3.9 9.72 40.4 3.9 9.72 41.0 4.0 9.72 Long-term debt 456.4 36.9 8.09 331.3 30.6 9.24 280.7 27.2 9.71 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities 18,580.0 631.9 3.40 17,474.0 737.5 4.22 16,629.9 1,001.1 6.02 Demand deposits 4,233.2 3,698.9 3,150.9 All other liabilities 169.5 185.5 197.6 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 22,982.7 21,358.4 19,978.4 Redeemable preferred stock 1.2 1.3 1.3 Total stockholders' equity 1,984.9 1,766.0 1,587.7 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $24,968.8 $23,125.7 $21,567.4 - ----------------------------------------------------------------------------------------------------------------------------------- Interest rate spread 3.99% 3.74% 3.21% Effect of noninterest-bearing funds .57 .66 .84 - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income/margin $1,017.2 4.56% $ 913.6 4.40% $ 781.1 4.05% - ----------------------------------------------------------------------------------------------------------------------------------- Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis. Interest income and yields are presented on a fully-taxable equivalent basis using the Federal statutory income tax rate, net of nondeductible interest expense. Such adjustments by earning asset category are as follows: Loans $ 5.9 $ 5.0 $ 6.8 Tax-exempt held to maturity securities 29.5 30.8 31.6 Trading securities .2 .1 .2 - ----------------------------------------------------------------------------------------------------------------------------------- Total $35.6 $35.9 $38.6 - ----------------------------------------------------------------------------------------------------------------------------------- 46 Boatmen's Bancshares, Inc. 32 - ----------------------------------------------------------------------------------------------------------------------------------- (dollars in millions) 1990 1989 - ----------------------------------------------------------------------------------------------------------------------------------- Income/ Yields/ Income/ Yields/ Assets Balance Expense Rates Balance Expense Rates - ----------------------------------------------------------------------------------------------------------------------------------- Loans, net of unearned income $11,706.4 $1,269.4 10.84% $11,462.6 $1,278.7 11.16% Short-term investments 72.9 6.3 8.57 70.9 6.5 9.16 Federal funds sold and securities purchased under resale agreements 982.8 80.3 8.17 1,212.8 111.7 9.21 Held to maturity securities: Taxable 3,669.6 312.4 8.51 3,012.4 247.0 8.20 Tax-exempt 1,055.0 106.9 10.14 1,002.8 103.7 10.34 - ----------------------------------------------------------------------------------------------------------------------------------- Total held to maturity securities 4,724.6 419.3 8.88 4,015.2 350.7 8.73 Available for sale securities Trading securities 46.4 4.1 8.90 43.7 4.0 9.28 Receivable due from Resolution Trust Corporation 67.1 5.4 7.99 - ----------------------------------------------------------------------------------------------------------------------------------- Total earning assets 17,600.2 1,784.8 10.14 16,805.2 1,751.6 10.42 Less reserve for loan losses (221.8) (227.2) Cash and due from banks 1,401.8 1,522.0 Property and equipment 369.2 362.6 All other assets 582.9 587.6 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets $19,732.3 $19,050.2 - ----------------------------------------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity - ----------------------------------------------------------------------------------------------------------------------------------- Savings deposits $ 967.9 $ 48.3 4.99% $ 969.9 $ 48.3 4.98% Interest-bearing transaction accounts 3,752.7 208.7 5.56 3,716.6 215.0 5.78 Time deposits 7,581.1 603.6 7.96 7,057.2 582.8 8.26 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 12,301.7 860.6 7.00 11,743.7 846.1 7.20 Federal funds purchased and other short-term borrowings 2,469.9 194.4 7.87 2,211.4 195.4 8.84 Capital lease obligation 41.7 4.1 9.72 42.2 4.1 9.72 Long-term debt 288.1 28.1 9.76 292.9 29.4 10.04 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities 15,101.4 1,087.2 7.20 14,290.2 1,075.0 7.52 Demand deposits 2,985.1 3,159.7 All other liabilities 213.0 228.4 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 18,299.5 17,678.3 Redeemable preferred stock 1.4 1.7 Total stockholders' equity 1,431.4 1,370.2 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $19,732.3 $19,050.2 - ----------------------------------------------------------------------------------------------------------------------------------- Interest rate spread 2.94% 2.90% Effect of noninterest-bearing funds 1.02 1.13 - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income/margin $ 697.6 3.96% $ 676.6 4.03% - ----------------------------------------------------------------------------------------------------------------------------------- Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis. Interest income and yields are presented on a fully-taxable equivalent basis using the Federal statutory income tax rate, net of nondeductible interest expense. Such adjustments by earning asset category are as follows: Loans $ 9.0 $13.5 Tax-exempt held to maturity securities 32.7 33.3 Trading securities .1 .2 - ----------------------------------------------------------------------------------------------------------------------------------- Total $41.8 $47.0 - -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in millions) 1988 % change in average balances - ----------------------------------------------------------------------------------------------------------------------------------- Five-year annual Income/ Yields/ compound Assets Balance Expense Rates 1993 1992 1989-1993 - ----------------------------------------------------------------------------------------------------------------------------------- Loans, net of unearned income $11,065.9 $1,151.8 10.41% 10.1% 7.2% 4.9% Short-term investments 340.1 26.2 7.69 (13.7) (36.3) (29.3) Federal funds sold and securities purchased under resale agreements 1,422.5 106.3 7.48 (68.3) (.3) (21.3) Held to maturity securities: Taxable 2,898.8 231.0 7.97 14.7 24.2 17.2 Tax-exempt 949.6 97.9 10.31 (9.3) (4.5) (2.0) - ----------------------------------------------------------------------------------------------------------------------------------- Total held to maturity securities 3,848.4 328.9 8.55 11.2 19.0 13.5 Available for sale securities Trading securities 51.4 5.0 9.78 (1.5) (50.8) .8 Receivable due from Resolution Trust Corporation - ----------------------------------------------------------------------------------------------------------------------------------- Total earning assets 16,728.3 1,618.2 9.67 7.6 7.5 5.9 Less reserve for loan losses (210.8) 17.5 15.5 9.4 Cash and due from banks 1,555.4 8.5 6.0 .9 Property and equipment 374.1 6.1 8.2 3.4 All other assets 519.4 23.3 5.0 11.9 - ----------------------------------------------------------------------------------------------------------------------------------- Total assets $18,966.4 8.0% 7.2% 5.7% - ----------------------------------------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity - ----------------------------------------------------------------------------------------------------------------------------------- Savings deposits $ 1,034.4 $ 52.2 5.05% 23.7% 26.9% 14.3% Interest-bearing transaction accounts 3,847.0 207.1 5.38 12.7 24.7 10.2 Time deposits 6,801.0 496.0 7.29 (2.0) (6.8) 2.5 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing deposits 11,682.4 755.3 6.47 6.2 6.2 6.5 Federal funds purchased and other short-term borrowings 2,134.1 156.1 7.31 2.3 (3.7) (.4) Capital lease obligation 42.7 4.2 9.72 (2.0) (1.5) (1.5) Long-term debt 306.2 28.2 9.21 37.8 18.0 8.3 - ----------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities 14,165.4 943.8 6.66 6.3 5.1 5.6 Demand deposits 3,246.5 14.4 17.4 5.5 All other liabilities 236.3 (8.6) (6.1) (6.4) - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 17,648.2 7.6 6.9 5.4 Redeemable preferred stock 3.3 (7.7) (18.3) Total stockholders' equity 1,314.9 12.4 11.2 8.6 - ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $18,966.4 8.0% 7.2% 5.7% - ----------------------------------------------------------------------------------------------------------------------------------- Interest rate spread 3.01% Effect of noninterest-bearing funds 1.02 - ----------------------------------------------------------------------------------------------------------------------------------- Net interest income/margin $ 674.4 4.03% - ----------------------------------------------------------------------------------------------------------------------------------- Nonaccrual loans are included in average balances and income on such loans is recognized on a cash basis. Interest income and yields are presented on a fully-taxable equivalent basis using the Federal statutory income tax rate, net of nondeductible interest expense. Such adjustments by earning asset category are as follows: Loans $14.6 Tax-exempt held to maturity securities 31.8 Trading securities 1.2 - ----------------------------------------------------------------------------------------------------------------------------------- Total $47.6 - -----------------------------------------------------------------------------------------------------------------------------------
1993 Annual Report 47 33 CONSOLIDATED BALANCE SHEET - ---------------------------------------------------------------------------------------------------------------------------
December 31 (dollars in thousands) 1993 1992 - --------------------------------------------------------------------------------------------------------------------------- Assets - --------------------------------------------------------------------------------------------------------------------------- Cash and due from banks $ 1,608,051 $ 1,771,021 Short-term investments 24,748 144,664 Securities: Held to maturity (market value $3,408,119 and $6,799,642, respectively) 3,324,847 6,652,058 Available for sale (at market value in 1993, market value in 1992 $478,361) 5,176,966 463,571 Trading 48,081 38,514 Federal funds sold and securities purchased under resale agreements 407,672 1,192,568 Loans (net of unearned income of $67,338 and $72,488, respectively) 14,825,922 13,110,886 Less reserve for loan losses 341,099 302,021 - --------------------------------------------------------------------------------------------------------------------------- Loans, net 14,484,823 12,808,865 - --------------------------------------------------------------------------------------------------------------------------- Property and equipment 480,586 433,616 Other assets 1,098,275 776,002 - --------------------------------------------------------------------------------------------------------------------------- Total assets $26,654,049 $24,280,879 - --------------------------------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity - --------------------------------------------------------------------------------------------------------------------------- Liabilities: Demand deposits $ 4,769,947 $ 4,210,794 Retail savings deposits and interest-bearing transaction accounts 8,773,058 7,809,229 Time deposits 7,365,997 7,664,757 - --------------------------------------------------------------------------------------------------------------------------- Total deposits 20,909,002 19,684,780 - --------------------------------------------------------------------------------------------------------------------------- Federal funds purchased and securities sold under repurchase agreements 1,996,022 1,664,025 Short-term borrowings 815,971 396,504 Capital lease obligation 39,224 40,012 Long-term debt 486,253 393,191 Other liabilities 273,168 239,899 - --------------------------------------------------------------------------------------------------------------------------- Total liabilities 24,519,640 22,418,411 - --------------------------------------------------------------------------------------------------------------------------- Redeemable preferred stock 1,155 1,248 - --------------------------------------------------------------------------------------------------------------------------- Stockholders' Equity: Common stock ($1 par value; 125,000,000 shares authorized; 104,125,546 and 51,131,452 shares issued and outstanding, respectively) 104,126 51,131 Surplus 786,840 809,923 Retained earnings 1,200,036 1,000,166 Unrealized net appreciation, available for sale securities 42,252 - --------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 2,133,254 1,861,220 - --------------------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $26,654,049 $24,280,879 - --------------------------------------------------------------------------------------------------------------------------- See accompanying notes to the consolidated financial statements.
48 Boatmen's Bancshares, Inc. 34 CONSOLIDATED STATEMENT OF INCOME - ---------------------------------------------------------------------------------------------------------------------------
Year ended December 31 (in thousands) 1993 1992 1991 - --------------------------------------------------------------------------------------------------------------------------- Interest income Interest and fees on loans $1,126,910 $1,095,453 $1,178,849 Interest on short-term investments 1,997 2,648 7,736 Interest on Federal funds sold and securities purchased under resale agreements 13,361 49,359 78,400 Interest on held to maturity securities Taxable 381,278 398,782 372,218 Tax-exempt 58,381 65,695 69,677 - --------------------------------------------------------------------------------------------------------------------------- Total interest on held to maturity securities 439,659 464,477 441,895 Interest on available for sale securities 29,057 Interest on trading securities 2,570 3,312 7,812 Interest on receivable due from Resolution Trust Corporation 28,955 - --------------------------------------------------------------------------------------------------------------------------- Total interest income 1,613,554 1,615,249 1,743,647 - --------------------------------------------------------------------------------------------------------------------------- Interest expense Interest on deposits 528,844 629,655 850,086 Interest on Federal funds purchased and other short-term borrowings 62,367 73,348 119,787 Interest on capital lease obligation 3,858 3,929 3,994 Interest on long-term debt 36,905 30,601 27,248 - --------------------------------------------------------------------------------------------------------------------------- Total interest expense 631,974 737,533 1,001,115 - --------------------------------------------------------------------------------------------------------------------------- Net interest income 981,580 877,716 742,532 Provision for loan losses 60,184 136,626 114,658 - --------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 921,396 741,090 627,874 - --------------------------------------------------------------------------------------------------------------------------- Noninterest income Trust fees 149,580 137,983 120,806 Service charges 153,201 133,568 105,816 Credit card 47,279 38,417 29,848 Investment banking profits and fees 35,600 31,753 20,892 Securities gains, net 2,807 31,948 3,852 Other 104,784 78,413 74,490 - --------------------------------------------------------------------------------------------------------------------------- Total noninterest income 493,251 452,082 355,704 - --------------------------------------------------------------------------------------------------------------------------- Noninterest expense Staff 466,480 416,278 361,628 Net occupancy 69,429 64,477 55,041 Equipment 77,527 68,755 59,454 FDIC insurance 44,385 41,619 35,640 Credit card 35,205 25,552 17,129 Foreclosed property costs, net (4,790) 26,338 23,813 Other 262,185 228,909 199,662 - --------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 950,421 871,928 752,367 - --------------------------------------------------------------------------------------------------------------------------- Income before income tax expense 464,226 321,244 231,211 Income tax expense 146,807 92,518 60,013 - --------------------------------------------------------------------------------------------------------------------------- Net income $ 317,419 $ 228,726 $ 171,198 - --------------------------------------------------------------------------------------------------------------------------- Net income per share $3.07 $2.29 $1.77 - --------------------------------------------------------------------------------------------------------------------------- Dividends declared per share $1.18 $1.10 $1.07 - --------------------------------------------------------------------------------------------------------------------------- See accompanying notes to the consolidated financial statements.
1993 Annual Report 49 35 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - -------------------------------------------------------------------------------------------------------------------------------
Unrealized Net Common Stock Treasury Stock Appreciation, ----------------- Retained -------------- Available for (in thousands) Shares Amount Surplus Earnings Shares Amount Sale Securities Total - ------------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 1990 46,188 $461,879 $230,576 $ 770,927 - - - $1,463,382 Net income - - - 171,198 - - - 171,198 Cash dividends declared: Common ($1.07 per share)(1) - - - (79,441) - - - (79,441) Redeemable preferred - - - (89) - - - (89) By pooled company prior to merger--common - - - (2,418) - - - (2,418) Issuance of common stock from public offering 2,990 2,990 108,145 - - - - 111,135 Common stock issued pursuant to various employee and shareholder stock issuance plans 351 1,368 9,394 - - - - 10,762 Common stock issued upon conversion of convertible subordinated debentures 65 174 1,738 - - - - 1,912 Purchase and retirement of common stock--pooled company (9) (9) (252) - - - - (261) Transfer to surplus resulting from change in par value of common stock(2) - (416,817) 416,817 - - - - - Adjustment of investments in equity securities to market value - - - 4,001 - - - 4,001 Other, net - - (1) (4) - - - (5) - ------------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 1991 49,585 49,585 766,417 864,174 - - - 1,680,176 Net income - - - 228,726 - - - 228,726 Cash dividends declared: Common ($1.10 per share)(1) - - - (92,032) - - - (92,032) Redeemable preferred - - - (88) - - - (88) By pooled company prior to merger-common - - - (616) - - - (616) Issuance of common stock from public offering--pooled company 629 629 15,133 - - - - 15,762 Common stock issued pursuant to various employee and shareholder stock issuance plans 390 390 14,403 - - - - 14,793 Common stock issued upon conversion of convertible subordinated debentures 532 532 14,338 - - - - 14,870 Other, net (5) (5) (368) 2 - - - (371) - ------------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 1992 51,131 51,131 809,923 1,000,166 - - - 1,861,220 Net income - - - 317,419 - - - 317,419 Cash dividends declared: Common ($1.18 per share)(1) - - - (117,334) - - - (117,334) Redeemable preferred - - - (85) - - - (85) Acquisition of treasury stock - - - - (52) (3,102) - (3,102) Common stock issued pursuant to various employee and shareholder stock issuance plans 641 641 15,992 - 52 3,102 - 19,735 Common stock issued upon conversion of convertible subordinated debentures 487 487 12,817 - - - - 13,304 Common stock issued upon 2-for-1 stock split 51,867 51,867 (51,867) - - - - - Adjustment of available for sale securities to market value - - - - - - 42,252 42,252 Other, net - - (25) (130) - - - (155) - ------------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 1993 104,126 $104,126 $786,840 $1,200,036 - - $42,252 $2,133,254 - ------------------------------------------------------------------------------------------------------------------------------- (1)Amounts adjusted for the two-for-one stock split which was declared on August 10, 1993 and paid on October 1, 1993. (2)On April 23, 1991, shareholders approved a change in the par value of the Corporation's common stock to $1.00 per share from $10.00 per share. See accompanying notes to the consolidated financial statements.
50 Boatmen's Bancshares, Inc. 36 CONSOLIDATED STATEMENT OF CASH FLOWS - ---------------------------------------------------------------------------------------------------------------------------
Year ended December 31 (in thousands) 1993 1992 1991 - --------------------------------------------------------------------------------------------------------------------------- Operating Activities: Net income $ 317,419 $ 228,726 $ 171,198 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 60,184 136,626 114,658 Depreciation, amortization and accretion 106,298 77,062 51,717 Increase (decrease) in deferred loan fees (767) 2,954 (1,135) Realized securities gains (2,807) (31,948) (3,852) Net (increase) decrease in trading securities (9,567) 94,073 (75,870) Decrease in interest receivable 3,795 37,747 12,323 Decrease in interest payable (11,863) (29,586) (29,620) Increase (decrease) in tax liability 11,955 (27,029) (9,299) Net (gain) loss on sales and writedowns of foreclosed property (5,656) 32,237 18,566 Other, net (30,882) (5,386) 43,784 - --------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 438,109 515,476 292,470 - --------------------------------------------------------------------------------------------------------------------------- Investing Activities: Net (increase) decrease in Federal funds sold and securities purchased under resale agreements 874,246 622,785 (672,054) Net decrease in receivable due from RTC 1,432,742 Net increase in loans (816,616) (293,695) (155,822) Proceeds from the maturity of held to maturity securities 2,278,249 1,747,629 1,438,238 Proceeds from the sales of held to maturity securities 43,417 755,394 204,455 Purchases of held to maturity securities (3,455,044) (3,267,629) (2,397,965) Proceeds from the maturity of available for sale securities 23,020 Proceeds from the sales of available for sale securities 154,869 Purchases of available for sale securities (61,199) Net decrease in short-term investments 119,916 14,472 191,917 Increase in property and equipment (101,932) (59,487) (61,361) Proceeds from the sale of foreclosed property 80,275 88,910 31,426 Net cash received from purchase acquisitions 444,540 120,198 34,689 - --------------------------------------------------------------------------------------------------------------------------- Net cash provided (used) by investing activities (571,128) (116,554) 46,265 - --------------------------------------------------------------------------------------------------------------------------- Financing Activities: Net increase (decrease) in Federal funds purchased and securities sold under repurchase agreements 323,464 (89,420) (839,820) Net increase (decrease) in deposits (780,182) 228,169 (691,701) Net increase (decrease) in short-term borrowings 417,140 (552,503) 755,000 Payments on long-term debt (18,190) (10,221) (16,781) Proceeds from the issuance of long-term debt 124,281 99,148 49,500 Payments on capital lease obligation (788) (716) (652) Decrease in redeemable preferred stock (93) (19) (89) Cash dividends paid (112,216) (86,218) (81,087) Issuance of common stock from public stock offerings 15,762 111,135 Common stock issued pursuant to various employee and shareholder stock issuance plans 19,735 14,793 10,762 Acquisition of treasury stock (3,102) Retirement of common stock (261) - --------------------------------------------------------------------------------------------------------------------------- Net cash used by financing activities (29,951) (381,225) (703,994) - --------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash and due from banks (162,970) 17,697 (365,259) Cash and due from banks at beginning of year 1,771,021 1,753,324 2,118,583 - --------------------------------------------------------------------------------------------------------------------------- Cash and due from banks at end of year $1,608,051 $1,771,021 $1,753,324 - --------------------------------------------------------------------------------------------------------------------------- See accompanying notes to the consolidated financial statements. For the years ended December 31, 1993, 1992 and 1991, interest paid totaled $643,837, $766,739 and $981,008, respectively. Income taxes paid totaled $152,579 in 1993, $118,075 in 1992 and $80,890 in 1991. Additional common stock was issued upon the conversion of $13,748 of the Corporation's convertible subordinated debt for the year ended December 31, 1993, $15,425 for the year ended December 31, 1992, and $1,993 for the year ended December 31, 1991. Investment securities and debt securities held for sale transferred to available for sale securities totaled approximately $5.2 billion in 1993. Investment securities transferred to debt securities held for sale totaled approximately $515 million in 1992. Loans transferred to foreclosed property totaled $22 million in 1993, $67 million in 1992 and $134 million in 1991. In 1993, assets and liabilities of purchased subsidiaries at dates of acquisition included investment securities of $160 million, loans of $954 million, cash of $483 million, other assets of $465 million, deposits of $2.0 billion and other liabilities of $20 million. In 1992, assets and liabilities of purchased subsidiaries at dates of acquisition included investment securities of $439.5 million, loans of $670.7 million, cash of $223.0 million, other assets of $201.5 million, deposits of $1,396.5 million and other liabilities of $22.5 million. In 1991, assets and liabilities of purchased subsidiary at date of acquisition included investment securities of $206.1 million, loans of $470.1 million, cash of $120.7 million, other assets of $67.4 million, deposits of $632.7 million and other liabilities of $145.6 million.
1993 Annual Report 51 37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands except per share data and when otherwise indicated) - ------------------------------------------------------------------------------ SUMMARY OF 1 PRINCIPAL ACCOUNTING POLICIES The accounting and reporting policies of the Corporation and its subsidiaries conform to generally accepted accounting principles. The following is a description of the more significant of those policies. Basis of Presentation The consolidated financial statements include the accounts of the Corporation and its subsidiaries after elimination of all material intercompany balances and transactions. Certain amounts for 1992 and 1991 were reclassified to conform with statement presentation for 1993. The reclassifications have no effect on stockholders' equity or net income as previously reported. Prior period financial statements are also restated to include the accounts of companies which are acquired and accounted for as poolings of interests. Results of operations of companies which are acquired and subject to purchase accounting are included from the dates of acquisition. In accordance with the purchase method of accounting, the assets and liabilities of purchased companies are stated at estimated fair values at the date of acquisition, and the excess of cost over fair value of net assets acquired is being amortized on a straight-line basis over periods benefitted. Held to Maturity Securities These securities are purchased with the original intent to hold to maturity and events which may be reasonably anticipated are considered when determining the Corporation's intent and ability to hold to maturity. Securities meeting such criteria at date of purchase and as of the balance sheet date are carried at cost, adjusted for amortization of premiums and accretion of discounts. Gains or losses on the disposition of held to maturity securities, if any, are based on the adjusted book value of the specific security. Available for Sale Securities Debt and equity securities to be held for indefinite periods of time and not intended to be held to maturity are classified as available for sale and carried at market value with net unrealized gains and losses, net of tax, reflected as a component of stockholders' equity until realized. Securities held for indefinite periods of time include securities that may be sold to meet liquidity needs or in response to significant changes in interest rates or prepayment risks as part of the Corporation's overall asset/liability management strategy. Prior to December 31, 1993, marketable equity securities were carried at the lower of aggregate cost or market value with net unrealized gains and losses being reflected as adjustments to retained earnings. Market value depreciation below cost on debt securities held for sale prior to December 31, 1993 was required to be reflected in current period earnings. Trading Securities Trading securities are held for resale within a short period of time and are stated at market value. Investment banking profits and fees include the net realized gain or loss and market value adjustments of the trading account portfolio and commissions on bond dealer and retail brokerage operations. Interest and Fees on Loans Interest on loans is accrued based upon the principal amount outstanding. It is the Corporation's policy to discontinue the accrual of interest when full collectibility of principal or interest on any loan is doubtful. Interest income on such loans is subsequently recognized only in the period in which payments are received, and such payments are applied to reduce principal when loans are unsecured or collateral values are deficient. Nonrefundable loan fees are deferred and recognized as income over the life of the loan as an adjustment of the yield. Direct costs associated with originating loans are deferred and amortized as a yield adjustment over the life of the loan. Commitment fees are deferred and recognized as noninterest income over the commitment period. Reserve for Loan Losses The reserve represents provisions charged to expense less net loan charge-offs. The provision is based upon economic conditions, historical loss and collection experience, risk characteristics of the portfolio, underlying collateral values, credit concentrations, industry risk, degree of off-balance sheet risk and other factors which, in management's judgment, deserve current recognition. The charge-off policy of the Corporation's banking subsidiaries varies with respect to the category of, and specific circumstances surrounding, each loan under consideration. The Corporation's policy with respect to consumer loans is generally to charge off all such loans when deemed to be uncollectible or 120 days past due, whichever comes first. With respect to commercial, real estate, and other loans, charge-offs are made on the basis of management's ongoing evaluation of nonperforming and criticized loans. Foreclosed Property The maximum carrying value for real estate acquired through foreclosure is the lower of the recorded investment in the loan for which the property previously served as collateral or the current appraised value of the foreclosed property. Any writedowns required prior to actual foreclosure are charged to the reserve for loan losses. Subsequent to foreclosure, losses on the periodic revaluation of the property are charged to current period earnings as noninterest expense. Gains and losses resulting from the sale of foreclosed property are credited or charged to current period earnings. Costs of maintaining and operating foreclosed property are expensed as incurred and revenues related to foreclosed property are recorded as an offset to operating expense. Expenditures to complete or improve foreclosed properties are capitalized if the expenditures are expected to be recovered upon ultimate sale of the property. Segregated Assets Segregated assets represent loans acquired in an FDIC assisted transaction that are covered under a loss sharing arrangement with the FDIC and possess more than the normal risk of collectibility. These assets consist of loans that at acquisition were or have since become classified as nonperforming loans or foreclosed property and are segregated from other performing assets covered under the loss sharing arrangement. The Corporation's primary purpose in managing a portfolio of this nature is to provide ongoing collection and control activities on behalf of the FDIC. Accordingly, these assets do not represent loans made in the ordinary course of business and, due to the underlying nature of this liquidating asset pool, are excluded from the Corporation's nonperforming asset statistics. Income from the segregated asset pool is generally recognized on a cash basis as a component of noninterest income. If collection of the unguaranteed portion of the segregated asset is doubtful, income payments are applied to reduce the principal balance to the extent of the government guarantee. 52 Boatmen's Bancshares, Inc. 38 - ------------------------------------------------------------------------------- Interest Rate Swaps Interest rate swap transactions are utilized as hedges as part of the Corporation's overall asset/liability management strategy. Although the notional amounts of these transactions are not reflected in the financial statements, the interest differentials are recognized over the terms of the agreements as a component of net interest income. Foreign Exchange Contracts The Corporation's banking subsidiaries trade foreign currencies on behalf of their customers and for their own account and, by policy, do not maintain significant open positions. Foreign exchange contracts are valued at the current prevailing rates of exchange and any profit or loss resulting from such valuation is included in current operations as a component of investment banking profits and fees. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are recognized principally by the straight-line method applied over the estimated useful lives of the assets, which are 10 to 50 years for buildings, 2 to 50 years for leasehold improvements, and 3 to 25 years for fixtures and equipment. Intangible Assets Goodwill arising from acquisitions consummated subsequent to 1985 is being amortized on a straight-line basis over the periods benefitted, ranging from 4-15 years. For acquisitions consummated in 1983 and 1985, goodwill is being amortized on a straight-line basis over 25 years, and goodwill related to acquisitions prior to 1983 is being amortized on a straight-line basis over 40 years. Core deposit intangibles and credit card premiums are amortized over their useful economic lives on an accelerated basis, not to exceed 10 years. Mortgage servicing rights are amortized over the estimated life of the related loan servicing pool. Income Taxes Effective January 1, 1992, the Corporation adopted the accounting principles of Financial Accounting Standards No. 109, "Accounting for Income Taxes", which requires accounting for income taxes under the asset and liability method. The Corporation previously accounted for income taxes under the asset and liability method of Financial Accounting Standards No. 96. Income tax expense is reported as the total of current income taxes payable and the net change in deferred income taxes provided for temporary differences. Deferred income taxes reflect the net tax effects of temporary differences between the carrying values of assets and liabilities for financial reporting purposes and the values used for income tax purposes. Deferred income taxes are recorded at the statutory Federal and state tax rates in effect at the time that the temporary differences are expected to reverse. The Corporation files a consolidated Federal income tax return which includes all its subsidiaries except for the life insurance company. Income tax expense is allocated among the parent company and its subsidiaries as if each had filed a separate tax return. Net Income Per Share Net income per share is calculated by dividing net income (after deducting dividends on redeemable preferred stock) by the weighted average number of common shares outstanding. Common stock equivalents have no material dilutive effect. The net income per share calculation for 1993, 1992 and 1991 is summarized as follows: - -------------------------------------------------------------------------------
(in thousands except share data) 1993 1992 1991 - ------------------------------------------------------------------------------- Net income $317,419 $228,726 $171,198 Less preferred dividends declared 85 88 89 - ------------------------------------------------------------------------------- Net income available to common shareholders $317,334 $228,638 $171,109 - ------------------------------------------------------------------------------- Average shares outstanding 103,489,599 100,017,099 96,894,770 - ------------------------------------------------------------------------------- Net income per share $3.07 $2.29 $1.77 - -------------------------------------------------------------------------------
2 CHANGES IN ACCOUNTING POLICIES On December 31, 1993, the Corporation adopted Financial Accounting Standards No. 115 (SFAS No. 115), "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires entities to classify debt and equity securities as either held to maturity, available for sale, or trading securities. Under SFAS No. 115, held to maturity securities are recorded at amortized cost; whereas available for sale securities and trading securities are carried at market value. SFAS No. 115 further requires that unrealized gains and losses on available for sale securities be reported, net of tax, as a separate component of stockholders' equity. Upon adoption of SFAS No. 115, the Corporation transferred approximately $5.2 billion of debt and equity securities to the available for sale portfolio, resulting in an increase to stockholders' equity of $42.3 million. Adoption of SFAS No. 115 had no effect on current year earnings. In 1992, the Corporation adopted Financial Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income Taxes". SFAS No. 109 requires an asset and liability approach which recognizes the amount of taxes payable or refundable in the current year and deferred tax consequences of events that have been recognized previously in financial statements or tax returns. The impact on tax expense in 1992 due to adoption of SFAS No. 109 was a consolidated benefit of $3.6 million or $.04 per share, recorded as of January 1, 1992. The Corporation adopted Financial Accounting Standards No. 106 (SFAS No. 106), "Employers' Accounting for Postretirement Benefits Other Than Pensions", on a prospective basis as of January 1, 1992 and will amortize the initial accumulated postretirement transition obligation of $47.9 million over 20 years. SFAS No. 106 requires the recognition of an employer's cost of providing postretirement benefits to retirees on an accrual basis and decreased net income in 1992 by $2.9 million or $.03 per share. 1993 Annual Report 53 39 3 ACQUISITIONS Purchase Acquisitions Results of operations of companies which are acquired and subject to purchase accounting treatment are included from dates of acquisition. Pro forma condensed results of operations as if the purchase acquisitions were consummated as of the beginning of the period have been omitted due to the immaterial effect on operations. Goodwill and core deposit intangibles arising from 1993 acquisitions totaled $43.6 million and $49.1 million, respectively. Goodwill and core deposit intangibles arising from 1992 purchase acquisitions totaled $24.6 million and $9.2 million, respectively. Core deposit intangibles in each of the purchase acquisitions summarized below are being amortized on an accelerated basis, not to exceed 10 years. Goodwill is being amortized on a straight-line basis over periods ranging from 4-15 years. Other information regarding purchase acquisitions is summarized as follows: - --------------------------------------------------------------------------------------
Core Acquired Company Acquisition Purchase Deposit (amounts in millions) Date Price Assets Goodwill Intangible - -------------------------------------------------------------------------------------- 1993 First City-El Paso (FDIC assisted) 3/5/93 $ 14.0 $ 340.0 $ 9.6 $13.7 Missouri Bridge Bank (FDIC assisted) 4/23/93 15.8 1,100.0 18.9 20.0 Cimarron Federal Savings (RTC assisted) 5/26/93 13.1 430.0 13.1 FCB Bancshares, Inc. 8/2/93 25.0 185.0 15.1 2.3 - -------------------------------------------------------------------------------------- Total $ 67.9 $2,055.0 $43.6 $49.1 - -------------------------------------------------------------------------------------- 1992 Founders Bancorporation, Inc. 3/2/92 $ 34.0 $ 330.0 $15.3 $ 3.5 Superior Federal Bank (RTC assisted) 3/20/92 700.0 Home Federal S&L (RTC assisted) 3/27/92 1.3 120.0 1.3 Jackson Exchange Bank (FDIC assisted) 5/7/92 1.4 120.0 1.4 Security Bank and First Bank of Catoosa in Tulsa 11/2/92 33.0 240.0 9.3 3.0 - -------------------------------------------------------------------------------------- Total $ 69.7 $1,510.0 $24.6 $ 9.2 - -------------------------------------------------------------------------------------- 1991 First Interstate Bank of Oklahoma, N.A. 8/1/91 $ 86.0 $ 900.0 $13.4 $11.5 - --------------------------------------------------------------------------------------
Pooling Acquisitions Results of operations of companies which are acquired and subject to pooling of interests accounting are reflected on a combined basis from the earliest period presented. On November 30, 1993, the Corporation consummated the acquisition of First Amarillo Bancorporation, Inc. (Amarillo), resulting in the issuance of approximately 5.9 million shares of common stock. Amarillo, subsequently renamed Boatmen's Texas, Inc., with approximately $1 billion in assets, is headquartered in Amarillo, Texas. Nonrecurring merger expenses related to this acquisition totaled $4.7 million and were comprised primarily of investment banking fees, compensation-related expense and abandonment of equipment and software. On an after-tax basis, merger-related expenses from this acquisition totaled $3.8 million or $.04 per share and were recognized in the fourth quarter of 1993. For the nine months ended September 30, 1993, Amarillo reported net interest income and net income of $25.8 million and $15.9 million, respectively. Net interest income and net income as previously reported for the Corporation and Amarillo for 1992 and 1991 are summarized as follows: - -------------------------------------------------------------------------------
(in millions) 1992 1991 - ------------------------------------------------------------------------------- Net interest income: Boatmen's Bancshares, Inc. $847.5 $717.7 First Amarillo Bancorporation, Inc. 30.2 24.8 - ------------------------------------------------------------------------------- Boatmen's Bancshares, Inc. restated $877.7 $742.5 - ------------------------------------------------------------------------------- Net income: Boatmen's Bancshares, Inc. $215.5 $164.7 First Amarillo Bancorporation, Inc. 13.2 6.5 - ------------------------------------------------------------------------------- Boatmen's Bancshares, Inc. restated $228.7 $171.2 - -------------------------------------------------------------------------------
On April 1, 1992, the Corporation consummated the acquisition of First Interstate of Iowa, Inc., (Iowa), resulting in the issuance of approximately 4.2 million shares of common stock. First Interstate of Iowa, Inc., subsequently renamed Boatmen's Bancshares of Iowa, Inc., with approximately $1.2 billion in assets, is headquartered in Des Moines, Iowa. Nonrecurring merger expenses related to the acquisition totaled $7.1 million and were recorded in the fourth quarter of 1991. On October 1, 1992, the Corporation consummated the acquisition of Sunwest Financial Services, Inc. (Sunwest), resulting in the issuance of approximately 14.8 million shares of common stock. Sunwest, subsequently renamed Boatmen's Sunwest, Inc., with approximately $3.8 billion in assets, is headquartered in Albuquerque, New Mexico and is the largest banking organization in that state. In the fourth quarter of 1992, the Corporation recorded nonrecurring charges to conform Sunwest's loan, accrual and reserve policies to the Corporation's policies which required additions to the reserve for loan losses and write-downs of foreclosed property. In addition, nonrecurring merger-related expenses were recognized, such as investment banking fees, severance benefits, and abandonment of equipment and software. Also in 1992, Sunwest realigned its investment portfolio to conform to the Corporation's investment philosophy by selling approximately $670 million of U.S. government securities and reinvesting the proceeds in mortgage-backed securities. Gains of approximately $24.3 million were recognized from this realignment. 54 Boatmen's Bancshares, Inc. 40 - ------------------------------------------------------------------------------- 4 HELD TO MATURITY SECURITIES The amortized cost and approximate market value of held to maturity securities are summarized as follows: - -------------------------------------------------------------------------------
Unrealized December 31, 1993 Amortized --------------- Market (in thousands) Cost Gains Losses Value - ------------------------------------------------------------------------------- U.S. Treasury $ 231,064 $ 1,791 $ (434) $ 232,421 Federal agencies: Mortgage-backed 1,666,297 14,258 (8,220) 1,672,335 Other agencies 320,501 1,602 (293) 321,810 - ------------------------------------------------------------------------------- Total U.S. Treasury and agencies 2,217,862 17,651 (8,947) 2,226,566 State and municipal 819,206 74,210 (200) 893,216 Other debt securities 258,407 1,998 (1,440) 258,965 - ------------------------------------------------------------------------------- Total debt securities 3,295,475 93,859 (10,587) 3,378,747 - ------------------------------------------------------------------------------- Other securities 29,372 29,372 - ------------------------------------------------------------------------------- Total held to maturity securities $3,324,847 $ 93,859 $(10,587) $3,408,119 - ------------------------------------------------------------------------------- Unrealized December 31, 1992 Amortized --------------- Market (in thousands) Cost Gains Losses Value - ------------------------------------------------------------------------------- U.S. Treasury $1,263,955 $ 39,170 $ (351) $1,302,774 Federal agencies: Mortgage-backed 2,626,253 30,287 (13,248) 2,643,292 Other agencies 1,288,833 34,210 (3,757) 1,319,286 - ------------------------------------------------------------------------------- Total U.S. Treasury and agencies 5,179,041 103,667 (17,356) 5,265,352 State and municipal 891,556 56,399 (316) 947,639 Other debt securities 532,807 6,558 (3,491) 535,874 - ------------------------------------------------------------------------------- Total debt securities 6,603,404 166,624 (21,163) 6,748,865 - ------------------------------------------------------------------------------- Other securities 48,654 3,933 (1,810) 50,777 - ------------------------------------------------------------------------------- Total held to maturity securities $6,652,058 $170,557 $(22,973) $6,799,642 - -------------------------------------------------------------------------------
The maturity distribution of held to maturity securities at December 31, 1993 is summarized as follows: - -------------------------------------------------------------------------------
(in thousands) Amortized Cost Market Value - ------------------------------------------------------------------------------- Due in one year or less $ 156,377 $ 158,022 Due after one year through five years 651,372 664,458 Due after five years through ten years 309,630 341,489 Due after ten years 281,384 311,802 Mortgage-backed securities 1,896,712 1,902,976 - ------------------------------------------------------------------------------- Total debt securities 3,295,475 3,378,747 - ------------------------------------------------------------------------------- Other securities 29,372 29,372 - ------------------------------------------------------------------------------- Total held to maturity securities $3,324,847 $3,408,119 - -------------------------------------------------------------------------------
At December 31, 1993, other securities consisted primarily of Federal Reserve and Federal Home Loan Bank stock. At December 31, 1992, this category also included marketable equity securities totaling $24 million. Sales and redemptions of held to maturity securities resulted in realized gains and losses as follows: - -------------------------------------------------------------------------------
Year ended December 31 (in thousands) 1993 1992 1991 - ------------------------------------------------------------------------------- Debt securities: Realized gains $ 629 $25,081 $ 6,209 Realized losses (3) (140) (873) - ------------------------------------------------------------------------------- Net realized gains $ 626 $24,941 $ 5,336 - ------------------------------------------------------------------------------- Equity securities: Realized gains $ 3,483 $ 800 $ 2,336 Realized losses (1,302) (200) (3,820) - ------------------------------------------------------------------------------- Net realized gains (losses) $ 2,181 $ 600 $(1,484) - -------------------------------------------------------------------------------
5 AVAILABLE FOR SALE SECURITIES The amortized cost and approximate market value of available for sale securities are summarized as follows: - -------------------------------------------------------------------------------
Unrealized December 31, 1993 Amortized --------------- Market (in thousands) Cost Gains Losses Value - ------------------------------------------------------------------------------- U.S. Treasury $1,152,605 $43,310 $ (62) $1,195,853 Federal agencies: Mortgage-backed 3,582,211 36,840 (10,805) 3,608,246 Other agencies 33,829 1 (45) 33,785 - ------------------------------------------------------------------------------- Total U.S. Treasury and agencies 4,768,645 80,151 (10,912) 4,837,884 Other debt securities 317,258 668 (4,557) 313,369 - ------------------------------------------------------------------------------- Total debt securities 5,085,903 80,819 (15,469) 5,151,253 - ------------------------------------------------------------------------------- Equity securities 22,388 4,716 (1,391) 25,713 - ------------------------------------------------------------------------------- Total available for sale securities $5,108,291 $85,535 $(16,860) $5,176,966 - ------------------------------------------------------------------------------- Unrealized December 31, 1992 Amortized --------------- Market (in thousands) Cost Gains Losses Value - ------------------------------------------------------------------------------- U.S. Treasury $259,269 $14,365 $273,634 Federal agencies: Mortgage-backed 194,289 336 194,625 Other agencies 2,484 41 2,525 - ------------------------------------------------------------------------------- Total U.S. Treasury and agencies 456,042 14,742 470,784 State and municipal 1,008 12 1,020 Other debt securities 6,521 36 6,557 - ------------------------------------------------------------------------------- Total available for sale securities $463,571 $14,790 - $478,361 - -------------------------------------------------------------------------------
Available for sale securities are carried at market value at December 31, 1993 and at amortized cost at December 31, 1992. The maturity distribution of available for sale securities at December 31, 1993 is summarized as follows: - --------------------------------------------------------------------------
(in thousands) Amortized Cost Market Value - -------------------------------------------------------------------------- Due in one year or less $ 374,330 $ 383,224 Due after one year through five years 812,104 846,414 Mortgage-backed securities 3,899,469 3,921,615 - -------------------------------------------------------------------------- Total debt securities 5,085,903 5,151,253 - -------------------------------------------------------------------------- Equity securities 22,388 25,713 - -------------------------------------------------------------------------- Total available for sale securities $5,108,291 $5,176,966 - --------------------------------------------------------------------------
There were no sales or redemptions of available for sale securities in 1993. In 1992, sales of debt securities held for sale resulted in gross gains of $6.4 million. Held to maturity and available for sale securities with book values totaling $3,678,510 and $3,358,685 at December 31, 1993 and 1992, respectively, were pledged to secure public deposits, trust deposits, and for other purposes required by law. 1993 Annual Report 55 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- 6 LOANS A summary of loan categories is as follows: - ----------------------------------------------------------
December 31 (in thousands) 1993 1992 - ---------------------------------------------------------- Domestic: Commercial $ 7,490,732 $ 6,507,435 Real estate-mortgage 2,988,489 3,049,097 Real estate-construction 557,977 416,528 Consumer 3,742,766 3,111,593 Lease financing 95,209 86,841 - ---------------------------------------------------------- Total domestic 14,875,173 13,171,494 Foreign loans 18,087 11,880 - ---------------------------------------------------------- Total loans 14,893,260 13,183,374 Less unearned income 67,338 72,488 - ---------------------------------------------------------- Total loans, net $14,825,922 $13,110,886 - ----------------------------------------------------------
Nonperforming assets, consisting of nonperforming loans and foreclosed property, are summarized as follows: - ----------------------------------------------------------
December 31 (in thousands) 1993 1992 - ---------------------------------------------------------- Nonaccrual $142,853 $218,782 Restructured 14,807 22,042 Past due 90 days or more 17,238 17,941 - ---------------------------------------------------------- Total nonperforming loans 174,898 258,765 - ---------------------------------------------------------- Foreclosed property 110,639 129,696 - ---------------------------------------------------------- Total nonperforming assets $285,537 $388,461 - ----------------------------------------------------------
Gross interest income which would have been recorded, if all nonaccrual and restructured loans had been current in accordance with original terms, amounted to $12.4 million in 1993 and $18.2 million in 1992. Actual interest recorded amounted to $2.9 million in 1993 and $6.3 million in 1992. Following is a summary of activity for 1993 regarding loans extended to directors and executive officers of the Corporation and its largest subsidiaries or to enterprises in which said individuals had beneficial interests. Such loans were made in the normal course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other persons. - -------------------------------------------------------------------------------------
(in thousands) - ------------------------------------------------------------------------------------- Outstanding Net change from changes Outstanding at 12/31/92 Additions Repayments in director status at 12/31/93 - ------------------------------------------------------------------------------------- $242,210 $78,641 $(100,672) $(15,113) $205,066 - -------------------------------------------------------------------------------------
The following summarizes activity in the reserve for loan losses: - --------------------------------------------------------------------------------
December 31 (in thousands) 1993 1992 1991 - -------------------------------------------------------------------------------- Balance, beginning of year $302,021 $252,283 $228,887 Loans charged off (74,202) (137,041) (127,563) Recoveries on loans previously charged off 40,239 34,446 27,601 - -------------------------------------------------------------------------------- Net charge-offs (33,963) (102,595) (99,962) Provision for loan losses 60,184 136,626 114,658 Reserves of purchased subsidiaries 12,857 15,707 8,700 - -------------------------------------------------------------------------------- Balance, end of year $341,099 $302,021 $252,283 - --------------------------------------------------------------------------------
In May, 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 114 (SFAS No. 114). "Accounting by Creditors for Impairment of a Loan." This statement will require that certain impaired loans be measured based on either the present value of expected future cash flows discounted at the loan's effective rate, the market price of the loan, or fair value of the underlying collateral if the loan is collateral dependent. Adoption of this pronouncement is required in 1995 and at present, it is not expected to have a material effect on the Corporation's financial statements. 7 PROPERTY AND EQUIPMENT Property and equipment are summarized as follows: - ----------------------------------------------------------------------
December 31 (in thousands) 1993 1992 - ---------------------------------------------------------------------- Land $ 66,307 $ 56,727 Buildings 284,028 268,964 Building under capital lease 45,053 45,053 Furniture, fixtures and equipment 417,438 366,865 Leasehold improvements 82,773 79,897 Construction in progress 12,071 6,149 - ---------------------------------------------------------------------- Total 907,670 823,655 Less accumulated depreciation/amortization 427,084 390,039 - ---------------------------------------------------------------------- Net property and equipment $480,586 $433,616 - ----------------------------------------------------------------------
Depreciation and amortization charged to expense in 1993, 1992 and 1991 amounted to $58,268, $50,612, and $43,505, respectively. At December 31, 1993, the Corporation was obligated under long-term leases, principally related to the use of land, buildings, and equipment in banking operations. The following table summarizes future minimum rental payments required under leases which have initial or remaining noncancellable lease terms in excess of one year. - -----------------------------------------------------------------------------------
(in thousands) - ----------------------------------------------------------------------------------- Period Capital lease Operating leases - ----------------------------------------------------------------------------------- 1994 $ 4,559 $ 19,042 1995 4,559 18,417 1996 4,559 16,011 1997 4,559 9,911 1998 4,559 7,541 After 1998 59,257 51,841 - ----------------------------------------------------------------------------------- Total minimum lease payments 82,052 $122,763 -------- Less amount representing interest 42,828 - ------------------------------------------------------- Present value of minimum lease payments $39,224 - -------------------------------------------------------
Lease provisions that would cause rentals to vary from those reflected above are not material. Property taxes, insurance, and maintenance expense related to property under lease are principally paid by the Corporation. Total rental expense for all operating leases amounted to $33,899, $33,275 and $28,778 in 1993, 1992, and 1991, respectively. 8 INTANGIBLE ASSETS Intangible assets, net of accumulated amortization are summarized as follows: - ---------------------------------------------------------------------
December 31 (in thousands) 1993 1992 - --------------------------------------------------------------------- Goodwill $213,595 $165,962 Core deposit premium 53,343 34,667 Credit card premium 3,542 1,483 Purchased mortgage servicing rights 4,858 3,776 - --------------------------------------------------------------------- Total intangible assets, net $275,338 $205,888 - ---------------------------------------------------------------------
Goodwill and core deposit premium amortization charged to expense in 1993, 1992, and 1991 amounted to $30,571, $16,076 and $12,394, respectively. 9 SEGREGATED ASSETS Included in other assets at December 31, 1993 are segregated assets totaling $248.2 million net of a valuation allowance of 56 Boatmen's Bancshares, Inc. 42 - -------------------------------------------------------------------------------- $18.4 million. As part of the regulatory assisted acquisition of Missouri Bridge Bank, N.A. (Bridge Bank), on April 23, 1993, the Corporation entered into a five year loss-sharing arrangement with the FDIC with respect to approximately $950 million in multi-family residential, commercial real estate, construction and commercial and industrial loans. During the five year period, the FDIC will reimburse the Corporation for 80 percent of the first $92.0 million of net charge-offs on these loans, after which the FDIC will increase its reimbursement coverage to 95 percent of additional charge-offs. During this period and for two years thereafter, the Corporation is obligated to pay the FDIC 80 percent of all recoveries on charged-off loans. Segregated assets are those loans acquired from the Bridge Bank and covered under the loss sharing arrangement with the FDIC that possess more than the normal risk of collectibility. These assets consist of loans that at acquisition were or have since become classified as nonperforming loans or foreclosed property. The Corporation's primary purpose in managing a portfolio of this nature is to provide ongoing collection and control activities on behalf of the FDIC. Accordingly, these assets do not represent loans made in the ordinary course of business and, due to the underlying nature of this liquidating asset pool, are excluded from the Corporation's nonperforming asset statistics. A summary of activity regarding the segregated asset pool is provided below. - ---------------------------------------------------------------------------------
Year ended December 31, 1993 Principal Allowance Principal (in millions) balance for losses balance, net - --------------------------------------------------------------------------------- Segregated assets identified upon acquisition $312.0 $ 27.0 $285.0 Charge-offs (52.1) (10.4) Recoveries 1.8 Transfers to segregated assets 36.5 Payments on segregated assets (29.8) - --------------------------------------------------------------------------------- Segregated assets, end of period $266.6 $ 18.4 $248.2 - ---------------------------------------------------------------------------------
10 DEPOSITS Deposits are summarized as follows: - ------------------------------------------------------------------------
December 31 (in thousands) 1993 1992 - ------------------------------------------------------------------------ Demand deposits $ 4,769,947 $ 4,210,794 Savings deposits 2,118,390 1,824,930 Interest-bearing transaction accounts 6,654,668 5,984,299 Time deposits $100,000 and over 955,988 1,196,048 Retail time deposits 6,410,009 6,468,709 - ------------------------------------------------------------------------ Total deposits $20,909,002 $19,684,780 - ------------------------------------------------------------------------
11 FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER REPURCHASE AGREEMENTS Federal funds purchased and securities sold under repurchase agreements generally represent borrowings with overnight maturities. Information relating to these borrowings is summarized as follows: - ---------------------------------------------------------------------
(in thousands) 1993 1992 1991 - --------------------------------------------------------------------- Balance: Average $1,759,173 $1,681,938 $1,667,071 Year end 1,996,022 1,664,025 1,753,365 Maximum month-end balance during year 2,560,448 2,493,120 1,909,163 - --------------------------------------------------------------------- Interest rate: Average 2.83% 3.41% 5.42% - --------------------------------------------------------------------- Year end 2.61% 2.62% 4.17% - ---------------------------------------------------------------------
12 SHORT-TERM BORROWINGS Short-term borrowings are summarized as follows: - ----------------------------------------------------------------
December 31 (in thousands) 1993 1992 - ---------------------------------------------------------------- Commercial paper $ 49,635 $ 56,025 Other 766,336 340,479 - ---------------------------------------------------------------- Total $815,971 $396,504 - ----------------------------------------------------------------
Commercial paper is issued by the parent company in maturities not to exceed nine months. Other short-term funds consisted principally of treasury, tax and loan accounts. At December 31, 1993, the parent company had available additional credit totaling $100 million under a revolving credit agreement, all of which was unused. The revolving credit agreement is subject to annual review and cancellation by either party. 13 LONG-TERM DEBT Long-term debt is summarized as follows: - --------------------------------------------------------------------------
December 31 (in thousands) 1993 1992 - -------------------------------------------------------------------------- Parent Company: 7 5/8% notes due 2004 $100,000 $100,000 6 3/4% notes due 2003 100,000 8 5/8% notes due 2003 50,000 50,000 9 1/4% notes due 2001 150,000 150,000 6 1/4% convertible subordinated debentures due 2011 1,215 1,388 12% note due 1998 25,000 25,000 8 1/2% notes due through 1997 5,000 - -------------------------------------------------------------------------- Total Parent Company 426,215 331,388 - -------------------------------------------------------------------------- Subsidiaries: 9 7/8% senior notes payable April 15, 1995 35,000 35,000 Federal Home Loan Bank notes due 1997 and 1998 25,000 9% convertible subordinated capital notes, due 1998 13,674 9 3/4% subordinated notes due 1996 3,000 10% convertible subordinated debentures due 2008 10,051 Other 38 78 - -------------------------------------------------------------------------- Total subsidiaries 60,038 61,803 - -------------------------------------------------------------------------- Total long-term debt $486,253 $393,191 - --------------------------------------------------------------------------
The 7 5/8% subordinated notes mature on October 1, 2004, the 6 3/4% subordinated notes mature on March 15, 2003, the 8 5/8% subordinated notes mature on November 15, 2003, and the 9 1/4% subordinated notes mature on December 1, 2001. These notes are not redeemable by the holders or the Corporation prior to maturity. The 6 1/4% convertible subordinated debentures are redeemable at the option of the holder without payment of premium by the Corporation. Redemption rights are subject to an annual noncumulative principal limitation of $25 thousand per holder and $1.2 million in the aggregate. Prepayments in whole or in part may be made at the option of the Corporation with payment of premium. The debentures are convertible into common stock of the Corporation at a conversion price of $16.71 per share adjusted for the two-for-one stock split on August 10, 1993, subject to adjustments under certain circumstances. During 1993, 1992 and 1991, $.2 million, $2.5 million and $1.0 million of the debentures were converted into 7,650, 74,270 and 29,517 shares of common stock, respectively. The 12% note is due in 1998 and may not be prepaid at the option of the Corporation. 1993 Annual Report 57 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- The Corporation prepaid the 8 1/2% notes at par in their entirety on June 15, 1993. The 9 7/8% senior notes are due April 15, 1995 with interest payable in April and October of every year until maturity. The 9% convertible subordinated capital notes due 1998 were convertible at the holders' option into shares of the Corporation's common stock at a conversion price of $14.12 per share (adjusted for the stock split). In the first quarter of 1993, the Corporation exercised its option to prepay the notes at a redemption price of 102% of the principal amount. During 1993, 1992 and 1991, $13.4 million, $12.9 million and $1.0 million of the debentures were converted into 473,326, 458,313 and 35,626 shares of common stock, respectively. The 10% convertible subordinated debentures were called at par in 1993. The Federal Home Loan Bank notes mature in 1997 and 1998 with interest rates ranging from 4.9% to 5.2%. The notes may be prepaid at the option of the Corporation with payment of premium. Several of the note agreements contain various financial covenants pertaining to minimum levels of net worth, limitations on additional indebtedness, and limitations on repurchases of common stock and dividend payments. The Corporation was in compliance with all such covenants at December 31, 1993. Obligations of the parent company included above are unsecured, and to a large extent are subordinated in right of payment to any other indebtedness of the Corporation. The indebtedness of the banking subsidiaries is subordinated to rights of depositors. Scheduled principal payments on total long-term debt in each of the five years subsequent to December 31, 1993 are as follows: - --------------------------------------------------------------------------
(in thousands) - -------------------------------------------------------------------------- Year Parent Company Consolidated - -------------------------------------------------------------------------- 1994 $ 1,200 $ 1,238 1995 35,015 1996 1997 10,000 1998 25,000 40,000 - --------------------------------------------------------------------------
14 PREFERRED STOCK At December 31, 1993, there were outstanding 11,551 shares of 7% Cumulative Redeemable Preferred Stock, Series B, $100 per share stated value. Dividends are payable quarterly. The stock is redeemable at the stated value at the option of the holders and has equal voting rights with each share of common stock. 15 COMMON STOCK On August 10, 1993, the Corporation declared a two-for-one stock split, which was effected as a 100% stock dividend to stockholders of record on August 31, 1993 and paid on October 1, 1993. The Corporation maintains various stock option plans which provide for the issuance of stock to certain key employees of the Corporation. Under certain plans, stock appreciation rights may be granted. The following table summarizes the status of the various plans. All information has been adjusted for the two-for-one stock split. - ----------------------------------------------------------------------------------------
1993 1992 - ---------------------------------------------------------------------------------------- SHARES PRICE PER SHARE Shares Price Per Share - ---------------------------------------------------------------------------------------- Options granted 632,000 $27.00 745,048 $16.18 to $27.63 Options exercised 434,377 3.29 to 22.81 222,074 5.65 to 20.28 Stock appreciation rights exercised 99,966 15.63 to 22.81 42,082 15.63 to 17.50 Options lapsed 58,544 9.39 to 27.00 58,246 9.39 to 22.81 Options outstanding 2,971,018 15.63 to 27.63 2,931,905 3.29 to 27.63 Options exercisable 1,280,034 5.76 to 27.63 1,060,035 3.29 to 22.48 - ----------------------------------------------------------------------------------------
The Corporation has other common stock related plans which are summarized below. 1990 Stock Purchase Plan for Employees This Plan provides eligible employees of the Corporation and its subsidiaries with the opportunity to purchase, at market value, with the Corporation providing a one-third matching contribution, common stock of the Corporation through regular payroll deductions. The aggregate number of shares issuable under this Plan is limited to 2,000,000 shares, and as of December 31, 1993, approximately 5,250 employees were participating in the Plan. Dividend Reinvestment and Stock Purchase Plan 1,600,000 shares of the Corporation's common stock have been reserved for sale, at market value, pursuant to this plan, to holders of record of shares of common stock who elect to use quarterly dividends or optional cash contributions to purchase additional shares. Thrift Incentive 401(k) Plan This is a savings plan for the benefit of employees of the Corporation and its subsidiaries. Participation by eligible employees is voluntary, and participants may contribute at least 2% and up to 12% of their salary, up to certain limits, by regular payroll deductions. All participants' contributions are invested by the trustee, as directed by the participant, in various investment funds, one of which consists solely of the Corporation's common stock. The Corporation matches, in full, the 2% contribution which is invested in a separate fund consisting solely of the Corporation's common stock. Shareholder Rights Plan In 1990, the Board of Directors of the Corporation declared a dividend of one preferred share purchase right (a "Right") for each outstanding share of common stock. The Rights trade automatically with shares of common stock and become exercisable only under certain circumstances. The Rights are designed to protect the interests of the Corporation and its shareholders against coercive takeover tactics. The purpose of the Rights is to encourage potential acquirers to negotiate with the Corporation's Board of Directors prior to attempting a takeover and to give the Board leverage in negotiating on behalf of all shareholders the terms of any proposed takeover. 16 RETIREMENT BENEFITS Substantially all employees of the Corporation and its subsidiaries are covered by the Boatmen's Bancshares, Inc. Retirement Plan for Employees, a noncontributory defined benefit plan. Pension benefits are based upon the employee's length of service and compensation during the final years of employment. Normal service costs are funded currently using the projected unit credit method. In conjunction with the acquisition of First Amarillo Bancorporation, Inc. 58 Boatmen's Bancshares, Inc. 44 - ------------------------------------------------------------------------------- in 1993, the former Amarillo plan was merged into the Corporation's retirement plan at December 31, 1993. In conjunction with the acquisitions of Superior Federal Savings Bank and Sunwest Financial Services, Inc. in 1992, the former retirement plans of these companies were merged into the Corporation's retirement plan at December 31, 1992. Contributions to the Plan totaled $11.8 million in 1993, $12.3 million in 1992 and $7.4 million in 1991. Net pension expense for 1993, 1992 and 1991 was comprised of the following: - -------------------------------------------------------------------------------
Year ended December 31 (in thousands) 1993 1992 1991 - ------------------------------------------------------------------------------- Service cost $ 11,800 $ 11,177 $ 8,856 Interest cost on projected benefit obligation 16,082 14,510 12,610 Return on plan assets (29,842) (16,072) (31,795) Net amortization and deferral 10,704 (725) 17,015 - ------------------------------------------------------------------------------- Net pension expense $ 8,744 $ 8,890 $ 6,686 - -------------------------------------------------------------------------------
The following table sets forth the retirement plan's funded status and amounts recognized in the Corporation's consolidated financial statements: - ----------------------------------------------------------------------------------
December 31 (in thousands) 1993 1992 - ---------------------------------------------------------------------------------- Plan assets at fair value, primarily listed stocks and bonds $245,389 $211,639 - ---------------------------------------------------------------------------------- Actuarial present value of benefit obligation: Vested benefits 169,278 136,423 Non-vested benefits 10,263 8,402 - ---------------------------------------------------------------------------------- Accumulated benefit obligation 179,541 144,825 Effect of projected future salary increases 45,748 46,560 - ---------------------------------------------------------------------------------- Projected benefit obligation 225,289 191,385 - ---------------------------------------------------------------------------------- Plan assets in excess of projected benefit obligation $ 20,100 $ 20,254 - ---------------------------------------------------------------------------------- Comprised of: Unrecognized net asset being amortized over 17 years $ 15,916 $ 17,925 Unrecognized net gain from past experience different from that assumed and effects of changes in assumptions 1,981 3,618 Unrecognized prior service loss (1,773) (2,184) Prepaid pension cost 3,976 895 - ---------------------------------------------------------------------------------- $ 20,100 $ 20,254 - ----------------------------------------------------------------------------------
Assumptions used in computing pension expense were: - ---------------------------------------------------------------------------------------------
1993 1992 1991 - --------------------------------------------------------------------------------------------- Weighted average discount rate 7 3/4-8 % 7-9 % 8 1/4-9 % Rate of increase in future compensation levels 4-5 1/2% 4-6 1/2% 4-6 1/2% - --------------------------------------------------------------------------------------------- Expected long-term rate of return on assets 8-8 3/4% 7-9 % 8-9 % - ---------------------------------------------------------------------------------------------
The weighted average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 7.50% and 5.00%, respectively, at December 31, 1993 and 8.00% and 5.50% respectively, at December 31, 1992. With respect to the former Amarillo retirement plan, the weighted average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 7.75% and 4.0%, respectively, at December 31, 1992. The Corporation provides postemployment life and contributory medical benefits to retired employees. The liability for such benefits is unfunded. In 1992, the Corporation adopted Statement of Financial Accounting Standards No. 106, "Employer's Accounting for Postretirement Benefits Other Than Pensions". Under this standard, costs of retiree benefits other than pensions are accrued in a manner similar to actual pension costs. In 1991, these costs, totaling $2.3 million, were expensed when paid. The following table presents the status of the plans: - -----------------------------------------------------------------------------------------
December 31 (in thousands) 1993 1992 - ----------------------------------------------------------------------------------------- Accumulated postretirement benefit obligation: Retirees $32,540 $25,795 Fully eligible active plan participants 10,557 7,414 Other active plan participants 16,529 16,999 - ----------------------------------------------------------------------------------------- Total accumulated postretirement benefit obligation 59,626 50,208 - ----------------------------------------------------------------------------------------- Unrecognized net gain 6,575 362 Unrecognized transition obligation 43,120 45,516 - ----------------------------------------------------------------------------------------- Accrued postretirement benefit cost $ 9,931 $ 4,330 - -----------------------------------------------------------------------------------------
Net postretirement benefit cost included the following components: - ------------------------------------------------------------------------------------
Year ended December 31 (in thousands) 1993 1992 - ------------------------------------------------------------------------------------ Service cost $1,238 $1,195 Interest cost 4,586 4,063 Amortization of transition obligation over 20 years 2,396 2,395 - ------------------------------------------------------------------------------------ Net postretirement benefit cost $8,220 $7,653 - ------------------------------------------------------------------------------------
The weighted-average annual assumed rate of increase in the per capita cost of covered benefits for the medical plan is 10.50% for 1994 (compared to 12.25% assumed for 1993) and is assumed to decrease gradually to 5.00% in 2003 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the assumed health care trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation for the medical plan as of December 31, 1993 by $4.4 million, and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for 1993 by $.5 million. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 7.50% at December 31, 1993 and 8.50% at December 31, 1992. In November, 1992, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112 (SFAS No. 112), "Employers' Accounting for Postemployment Benefits". This statement will require recognition of the cost to provide postemployment benefits on an accrual basis. Adoption of this pronouncement is required in 1994 and is not expected to have a material effect on the Corporation's results of operations. 17 INCOME TAXES Income tax expense is summarized as follows: - ------------------------------------------------------------------------------------
Year ended December 31 (in thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------ Current: Federal $126,509 $105,822 $ 66,334 State 21,392 14,563 10,102 - ------------------------------------------------------------------------------------ Total current 147,901 120,385 76,436 - ------------------------------------------------------------------------------------ Deferred: Provision for loan losses (22,262) (16,071) (8,047) Other real estate owned losses (452) (7,817) (3,814) Unrealized net gains on available for sale securities 26,525 Other, net (4,905) (3,979) (4,562) - ------------------------------------------------------------------------------------ Total deferred (1,094) (27,867) (16,423) - ------------------------------------------------------------------------------------ Income tax expense $146,807 $ 92,518 $60,013 - ------------------------------------------------------------------------------------
1993 Annual Report 59 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- A reconciliation of the statutory Federal income tax rate with the effective tax rate is as follows: - -------------------------------------------------------------------------------
Percent of pre-tax income - ------------------------------------------------------------------------------- Year ended December 31 1993 1992 1991 - ------------------------------------------------------------------------------- Statutory rate 35.0% 34.0% 34.0% Tax-exempt interest (4.9) (7.4) (11.0) Deferred taxes at applicable rates (1.1) (1.7) .2 State taxes, net of Federal benefit 2.3 2.7 2.8 Other, net .3 1.2 - ------------------------------------------------------------------------------- Effective rate 31.6% 28.8% 26.0% - -------------------------------------------------------------------------------
As of December 31, 1993, the Corporation's deferred tax asset account was comprised of the following: - ------------------------------------------------------------------------------- Deferred tax liabilities: Lease financing $ 16,413 Unrealized net gains on available for sale securities 26,525 Other 47,955 - ------------------------------------------------------------------------------- Total deferred tax liabilities 90,893 - ------------------------------------------------------------------------------- Deferred tax assets: Provision for loan loss (130,509) Other real estate owned losses (15,622) Other (32,980) - ------------------------------------------------------------------------------- Total deferred tax assets (179,111) - ------------------------------------------------------------------------------- Net deferred tax asset $ (88,218) - -------------------------------------------------------------------------------
18 RESERVES ON DEPOSITS Required reserves on deposits, included in the caption "Cash and due from banks," were $546,420 and $462,281 at December 31, 1993 and 1992, respectively. 19 FAIR VALUE OF FINANCIAL INSTRUMENTS The reported fair values of financial instruments are based on a variety of factors. Where possible, fair values represent quoted market prices for identical or comparable instruments. In other cases, fair values have been estimated based on assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates reflecting varying degrees of risk. Intangible values assigned to customer relationships are not reflected in the reported fair values. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of year end or that will be realized in the future. The carrying amounts reported in the balance sheet for cash and due from banks, short-term investments, Federal funds sold and securities purchased under resale agreements approximate fair value. Fair values for held to maturity securities, available for sale securities, and trading securities are based on quoted market prices or dealer quotes. If quoted prices are not available for the specific security, fair values are based on quoted market prices of comparable instruments. The fair values of 1-4 family residential loans, home equity and other homogeneous categories of consumer loans are estimated using quoted market prices for similar traded loans or securities backed by such loans, adjusted for differences between the quoted instruments and the instrument being valued. The fair values for other loans are estimated using a discounted cash flow analysis, based on interest rates currently offered for loans with similar terms to borrowers of similar credit quality or in some situations, due to the variable rate nature of the instrument, carrying value and fair value are considered one and the same. Fair values for nonperforming loans are estimated using assumptions regarding current assessments of collectibility and historical loss experience. By definition fair values of deposits with no stated maturities, such as demand deposits, savings and NOW accounts and money market deposit accounts, are equal to the amounts payable on demand at the reporting date. The fair values of all other fixed rate deposits are based on discounted cash flows using rates currently offered for deposits of similar remaining maturities. The carrying amounts of variable rate deposits approximate fair value at the reporting date. The carrying amounts of Federal funds purchased and other short-term borrowings approximate their fair values as of the reporting date. The fair value of long-term debt is based on quoted market prices for similar issues, or current rates offered to the Corporation for debt of the same remaining maturity. The fair values of interest rate swaps and foreign exchange contracts are estimated using dealer quotes. These values represent the costs to replace all outstanding contracts at current market rates, taking into consideration the current credit worthiness of the counterparties. The fair values of interest rate swaps totaled approximately $16 million and $8 million at December 31, 1993 and 1992, respectively. The fair value of foreign exchange contracts at December 31, 1993 was approximately $1.6 million. The fair values of loan commitments, commercial letters of credit and standby letters of credit are determined using estimated fees currently charged to enter into similar agreements. These fees totaled approximately $2.5 million and $3.2 million at December 31, 1993 and 1992, respectively. The estimated fair values of the Corporation's financial instruments were as follows: - ------------------------------------------------------------------------------------
December 31, 1993 (in millions) Carrying amount Fair value - ------------------------------------------------------------------------------------ Financial assets: Cash and due from banks and short-term investments $ 2,040.5 $ 2,040.5 Held to maturity securities 3,324.8 3,408.1 Available for sale securities 5,177.0 5,177.0 Trading securities 48.1 48.1 Loans 14,484.8 14,755.1 Financial liabilities: Deposits 20,909.0 20,974.2 Short-term borrowings 2,812.0 2,812.0 Long-term debt 486.3 542.8 - ------------------------------------------------------------------------------------ December 31, 1992 (in millions) Carrying amount Fair value - ------------------------------------------------------------------------------------ Financial assets: Cash and due from banks and short-term investments $ 3,108.3 $ 3,108.3 Held to maturity securities 6,652.1 6,799.6 Available for sale securities 463.6 478.4 Trading securities 38.5 38.5 Loans 12,808.9 13,051.4 Financial liabilities: Deposits 19,684.8 19,773.0 Short-term borrowings 2,060.5 2,060.5 Long-term debt 393.2 436.1 - ------------------------------------------------------------------------------------
60 Boatmen's Bancshares, Inc. 46 - ------------------------------------------------------------------------------- 20 FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK In the normal course of business, the Corporation utilizes a variety of off-balance sheet financial instruments to service the financial needs of customers and to manage the Corporation's overall asset/liability position. This activity includes commitments to extend credit, standby and commercial letters of credit, securities lending, interest rate swaps and foreign exchange contracts. Each of these instruments involve varying degrees of risk. As such, the contract or notional amounts of these instruments may or may not be an appropriate indicator of the credit or market risk associated with these instruments. Credit risk exposure from standby and commercial letters of credit is minimized by subjecting these off-balance sheet instruments to the same credit policies and underwriting standards used when making loans or committing to extend credit. The Corporation evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on such evaluations. Acceptable collateral includes cash or cash equivalents, marketable securities, deeds of trust, receivables, inventory, fixed assets and financial guarantees. The risk associated with interest rate swaps and foreign exchange contracts arises from the counterparties' failure to meet the terms of the agreements and movements in foreign exchange rates, or interest rates. The Corporation manages this risk by maintaining a well-diversified portfolio of highly-rated counterparties in addition to imposing limits as to types, amounts and degree of risk the portfolios can undertake. The limits are approved by senior management and positions are monitored to ensure compliance with such limits. Generally accepted accounting principles recognize these instruments as contingent obligations or off-balance sheet items and accordingly, the contract or notional amounts are not reflected in the consolidated financial statements. Provided below is a summary of the Corporation's off-balance sheet financial instruments at December 31, 1993 and 1992. - ------------------------------------------------------------------------------------
Financial instruments whose credit risk is represented by contract amounts - ------------------------------------------------------------------------------------ December 31 (in millions) 1993 1992 - ------------------------------------------------------------------------------------ Commitments to extend credit $ 6,004.1 $5,515.2 Standby letters of credit 776.0 678.0 Commercial letters of credit 130.1 140.3 Securities lent 3,439.8 1,965.3 - ------------------------------------------------------------------------------------ Total $10,350.0 $8,298.8 - ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
Financial instruments whose credit risk is represented by other than notional or contract amounts - ------------------------------------------------------------------------------------ December 31 (in millions) 1993 1992 - ------------------------------------------------------------------------------------ Foreign exchange contracts: Commitments to purchase $ 574.7 $ 400.9 Commitments to sell 544.5 384.9 Interest rate swaps 1,933.2 1,071.1 - ------------------------------------------------------------------------------------ Total $3,052.4 $1,856.9 - ------------------------------------------------------------------------------------
A loan commitment represents a contractual agreement to lend up to a specified amount, over a stated period of time as long as there is no violation of any condition established in the contract, and generally requires the payment of a fee. Standby letters of credit are issued to improve a customer's credit standing with third parties, whereby the Corporation agrees to honor a financial commitment by issuing a guarantee to third parties in the event the Corporation's customer fails to perform. Since the majority of the loan commitments and virtually all of the standby letters of credit are expected to expire unfunded, the total commitment amounts do not represent future cash requirements. Interest rates, in the event funding of the aforementioned commitments are required, are predominantly based on floating rates or prevailing market rates at the time such commitments are funded. Substantially all of these commitments expire in 1-2 years unless renewed by the Corporation. Commercial letters of credit are short-term commitments issued for trade purposes, primarily to finance the movement of goods between a buyer and seller dealing in international markets. The Corporation, through its trust subsidiary, is involved in off-balance sheet securities lending. In this capacity, the Corporation, acting as agent, lends securities on behalf of its customers to third party borrowers. The Corporation indemnifies its customers against losses in the event of counterparty default, and minimizes this risk through collateral requirements and limiting transactions to pre-approved borrowers. Collateral policies require each borrower to initially deliver cash or securities exceeding 102% of the market value of the securities lent. Additional collateral is required through the term of the lending agreement to ensure that the value of collateral exceeds the market value of the securities lent. The Corporation enters into interest rate swap transactions primarily as an asset/liability strategy to manage interest-rate risk. These transactions involve the exchange of interest payments based on a notional amount. The notional amounts of interest rate swaps express the volume of transactions and are not an appropriate indicator of off-balance sheet market risk or credit risk. At December 31, 1993, the Corporation's swap portfolio totaled $1.9 billion of which approximately $550 million matures within the next year. Foreign exchange activity, which is marked-to-market daily based on prevailing rates of exchange, can expose the Corporation to market risk, particularly when open positions exist and, to a lesser extent, credit risk associated with counterparties and their ability to meet the terms of the foreign exchange contracts. The Corporation's exposure to credit risk on foreign exchange contracts is measured as the cost of replacing the contract in the event of default by the counterparty which is limited to the on-balance sheet market valuation adjustment for all contracts in a gain position, an immaterial amount. 1993 Annual Report 61 47 - ------------------------------------------------------------------------------- 21 PARENT COMPANY CONDENSED FINANCIAL STATEMENTS Following are the condensed financial statements of Boatmen's Bancshares, Inc. (Parent Company only) for the periods indicated: Balance Sheet - -----------------------------------------------------------------------
December 31 (in thousands) 1993 1992 - ----------------------------------------------------------------------- Assets: Cash $ 386 $ 960 Short-term investments 16,403 95,000 Investment in subsidiaries: Banks and bank holding companies 2,244,985 1,950,383 Nonbank 14,139 11,836 - ----------------------------------------------------------------------- Total investments in subsidiaries 2,259,124 1,962,219 - ----------------------------------------------------------------------- Advances to subsidiaries: Bank 159,807 88,348 Nonbank 109,995 40,400 - ----------------------------------------------------------------------- Total advances to subsidiaries 269,802 128,748 - ----------------------------------------------------------------------- Goodwill 95,334 100,795 Other assets 48,410 36,391 - ----------------------------------------------------------------------- Total assets $2,689,459 $2,324,113 - ----------------------------------------------------------------------- Liabilities: Accounts payable and accrued liabilities $ 46,955 $ 47,190 Dividends payable 32,245 27,042 Short-term borrowings 49,635 56,025 Long-term debt (including current maturities) 426,215 331,388 - ----------------------------------------------------------------------- Total liabilities 555,050 461,645 - ----------------------------------------------------------------------- Redeemable preferred stock 1,155 1,248 - ----------------------------------------------------------------------- Stockholders' equity: Common stock 104,126 51,131 Surplus 786,840 809,923 Unrealized net appreciation, available for sale securities 42,252 Retained earnings 1,200,036 1,000,166 - ----------------------------------------------------------------------- Total stockholders' equity 2,133,254 1,861,220 - ----------------------------------------------------------------------- Total liabilities and stockholders' equity $2,689,459 $2,324,113 - -----------------------------------------------------------------------
Statement of Income - ----------------------------------------------------------------------------------------------
Year ended December 31 (in thousands) 1993 1992 1991 - ---------------------------------------------------------------------------------------------- Income: Dividends from subsidiaries: Banks and bank holding companies $239,467 $157,557 $107,160 Nonbank 813 1,100 1,147 - ---------------------------------------------------------------------------------------------- Total dividends from subsidiaries 240,280 158,657 108,307 - ---------------------------------------------------------------------------------------------- Fees from subsidiaries 33,316 26,199 23,476 Dividends on equity securities 618 Interest on short-term investments 988 1,263 3,024 Interest on advances to subsidiaries 6,713 3,436 3,935 Loss on sale of equity securities (2,892) Other 791 397 353 - ---------------------------------------------------------------------------------------------- Total income 282,088 189,952 136,821 - ---------------------------------------------------------------------------------------------- Expense: Interest expense 32,062 23,853 23,135 Staff expense 31,120 20,172 12,936 Other 30,139 26,073 21,795 - ---------------------------------------------------------------------------------------------- Total expense 93,321 70,098 57,866 - ---------------------------------------------------------------------------------------------- Income before income tax benefit and equity in undistributed income of subsidiaries 188,767 119,854 78,955 Income tax benefit 14,932 10,290 9,337 - ---------------------------------------------------------------------------------------------- Income before equity in undistributed income of subsidiaries 203,699 130,144 88,292 Equity in undistributed income of subsidiaries 113,720 98,582 82,906 - ---------------------------------------------------------------------------------------------- Net income $317,419 $228,726 $171,198 - ----------------------------------------------------------------------------------------------
Retained earnings include $1,072,991 and $959,271 of equity in undistributed income of subsidiaries at year-end 1993 and 1992, respectively. Annual dividend distributions to the Corporation from its banking subsidiaries are subject to certain limitations by applicable banking regulatory authorities. In the aggregate, the statutory maximum available dividends which may be paid to the Corporation without prior regulatory approval is $464,625, resulting in $1,788,749 or 79.4% of the total equity of the subsidiaries being potentially restricted as of December 31, 1993. Statement of Cash Flows - ------------------------------------------------------------------------------------
Year ended December 31 (in thousands) 1993 1992 1991 - ------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $ 317,419 $ 228,726 $ 171,198 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,127 4,235 4,701 Equity in undistributed income of subsidiaries (113,720) (98,582) (82,906) Loss on sale of equity securities 2,892 Loss on sale of assets 237 174 153 Increase (decrease) in taxes payable 105 (3,332) (4,394) Other, net (6,796) 17,426 3,970 - ------------------------------------------------------------------------------------ Net cash provided by operating activities 201,372 148,647 95,614 - ------------------------------------------------------------------------------------ Cash flows from investment activities: Proceeds from sales of equity securities 5,905 Purchase of net assets and increase in investments in subsidiaries (125,364) (112,102) (92,628) Net change in advances to subsidiaries (141,054) (82,127) 4,967 Net change in short-term investments 78,597 (5,500) (58,700) Net change in property and equipment (3,595) (305) (433) - ------------------------------------------------------------------------------------ Net cash used for investing activities (191,416) (194,129) (146,794) - ------------------------------------------------------------------------------------ Cash flows from financing activities: Net change in short-term borrowings (6,390) 24,571 (29,217) Repayments of long-term debt (5,003) (4,140) (12,484) Proceeds from issuance of long-term debt 99,281 99,148 49,500 Cash dividends paid (112,216) (85,602) (77,415) Issuance of common stock from public stock offering 111,135 Common stock issued pursuant to various employee and shareholder stock issuance plans 16,993 12,030 9,671 Acquisition of treasury stock (3,102) Decrease in redeemable preferred stock (93) (19) (89) - ------------------------------------------------------------------------------------ Net cash provided by (used for) financing activities (10,530) 45,988 51,101 - ------------------------------------------------------------------------------------ Increase (decrease) in cash (574) 506 (79) Cash at beginning of year 960 454 533 - ------------------------------------------------------------------------------------ Cash at end of year $ 386 $ 960 $ 454 - ------------------------------------------------------------------------------------
22 LEGAL PROCEEDINGS Various claims and lawsuits, incidental to the ordinary course of business, are pending against the Corporation and its subsidiaries. In the opinion of management, after consultation with legal counsel, resolution of these matters is not expected to have a material effect on the consolidated financial statements. 62 Boatmen's Bancshares, Inc. 48 - ------------------------------------------------------------------------------- STATEMENT BY MANAGEMENT Boatmen's Bancshares, Inc. The accompanying financial statements and the related financial information in this Annual Report were prepared by the management of Boatmen's Bancshares, Inc. in accordance with generally accepted accounting principles and where appropriate reflect management's best estimates and judgment. Management is responsible for the integrity, objectivity, consistency and fair presentation of the financial statements and all financial information contained in this Annual Report. The independent auditors, whose report is contained herein, are responsible for auditing the Corporation's financial statements in accordance with generally accepted auditing standards. In order to fulfill its responsibility, management relies in part on a system of internal accounting control which has been designed to safeguard the Corporation's assets from material loss or misuse and ensure that transactions are properly authorized and recorded in its financial records. An extensive internal auditing program monitors compliance with established procedures and controls to provide assurance that the system of internal accounting control is functioning in a proper manner. There are limits inherent in all systems of internal control based on the recognition that the cost of such systems should not exceed the benefits to be derived. Management believes the Corporation's system of internal accounting control provides reasonable assurance that the Corporation's assets are safeguarded and that its financial records are reliable. The Corporation's internal auditor and independent auditors have direct access to the Audit Committee of the Board of Directors. This committee, which is composed entirely of outside directors, meets periodically with management, the internal auditor, and the independent auditors to ensure the financial accounting and audit process is properly conducted. Andrew B. Craig, III Chairman of the Board, President and Chief Executive Officer James W. Kienker Executive Vice President and Chief Financial Officer REPORT OF ERNST & YOUNG INDEPENDENT AUDITORS The Board of Directors and Stockholders Boatmen's Bancshares, Inc. We have audited the accompanying consolidated balance sheet of Boatmen's Bancshares, Inc. as of December 31, 1993 and 1992, and the related consolidated statements of income, changes in stockholders' equity and cash flows for each of the two years in the period ended December 31, 1993. These financial statements are the responsibility of the management of Boatmen's Bancshares, Inc. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Boatmen's Bancshares, Inc. at December 31, 1993 and 1992, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. As discussed in Note 2 to the consolidated financial statements, in 1993, Boatmen's Bancshares, Inc. changed its method of accounting for debt and equity securities and, in 1992, changed its methods of accounting for income taxes and postretirement benefits other than pensions. We previously audited and reported on the consolidated statements of income, changes in stockholders' equity and cash flows of Boatmen's Bancshares, Inc. for the year ended December 31, 1991, prior to their restatement for the 1993 and 1992 poolings of interests as described in Note 3. The contribution of Boatmen's Bancshares, Inc. represents 75 percent of restated total interest income, and 88 percent of restated net income for the year ended December 31, 1991. Financial statements of the other pooled companies included in the 1991 restated consolidated statements of income, changes in stockholders' equity and cash flows were audited and reported on separately by other auditors. We have also audited, as to combination only, the accompanying statements of income, changes in stockholders' equity and cash flows for the year ended December 31, 1991, after restatement for the 1993 and 1992 poolings of interests; in our opinion, such consolidated financial statements have been properly combined on the basis described in Note 3 to the consolidated financial statements. St. Louis, Missouri ERNST & YOUNG January 20, 1994 1993 Annual Report 63 49 DIRECTORS - ------------------------------------------------------------------------------- Richard L. Battram Vice Chairman The May Department Stores Company B. A. Bridgewater, Jr. Chairman, President and Chief Executive Officer Brown Group, Inc. William E. Cornelius Retired Chairman and Chief Executive Officer Union Electric Company Andrew B. Craig, III Chairman of the Board, President and Chief Executive Officer Boatmen's Bancshares, Inc. Ilus W. Davis Chairman of Kansas City Office Armstrong, Teasdale, Schlafly & Davis Michael G. Fitt Retired Chairman of the Board and Chief Executive Officer Employers Reinsurance Corporation John E. Hayes, Jr. Chairman of the Board, President and Chief Executive Officer Western Resources, Inc. Samuel B. Hayes, III Vice Chairman Boatmen's Bancshares, Inc. Ike Kalangis Chairman, President and Chief Executive Officer Boatmen's Sunwest, Inc. Lee M. Liberman Chairman Emeritus Laclede Gas Company John Peters MacCarthy Vice Chairman Boatmen's Bancshares, Inc. William E. Maritz Chairman of the Board and Chief Executive Officer Maritz Inc. Andrew E. Newman Chairman of the Board Edison Brothers Stores, Inc. Jerry E. Ritter Executive Vice President, Chief Financial and Administrative Officer Anheuser-Busch Companies, Inc. William P. Stiritz Chairman and Chief Executive Officer Ralston Purina Company A. E. Suter Senior Vice Chairman and Chief Operating Officer Emerson Electric Co. Dwight D. Sutherland Partner Sutherland Lumber Company Theodore C. Wetterau Retired Chairman and Chief Executive Officer Wetterau Incorporated PRINCIPAL OFFICERS - ------------------------------------------------------------------------------- Andrew B. Craig, III Chairman of the Board, President and Chief Executive Officer Samuel B. Hayes, III Vice Chairman John Peters MacCarthy Vice Chairman John M. Brennan Executive Vice President Loan Administration J. Robert Brubaker Executive Vice President and Senior Operations Officer Gregory L. Curl Executive Vice President Alfred S. Dominick, Jr. Executive Vice President Retail Banking James W. Kienker Executive Vice President and Chief Financial Officer Phillip E. Peters Executive Vice President and Chief Investment Officer Philip N. McCarty Senior Vice President and Secretary David L. Ahner Senior Vice President Corporate Real Estate Larry D. Bayliss Senior Vice President Advertising and Public Relations William K. Carson Senior Vice President and President Boatmen's Mortgage Corporation Jacquelyn L. Dezort Senior Vice President and Auditor Forrest S. FitzRoy Senior Vice President and General Counsel Arthur J. Fleischer Senior Vice President Human Resources John W. Fricke Senior Vice President Community Banks Robert W. Godwin Senior Vice President Taxation Leo G. Haas Senior Vice President Michael E. Jennings Senior Vice President W. Bruce Phelps Senior Vice President and Controller Gary S. Pratte Senior Vice President Loan Administration Raymond E. Senuk Senior Vice President Chief Information Officer R. Patrick Shannon Senior Vice President Loan Review Marvin W. Smith Senior Vice President Operations Administration H. Chandler Taylor Senior Vice President Loan Administration 64 Boatmen's Bancshares, Inc. 50 CORPORATE INFORMATION - ------------------------------------------------------------------------------- Market Information The Corporation's common stock is traded on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") National Market System ("NMS") under the symbol "BOAT." Options on the Corporation's common stock are traded on the Chicago Board Options Exchange ("CBOE") under the symbol "BTQ." The following table sets forth the high, low and closing trade prices of the common stock for each quarterly period during 1993 and 1992 as reported by the National Association of Securities Dealers, Inc. ("NASD"): Common Stock Share Data(1) - ------------------------------------------------------------------------------------------------------------------------
High Low Close Book Value Market/Book Dividends Declared - ------------------------------------------------------------------------------------------------------------------------ 1993 FOURTH $33.50 $27.50 $29.88 $20.49 146% $.31 THIRD 32.38 29.19 32.19 19.66 164 .31 SECOND 32.50 27.25 30.19 19.18 157 .28 FIRST 30.50 26.88 30.50 18.67 163 .28 1992 Fourth $28.25 $24.75 $28.00 $18.20 154% $.28 Third 26.81 24.75 25.88 18.25 142 .28 Second 25.75 21.19 25.06 17.71 142 .27 First 24.25 20.75 22.13 17.31 128 .27 - ------------------------------------------------------------------------------------------------------------------------ (1) Previously reported per share data have been restated to reflect the two-for-one stock split which was declared on August 10, 1993 and paid on October 1, 1993.
At February 11, 1994, there were approximately 27,968 holders of record of the Corporation's common stock and the closing price on that day was $27.88. Trading Volume The number of shares of the Corporation's common stock traded during the fourth quarter of 1993 and year-to-date 1993 as reported by NASD were 17,686,388 and 52,611,322, respectively.
Standard Thomson Agency Ratings Moody's & Poor's Bankwatch - ------------------------------------------------------------------------------------- Boatmen's Bancshares, Inc.: B 6 3/4% Subordinated notes due 2003 A-3 A- A 7 5/8% Subordinated notes due 2004 A-3 A- A 8 5/8% Subordinated notes due 2003 A-3 A- A 9 1/4% Subordinated notes due 2001 A-3 A- A 6 1/4% Convertible subordinated debentures due 2011 A-3 A- A Commercial paper P-1 A-1 TBW-1 The Boatmen's National Bank of St. Louis: B Short-term/long-term deposits P-1/Aa3 A-1/A+ TBW-1 Boatmen's First National Bank of Kansas City: B Short-term/long-term deposits A-1/A+ TBW-1 - -------------------------------------------------------------------------------------
Corporate Headquarters One Boatmen's Plaza 800 Market Street St. Louis, MO 63101 Transfer Agent Boatmen's Trust Company 510 Locust Street St. Louis, MO 63101 (314) 466-1357 or (800) 456-9852 Investor Relations Contact Kevin R. Stitt Director of Investor Relations (314) 466-7662 (314) 466-6191 (FAX) A Dividend Reinvestment and Stock Purchase Plan is available to shareholders of the Corporation. The key features of this Plan are: . Dividends on common stock may be automatically reinvested; . Option to invest up to $10,000 cash per quarter; . No brokerage commissions or service charges on reinvested dividends or cash investments. A Direct Deposit of Dividends program is also available to shareholders of the Corporation. This program, which is offered at no charge, provides for the deposit of quarterly dividends directly to a checking or savings account. Please direct inquiries regarding these programs and requests for the Reinvestment Plan Prospectus and Direct Deposit Authorization Form to: Boatmen's Trust Company P.O. Box 14768 St. Louis, MO 63178 (314) 466-1357 or (800) 456-9852 The Corporation's Bylaws require that notice of shareholder nominations for directors and proposals of business to be transacted at the Corporation's Annual Meeting of Shareholders must be received by the Secretary of the Corporation not less than 75 days prior to the date of the meeting. The Corporation's annual meeting will be held on April 26, 1994 at 10:00 a.m. at the Corporate Headquarters, One Boatmen's Plaza, St. Louis, Missouri. 1993 Annual Report 65 EX-21 9 SUBSIDIARIES OF THE CORPORATION 1 EXHIBIT 21 SUBSIDIARIES OF THE CORPORATION Following is a list of subsidiaries of the Corporation.
STATE OR OTHER JURISDICTION OF SUBSIDIARY INCORPORATION ---------- --------------- Boatmen's National Bank of Belleville................................................... United States Boatmen's First National Bank of Kansas City............................................ United States Boatmen's Bank of Southern Missouri..................................................... Missouri The Boatmen's National Bank of St. Louis................................................ United States Boatmen's National Bank of Boonville.................................................... United States Boatmen's Bank of Butler................................................................ Missouri Boatmen's National Bank of Cape Girardeau............................................... United States Boatmen's National Bank of Central Illinois............................................. United States Boatmen's National Bank of Charleston................................................... United States Boatmen's Bank of Delaware.............................................................. Delaware Boatmen's Bank of Franklin County....................................................... Illinois Boatmen's Bank of Kennett............................................................... Missouri Boatmen's National Bank of Lebanon...................................................... United States Boatmen's Bank of Marshall.............................................................. Missouri Boatmen's Bank of Mid-Missouri.......................................................... Missouri Boatmen's Bank of Mt. Vernon............................................................ Illinois Boatmen's Bank of Nevada................................................................ Missouri Boatmen's First National Bank of Oklahoma............................................... United States Boatmen's Bank of Pulaski County........................................................ Missouri Boatmen's Bank of Quincy................................................................ Illinois Boatmen's River Valley Bank............................................................. Missouri Boatmen's Bank of Rolla................................................................. Missouri Boatmen's Bank of Southwest Missouri................................................... Missouri Boatmen's Bank of Tennessee............................................................. Tennessee Boatmen's Bank of Troy.................................................................. Missouri Boatmen's Bank of Vandalia.............................................................. Missouri Boatmen's First National Bank of West Plains............................................ United States Superior Federal Bank, F.S.B. .......................................................... United States Boatmen's Bancshares of Iowa, Inc. ..................................................... Iowa Boatmen's Bank Iowa, N.A. .............................................................. United States Boatmen's Bank of Fort Dodge ........................................................... Iowa Boatmen's Bank of Kalona ............................................................... Iowa Boatmen's Bank of Marengo .............................................................. Iowa Boatmen's Bank of North Iowa ........................................................... Iowa Boatmen's National Bank of Northwest Iowa .............................................. United States Boatmen's Bank of Sigourney ............................................................ Iowa Boatmen's Bank of Sioux City ........................................................... Iowa Boatmen's Building Corporation of Iowa, Inc. ........................................... Iowa Boatmen's Information Systems of Iowa, Inc. ............................................ Iowa FKF, Inc. .............................................................................. Iowa Boatmen's Kansas, Inc. ................................................................. Kansas Boatmen's Bank of Kansas ............................................................... Kansas Boatmen's Texas, Inc. .................................................................. Missouri Boatmen's First National Bank of Amarillo .............................................. United States Eighth and Taylor Corp. ................................................................ Texas Boatmen's Oklahoma, Inc. ............................................................... Missouri Boatmen's Sunwest, Inc. ................................................................ New Mexico 2 STATE OR OTHER JURISDICTION OF SUBSIDIARY INCORPORATION ---------- --------------- Sunwest Bank of Albuquerque, N.A. ...................................................... United States Sunwest Bank of Clovis, N.A. ........................................................... United States Sunwest Bank of Farmington ............................................................. New Mexico Sunwest Bank of Gallup ................................................................. New Mexico Sunwest Bank of Grant County ........................................................... New Mexico Sunwest Bank of Hobbs, N.A. ............................................................ United States Sunwest Bank of Las Cruces, N.A. ....................................................... United States Sunwest Bank of Raton, N.A. ............................................................ United States Sunwest Bank of Rio Arriba, N.A. ....................................................... United States Sunwest Bank of Roswell, N.A. .......................................................... United States Sunwest Bank of Santa Fe ............................................................... New Mexico Sunwest Bank of El Paso ................................................................ Texas Security Bancshares, Inc. .............................................................. Oklahoma Catoosa Bancshares, Inc. ............................................................... Oklahoma Founders Bancorporation, Inc. .......................................................... Oklahoma Boatmen's Insurance Agency, Inc. ....................................................... Missouri Boatmen's Life Insurance Company........................................................ Missouri Boatmen's Mortgage Corporation.......................................................... Missouri Boatmen's Trust Company................................................................. Missouri Boatmen's Community Development Corporation............................................. Missouri Boatmen's Service Company, Inc. ........................................................ Missouri Tyler International Sales, Inc. ........................................................ U.S. Virgin Islands Credit Systems, Incorporated (44% stock ownership)...................................... Delaware Monetary Transfer System (Joint Venture-40.0%).......................................... Missouri
The Corporation's subsidiaries do business only under their names as listed above. The Corporation's indirect subsidiaries not listed, if considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary at December 31, 1993. EX-23 10 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report (Form 10-K) of Boatmen's Bancshares, Inc. of our report dated January 20, 1994 included in the 1993 Annual Report to Shareholders of Boatmen's Bancshares, Inc. We also consent to the incorporation by reference into each registration statement listed below of our report dated January 20, 1994 with respect to the consolidated financial statements of Boatmen's Bancshares, Inc. incorporated herein by reference in the Annual Report (Form 10-K) for the year ended December 31, 1993.
FORM NO. ---- --- S-3 33-50525 Dividend Reinvestment and Stock Purchase Plan S-8 33-15714 1987 Non-Qualified Stock Option Plan S-8 33-15715 Amended 1981 Incentive Stock Option Plan S-8 33-25945 Centerre Bancorporation 1983 Incentive Stock Option Plan Centerre Bancorporation 1980 Stock Option Plan S-8 33-25946 Centerre Bancorporation 1987 Stock Incentive Plan S-8 33-50451 1990 Stock Purchase Plan for Employees S-8 33-37862 Thrift Incentive 401(k) Plan S-8 33-44546 1991 Incentive Stock Option Plan S-8 33-46730 First Interstate of Iowa, Inc. S-8 33-55186 Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan S-8 33-55110 Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan S-8 33-51635 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 1) S-8 33-51637 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 2)
ERNST & YOUNG St. Louis, Missouri March 15, 1994 EX-23.1 11 INDEPENDENT AUDITORS' CONSENT 1 EXHIBIT 23(a) INDEPENDENT AUDITORS' CONSENT Board of Directors and Shareholders Boatmen's Bancshares, Inc. We consent to incorporation by reference into each registration statement listed below of our report dated January 31, 1992, relating to the consolidated income statement and statements of changes in shareholders' equity and cash flows of First Interstate of Iowa, Inc. and subsidiaries for the year ended December 31, 1991, which report appears as an exhibit in the December 31, 1993 annual report on Form 10-K of Boatmen's Bancshares, Inc.
FORM NO. ---- --- S-3 33-50525 Dividend Reinvestment and Stock Purchase Plan S-8 33-15714 1987 Non-Qualified Stock Option Plan S-8 33-15715 Amended 1981 Incentive Stock Option Plan S-8 33-25945 Centerre Bancorporation 1983 Incentive Stock Option Plan Centerre Bancorporation 1980 Stock Option Plan S-8 33-25946 Centerre Bancorporation 1987 Stock Incentive Plan S-8 33-50451 1990 Stock Purchase Plan for Employees S-8 33-37862 Thrift Incentive 401(k) Plan S-8 33-44546 1991 Incentive Stock Option Plan S-8 33-46730 First Interstate of Iowa, Inc. S-8 33-55186 Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan S-8 33-55110 Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan S-8 33-51635 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 1) S-8 33-51637 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 2)
KPMG PEAT MARWICK Des Moines, Iowa March 10, 1994 EX-23.2 12 INDEPENDENT AUDITORS' CONSENT 1 EXHIBIT 23(b) INDEPENDENT AUDITORS' CONSENT Board of Directors and Shareholders Boatmen's Bancshares, Inc. We consent to incorporation by reference into each registration statement listed below of our report dated March 5, 1992, relating to the consolidated statements of operations, changes in shareholders' equity and cash flows of Sunwest Financial Services, Inc. and subsidiaries for the year ended December 31, 1991, which report appears as an exhibit in the December 31, 1993 annual report on Form 10-K of Boatmen's Bancshares, Inc.
FORM NO. ---- --- S-3 33-50525 Dividend Reinvestment and Stock Purchase Plan S-8 33-15714 1987 Non-Qualified Stock Option Plan S-8 33-15715 Amended 1981 Incentive Stock Option Plan S-8 33-25945 Centerre Bancorporation 1983 Incentive Stock Option Plan Centerre Bancorporation 1980 Stock Option Plan S-8 33-25946 Centerre Bancorporation 1987 Stock Incentive Plan S-8 33-50451 1990 Stock Purchase Plan for Employees S-8 33-37862 Thrift Incentive 401(k) Plan S-8 33-44546 1991 Incentive Stock Option Plan S-8 33-46730 First Interstate of Iowa, Inc. S-8 33-55186 Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan S-8 33-55110 Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan S-8 33-51635 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 1) S-8 33-51637 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 2)
KPMG PEAT MARWICK Albuquerque, New Mexico March 10, 1994 EX-23.3 13 INDEPENDENT AUDITORS' CONSENT 1 EXHIBIT 23(c) INDEPENDENT AUDITORS' CONSENT Board of Directors and Shareholders Boatmen's Bancshares, Inc. We consent to incorporation by reference into each registration statement listed below of Boatmen's Bancshares, Inc. of our report dated January 24, 1992, except for Note 23 which is as of February 24, 1992, relating to the consolidated statements of income, stockholders' equity and cash flows of First Amarillo Bancorporation, Inc. and subsidiaries for the year ended December 31, 1991, which report is included in the December 31, 1993, Annual Report on Form 10-K of Boatmen's Bancshares, Inc.
FORM NO. ---- --- S-3 33-50525 Dividend Reinvestment and Stock Purchase Plan S-8 33-15714 1987 Non-Qualified Stock Option Plan S-8 33-15715 Amended 1981 Incentive Stock Option Plan S-8 33-25945 Centerre Bancorporation 1983 Incentive Stock Option Plan Centerre Bancorporation 1980 Stock Option Plan S-8 33-25946 Centerre Bancorporation 1987 Stock Incentive Plan S-8 33-50451 1990 Stock Purchase Plan for Employees S-8 33-37862 Thrift Incentive 401(k) Plan S-8 33-44546 1991 Incentive Stock Option Plan S-8 33-46730 First Interstate of Iowa, Inc. S-8 33-55186 Sunwest Financial Services, Inc. 1983 Incentive Stock Option Plan S-8 33-55110 Sunwest Financial Services, Inc. 1987 Incentive Stock Option Plan S-8 33-51635 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 1) S-8 33-51637 First Amarillo Bancorporation, Inc. and Subsidiaries Incentive Stock Option Plan (Number 2)
KPMG PEAT MARWICK Amarillo, Texas March 10, 1994 EX-99 14 INDEPENDENT AUDITORS' REPORT 1 EXHIBIT 99 INDEPENDENT AUDITORS' REPORT Board of Directors and Shareholder First Interstate of Iowa, Inc. We have audited the consolidated income statement and changes in shareholders' equity and cash flows of First Interstate of Iowa, Inc. and subsidiaries for the year ended December 31, 1991 (not presented separately herein). These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations, changes in shareholders' equity, and cash flows of First Interstate of Iowa, Inc. and subsidiaries for the year ended December 31, 1991 in conformity with generally accepted accounting principles. KPMG PEAT MARWICK Des Moines, Iowa January 31, 1992 EX-99.1 15 INDEPENDENT AUDITORS' REPORT 1 EXHIBIT 99(a) INDEPENDENT AUDITORS' REPORT The Board of Directors Sunwest Financial Services, Inc.: We have audited the consolidated statements of operations, changes in stockholders' equity and cash flows of Sunwest Financial Services, Inc. and subsidiaries for the year ended December 31, 1991 (not presented separately herein). These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Sunwest Financial Services, Inc. and subsidiaries for the year ended December 31, 1991, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK Albuquerque, New Mexico March 5, 1992 EX-99.2 16 INDEPENDENT AUDITORS' REPORT 1 EXHIBIT 99(b) INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholders First Amarillo Bancorporation, Inc.: We have audited the consolidated statements of income, stockholders' equity and cash flows of First Amarillo Bancorporation, Inc. and subsidiaries for the year ended December 31, 1991 (not presented separately herein). These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements of First Amarillo Bancorporation, Inc. and subsidiaries referred to above present fairly, in all material respects, the results of their operations and their cash flows for the year ended December 31, 1991 in conformity with generally accepted accounting principles. KPMG PEAT MARWICK Amarillo, Texas January 24, 1992 except for Note 23 which is as of February 24, 1992 -----END PRIVACY-ENHANCED MESSAGE-----