-----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, CbRX607OY8ZHLtw29cjKthPGvLEWYamJlRV2wRirmz6de1MlrarnXfoKHpHUzw5V 0zUGezAzuDaPKeSwXuwWtg== 0000950144-94-000717.txt : 19940331 0000950144-94-000717.hdr.sgml : 19940331 ACCESSION NUMBER: 0000950144-94-000717 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNION PLANTERS CORP CENTRAL INDEX KEY: 0000100893 STANDARD INDUSTRIAL CLASSIFICATION: 6021 IRS NUMBER: 620859007 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-10160 FILM NUMBER: 94518249 BUSINESS ADDRESS: STREET 1: 7130 GOODLETT FARMS PKWY CITY: CORDOVA STATE: TN ZIP: 38018 BUSINESS PHONE: 9013836000 MAIL ADDRESS: STREET 1: PO BOX 387 CITY: MEMPHIS STATE: TN ZIP: 38147 10-K 1 UNION PLANTERS FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 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 No. 0-6919 UNION PLANTERS CORPORATION (Exact name of registrant as specified in its charter) Tennessee 62-0859007 (State of incorporation) (I.R.S. Employer Identification No.)
7130 Goodlett Farms Parkway, Memphis, Tennessee 38018 (address of principal executive offices and zip code) Registrant's telephone number, including area code: (901) 383-6000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Common Stock having a par New York Stock Exchange value of $5 per share (name of each exchange (title of class) on which registered)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: 8% Cumulative, Convertible Preferred Stock, Series E having a stated value of $25 per share (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 requirement 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 the 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. /X/ The aggregate market value of the voting stock held by nonaffiliates of the registrant at February 28, 1994 was approximately $440,285,000. INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF COMMON STOCK. CLASS OUTSTANDING AT FEBRUARY 17, 1994 Common Stock having a par 20,505,885 value of $5 per share (title of class)
DOCUMENTS INCORPORATED BY REFERENCE Part of Form 10-K Documents Incorporated into which Incorporated ---------------------- ----------------------- 1. Certain parts of the Annual Report to Items 1, 2, 5, 6, 7, and 8 Shareholders for the year ended December 31, 1993 2. Certain parts of the Definitive Proxy Part III Statement for the Annual Shareholders Meeting to be held April 28, 1994
2 FORM 10-K CROSS REFERENCE INDEX
Page Number ----------- PART I Item 1. Business 4 Item 1a. Executive Officers of the Registrant 20 Item 2. Properties 22 Item 3. Legal Proceedings 23 Item 4. Submission of Matters to a Vote of Security Holders * PART II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters 27 Item 6. Selected Financial Data 27 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 27 Item 8. Financial Statements and Supplementary Data 27 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure * PART III Item 10. Directors and Executive Officers of the Registrant 27 Item 11. Executive Compensation 28 Item 12. Security Ownership of Certain Beneficial Owners and Management 28 Item 13. Certain Relationships and Related Transactions 28
-2- 3 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 28 SIGNATURES 30
* Not Applicable -3- 4 PART I ITEM 1. BUSINESS GENERAL Union Planters Corporation (the Corporation) is a registered bank holding company and savings and loan holding company incorporated under the laws of Tennessee in 1971 and headquartered in Memphis, Tennessee. The Corporation's activities are conducted primarily through its 32 (38 including acquisitions consummated subsequent to December 31, 1993 and through March 1, 1994) bank and savings and loan subsidiaries headquartered in Tennessee, Mississippi, Arkansas, Kentucky, and Alabama. The largest subsidiary of the Corporation is Union Planters National Bank (UPNB), a financial services company which provides commercial banking services and products in Tennessee and other selected markets, primarily in the Mid-South and the Southeastern United States. Reference is made to Table 15 in Part II, Item 7, of Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) for a listing of the Corporation's subsidiaries owned at December 31, 1993, showing their respective total assets, total loans, total deposits, and total shareholders' equity. The Corporation serves its customers through 234 banking offices. Reference is made to page 59 of the 1993 Annual Report to Shareholders for a listing of the cities and communities served and the number of banking offices for each of the Corporation's banking subsidiaries. -4- 5 UNION PLANTERS NATIONAL BANK (UPNB) UPNB offers a full range of traditional commercial banking services and products to individuals, businesses, and public and private entities. In addition to commercial loans, UPNB offers cash management and depository services, correspondent banking services, real estate and construction lending services, secured or asset-based lending, agri-business lending, leasing, and international trade services. Retail banking services include demand, savings and time deposit accounts, money market accounts, small commercial loans, personal loans, real estate and installment loans, credit cards, safe deposit facilities, trust and discount brokerage services, and other ancillary financial services normally furnished by full-service banks. Special private banking centers offer a complete range of personal financial services including credit and special investment services suitable to individuals having complex financial services needs. Trust services offered by UPNB include investment of funds, financial planning, estate and trust administration, and other trust services to individuals, businesses, government, and nonprofit organizations. UPNB acts in various corporate trust and agency capacities in connection with living trusts, retirement plans, and wills. Trust services are offered through UPNB's branch system, an office in Jackson, Tennessee, and its principal trust office in Memphis, Tennessee. Trust revenues for 1993 were $5.0 million compared to $4.5 million in 1992. UPNB is a major residential mortgage and construction lender in Shelby County, Tennessee. UPNB acts as a mortgage loan originator, processor, and servicer and its revenues are derived from brokerage, origination, and servicing fees. For 1993, these business activities had total revenues of approximately $13.2 million compared to $15.3 million in 1992. Commercial banking services also include providing data processing for correspondent banks and a computerized remote data- processing system to both correspondent and non-affiliated small and medium-sized banks. Management has decided to discontinue its data-processing services and the wind-down should be completed by mid-year 1994. Gross revenues from this operation were $482,000 in 1993 compared to $786,000 in 1992. Union Planters Brokerage Services (UPBS), an unincorporated division of UPNB, offers discount securities brokerage services to retail customers, primarily individuals. Revenues from this operation were $1.5 million in 1993 compared to $1.2 million in 1992. Through its Capital Markets Operation, UPNB purchases, pools, and securitizes portfolios of whole mortgage loans, consumer loans, and other financial instruments. The UPNB SBA Loan Trading -5- 6 Operation is similar to the Capital Markets Operations except that it involves the purchasing, pooling, and securitization of the government-guaranteed portions of SBA loans. The Capital Markets and SBA Loan Trading Operations contributed approximately $474,000 and $4.1 million, respectively, to the pretax earnings of UPNB in 1993 and had gross revenues of $4.0 million and $12.7 million, respectively. In 1992, these operations generated pretax earnings of $2.5 million and $3.8 million, respectively, on gross revenues of $8.6 million and $11.2 million, respectively. In 1993, UPNB had net earnings of $35.6 million, which represented a return on average assets (ROA) of 1.07%, compared to net earnings of $27.1 million and an ROA of .89% for 1992. COMMUNITY BANKING SUBSIDIARIES The Corporation's Community Bank Group consists of 28 (34 including acquisitions consummated subsequent to December 31, 1993 and through March 1, 1994) bank and three savings and loan subsidiaries headquartered in Tennessee, Mississippi, Arkansas, Kentucky, and Alabama, and offers full retail banking services in the market areas served. These services include checking and savings accounts, money market accounts, various types of time deposits, safe deposit facilities, 24-hour service for certain banking transactions through automated teller machines, limited trust services, and money transfers. Services also include financing of commercial transactions and making and servicing both secured and unsecured loans to individuals, partnerships, and corporations. The installment loan departments of the Community Banks make direct loans to individuals for personal, automobile, real estate, home improvement, business, and similar needs. In 1993, the Community Bank Group had net earnings of $30.2 million which represented a 1.01% ROA. This compares to net earnings of $24.4 million in 1992 which represented a 1.36% ROA. The decline in ROA between 1992 and 1993 was due primarily to one-time charges related to institutions acquired in 1993 and provisions for conversion to a new data processing system. Reference is made to the MD&A discussion incorporated herein by reference in Part II, Item 7, and to Note 2 to the financial statements for information regarding the Corporation's completed and pending acquisitions. UNION PLANTERS INVESTMENT BANKERS CORPORATION (UPIBC) In the fourth quarter of 1990, the broker/dealer operations conducted by UPIBC and its subsidiaries were discontinued, and on January 2, 1991, the Corporation acquired an interest as a limited partner in Vining-Sparks IBG, Limited Partnership (VSIBG), the general partner of which is Memphis-headquartered broker/dealer, Vining Sparks Securities, Inc. (VSS). VSIBG engages in certain -6- 7 broker/dealer activities of the types formerly carried on separately by VSS and UPIBC. As discussed above, the activities of the Capital Markets and SBA Loan Trading Operations which were formerly part of UPIBC have been transferred to UPNB and are now part of UPNB's banking operations. The revenues of the broker/dealer operations are now limited to the Corporation's proportionate share (29%) of net earnings from its passive investment as a limited partner in VSIBG, which amounted to $3.7 million in 1993 and $3.9 million in 1992. The Corporation's investment in VSIBG at December 31, 1993 was $5.5 million. The only significant accounting transactions related to UPIBC in 1993 and 1992 were expenses related to pending litigation and some expenses related to winding down the former operations. Reference is made to Notes 13 and 19 to the financial statements found on pages 25 and 33, respectively, of the 1993 Annual Report to Shareholders. Reference is also made to Table 1, "Summary of Consolidated Results" on page 49 of the 1993 Annual Report to Shareholders for the impact of the broker/dealer operations on 1993 operating results. The material specifically referred to is incorporated by reference as a part of this response. SUPERVISION AND REGULATION Bank holding companies, banks, savings and loan holding companies, savings and loan associations, and many of their non-bank subsidiaries are extensively regulated under both federal and state law. Compliance with these laws, including the Federal Deposit Insurance Corporation Improvement Act of 1991, continues to increase the regulatory burden on depository institutions, including the banking and thrift subsidiaries of the Corporation. The following description of statutory and regulatory provisions is not intended to be exhaustive and is qualified in its entirety by reference to such provisions. Any significant change in applicable law or regulations may have a material effect on the businesses and prospects of the Corporation. GENERAL As a bank holding company ("BHC"), the Corporation is subject to the regulation and supervision of the Board of Governors of the Federal Reserve System (the "Federal Reserve"). In addition, as a savings and loan holding company, the Corporation is registered with the Office of Thrift Supervision (the "OTS") and is subject to OTS regulations, supervision, and reporting requirements under the Home Owners Loan Act. The Corporation's subsidiaries which are national banking associations, including UPNB, are subject to supervision and examination by the Office of the Comptroller of the Currency (the "Comptroller") and the Federal Deposit Insurance Corporation (the "FDIC"). State bank subsidiaries of the -7- 8 Corporation which are members of the Federal Reserve System are subject to supervision and examination by both the Federal Reserve and the state banking authorities of the states in which their headquarters are located. State bank subsidiaries which are not members of the Federal Reserve System are subject to supervision and examination both by the FDIC and the state banking authorities of the states in which they are located. The Corporation's savings and loan and savings bank subsidiaries are subject to supervision and examination by the OTS. The Corporation's "Banking Subsidiaries" (which term, as used herein, shall be deemed to include its savings and loan and savings bank subsidiaries) are subject to various requirements and restrictions, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be granted and the rate of interest that may be charged thereon, and limitations on the types and amounts of investments which may be made and the types of services that may be offered. Various consumer-protection laws and regulations also affect the operations of the Corporation's Banking Subsidiaries. In addition to the impact of regulation, the Banking Subsidiaries are affected significantly by the actions of the Federal Reserve as it attempts to control the money supply and credit availability in order to influence the economy. The Bank Holding Company Act of 1956, as amended (the "BHCA") generally requires the prior approval of the Federal Reserve where a BHC proposes to acquire direct or indirect ownership or control of more than 5% of the voting shares of any bank or otherwise to acquire control of a bank or to merge or consolidate with any other BHC. The BHCA generally prohibits the Federal Reserve from approving an application by a BHC to acquire a bank located in another state, unless such an acquisition is specifically authorized by statute of the state in which the bank to be acquired is located. Tennessee and certain other states, including most states contiguous to Tennessee, have adopted reciprocal interstate banking legislation permitting Tennessee-based bank holding companies to acquire banks and bank holding companies in such other states and allowing bank holding companies located in such states other than Tennessee to acquire banks and bank holding companies headquartered in Tennessee. A BHC is generally prohibited under the BHCA from acquiring voting shares of any company which is not a bank and from engaging in any activities other than those of banking or of managing or controlling banks or furnishing services to, or performing services for its subsidiaries. An exception to these prohibitions permits a BHC to engage in, or to acquire an interest in a company, such as a thrift institution, which engages in activities which the Federal Reserve has determined are so closely related to banking or managing or controlling banks as to be a proper incident thereto. -8- 9 CAPITAL ADEQUACY The Federal Reserve has adopted risk-based capital guidelines for bank holding companies. The minimum requirement of the guidelines for the ratio of a BHC's total capital to risk-weighted assets, including certain off-balance-sheet activities such as standby letters of credit (the "Total Capital Ratio") is 8%. At least one-half of a BHC's total capital must be composed of Tier 1 Capital which consists of common shareholders' equity, minority interests in the equity accounts of consolidated subsidiaries, non-cumulative perpetual preferred stock, and a limited amount of cumulative perpetual preferred stock, less goodwill ("Tier 1 Capital"). The remainder of total capital is classified as "Tier 2 Capital," which may consist of subordinated debt (or certain other qualifying debt issued prior to March 12, 1988), other preferred stock, and a limited amount of loan loss reserves. In addition, the Federal Reserve has established minimum leverage ratio guidelines for bank holding companies. These guidelines provide for a minimum ratio of Tier 1 Capital to average total assets, less goodwill (the "Leverage Ratio") of 3% for bank holding companies that meet certain specified criteria, including those having the highest regulatory rating. All other bank holding companies generally are required to maintain a Leverage Ratio of at least 3% plus an additional cushion of 100 to 200 basis points. The guidelines also provide that bank holding companies experiencing internal growth or making acquisitions are expected to maintain strong capital positions substantially above the minimum prescribed supervisory levels without significant reliance on intangible assets. Moreover, the Federal Reserve has indicated that it will consider a tangible Tier 1 Capital leverage ratio (arrived at by deducting all intangibles) and other indicia of capital strength in evaluating proposals for expansion or new activities. The Federal Reserve has not advised the Corporation of any specific minimum Leverage Ratio which would be applied to the Corporation. In addition to those applicable to BHCs, there are capital guidelines which must also be met by each of a BHC's depository-institution subsidiaries. The Federal Reserve, the FDIC, the Comptroller, and the OTS have adopted substantially similar minimum capital guidelines with which each of the Corporation's Banking Subsidiaries regulated by them is expected to comply. State-chartered banks are also required to meet minimum capital requirements prescribed by their respective state bank regulatory authorities. Failure to meet minimum capital requirements could subject a depository institution to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, and a prohibition on the taking of brokered deposits. As described below, under the "Prompt Corrective Action" regulations, substantial additional restrictions can be imposed upon FDIC-insured institutions which fail to meet -9- 10 applicable capital requirements. See " -- Prompt Corrective Action." At December 31, 1993, the Corporation's Total (risk-based) Capital Ratio was 18.59%, its Tier 1 Capital ratio was 14.85% and its Leverage Ratio was 7.10%. In addition, each of the Corporation's Banking Subsidiaries satisfied the minimum capital requirements applicable to it and had the requisite capital levels to qualify as a "well-capitalized" institution under the prompt corrective action provisions discussed below. PROMPT CORRECTIVE ACTION The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") enacted in December 1991 requires the appropriate federal bank regulatory authorities to take "prompt corrective action" with respect to depository institutions which do not meet their minimum capital requirements. FDICIA establishes five capital tiers: "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized," and "critically undercapitalized." Under the capital regulations, a bank is defined to be well capitalized if it maintains a Leverage Ratio of at least 5%, a Tier 1 Capital ratio of at least 6% and a Total Capital ratio of at least 10% and has not been determined to be in a "troubled condition" by its appropriate federal regulatory authority. A bank is defined to be adequately capitalized if it meets all of its minimum capital requirements as described above under " -- Capital Adequacy." A bank will be considered to be undercapitalized if it should fail to meet any minimum required measure, significantly undercapitalized if it should fall significantly below such measure, and critically undercapitalized if it should fail to maintain a level of tangible equity equal to not less than 2% of its total assets. A bank may be deemed to be in a capitalization category which is lower than is indicated by its actual capital position if it should receive an unsatisfactory examination rating. All institutions, regardless of their capital levels, are restricted from making any capital distributions or paying any management fees if, as a result thereof, the institution would fail to satisfy the minimum levels required in order to be considered adequately capitalized. An undercapitalized institution is: (i) subject to increased monitoring by the appropriate federal banking regulator; (ii) required to submit to its regulator an acceptable capital restoration plan within 45 days; (iii) subject to asset growth limitations; and (iv) required to obtain prior regulatory approval for acquisitions, branching, and new lines of business. The capital restoration plan must include a guarantee by the institution's holding company that the institution will comply with the plan until it has been adequately capitalized on average for four consecutive quarters. Pursuant to the guarantee, the institution's holding company would be liable up to the lesser of -10- 11 5% of the institution's total assets or the amount necessary to bring the institution into capital compliance as of the date it failed to comply with its capital restoration plan. If the controlling BHC should fail to fulfill its obligations under the guarantee and should file (or have filed against it) a petition under the federal Bankruptcy Code, the appropriate federal banking regulator could have a claim as a general creditor of the BHC, and, if the guarantee were deemed to be a commitment to maintain capital under the federal Bankruptcy Code, the claim would be entitled to a priority position in such bankruptcy proceeding over third-party creditors of the BHC. The regulatory agencies have discretionary authority to reclassify well-capitalized institutions as adequately capitalized or to impose on adequately capitalized institutions requirements or actions specified for undercapitalized institutions if the agency should determine, after notice and an opportunity for hearing, that the institution is in an unsafe or unsound condition or is engaging in an unsafe or unsound practice, which may consist of its receipt of an unsatisfactory examination rating if the deficiencies cited are not corrected. A significantly undercapitalized institution, as well as any undercapitalized institution which fails to submit an acceptable capital restoration plan, may be subject to regulatory demands for recapitalization, broader application of restrictions on transactions with affiliates, limitations upon interest rates paid on deposits, asset growth and other activities, possible replacement of directors and officers and restrictions on capital distributions by any BHC controlling the institution. Any company controlling the institution could also be required to divest the institution or the institution could be required to divest subsidiaries. The senior executive officers of a significantly undercapitalized institution may not receive bonuses or increases in compensation without prior regulatory approval and the institution would be prohibited from making payments of the principal of, or interest on its subordinated debt. If an institution should become critically undercapitalized, the institution will be subject to conservatorship or receivership within 90 days unless periodic determinations are made that forbearance from such action would better protect the deposit insurance fund. Unless appropriate findings and certifications are made by the appropriate federal bank regulatory agencies, a critically undercapitalized institution must be placed in receivership if it should remain critically undercapitalized on average during the calendar quarter beginning 270 days after the date on which it became critically undercapitalized. DIVIDEND RESTRICTIONS The Corporation is a legal entity which is separate and distinct from its Subsidiary Banks as well as its non-bank subsidiaries. The Corporation's revenues (on a parent company only basis) result, in significant part, from dividends and management -11- 12 fees paid to the Corporation by its subsidiaries. The right of the Corporation, and consequently the right of creditors and shareholders of the Corporation, to participate in any distribution of the assets or earnings of any subsidiary, through the payment of such dividends or otherwise, is necessarily subject to the prior claims of creditors of the subsidiary (including its depositors, in the case of the Banking Subsidiaries) except to the extent that claims of the Corporation in its capacity as a creditor may be recognized. There are statutory and regulatory requirements applicable to the payment of dividends by the Corporation's Banking Subsidiaries to the Corporation. Each subsidiary of the Corporation which is a national banking association, including UPNB, is required by federal law to obtain the prior approval of the Comptroller for the payment of dividends if the total of all dividends declared by the board of directors of such bank in any year would exceed the total of (i) such bank's net profits (as defined and interpreted by regulation) for that year plus (ii) the retained net profits (as defined and interpreted by regulation) for the preceding two years, less any required transfers to surplus. In addition, national banks may only pay dividends to the extent that their retained net profits (including the portion transferred to surplus) exceed statutory bad debts (as defined by regulation). The Corporation's state-chartered Depository Subsidiaries are subject to similar restrictions on the payment of dividends by the respective state laws under which they are organized. Moreover, as noted above under " -- Prompt Corrective Action," all depository institutions are prohibited from paying any dividends, making other distributions or paying any management fees if, after such payment, the depository institution would fail to satisfy its minimum capital requirements. At December 31, 1993, UPNB and the Corporation's other Depository Subsidiaries had, in the aggregate, approximately $74.3 million available for distribution to the Corporation without obtaining prior regulatory approval. The actual amount of dividends paid will be limited to a lesser amount by management of the Corporation in order to maintain compliance with the Corporation's own internal capital guidelines and to maintain strong capital positions in each of the Banking Subsidiaries of the Corporation. Future dividends will essentially depend upon the level of earnings of the Banking Subsidiaries of the Corporation. It is the policy of the Federal Reserve that bank holding companies should pay dividends only out of current earnings. The federal bank regulatory authorities may also prohibit banks and bank holding companies from paying a dividend if they should deem such payment to be an unsafe or unsound practice. Furthermore, it is the position of the Federal Reserve that as a BHC, the Corporation is expected to act as a source of financial strength to each of its subsidiary banks. See " -- Support of Banking Subsidiaries" below. -12- 13 SUPPORT OF BANKING SUBSIDIARIES Under Federal Reserve policy, the Corporation is expected to act as a source of financial strength to its Banking Subsidiaries and, where required, to commit resources to support each of such Subsidiaries. This support may be required at times when, absent such Federal Reserve policy, the Corporation might not be inclined to provide it. Moreover, if one of its subsidiary banks should become undercapitalized, the Corporation would be required by FDICIA to guarantee the subsidiary bank's compliance with its capital plan in order for such plan to be accepted by the appropriate federal regulatory authority. See "-- Prompt Corrective Action." Under the "cross guarantee" provisions of the Federal Deposit Insurance Act, any FDIC-insured subsidiary of the Corporation (which includes all of the Corporation's Banking Subsidiaries) may be held liable for any loss incurred by, or reasonably expected to be incurred by the FDIC in connection with (i) the "default" of any other commonly controlled FDIC-insured subsidiary or (ii) any assistance provided by the FDIC to any commonly controlled FDIC-insured subsidiary "in danger of default." "Default" is defined generally as the appointment of a conservator or receiver and "in danger of default" is defined generally as the existence of certain conditions indicating that a default is likely to occur in the absence of regulatory assistance. Because it is a bank holding company, any capital loans made by the Corporation to any of its Banking Subsidiaries are subordinate in right of payment to the claims of depositors and to certain other indebtedness of such Banking Subsidiary. In the event of a BHC's bankruptcy, any commitment by the BHC to a federal bank regulatory agency to maintain the capital of a subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment over certain other creditors of the BHC. TRANSACTIONS WITH AFFILIATES Provisions of the Federal Reserve Act impose restrictions and limitations upon the type, amount, quantity, and quality of transactions between an "affiliate" (as defined below) of an FDIC-insured bank and the insured bank (including transactions with its bank holding company and its nonbank subsidiaries). The purpose of these restrictions and limitations is to prevent misuse of the resources of an FDIC-insured institution by its uninsured affiliates. An exception to most of these restrictions is provided for transactions between two insured banks which are subsidiaries of the same bank holding company where the holding company owns 80% or more of each of these banks (the "sister bank" exception). The restrictions are also inapplicable to transactions between an insured bank and its wholly-owned subsidiaries. These restrictions include limitations on the purchase and sale of assets and -13- 14 extensions of credit by the insured bank to its BHC or its BHC's nonbank subsidiaries. An insured bank and its subsidiaries are limited in engaging in "covered transactions" with their nonbank or non-savings bank affiliates to the following amounts: (i) in the case of any one such affiliate, the aggregate amount of covered transactions of the insured bank and its subsidiaries may not lawfully exceed 10% of the capital stock and surplus of the insured bank and (ii) in the case of all affiliates of such insured bank, the aggregate amount of covered transactions of the insured bank and its subsidiaries may not lawfully exceed 20% of the capital stock and surplus of the bank. "Covered transactions" are defined by statute to include a loan or extension of credit, as well as a purchase of securities issued by an affiliate, a purchase of assets (unless otherwise exempted by the Federal Reserve), the acceptance of securities issued by the affiliate as collateral for a loan and the issuance of a guarantee, acceptance, or letter of credit for, or on behalf of, an affiliate. An "affiliate" of an insured bank is a person or entity which controls, is controlled by or is under common control with, such insured bank. The BHCA also prohibits a BHC and its subsidiaries from engaging in certain tie-in arrangements in connection with any extension of credit, lease or sale of property or furnishing of services. FDIC INSURANCE ASSESSMENTS The Banking Subsidiaries of the Corporation are subject to FDIC deposit insurance assessments. The FDIC has adopted a risk-based premium schedule which has increased the assessment rates for most FDIC-insured depository institutions. Under the new schedule, the annual premiums initially range from $.23 to $.31 for every $100 of deposits. Each financial institution is assigned to one of three capital classifications -- well capitalized, adequately capitalized or undercapitalized -- and further assigned to one of three subgroups within its capital classification based upon supervisory evaluations by the institution's primary federal and, if applicable, state supervisory authorities and on the basis of other information relevant to the institution's financial condition and the risk posed to the applicable insurance fund. The actual assessment rate applicable to a particular institution will, therefore, depend in part upon the risk assessment classification so assigned to the institution by the FDIC. RECENT BANKING LEGISLATION In addition to the matters noted above, FDICIA made other significant changes to the federal banking laws. FDICIA institutes certain changes to the supervisory process, including provisions that mandate certain regulatory agency actions against undercapitalized institutions within specified time limits. STANDARDS FOR SAFETY AND SOUNDNESS. FDICIA required the federal bank regulatory agencies to prescribe, by regulation to become -14- 15 effective no later than December 1, 1993, standards for all insured depository institutions and depository-institution holding companies relating to: (i) internal controls, information systems and audit systems; (ii) loan documentation; (iii) credit underwriting; (iv) interest-rate risk exposure; (v) asset growth; and (vi) compensation, fees, and benefits. The compensation standards must prohibit employment contracts, compensation or benefit arrangements, stock option plans, fee arrangements or other compensatory arrangements that would provide excessive compensation, fees or benefits or could lead to material financial loss, but (subject to certain exceptions) may not prescribe specific compensation levels or ranges for directors, officers or employees. In addition, the federal bank regulatory agencies are required to prescribe by regulation standards specifying: (i) maximum classified assets to capital ratios; (ii) minimum earnings sufficient to absorb losses without impairing capital; and (iii) to the extent feasible, a minimum ratio of market value to book value for publicly traded shares of depository institutions and depository-institution holding companies. BROKERED DEPOSITS. The FDIC has adopted regulations governing the receipt of brokered deposits. Under the regulations, a bank may not lawfully accept, roll over or renew any brokered deposits unless (i) it is well capitalized or (ii) it is adequately capitalized and receives a waiver from the FDIC. A bank that may not receive brokered deposits also may not offer "pass-through" insurance on certain employee benefit accounts. Whether or not it has obtained such a waiver, an adequately capitalized bank may not pay an interest rate on any deposits in excess of 75 basis points over certain prevailing market rates specified by regulation. There are no such restrictions on a bank that is well capitalized. Because UPNB and all of the Community Banks had at December 31, 1993, the requisite capital levels to qualify as well capitalized institutions, management of the Corporation believes that the brokered deposits regulation will have no material effect on the funding or liquidity of any of its Banking Subsidiaries. Moreover, management does not believe that the Corporation now has, or at that date had brokered deposits in any amount. CONSUMER PROTECTION PROVISIONS. FDICIA seeks to encourage enforcement of existing consumer-protection laws and enacted new consumer-oriented provisions including a requirement of notice to appropriate regulatory authorities and customers of any proposed branch closing and provisions intended to encourage the offering of "lifeline" banking accounts and lending in distressed communities. FDICIA also requires depository institutions to make additional disclosures to depositors with respect to the rate of interest to be paid on, and the terms of their deposit accounts. INSTITUTIONAL EXPOSURE. FDICIA also required the Federal Reserve to prescribe standards which limit the risks posed by an insured institution's "exposure" to any other depository -15- 16 institution in order to limit the risks that the failure of a large depository institution would pose to an insured depository institution. FDICIA broadly defines "exposure" to include extensions of credit to the other institution; purchases of, or investments in, securities issued by the other institution; securities issued by the other institution and accepted as collateral for an extension of credit to any person; and all similar transactions which the Federal Reserve has defined by regulation to constitute exposure. The Federal Reserve has adopted certain procedures and "benchmark" standards to limit an insured depository institution's credit and settlement exposure to each of its correspondent banks. The final rules were effective on December 19, 1992, but provided for a two-year transition period. MISCELLANEOUS. FDICIA also made extensive changes in the applicable rules regarding audit, examinations, and accounting. FDICIA generally requires annual, on-site, full-scope examinations by each bank's primary federal regulatory authority. FDICIA also imposes new responsibilities on management, the independent audit committee and outside accountants to develop, approve or attest to reports regarding the effectiveness of internal controls, legal compliance, and off-balance-sheet liabilities and assets. DEPOSITOR PREFERENCE. Legislation recently enacted by Congress establishes a nationwide depositor preference rule in the event of a bank failure. Under this arrangement, all deposits and certain other claims against a bank, including the claim of the FDIC as subrogee of insured depositors, would receive payment in full before any general creditor of the bank would be entitled to any payment in the event of an insolvency or liquidation of the bank. SECURITIES ACTIVITIES The Securities Exchange Act of 1934 and in some instances state securities statutes impose supervisory and regulatory requirements on the various securities activities conducted by banks and non-banking subsidiaries of bank holding companies. GOVERNMENT POLICIES The earnings of the Corporation may be significantly affected by the policies of various regulatory authorities, including the domestic monetary policies of the Federal Reserve regulating credit, United States fiscal policy, and policies implemented by regulations affecting interest rates payable on deposits. The effect of such changes in policies upon the future earnings of the Corporation cannot be predicted. COMPETITION The Corporation and its subsidiaries are subject to substantial competition in all aspects of their businesses. They -16- 17 compete directly with numerous other financial services firms, a significant number of which have substantially greater capital and other resources, higher lending limits, larger advertising budgets, and which offer a wider range of financial services. In addition to the competition from commercial banks and securities firms, there is increasing competition from other sources such as savings and loans, insurance companies, consumer finance companies, credit unions, mortgage companies, money market funds, and lending agencies of the United States Government. In the five-county Memphis market alone, there were approximately 45 banks and savings and loan associations (excludes credit unions) at June 30, 1993, as well as numerous other competing financial institutions. There is significant competition with respect to interest rates paid on deposits, interest rates charged on loans, and fees charged for services. PERSONNEL As of February 28, 1994, the Corporation, including all subsidiaries, had 3,457 employees (including 517 part-time employees). STATISTICAL DISCLOSURES The statistical information required by Item 1 may be found in the 1993 Annual Report to Shareholders, and, to the extent indicated, is incorporated herein by reference, as follows:
Page in the Corporation's 1993 Annual Report to Guide 3 Disclosure Shareholders ------------------ ------------------------- I. Distribution of Assets, Liabilities, and Shareholders' Equity; Interest Rates and Interest Differential A. Average Balance Sheet 51 B. Net Interest Earnings Analysis 51 C. Rate/Volume Analysis 52 II. Investment Portfolio A. Book Value of Investment Securities 14, 15, and 56 B. Maturities of Investment Securities 15 and 16 C. Investment Securities Concentrations Not applicable III. Loan Portfolio A. Types of Loans 53 B. Maturities and Sensitivity of Loans to Changes in Interest Rates Follows this table
-17- 18
Page in the Corporation's 1993 Annual Report to Guide 3 Disclosure Shareholders ------------------ ------------------------- C. Risk Elements 1. Nonaccrual, Past Due 90 Days or More, and Restructured Loans 54 2. Potential Problem Loans 44 3. Foreign Outstandings Not significant 4. Loan Concentrations -- D. Other Interest-Bearing Assets Not significant IV. Summary of Loan Loss Experience A. Analysis of Allowance for Loan Losses 54 B. Allocation of the Allowance for Loan Losses 53 V. Deposits A. Average Balances 51 and 52 B. Maturities of Large Denomination Certificates of Deposit Follows this table C. Foreign Deposit Liability Disclosure Not significant VI. Return on Equity and Assets A. Return on Assets 35 B. Return on Equity 35 C. Foreign Deposit Liability Disclosure Not significant D. Equity to Assets Ratio 35 VII. Short-Term Borrowings 18
The following table presents the maturities and sensitivities of the Corporation's loans to changes in interest rates at December 31, 1993:
Due Due After One Due After Within But Within Five One Year Five Years Years -------- ------------- --------- (Dollars in thousands) Commercial $410,209 $166,083 $ 90,320 Real Estate-Construction 66,318 11,726 4,927 -------- -------- -------- Total $476,527 $177,809 $ 95,247 ======== ======== ======== Fixed Rate $107,564 $ 24,601 ======== ======== Variable Rate $ 70,245 $ 70,646 ======== ========
-18- 19 The following table presents maturities of certificates of deposit of $100,000 and over and other time deposits of $100,000 and over:
December 31, 1993 ------------ (Dollars in thousands) Under 3 Months $153,576 3 to 6 Months 85,835 6 to 12 Months 46,968 Over 12 Months 81,216 -------- Total $367,595 ========
-19- 20 ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT The following is a list of executive officers of the Corporation. Information regarding the executive officers, their ages, their present positions held with the Corporation and its subsidiaries, and their principal occupations for the last five years are as follows:
Position of Executive Officers Name with the Corporation and UPNB Age ---- ------------------------------ --- Benjamin W. Rawlins, Jr. Chairman of the Board and 56 Chief Executive Officer of the Corporation; Chairman of the Board and Chief Executive Officer of UPNB J. Armistead Smith Vice Chairman of the Corporation 58 Jackson W. Moore President of the Corporation 45 Jack W. Parker Executive Vice President and 47 Chief Financial Officer of the Corporation; Executive Vice President and Chief Financial Officer of UPNB M. Kirk Walters Senior Vice President, Treasurer, 53 and Chief Accounting Officer of the Corporation; Senior Vice President and Chief Accounting Officer of UPNB J. F. Springfield Secretary and General Counsel of 64 the Corporation; Executive Vice President, Secretary, and General Counsel of UPNB James A. Gurley Executive Vice President of the 60 Corporation; Executive Vice President of UPNB
Mr. Rawlins has been Chairman of the Board of the Corporation and UPNB since April, 1989 and January, 1986, respectively. He has also served as Chief Executive Officer of the Corporation and UPNB since September, 1984. Mr. Rawlins was President of the Corporation from September, 1984 until he was elected Chairman. Mr. Smith has been Vice Chairman of the Corporation since 1989. Effective March, 1994, Mr. Smith became Chairman of the East Tennessee Region of the Corporation. He was President of the -20- 21 Corporation's Community Bank Group from April of 1992 until February, 1994. Mr. Smith was President of UPNB from 1988 to April, 1992. Prior to becoming a Vice Chairman of the Corporation, Mr. Smith was an Executive Vice President of the Corporation from 1987 until elected Vice Chairman. He was a Vice Chairman of UPNB from 1985 until he was elected President. Mr. Moore has been President of the Corporation since April, 1989. Since 1977, he had been a partner in the law firm of Wildman, Harrold, Allen, Dixon & McDonnell (and its predecessor Canada, Russell & Turner), the Corporation's outside legal counsel and had served on its Management Committee and as Chairman of its Administrative Committee for five years. He is also Chairman of PSB Bancshares, Inc. and is a Vice President and Director of its subsidiary, The Peoples Savings Bank, located in Clanton, Alabama. He has served on the Boards of the Corporation and UPNB since 1986. Mr. Parker has been Executive Vice President and Chief Financial Officer of the Corporation since March, 1990. He has been an Executive Vice President and Chief Financial Officer of UPNB since March, 1990. From 1987 until being elected to these positions with the Corporation, he was an Executive Vice President of UPNB and President of the Mortgage Banking Group of UPNB. Mr. Walters was elected Senior Vice President of the Corporation in November, 1990 and has been Chief Accounting Officer since February, 1990. He has been Treasurer of the Corporation since 1985. He was a Vice President of the Corporation from 1975 until he was elected to his current position. Mr. Walters has been an officer of UPNB for more than twenty years and is currently a Senior Vice President. Mr. Springfield has been Secretary and General Counsel of the Corporation and Secretary and General Counsel of UPNB since December, 1985. He has been an officer of UPNB for more than thirty-seven years, and is currently an Executive Vice President. Mr. Gurley was elected Executive Vice President of the Corporation in November, 1990. He was a Vice President of the Corporation from 1980 until he was elected Executive Vice President. He has been an officer of UPNB for more than twenty years and is currently an Executive Vice President. -21- 22 ITEM 2. PROPERTIES The Corporation's corporate headquarters are located in the company-owned UPNB Administrative Center at 7130 Goodlett Farms Parkway, Memphis, Tennessee, a two-building complex located near the center of Shelby County. In addition to being the corporate headquarters, it contains approximately 250,000 square feet of space and houses Retail Branch Administration, Bank Cards, Mortgage Servicing and Origination, Funds Management, Data Processing, Operations, Marketing, Human Resources, Financial, Legal, Insurance Services, and Community Bank Group Administration. UPNB's headquarters is located in a 70,000 square foot company-owned building in East Memphis. In addition to being its headquarters, the building also houses UPNB's Commercial Group, Trust Group, Credit and Review, and Brokerage Services. As of December 31, 1993, UPNB and other subsidiaries of the Corporation operated 170 banking offices in Tennessee, 25 in Mississippi, 22 in Arkansas, and 2 in Alabama. Of these, 150 are owned and 69 are leased by the subsidiaries. The subsidiaries also operate 167 twenty-four hour automated teller locations. The acquisitions completed subsequent to December 31, 1993 and through March 1, 1994 increased by 15 the number of banking offices to 234, of which 10 were added in Tennessee and five in Kentucky. There are no material encumbrances on any of the company-owned properties. -22- 23 ITEM 3. LEGAL PROCEEDINGS The Corporation and/or various subsidiaries are parties to various pending civil actions, all of which are being defended vigorously. Management is of the opinion that the Corporation has accrued liabilities sufficient to cover the estimated costs associated with the ultimate resolution of all pending matters, including those discussed below. While additional provisions for litigation are possible, management is of the opinion, based on current information, including evaluations of outside counsel, that no additional provisions will be necessary for the foreseeable future. Any such additional provisions would obviously impact earnings in the operating periods in which such provisions were made. Nevertheless, management's view is that such additional provisions, if any, would not materially affect the financial condition of the Corporation. Various other legal proceedings against the Corporation and its subsidiaries have arisen in the ordinary course of business. Management is of the opinion that the Corporation's financial position will not be materially affected by the ultimate resolution of these other legal matters. UPNB and one of its officers are co-defendants in two civil actions seeking $29 million (after trebling) filed on or about July 25, 1985 in the U.S. Bankruptcy Court for the Eastern District of Missouri by the trustee for a failed grocery and its shareholders purportedly predicated upon an August, 1981 $115,000 loan by the First National Bank of Gibson County, Tennessee, later acquired by UPNB, to finance the shareholders' acquisition of the grocery business from other defendants unrelated to UPNB. The actions allege that the defendants subsequently conspired to defraud the plaintiffs of their rights in the grocery. This matter has been dormant since UPNB filed a motion for summary judgment in 1985. In 1988, the Corporation rescinded and terminated a purported agreement for the acquisition of a Louisiana bank holding company, Great American Corporation (GAC). The Corporation and a subsidiary were made parties to several civil actions relating to the failed acquisition alleging damages estimated at $66 million and founded essentially upon theories that the Corporation had breached the acquisition agreement and committed wrongful acts under state law and a separate confidentiality agreement. In November, 1992, the Corporation completed the negotiation and signing of definitive agreements for the settlement of all the pending civil actions. A class consisting of all outside GAC shareholders between January 22 and October 4, 1988 was certified for purposes of consummating the settlement and the number of share owners excluded from that class was immaterial. Early in the second quarter of 1993 consummation of the settlement of all pending civil actions involving the Corporation and a subsidiary arising from the attempted acquisition -23- 24 of GAC was effected. The costs of such settlement did not exceed amounts previously reserved for such purpose. UPNB, a member of the MasterCard and VISA organizations, was a co-defendant or cross-claim defendant in two related civil actions arising out of its previous utilization of a third party, Electronic Transaction Network, Inc.(E-Net), to solicit and assist in the administration of credit card transaction processing arrangements with several thousand consumer merchants located throughout the United States. The plaintiff sought compensatory damages said to exceed $10 million (trebled to exceed $30 million) and other relief based on various alleged wrongdoing by UPNB and two co-defendants. During the third quarter of 1993, a definitive agreement was entered into for the settlement of all pending litigation against UPNB in connection with its former relationship with E-Net, without the payment of any sum by UPNB. The Corporation's broker/dealer subsidiaries (now inactive) are among the more than eighty defendants in various actions brought by purchasers of $400 million in housing revenue bonds issued by the Health, Educational, and Housing Facility Board of the City of Memphis, Tennessee and by purchasers of bonds that were part of seven other taxable municipal issues. These actions have been transferred to the United States District Court for the Eastern District of Louisiana for pretrial proceedings captioned In Re: Taxable Municipal Bond Securities Litigation, Multi-district Litigation ("MDL" 863). Focusing upon the fact that the bond sale proceeds were initially invested and remain in "guaranteed investment contracts" ("GICs") with Executive Life Insurance Company ("ELIC"), whose own investments were allegedly concentrated in so-called "junk bonds" of declining value, the lawsuits in MDL 863 allege that the offering materials failed to make adequate disclosures and that the bonds represented a scheme among the Executive Life organization, Drexel Burnham Lambert, Inc., and the other defendants to raise money for "junk bond" purchases, rather than for public purposes. ELIC is in conservatorship, interest on the bonds is in default, and Drexel is in Chapter 11 reorganization. The complaint for the Memphis issue requests certification of a plaintiff class including substantially all persons who purchased a Memphis bond through April 9, 1990, either in the original $400 million Memphis bond underwriting, in which a broker/dealer subsidiary of the Corporation participated, or in the secondary market, wherein such subsidiary sold a total of approximately $120 million par value in Memphis bonds. The class claims in respect of the Memphis issue seek to impose joint and several liability upon, among others, numerous defendants who participated in the underwriting, including such subsidiary. In addition, a number of individual actions naming the Corporation's broker/dealer subsidiaries have been brought by secondary market purchasers. The class and individual plaintiffs predicate their claims upon Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder, the Investment Company Act, the -24- 25 Investment Advisors Act, common law fraud, negligent misrepresentation, gross and ordinary negligence, breach of fiduciary duty, the Tennessee Securities Act, and other laws. For relief, the various complaints seek a declaratory judgment that the Memphis bonds were void from their inception, rescission of all of plaintiffs' purchases, punitive damages, prejudgment interest, and other relief. While the actions originally included Investment Company Act, Investment Advisers Act, and racketeering (RICO) claims, most of these have been dismissed, and the current complaints do not assert any such claims against the UPC parties. On January 28, 1993, the California Supreme Court declined to review a lower court ruling to the effect that claims to ELIC assets by policyholders, annuitants, and holders of GICs are to be treated as equal in priority in the distribution of such assets. The Corporation's broker/dealer subsidiaries have joined in a common defense with other members of the syndicate which underwrote the bonds which are the subject of the litigation. On May 30, 1991, in an action originally filed by UPNB in the Circuit Court of Cook County, Illinois, Chancery Division, seeking to foreclose on a single parcel of mortgaged residential property, the defendant debtors filed a counterclaim against UPNB and the Corporation individually and on the purported behalf of a requested class which would have consisted essentially of all persons who had a mortgage loan serviced by UPNB at any time during the past 10 years. The counterclaim alleged that UPNB, like other participants in the mortgage loan industry, engaged in a regular practice of charging mortgage debtors greater amounts to escrow for estimated property taxes and insurance than is allowed by law and applicable loan agreements. The counterclaim sought recovery of all excess charges and/or interest thereon, and other relief. The class action aspects of this counterclaim have been dismissed, leaving only a setoff claim by the defendant debtors with respect to the foreclosure. On February 16, 1993, an action was filed in the Circuit Court of Choctaw County, Alabama as an individual action and as a purported class action against UPNB and UPC with theories of recovery and relief requested similar to the Illinois counterclaim. On or about July 10, 1991, UPNB was joined with nine other banks as defendants in a civil action in the Circuit Court of Shelby County, Tennessee. The suit as originally filed alleges that the banks unlawfully conspired to fix the charges for checks drawn on insufficient funds. The suit seeks compensatory and punitive damages of $25 million against each defendant and certification of a class of plaintiffs comprised of all depositors who have been charged the NSF fees. The suit was amended on or about July 12, 1991, August 2, 1991 and again on November 25, 1991 to add plaintiffs and to include claims of unfair and deceptive trade practices, breach of contract, tortious conduct, violation of provisions of the UCC, treble damages under the Tennessee Consumer Protection Act, and usury. The amendments also broadened the class -25- 26 and the claims to seek recovery for fees charged for deposited third-party checks which were returned uncollected. In March, 1992 the state court proceeding was dismissed; plaintiffs subsequently appealed the dismissal, and on February 23, 1993, the Tennessee Court of Appeals affirmed the dismissal of five of the six counts in the state court action but reversed the dismissal of the count alleging violation of the contractual duty of good faith and fair dealing, holding that the plaintiffs met bare minimum pleading requirements to permit that claim to go forward. During the third quarter of 1993, class certification was granted by the state court, with the plaintiff class apparently consisting of all persons in the United States who, in the six years prior to the filing of the complaint were charged the fees described above. However, on December 17, 1993, the defendants' motion for summary judgment was granted on the remaining breach of contract claim. Plaintiffs have appealed that ruling. Further, on May 22, 1992, substantially the same group of plaintiffs filed a civil action in the U.S. District Court for the Western District of Tennessee against UPNB and eight other banks, alleging violations of the Sherman Act, the federal anti-trust statute prohibiting the fixing of prices by competitors, as well as the Tennessee Consumer Protection Act. The suit further requests certification of a similarly broad class, seeks injunctive relief and damages for the class members in amounts, according to the suit, "which are presently undetermined but believed to be more than $100 million." The complaint also seeks treble damages and a jury trial. On March 19, 1993 the federal court granted defendants' motion to dismiss the Tennessee Consumer Protection Act claim, but permitted the Sherman Act claim to remain at that stage of the proceedings. On September 15, 1993 the defendants filed a motion for summary judgment seeking dismissal of the price fixing allegations as well, and on March 11, 1994, the court granted that motion. Plaintiffs have indicated they will appeal. Certain subsidiaries of the Corporation and UPNB were threatened in 1989 with a civil action by the FDIC for the estate of a closed savings association. If filed, the action would reportedly seek compensatory damages of at least $37 million, and other relief including an injunction against transferring or encumbering any assets until any judgments were paid, based upon allegations of wrongdoing in the sale of covered call options to the closed savings association. A tolling and forbearance agreement, entered into by all parties to the threatened action in 1989, continues in effect. The Corporation has furnished the FDIC with information assertedly demonstrating the lack of merit in the threatened action and believes that such action, if nevertheless filed, can be resolved without material loss. During 1993, agreements-in-principle and/or final settlements were reached with plaintiffs to resolve a significant number of previously reported legal claims, utilizing reserves previously -26- 27 established in prior periods or otherwise having no material effect upon the Corporation's financial position. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The information required by Item 5 is included in the Corporation's 1993 Annual Report to Shareholders on page 57 under the heading Table 14, "Selected Quarterly Data," which is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA The information required by Item 6 is included in the Corporation's 1993 Annual Report to Shareholders on page 35 under the heading "Selected Financial Data," and which is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by Item 7 is included in the Corporation's 1993 Annual Report to Shareholders on pages 36-58 under the heading "Management's Discussion and Analysis of Results of Operations and Financial Condition," and which is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by Item 8 is included in the Corporation's 1993 Annual Report to Shareholders on pages 4-34 and on page 57 under the heading Table 14, "Selected Quarterly Data," and which is incorporated herein by reference. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by Item 10 as to the directors of the Corporation is included on pages 3-5 and 15 of the definitive proxy statement of the Corporation for the annual meeting of shareholders to be held on April 28, 1994 (Proxy Statement) and which is incorporated herein by reference. The information concerning "Executive Officers of the Registrant" is included in Part I (Item 1a) of this Form 10-K in accordance with Instruction 3 to paragraph (b) of Item 401 of Regulation S-K. -27- 28 ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 as to compensation of directors and executive officers is included on pages 5 and 6 and 7-14 of the Proxy Statement which is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by Item 12 as to certain beneficial owners and management is included on pages 2-5 of the Proxy Statement which is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by Item 13 as to transactions and relationships with certain directors and executive officers of the Corporation and their associates is included on page 13 of the Proxy Statement which is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) (1) The following audited consolidated financial statements of Union Planters Corporation and Subsidiaries, included in the Corporation's 1993 Annual Report to Shareholders, are incorporated herein by reference in Item 8:
Page in Annual Report ------------- Consolidated Balance Sheet - December 31, 1993 and 1992 4 Consolidated Statement of Earnings - Years ended December 31, 1993, 1992, and 1991 5 Consolidated Statement of Changes in Shareholders' Equity - Years ended December 31, 1993, 1992, and 1991 6 Consolidated Statement of Cash Flows - Years ended December 31, 1993, 1992, and 1991 7 Notes to Consolidated Financial Statements 8 Management's Responsibility for Financial Reporting 34
-28- 29
Page in Annual Report ------------- Report of Independent Accountants 34
(a) (2) All schedules have been omitted since the required information is either not applicable, not deemed material, or is included in the respective consolidated financial statements or in the notes thereto. (a) (3) Exhibits: The exhibits listed on the Exhibit Index on pages i, ii, and iii, following page 30 of this Form 10-K are filed herewith or are incorporated herein by reference. (b) Reports on Form 8-K:
Date of Current Report Subject ---------------------- --------------------------- October 14, 1993 Financial Statements of two entities being acquired October 21, 1993 Third Quarter Press Release announcing operating results
-29- 30 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. UNION PLANTERS CORPORATION (Registrant) By: /s/ Benjamin W. Rawlins, Jr. --------------------------------------------------- Benjamin W. Rawlins, Jr., Chairman of the Board and Chief Executive Officer Date: March 23, 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 Registrant and in the capacities indicated on the 23rd of March, 1994 /s/Benjamin W. Rawlins, Jr. /s/John W. Parker - ---------------------------------------------- -------------------------------------------------- Benjamin W. Rawlins, Jr. John W. Parker Chairman of the Board, Chief Executive Officer, Executive Vice President and Chief Financial and Director Officer /s/J. Armistead Smith /s/M. Kirk Walters - ---------------------------------------------- -------------------------------------------------- J. Armistead Smith M. Kirk Walters Vice Chairman and Director Senior Vice President, Treasurer, and Chief Accounting Officer /s/Jackson W. Moore /s/R. Brad Martin - ---------------------------------------------- -------------------------------------------------- Jackson W. Moore R. Brad Martin President and Director Director /s/Albert M. Austin - ---------------------------------------------- -------------------------------------------------- Albert M. Austin Stanley D. Overton Director Director /s/Marvin E. Bruce - ---------------------------------------------- -------------------------------------------------- Marvin E. Bruce C. Penn Owen, Jr. Director Director /s/Dr. V. Lane Rawlins - ---------------------------------------------- -------------------------------------------------- George W. Bryan Dr. V. Lane Rawlins Director Director /s/Robert B. Colbert, Jr. /s/Donald F. Schuppe - ---------------------------------------------- -------------------------------------------------- Robert B. Colbert, Jr. Donald F. Schuppe Director Director /s/Leslie M. Stratton, III - ---------------------------------------------- -------------------------------------------------- Hanford F. Farrell, Jr. Leslie M. Stratton, III Director Director /s/Parnell S. Lewis, Jr. - ---------------------------------------------- -------------------------------------------------- Parnell S. Lewis, Jr. Mike P. Sturdivant Director Director /s/C. J. Lowrance, III - ---------------------------------------------- -------------------------------------------------- C. J. Lowrance, III Richard A. Trippeer, Jr. Director Director
-30- 31 EXHIBIT INDEX 3 (a) Restated Charter of Incorporation, as amended December 17, 1992, of Union Planters Corporation (Filed herewith) 3 (b) Amended and Restated By-Laws, as amended January 20, 1994, of Union Planters Corporation (Filed herewith) 2 Amendment and Plan of Reorganization, along with the Plan of Merger annexed thereto as Exhibit A, dated as of January 27, 1994 between Union Planters Corporation and BFC Acquisition Company, Inc. and BANCFIRST Corporation and BANKFIRST, a federal savings bank (incorporated by reference to Exhibit 2 to Union Planters Corporation Current Report on Form 8-K dated February 8, 1994 filed on February 18, 1994). 4 (a) Rights Agreement, dated January 19, 1989 between Union Planters Corporation and Union Planters National Bank, including Form of Rights Certificate (Exhibit A), and a Form Summary of Rights (Exhibit B) (Incorporated by reference to Exhibit 1 to Union Planters Corporation's Current Report dated as of January 19, 1989 on Form 8-K filed February 1, 1989 Commission File No. 0-6919) 4 (b) Indenture dated April 1, 1989 between Union Planters Corporation and LaSalle National Bank for $34,500,000 of 10 1/8% Subordinated Capital Debentures due 1999 * 4 (c) Indenture dated October 1, 1992 between Union Planters Corporation and The First National Bank of Chicago (Trustee) for $40,250,000 of 8 1/2% Subordinated Notes due 2002 *** 4 (d) Subordinated Indenture dated October 15, 1993 between Union Planters Corporation and The First National Bank of Chicago for $75,000,000 of 6.25% Subordinated Notes due 2003 **** 10 (a) Employment Agreement between Union Planters Corporation and Benjamin W. Rawlins, Jr. (incorporated by reference to Exhibit 10(a) to the Annual Report on Form 10-K dated December 31, 1992) 10 (b) Employment Agreement between Union Planters Corporation and J. Armistead Smith (incorporated by reference to Exhibit 10(b) to the Annual Report on Form 10-K dated December 31, 1992) -i- 32 10 (c) Employment Agreement between Union Planters Corporation and Jackson W. Moore (incorporated by reference to Exhibit 10(c) to the Annual Report on Form 10-K dated December 31, 1992) 10 (d) Deferred Compensation Agreements between Union Planters Corporation and certain highly compensated officers (incorporated by reference to Exhibit 10 (g) to the Annual Report on Form 10-K dated December 31, 1989) 10 (e) Union Planters Corporation 1983 Stock Incentive Plan ** 10 (f) (1) Amended Union Planters Corporation 1983 Stock Incentive Plan ***** 10 (g) Union Planters Corporation 1992 Stock Incentive Plan (incorporated by reference to Exhibit 10(g) to the Annual Report on Form 10-K dated December 31, 1992) 10 (h) Deferred Compensation Agreements between Union Planters Corporation and Union Planters National Bank and certain outside directors (Incorporated by reference to Exhibit 10(m) to the Annual Report on Form 10-K dated December 31, 1989) 10 (i) Executive Deferred Compensation Agreement between Union Planters Corporation and certain highly compensated officers (Incorporated by reference to Exhibit 10 (n) to the Annual Report on Form 10-K dated December 31, 1989) 10 (j) "Standard Form of Agreement Between Owner and Contractor" between Union Planters National Bank and Martin, Cole, Dando, and Robertson, Inc. (incorporated by reference to Exhibit 10(j) to the Annual Report on Form 10-K dated December 31, 1992) 10 (k) "Standard Form of Agreement Between Owner and Architect" between Union Planters National Bank and Hnedak Bobo Group, P.C. (incorporated by reference to Exhibit 10(k) to the Annual Report on Form 10-K dated December 31, 1992) 11 Computation of Per Share Earnings (Filed herewith) 13 Annual Report to Security Holders (Filed herewith) 21 Subsidiaries of the Registrant (Filed herewith) 23 Consent of Price Waterhouse (Filed herewith) ii 33 * Incorporated by reference to exhibit number 4 filed as part of Registration Statement No. 33-27784 ** Incorporated by reference to exhibit 10 (1) filed as part of Registration Statement 2-97661 *** Incorporated by reference to exhibit number 4 filed as part of Registration Statement No. 33-52434 **** Incorporated by reference to Exhibit Number 4(d) filed as part of Registration Statement No. 33-50655 ***** Incorporated by reference to Exhibit Number 4 filed as part of Registration Statement No. 33-23306 -iii- EX-3.(A) 2 UNION PLANTERS RESTATED CHARTER OF INC. 1 RESTATED CHARTER OF UNION PLANTERS CORPORATION __________________________ FIRST: CORPORATE NAME: The name of the Corporation is: * * * UNION PLANTERS CORPORATION * * * (hereinafter sometimes referred to as the "Corporation"). SECOND: DURATION: The duration of the Corporation is perpetual. THIRD: PRINCIPAL OFFICE: The address of the principal office of the Corporation in the State of Tennessee shall be 7130 Goodlett Farms Parkway, in the City of Cordova, County of Shelby. The registered agent is George V. Kinney, Cashier, 7130 Goodlett Farms Parkway, Cordova, Shelby County, Tennessee 38018. FOURTH: TYPE OF CORPORATION: The corporation is for profit. FIFTH: CORPORATE PURPOSES: Subject to any limitations which may be imposed upon its activities by applicable law, the Corporation is formed to engage in any lawful act or activity for which corporations may be organized under the Tennessee Business Corporation Act. Specifically, but not by way of limitation, the Corporation is formed for the following purposes: (a) To acquire by purchase; by subscription; by exchange; in exchange for its Common Stock, Preferred Stock, bonds, debentures or other obligations; or to acquire in any other manner; or to organize de novo; and to take, receive, hold, own, sell, assign, transfer, exchange, pledge, hypothecate, dispose of or otherwise deal with any interest in any business whether or not represented by shares of stock, shares, bonds, debentures, notes, participation certificates, warrants, rights, options, and without limitation any securities or instruments evidencing rights or options to receive, purchase or subscribe for any interest in any business (wherever located or organized) or any securities, whether issued by or created by any person, firm, association, corporation, national banking association, state-chartered bank, trust company, savings bank, business trust, syndicate, limited partnership, organization, or by any other entity; and to possess and exercise in respect thereof any and all of the rights, powers and privileges of owners or holders who are natural persons including, without limitation, the exercise of any voting rights pertaining thereto; (b) To purchase or otherwise acquire any property, tangible or intangible, whether real, personal or mixed and wherever located and to receive, hold, manage, use, dispose of and otherwise exercise all rights, powers and privileges of ownership thereof; (c) To promote, finance, advise, counsel and assist in any way, any person or any business entity in which the Corporation shall have any interest of any kind; (d) To do all things necessary or desirable to enhance the value of or to protect or preserve the interest of the Corporation in any business entity, securities or other property of any type which it may own or in which it may have any interest of any kind; and (e) To render assistance, counsel and advice to any person or entity and to serve or represent the same in any capacity whatsoever, whether or not the Corporation shall have any ownership interest in such person or entity. SIXTH: CAPITAL STOCK: The total number of shares of all classes of stock to which the Corporation shall have authority to issue is sixty million (60,000,000) shares, which shall be divided into two classes as follows: ten million (10,000,000) shares of Preferred Stock without par value (Preferred Stock) and fifty million (50,000,000) shares of Common Stock of the par value of $5.00 per share (Common Stock). The designations, voting powers, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions of the above classes of stock and other general provisions relating thereto shall be as follows: PREFERRED STOCK (a) Shares of Preferred Stock may be issued in one or more series at such time or times and for such consideration or considerations as the Board of Directors may determine. All shares of any 2 one series shall be of equal rank and identical in all respects except the dates from which dividends accrue or accumulate with respect thereto may vary. (b) The Board of Directors is expressly authorized at any time, and from time to time, to provide for the issuance of shares of Preferred Stock in one or more series, with such voting powers, full or limited, but not to exceed one vote per share, or without voting powers and with such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions providing for the issuance thereof adopted by the Board of Directors, and as are not stated and expressed in this Charter, or any Amendment thereto, including, (but without limiting the generality of the foregoing) the following: (1) The distinctive designation and number of shares comprising such series, which number may (except where otherwise provided by the Board of Directors in creating such series) be increased or decreased (but not below the number of shares then outstanding) from time to time by action of the Board of Directors; (2) The dividend rate or rates on the shares of such series and the relation which such dividends shall bear to the dividends payable on any other class or classes of capital stock; the terms and conditions upon which and the periods in respect of which dividends shall be payable; whether and upon what conditions such dividends shall be cumulative, non-cumulative or partially cumulative and, if cumulative or partially cumulative, the date or dates from which dividends shall accumulate; (3) Whether the shares of such series shall be callable or redeemable, the limitations and restrictions with respect to such call or redemption, the time or times when, the price or prices at which, and the manner in which such shares shall be callable or redeemable, including the manner of selecting shares of such series for call or redemption if less than all shares are to be called or redeemed; (4) The amount payable upon shares of such series upon the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation; (5) Whether the shares of such series shall be subject to the operation of a purchase, retirement or sinking fund, and, if so, whether and upon what conditions such purchase, retirement sinking fund shall be cumulative, partially cumulative or non-cumulative, the extent to which and the manner in which such fund shall be applied to the purchase, call or redemption of the shares or such series for retirement or to other corporate purposes and the terms and provisions relative to the operation thereof; (6) Whether the shares of such series shall be convertible into or exchangeable for shares of any other class or classes or of any other series of any class or classes of capital stock of the Corporation, and, if so convertible or exchangeable, the price or prices or the rate or rates of conversion or exchange, and the method, if any, of adjusting the same, and any other terms and conditions of such conversion or exchange, provided, however, that no shares of any such series shall be convertible into shares of any other class or series having prior or superior rights and preferences as to dividends or distributions of assets upon liquidation, and provided further that shares without par value shall not be convertible into shares with par value unless that part of the stated capital of the Corporation represented by such shares without par value is, at the time of conversion, at least equal to the aggregate par value of the shares into which the shares without par value are to be converted; (7) The voting powers, full and/or limited, if any, of the shares of such series; and whether and under what conditions the shares of such series (alone or together with the shares of one or more other series having similar provisions) shall be entitled to vote separately as a single class, for the election of one or more additional directors of the Corporation in case of dividend arrearage or other specified events, or upon other specified matters; (8) Whether the issuance of any additional shares of such series, or of any shares of any other series, shall be subject to restrictions as to issuance, or as to the powers, preferences or rights of any such other series; and (9) Any other preferences, privileges and powers, and relative, participating, optional or other special rights, and qualifications, limitations or restrictions of such series, as the Board of Directors may deem advisable and as shall be consistent with the provisions of the laws of the State of Tennessee and of this Charter. (c) No dividends shall be paid or declared or set apart on any particular series of Preferred Stock in respect of any period unless accumulated dividends shall be or shall have been paid, or declared and set apart for payment, pro rata on all shares of Preferred Stock at the time outstanding of each other series, so that the amount of dividends declared on such particular series shall bear the same ratio to the amount declared on each such other series as the dividend rate of such particular series shall bear to the dividend rate of such other series. (d) Unless and except to the extent otherwise required by law or provided in the resolution or resolutions of the Board of Directors creating any series of Preferred Stock pursuant to this ARTICLE SIXTH, the holders of the Preferred Stock shall have no voting power with respect to any matter whatsoever. Page 2 of Union Planters Corporation Charter 3 (e) Shares of Preferred Stock called, redeemed, converted, exchanged, purchased, retired or surrendered to the Corporation, or which have been issued and reacquired in any manner, shall, upon compliance with any applicable provisions of the Tennessee Business Corporation Act, have the status of authorized and unissued shares of Preferred Stock and may be reissued by the Board of Directors as part of the series of which they were originally a part or may be reclassified into and reissued as part of a new series or as a part of any other series, all subject to the protective conditions or restrictions of any outstanding series of Preferred Stock. SERIES A PREFERRED STOCK (f) Pursuant to the authority vested in the Board of Directors in accordance with the provisions of this ARTICLE SIXTH of the Charter, the Board of Directors does hereby create, authorize and provide for the issuance of Series A Preferred Stock out of the class of 10,000,000 shares of preferred stock, no par value (the "Preferred Stock"), having the voting powers, designation, relative, participating, optional and other special rights, preferences, and qualifications, limitations and restrictions thereof that are set forth as follows: (1) Designation and Amount. The shares of such series shall be designated as Series A Preferred Stock ("Series A Preferred Stock") and the number of shares constituting such series shall be 250,000. Such number of shares may be adjusted by appropriate action of the Board of Directors. (2) Dividends and Distributions. (a) Subject to the prior and superior rights of the holders of any shares of any other series of Preferred Stock or any other shares of preferred stock of the Corporation ranking prior and superior to the shares of Series A Preferred Stock with respect to dividends, each holder of one one-hundredth (1/100) of a share (a "Unit") of Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for that purpose, (i) dividends payable in cash on the 1st day of January, April, July and October in each year (each such date being a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of such Unit of Series A Preferred Stock, in an amount per Unit (rounded to the nearest cent) equal to the greater of (x) $.01 or (y) subject to the provision for adjustment hereinafter set forth, the aggregate per share amount of all cash dividends declared on shares of the common stock of the Corporation, par value $5.00 per share, (the "Common Stock") since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of a Unit of Series A Preferred Stock, and (ii) subject to the provision for adjustment hereinafter set forth, quarterly distributions (payable in kind) on each Quarterly Dividend Payment Date in an amount per Unit equal to the aggregate per share amount of all non-cash dividends or other distributions (other than a dividend payable in shares of Common Stock or a subdivision of the outstanding share of Common Stock, by reclassification or otherwise) declared on shares of Common Stock since the immediately preceding Quarterly Dividend Payment Date, or with respect to the first Quarterly Dividend Payment Date, since the first issuance of a Unit of Series A Preferred Stock. In the event that the Corporation shall at any time after January 19, 1989 (the "Rights Declaration Date") (i) declare or pay any dividend on outstanding shares of Common Stock payable in shares of Common Stock, or (ii) subdivide outstanding shares of Common Stock or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case the amount to which the holder of a Unit of Series A Preferred Stock was entitled immediately prior to such event pursuant to the preceding sentence shall be adjusted by multiplying such amount of a fraction the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event. (b) The Corporation shall declare a dividend or distribution on Units of Series A Preferred Stock as provided in paragraph (a) above immediately after it declares a dividend or distribution on the shares of Common Stock (other than a dividend payable in shares of Common Stock); provided, however that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend payment Date, a dividend of $.01 per Unit on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (c) Dividends shall begin to accrue and shall be cumulative on each outstanding Unit of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issuance of such Unit of Series A Preferred Stock, unless the date of issuance of such Unit is prior to the record date for the First Quarterly Dividend Payment Date, in which case, dividends on such Unit shall begin to accrue from the date of issuance of such Unit, or unless the date of issuance is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of Units of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on Units of Series A Preferred Stock in an amount less than the aggregate amount of all such dividends at the time accrued and payable on such Units shall be allocated pro rata on a unit-by-unit basis amount all Units of Series A Preferred Stock at the time outstanding. The Board of Directors may fix a record date for the determination of holders of Units of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Page 3 of Union Planters Corporation Charter 4 (3) Voting Rights. The holders of Units of Series A Preferred Stock shall have the following voting rights. (a) Subject to the provision for adjustment hereinafter set forth, each Unit of Series A Preferred Stock shall entitle the holder thereof to one vote on all matters submitted to a vote of the shareholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, (ii) subdivide outstanding shares of Common Stock or (iii) combine the outstanding shares of Common Stock into a smaller number of shares, then in each such case the number of votes per Unit to which holders of Units of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event. (b) Except as otherwise provided herein or by law, the holders of Units of Series A Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. (c) Except as set forth herein or required by law, holders of Units of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of shares of Common Stock as set forth herein) for the taking of any corporate action. (4) Certain Restrictions. (a) Whenever quarterly dividends or other dividends or distributions payable on Units of Series A Preferred Stock as provided in paragraph 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on outstanding Units of Series A Preferred Stock shall have been paid (or set aside for payment) in full, the Corporation shall not: (i) declare or pay dividends on, make any other distributions or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior to the Series A Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity as to dividends with the Series A Preferred Stock, except for dividends paid ratably on Units of Series A Preferred Stock and shares of all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of such Units and all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, provided, however, that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock ranking junior (both as to dividends and upon liquidation, dissolution or winding up) to the Series A Preferred Stock; or (iv) purchase or otherwise acquire for consideration any Units of Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such Units. (b) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (a) of this paragraph 4, purchase or otherwise acquire such shares at such time and in such manner. (5) Reacquired Shares. Any Units of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such Units shall, upon their cancellation, become authorized but unissued Units of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. (6) Liquidation, Dissolution or Winding Up. (a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, no distribution shall be made (i) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless the holders of Units of Series A Preferred Stock shall have received, subject to adjustment as hereinafter provided in paragraph (b), the greater of either (y) $90.00 per Unit plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not earned or declared, to the date of such payment, or (z) the amount equal to the aggregate per share amount to be distributed to holders of shares of Common Stock, or (ii) to the holders of shares of stock ranking on a parity upon liquidation, dissolution or winding up with the Series A Preferred Stock, unless simultaneously therewith distributions are made ratably on Units of Series A Preferred Stock and all other shares of such parity stock in proportion to the total amounts to which the holders Page 4 of Union Planters Corporation Charter 5 of Units of Series A Preferred Stock are entitled under Clause (i)(y) of this sentence and to which the holders of such shares of such parity stock are entitled, in each case upon such liquidation dissolution or winding up. (b) in the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, or (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding shares of Common Stock into a smaller number of shares, then in each such case the aggregate amount to which holders of Units of Series A Preferred Stock were entitled immediately prior to such event pursuant to clause (i)(z) of paragraph (1) of this paragraph 6 shall be adjusted by multiplying such amount by a fraction the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event. (7) Share Exchange, Merger, Etc. In case the Corporation shall enter into any share exchange, merger, combination or other transaction in which the shares of Common Stock are exchanged for or converted into other stock or securities, cash and/or any other property, then in any such case Units of Series A Preferred Stock shall at the same time be similarly exchanged for or converted into an amount per Unit (subject to the provision for adjustment hereinafter set forth) equal to the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is converted or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on outstanding shares of Common Stock payable in shares of Common Stock, or (ii) subdivide outstanding shares of Common Stock, or (iii) combine outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the immediately preceding sentence with respect to the exchange or conversion of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which shall be the number of shares of Common Stock that are outstanding immediately after such event and the denominator of which shall be the number of shares of Common Stock that were outstanding immediately prior to such event. (8) Redemption. The Units of Series A Preferred Stock shall not be redeemable at the option of the Corporation or any holder thereof. Notwithstanding the foregoing sentence of this Section, the Corporation may acquire Units of Series A Preferred Stock in any other manner permitted by law and the Charter or Bylaws of the Corporation. (9) Ranking. The Units of Series A Preferred Stock shall rank junior to all other series of the Preferred Stock and to any other class of preferred stock that hereafter may be issued by the Corporation as to the payment of dividends and the distribution of assets, unless the terms of any such series or class shall provide otherwise. (10) Amendment. The Charter, including without limitation the provisions hereof, shall not hereafter be amended, either directly or indirectly, or through merger or share exchange with another corporation, in any manner that would alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect the holders thereof adversely without the affirmative vote of the holders of a majority or more of the outstanding Units of Series A Preferred Stock, voting separately as a class. (11) Fractional Shares. The Series A Preferred Stock may be issued in Units or other fractions of a share, which Units or fractions shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Preferred Stock. SERIES B PREFERRED STOCK (g) Pursuant to the authority vested in the Board of Directors in accordance with the provisions of this Article VI of the Charter, the Board of Directors of Union Planters Corporation (the "Corporation") does hereby create, authorize and provide for the issuance of a new series of preferred stock out of the authorized class of 10,000,000 shares of preferred stock, no par value (the "Preferred Stock"), having the voting powers, designations, relative participating, optional and other special rights, preferences, qualifications, limitations and restrictions thereof that are set forth as follows: 1. Designation and Amount. The shares of such series shall be designated as Series B $8.00 Nonredeemable Cumulative Convertible Preferred Stock (the "Series B Preferred Stock") and the number of shares constituting such series shall be 44,000. Such number of shares may be adjusted by appropriate action of this Board of Directors. 2. Dividends and Distributions. (a) Subject to the prior and superior rights of the holders of any shares of any other series of Preferred Stock of the Corporation ranking prior and superior to the shares of Series B Preferred Stock with respect to dividends, the holders of the Series B Preferred Stock, in preference to the holders of the $5.00 par value common stock of the Corporation (the "UPC Common Stock"), and any other capital stock of the Corporation ("Capital Stock") ranking junior to the Series B Preferred Stock as to the payment of dividends, shall be entitled to receive as and if declared by the Board of Directors out of funds legally available for that purpose, cumulative cash dividends at, but not exceeding, $8.00 per share per annum and no more. Page 5 of Union Planters Corporation Charter 6 (b) Dividends upon shares of Series B Preferred Stock shall be cumulative so that if in respect of any past quarterly dividend period or periods, full dividends accrued on the outstanding shares of Series B Preferred Stock shall not have been paid, the aggregate deficiency shall be fully paid or declared or set aside for payment before (i) any dividend shall be declared and paid or set aside for payment on UPC Common Stock, or any other Capital Stock ranking junior to the Series B Preferred Stock as to the payment of dividends, (ii) any other distribution of assets shall be made with respect to UPC Common Stock or any other Capital Stock ranking junior to the Series B Preferred Stock as to the payment of dividends, and (iii) the redemption or purchase of any shares of Series B Preferred Stock, UPC Common Stock, or any other Capital Stock ranking on a parity with or junior to the Series B Preferred Stock as to the payment of dividends by the Corporation. (c) Cash dividends on the Series B Preferred Stock shall commence to accrue and shall be cumulative from the Effective Date of the Merger between Union Planters - Steiner Acquisition Company and Steiner Holdings pursuant to that Merger Agreement dated June 9, 1989 between UPC, Subsidiary, Steiner Bank, Arnold Steiner and Mary Steiner (the "Merger Agreement"); and, otherwise, from the Quarterly Dividend Payment Date on which cash dividends were paid on Series B Preferred Stock (in respect of a dividend on Series B Preferred Stock) next preceding the date of issuance of such shares of Series B Preferred Stock. (d) Cash dividends on shares of Series B Preferred Stock shall be payable quarterly on the third Friday of February, May, August and November (a "Quarterly Dividend Payment Date") and will have the same record date for the payment of dividends as the record date for payment of dividends on UPC Common Stock, and, if there is no record date for the payment of dividends on UPC Common Stock, then the record date for the payment of dividends of the Series B Preferred Stock shall be that date which is 15 days prior to a given Quarterly Dividend Payment Date. 3. No Preemptive Rights. No holders of Series B Preferred Stock shall be entitled, as of right, to purchase or subscribe for any part of the unissued Series B Preferred Stock, UPC Common Stock, or Capital Stock, or to purchase or subscribe for any bonds, certificates of indebtedness, debentures, or other securities convertible into or carrying options, warrants or rights to purchase stock or other securities of the Corporation, or to purchase or subscribe for any stock or any securities of the Corporation purchased by the Corporation or by its nominee or nominees, or to have any other preemptive rights now or hereafter defined by the laws of the State of Tennessee; provided, however, that this section shall not be deemed to prohibit the exercise by the holders of UPC Series B Preferred Stock of Rights issued pursuant to the UPC Share Purchase Rights Agreement. 4. Liquidation. (a) In the event of the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of Series B Preferred Stock shall be entitled to receive, after payment or provision for payment of all debts, but before any distribution of assets may be made to the holders of UPC Common Stock, or any other Capital Stock of the Corporation ranking junior to the Series B Preferred Stock as to liquidation, out of assets of the Corporation available for distributions to its stockholders, $100 per share, plus, in each case, accrued and unpaid dividends thereon to the date of payment thereof. After such payment has been made in full to the holders of the outstanding shares of Series B Preferred Stock (or funds necessary for the payment have been set aside in trust for the account of such holders so as to be and continue to be available therefor), the holders of Series B Preferred Stock shall be entitled to no further distribution, and the remaining assets of the Corporation shall be divided and distributed among the holders of UPC Common Stock (subject to any prior rights of any holders of any other Capital Stock of the Corporation entitled to participate with the UPC Common Stock as to the distribution of assets) then outstanding according to their respective shares. If on liquidation, dissolution or winding up, the net assets of the Corporation available for distribution among the holders of Series B Preferred Stock are insufficient to permit full payment to them, the entire net assets of the Corporation so available for distribution shall be distributed ratably among the holders of Series B Preferred Stock and the holders of any other Capital Stock ranking on a parity with the Series B Preferred Stock as to liquidation and distribution of assets. Nothing herein contained shall be construed to prohibit the retirement of Series B Preferred Stock by purchase, and neither the purchase of Series B Preferred Stock, the consolidation or merger of the Corporation, nor the sale or transfer of all or substantially all of the assets of the Corporation as an entirety shall be deemed a "liquidation, dissolution or winding up of the Corporation" within the meaning of this paragraph 4. 5. Right to Vote. Except to the extent that the power or right to vote is granted or required pursuant to the Tennessee Business Corporation Act, as amended from time to time, the Series B Preferred Stock shall have no power or right to vote. 6. Conversion of Series B Preferred Stock. The holders of shares of Series B Preferred Stock shall have the right, at their option, any time after that date which is five (5) years after the Effective Date of the Merger, to convert such shares into shares of UPC Common Stock on the following terms and conditions: (a) Except as provided in subsection (c) of this Section 6, each share of Series B Preferred Stock shall be convertible into that number of shares of UPC Common Stock determined by dividing (i) the product of the multiplication of the number of Series B Preferred Shares issued in the Merger by $100, by (ii) $12.95, then dividing that number by the number of Series B Preferred Shares issued in the Merger (the "Conversion Ratio"). Page 6 of Union Planters Corporation Charter 7 (b) Except as provided in subsection (c) of this Section 6, the estate of Arnold Steiner and the trustees of the trusts which receive assets of the Estate of Bernard S. Steiner, Jr. pursuant to the provisions of the last will and testament of Bernard S. Steiner, Jr., and which shall have received Series B Preferred Stock pursuant to the Merger and such last will and testament, shall have the right to convert the shares of Series B Preferred Stock they own in accordance with the Conversion Ratio within five (5) years from the Effective Date of the Merger, (i) as to the estate of Arnold Steiner, upon the death of Arnold Steiner, and as to each such trust, upon the death(s) of the oldest permissible income beneficiary of that particular trust; (ii) should there be a change in control (as defined in Section 2(a) of the Bank Holding Company Act of 1956, as amended, 12 U.S.C. Section 1841(a) of UPC; and (iii) should UPC issue any other preferred stock having priority as to the payment of dividends or as to liquidation preference over that of the Series B Preferred Stock. (c) If any Series B Preferred Stock shall be converted into UPC Common Stock at a time when the UPC Common Stock into which such Series B Preferred Stock is convertible has attached or attributable thereto Rights issued pursuant to the UPC Share Purchase Rights Agreement, the surrender of such Series B Preferred Stock shall effectively cancel all Rights attached or attributable to the share(s) of Series B Preferred Stock so converted. (d) If at any time, or from time to time, the Corporation shall (i) declare and pay, on or in respect of, UPC Common Stock any dividend payable in shares of UPC Common Stock, (ii) subdivide the outstanding shares of UPC Common Stock into a greater number of shares, or contract the number of outstanding shares of Series B Preferred Stock by combining such shares into a smaller number of shares, or (iii) contract the number of outstanding shares of UPC Common Stock by combining such shares into a smaller number of shares, or subdivide the outstanding shares of Series B Preferred Stock into a greater number of shares of Series B Preferred Stock, the Conversion Ratio shall be proportionately adjusted as of such time. (e) If the Corporation consolidates with or merges into any corporation or reclassifies outstanding shares of UPC Common Stock (other than by way of subdivision or contraction of such shares) each share of Series B Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property of the Corporation, or of the entity resulting from such consolidation or merger, to which a holder of the number of shares of UPC Common Stock deliverable upon conversion of such share of Series B Preferred Stock would have been entitled upon such consolidation, merger or reclassification, had the holder of such share of Series B Preferred Stock exercised his right of conversion and had such shares been issued and outstanding and had such holder been the holder of record of such UPC Common Stock at the time of such consolidation, merger or reclassification; and the Corporation shall make lawful provision therefor as a part of such consolidation, merger or reclassification. (f) Whenever the Conversion Ratio is required to be adjusted, as herein provided, the Corporation shall promptly file with the transfer agent for the UPC Common Stock and simultaneously provide to each holder of record of Series B Preferred Stock a statement signed by the President or a Vice President or the Secretary or the Treasurer setting forth the adjusted Conversion Ratio, determined as so provided. Such statement shall set forth in reasonable detail such facts as may be necessary to show the reason for and the manner of computing such adjustment. (g) On presentation and surrender to the Corporation at any office or agency maintained for the transfer of Series B Preferred Stock or the certificates of Series B Preferred Stock so to be converted, duly endorsed for transfer, the holder of such Series B Preferred Stock shall be entitled, subject to the limitations herein contained, to receive in exchange therefor a certificate or certificates for fully paid and nonassessable shares, and cash for fractional shares of UPC Common Stock or other securities pursuant to subsection (e) above, on the basis aforesaid. The Series B Preferred Stock shall be deemed to have been converted and the person converting the same to have become the holder of record of UPC Common Stock, for the purpose of receiving dividends and for all other purposes whatever as of the date when the certificate or certificates for such Series B Preferred Stock are surrendered to the Corporation as aforesaid. The Corporation shall not be required to make any such conversion, and no surrender of the Series B Preferred Stock shall be effective for such purposes, while the books for the transfer of either class of stock are closed for any purpose, but the surrender of such shares of Series B Preferred Stock for conversion during any period while such books are closed shall become effective for all purposes of conversion immediately upon the reopening of such books, as if the conversion had been made on the date such shares of Series B Preferred Stock were surrendered. (h) The Corporation shall pay any and all taxes which may be imposed upon it with respect to the issuance and delivery of UPC Common Stock upon the conversion of the Series B Preferred Stock as herein provided. The Corporation shall not be required in any event to pay any transfer or other taxes by reason of the issuance of such UPC Common Stock in names other than those in which the Series B Preferred Stock surrendered for conversion may stand, and no such conversion or issuance of UPC Common Stock shall be made unless and until the person requesting such issuance has paid to the Corporation the amount of any such tax, or has established to the satisfaction of the Corporation and its transfer agent, if any, that such tax has been paid or is not required. Upon any conversion of Series B Preferred Stock as herein provided, no adjustment or allowance shall be made for dividends on the Series B Preferred Stock so converted, and all rights to dividends, if any, shall cease and be deemed satisfied; however, except as provided in the next sentence hereof, nothing in this section shall be deemed to relieve the Corporation from its obligation to pay any dividends which shall have been declared and shall be payable to holders of Series B Preferred Stock of record Page 7 of Union Planters Corporation Charter 8 as of a date prior to such conversion even though the payment date for such dividend is subsequent to the date of conversion. 7. Reservation of UPC Common Stock. The Corporation shall, so long as any of the Series B Preferred Stock is outstanding, reserve and keep available out of its authorized and unissued UPC Common Stock, solely for the purpose of effecting the conversion of the Series B Preferred Stock, such number of shares of UPC Common Stock as shall, from time to time, be sufficient to effect the conversion of all shares of the Series B Preferred Stock then outstanding. The Corporation shall, from time to time, increase its authorized UPC Common Stock and take such other actions as may be necessary to permit the issuance from time to time of the shares of the UPC Common Stock, as fully paid and nonassessable shares, upon the conversion of the Series B Preferred Stock as herein provided. 8. Definitions. For purposes hereof: (a) The term "outstanding", when used in reference to shares of stock, shall mean issued shares, excluding shares held by the Corporation or a subsidiary thereof, and shares called for redemption, funds for the redemption of which shall have been set aside by the Corporation or deposited in trust; (b) The amount of dividends "accrued" on any share of Series B Preferred Stock as of any quarterly dividend date shall be deemed to be the amount of any unpaid dividends accumulated thereon to and including such quarterly dividend date, whether or not earned or declared, and the amount of dividends "accrued" on any shares of Series B Preferred Stock as at any date other than a quarterly dividend date shall be deemed to be (i) the amount of any unpaid dividends accumulated thereon to and including the last preceding quarterly dividend date, whether or not earned or declared, plus (ii) an amount calculated on the basis of the annual dividend rate fixed for the shares of Series B Preferred Stock (8%) for the period after such last preceding quarterly dividend date to and including the date as of which the calculation is made, based on a 360-day year or 12 consecutive 30-day months. 9. Redemption. The shares of Series B Preferred Stock shall not be redeemable at the option of the Corporation or any holder thereof. Notwithstanding the foregoing sentence of this Section, the Corporation may acquire Series B Preferred Stock in any other manner permitted by law and its Charter or Bylaws. 10. Ranking. The Series B Preferred Stock shall rank superior to that of the Corporation's Series A Preferred Stock as well as to all other series of the Corporation's preferred stock, unless the designation of rights and preferences for any other series of the Corporation's preferred stock expressly provides otherwise. 11. Amendment. The Charter, including without limitations the provisions hereof, shall not hereafter be amended, either directly or indirectly, or through merger or share exchange with another corporation, in any manner that would alter or change the powers, preferences or special rights of the Series B Preferred Stock so as to affect the holders thereof adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series B Preferred Stock, voting separately as a class; provided, however, that this paragraph shall have no affect on the ability of the Corporation to amend the Rights Agreement or redeem the UPC Preferred Share Purchase Rights in accordance therewith. 12. Fractional Shares. The Series B Preferred Shares may be issued in units or other fractions of a share, which units or fractions shall entitle the holder, in proportion to such holder's fractional shares, to exercise such rights, receive dividends, and participate in all distributions and derive the benefit of all other rights of holders of Series B Preferred Stock. SERIES C PREFERRED STOCK (h) Pursuant to the authority vested in the Board of Directors of Union Planters Corporation (the "Corporation") by the provisions of this Article Sixth of the Charter and by the provisions of the Tennessee Business Corporation Act, the Board of Directors of the Corporation does hereby create, authorize and provide for the issuance of a new series of preferred stock out of the Corporation's authorized class of 10,000,000 shares of no par value preferred stock (the "Preferred Stock"), having the designation, relative participating, optional and other special rights, preferences, qualifications, limitations and restrictions provided hereafter: 1. Designation and Amount. The shares of such series shall be designated as 10 3/8% Increasing Rate, Redeemable, Cumulative Preferred Stock, Series C (the "Series C Preferred Stock") and the number of shares of Preferred Stock constituting such Series C Preferred Stock shall be 690,000. Such number of shares of Series C Preferred Stock may be adjusted hereafter by appropriate action of the Board of Directors. The Series C Preferred Stock shall have a stated value (the "Stated Value") of $25.00 per share. 2. Dividends and Distributions. (a) The holders of shares of Series C Preferred Stock, in preference to the holders of the $5.00 par value common stock of the Corporation (the "UPC Common Stock") shall be entitled to receive when and as declared by the Board of Directors, out of funds legally available for the purpose, cumulative cash dividends payable quarterly at the rate per share set forth in Page 8 of Union Planters Corporation Charter 9 paragraph 2(c) below, on the fifteenth day (or, if such fifteenth day is not a Business Day, on the next Business Day) of February, May, August and November in each year (a "Quarterly Dividend Payment Date"), in respect of the Quarterly Dividend Period next preceding such fifteenth day, and no other dividend or dividends. Such dividends shall be payable to holders of the Series C Preferred Stock on such date as is not more than 30 nor less than 10 days prior to the particular Quarterly Dividend Payment Date. As used herein, a "Quarterly Dividend Period" means a period of three months ending on the last day of January, April, July or October. Subject to the provisions of paragraph (c) of Section Sixth of the Charter, dividends on account of arrears for any past Quarterly Dividend Period(s) may be declared and paid at any time, without reference to any regular Quarterly Dividend Payment Date to holders of record on such date not exceeding 30 or less than 10 days preceding the payment date thereof as may be fixed by the Board of Directors. The amount of dividend per share payable for any Quarterly Dividend Period less than a full Quarterly Dividend Period shall be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in the period for which payable. (b) Preferred dividends upon shares of Series C Preferred Stock shall commence to accrue and be cumulative from (but not including) the day upon which the initial issuance of shares of Series C Preferred Stock occurs. (c) For each Quarterly Dividend Period ending on or before October 31, 1994, preferred dividends payable with respect to each such Quarterly Dividend Period shall be $0.648438 per share. For each Quarterly Dividend Period ending after November 1, 1994 and on or before October 31, 1995, preferred dividends payable with respect to each such Quarterly Dividend Period shall be $0.679688 per share. For each Quarterly Dividend Period ending after November 1, 1995, and on or before October 31, 1996, preferred dividends payable with respect to each such Quarterly Dividend Period shall be $0.710938 per share. For each Quarterly Dividend Period ending after November 1, 1996, preferred dividends payable with respect to such Quarterly Dividend Periods shall be $0.742188 per share. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments which may be in arrears. (d) For purposes hereof, "Business Day" shall mean any day upon which commercial banks in the City of Memphis, Tennessee, are required to be open for the transaction of their general banking business. 3. No Preemptive Rights. Holders of shares of Series C Preferred Stock shall not be entitled, as of right, to purchase or subscribe for any part of the unissued Series C Preferred Stock, any UPC Common Stock, or any other capital stock of the Corporation, or to purchase or subscribe for any bonds, certificates of indebtedness, debentures, or other securities convertible into or carrying options, warrants or rights to purchase any stock or other securities of the Corporation, or to purchase or subscribe for any stock or any securities of the Corporation purchased by the Corporation or by its nominee or nominees, or to have any other preemptive rights now or hereafter defined by the laws of the State of Tennessee. 4. Liquidation. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of Series C Preferred Stock shall be entitled to receive, after payment or provision for payment of all debts, but before any distribution of assets may be made to the holders of UPC Common Stock or any other stock of the Corporation ranking junior to the Series C Preferred Stock as to the distribution of assets on liquidation, dissolution or winding up of the Corporation, out of assets of the Corporation available for distributions to its shareholders, $25.00 per share (the "Liquidation Value"), plus, in each case, accrued and unpaid dividends thereon from (but not including) the day of initial issuance to the date of payment thereof. After such payment has been made in full to the holders of the outstanding shares of Series C Preferred Stock (or funds necessary for the payment have been set aside in trust for the account of such holders so as to be and continue to be available therefor), the holders of Series C Preferred Stock shall be entitled to no further distributions, and the remaining assets of the Corporation shall be divided and distributed among the holders of UPC Common Stock (subject to any prior rights of any holders of any other capital stock of the Corporation entitled to participate with the UPC Common Stock as to the distribution of assets) then outstanding according to their respective rights as shareholders. If, upon any liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation, or proceeds thereof available for distribution among the holders of Series C Preferred Stock should be insufficient to permit payment in full of the preferential amount aforesaid and liquidating payments on any other Preferred Stock ranking, as to liquidation, dissolution or winding up, on a parity with the Series C Preferred Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Series C Preferred Stock and the holders of any such other Preferred Stock ratably in accordance with the respective amounts which would be payable on such shares of Series C Preferred Stock and on any such other Preferred Stock if all amounts payable thereon were paid in full. Neither the consolidation or merger of the Corporation with or into any other corporation or corporations, nor a reorganization of the Corporation alone, nor the sale or transfer by the Corporation of all or substantially all of its assets shall be deemed a "liquidation, dissolution or winding up of the Corporation" within the meaning of this paragraph 4. 5. Right to Vote. (a) Except as hereinafter provided for and as otherwise from time to time required by law, the Series C Preferred Stock shall have no voting rights. Page 9 of Union Planters Corporation Charter 10 (b) So long as any shares of the Series C Preferred Stock remain outstanding, the consents of the holders of at least two-thirds (2/3ds) of the shares of Series C Preferred Stock outstanding at the time (voting separately as a class together with all other series of Preferred Stock of the Corporation ranking on a parity with the Series C Preferred Stock either as to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable) given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following: (i) the authorization, creation or issuance of a new class or series of shares of capital stock having rights, preferences or privileges prior to the Series C Preferred Stock, or any increase in the number of authorized shares of any class or series having rights, preferences or privileges prior to the Series C Preferred Stock; or (ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Corporation's Charter which would materially and adversely affect any right, preference, privilege or voting power of the Series C Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized UPC Common Stock or Preferred Stock or the authorization, creation or issuance of any other series of UPC Common Stock or Preferred Stock, in each case ranking on a parity with or junior to the Series C Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers. (c) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series C Preferred Stock shall have been redeemed or called for redemption and funds shall have been deposited in trust in an amount sufficient to effect such redemption. 6. Redemption. (a) The shares of Series C Preferred Stock shall be redeemable, in whole or in part, only at the option of the Corporation by resolution of its Board of Directors and with the prior written consent of the Board of Governors of the Federal Reserve System, or of the appropriate Federal Reserve Bank acting under delegated authority, or their successors, at any time and from time to time on or after October 31, 1994 at $25.00 per share, plus all dividends accrued and unpaid on such Series C Preferred Stock from (but not including) the day of issuance up to the day fixed for redemption. Notwithstanding the foregoing sentence of this Section, the Corporation may acquire Series C Preferred Stock in any other manner permitted by law and its Charter or Bylaws. (b) In the event that less than the entire amount of the Series C Preferred Stock outstanding is to be redeemed at any one time, the shares to be redeemed shall be selected by lot or pro rata (as nearly as may be) or by any other method determined by the Board of Directors of the Corporation in its sole discretion to be equitable. Notice of any redemption shall be given by first class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the redemption date, to each holder of record of the shares selected for redemption at such holders' respective addresses as the same shall appear on the stock register of the Corporation. Each such notice shall state: (1) the redemption date; (2) the number of shares of Series C Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the redemption price and the manner in which the redemption price is to be paid and delivered; (4) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; and (5) that dividends on the shares to be redeemed will cease to accrue on such redemption date. No failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for redemption. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the holder receives the notice. Upon such redemption date, or upon such earlier date as the Board of Directors shall designate for payment of the redemption price (unless the Corporation shall default in the payment of the redemption price as set forth in such notice), the holders of shares of Series C Preferred Stock selected for redemption and to whom notice has been duly given shall cease to be shareholders with respect to such shares of Series C Preferred Stock and shall have no interest in or claim against the Corporation by virtue thereof and shall have no dividend, voting or other rights with respect to such shares except the right to receive the moneys payable upon such redemption from the Corporation or otherwise, without interest thereon, upon surrender (and endorsement, if required by the Corporation) of the certificates, and the shares evidenced and represented thereby shall no longer be deemed to be outstanding. The Corporation's obligation to provide funds for redemption shall be deemed fulfilled if, on or before the redemption date, the Corporation shall deposit with a bank or trust company (which may be an affiliate of the Corporation), having an office or agency in Memphis, Tennessee and having a capital and surplus of at least $50,000,000, or with any other such bank or trust company located in the continental United States as may be designated from time to time by the Corporation, funds necessary for such redemption, in trust, with irrevocable instructions that such funds be applied to the redemption of the shares of Series C Preferred Stock so called for redemption. Any interest accrued on such funds shall be paid to the Corporation from time to time. Any funds so deposited and unclaimed at the end of six years from such redemption date shall be repaid or released to the Corporation, after which the holder or holders of such shares of Series C Preferred Stock so called for redemption shall look only to the Corporation for payment of the redemption price. Upon redemption of Series C Preferred Stock in the manner set out herein, or upon the purchase of Series C Preferred Stock by the Corporation, the Series C Preferred Stock so acquired by the Corporation shall be retired and Page 10 of Union Planters Corporation Charter 11 canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of Series C Preferred Stock. 7. Ranking. (a) Any class or series of stock of the Corporation shall be deemed to rank: (i) "prior to" the Series C Preferred Stock if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Series C Preferred Stock; and (ii) "on a parity with" the Series C Preferred Stock if the holders of such class or series of stock and the holders of the Series C Preferred Stock shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority one over the other whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share of such other class or series of stock are different from those of the Series C Preferred Stock. (b) The Series C Preferred Stock shall rank on a parity with both the Corporation's Series B Preferred Stock and the Series A Preferred Stock, if and when such Series A Preferred Stock should be issued. 8. Debt Obligations. The Corporation, at any time and from time to time, may authorize the issue of debt obligations, whether or not subordinated, without the approval of the shareholders. 9. Conversion or Exchange. The holders of the Series C Preferred Stock shall not have any rights herein to convert such shares into, or exchange such shares for, shares of any other class or classes or any other series of any class or classes of capital stock (or any other equity or debt security) of the Corporation. SERIES D PREFERRED STOCK (i) Pursuant to the authority vested in the Board of Directors of Union Planters Corporation (the "Corporation") by the provisions of this Article Sixth of its Charter and by the provisions of the Tennessee Business Corporation Act, the Board of Directors of the Corporation does hereby create, authorize and provide for the issuance of a new series of preferred stock out of the Corporation's authorized class of 10,000,000 shares of preferred stock having no par value (the "Preferred Stock"), having the designation, relative participating, optional and other special rights, preferences, qualifications, limitations and restrictions provided hereafter: 1. Designation and Amount. The shares of such series shall be designated as the: 9.5% REDEEMABLE, CUMULATIVE, CONVERTIBLE, PREFERRED STOCK, SERIES D (the "Series D Preferred Stock") and the number of shares of Preferred Stock constituting such Series D Preferred Stock shall be 253,659. Such number of shares of Series D Preferred Stock may be adjusted hereafter by appropriate action of the Board of Directors. The Series D Preferred Stock shall have a stated value of $20.50 per share (the "Stated Value"). 2. Dividends and Distributions. (a) The holders of shares of Series D Preferred Stock, in preference to the holders of the $5.00 par value common stock of the Corporation (the "UPC Common Stock") shall be entitled to receive when, as and if declared by the Board of Directors, out of funds legally available for the purpose, cumulative cash dividends payable quarterly at the annual rate of 9.5% of the Stated Value thereof on the fifteenth day (or, if such fifteenth day should not be a Business Day, on the next Business Day) of February, May, August and November in each year (a "Quarterly Dividend Payment Date"), in respect of the Quarterly Dividend Period next preceding such fifteenth day, and no other dividend or dividends. Such dividends shall be payable to holders of record of the Series D Preferred Stock on such date as may be fixed by the Board of Directors which date shall not be more than 30 nor less than 10 days prior to the applicable Quarterly Dividend Payment Date. As used herein, a "Quarterly Dividend Period" means a period of three calendar months ending on the last day of January, April, July and October. Subject to the provisions of paragraph (c) of Article Sixth of the Charter, dividends on account of arrears for any past Quarterly Dividend Period(s) may be declared and paid at any time designated by the Board of Directors, without reference to any regular Quarterly Dividend Payment Date, to holders of record on such date as may be fixed by the Board of Directors, which date shall not be more than 30 nor less than 10 days preceding the designated payment date. The amount of dividend per share payable for any Quarterly Dividend Period less than a full Quarterly Dividend Period shall be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in the period with respect to which it is payable. (b) Preferred dividends upon shares of Series D Preferred Stock shall commence to accrue and be cumulative from the day upon which the original issuance of shares of Series D Preferred Stock shall occur which shall be deemed to be the effective date of the merger of Southeastern Bancshares, Inc. with and into Union Planters - SBI Acquisition Company, both of which are Tennessee corporations. Page 11 of Union Planters Corporation Charter 12 (c) No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments which may be in arrears. (d) For purposes hereof, a "Business Day" shall mean any day on which commercial banks in the City of Memphis, Tennessee, are required to be open for the transaction of their general banking businesses. 3. No Preemptive Rights. The holders of shares of Series D Preferred Stock shall not be entitled, as of right, to purchase or subscribe for any part of the unissued Series D Preferred Stock, any UPC Common Stock, or any other capital stock of the Corporation, or to purchase or subscribe for any bonds, certificates of indebtedness, debentures, or other securities convertible into, or carrying options, warrants or rights to purchase, any stock or other securities of the Corporation, or to purchase or subscribe for any stock or any securities of the Corporation purchased by the Corporation or by its nominee or nominees, or to have any other preemptive rights now or hereafter defined by the laws of the State of Tennessee. 4. Liquidation. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of Series D Preferred Stock shall be entitled to receive, after payment or provision for payment of all debts but before any distribution of assets may be made to the holders of UPC Common Stock or any other stock of the Corporation ranking junior to the Series D Preferred Stock as to the distribution of assets on liquidation, dissolution or winding up of the Corporation, out of assets of the Corporation available for distributions to its shareholders, $20.50 per share (the "Liquidation Value"), plus, in each case, accrued and unpaid dividends thereon from (but not including) the day of original issuance to the date of payment thereof. After such payment has been made in full to the holders of the outstanding shares of Series D Preferred Stock (or funds necessary for such payment have been set aside in trust for the account of such holders so as to be and to continue to be available therefor), the holders of Series D Preferred Stock shall be entitled to no further distributions, and the remaining assets of the Corporation shall be divided and distributed among the holders of UPC Common Stock (subject to any senior rights of any holders of any other capital stock of the Corporation entitled to participate with the UPC Common Stock as to the distribution of assets) then outstanding according to their respective rights as shareholders. If, upon any liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation, or proceeds thereof available for distribution among the holders of Series D Preferred Stock should be insufficient to permit payment in full of the preferential amount aforesaid and liquidating payments on any other Preferred Stock ranking, as to liquidation, dissolution or winding up, on a parity with the Series D Preferred Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Series D Preferred Stock and the holders of any such other Preferred Stock ranking on a parity with the Series D Preferred Stock ratably in accordance with the respective amounts which would be payable on such shares of Series D Preferred Stock and on any such other Preferred Stock ranking on a parity with the Series D Preferred Stock if all amounts payable thereon were paid in full. Neither the consolidation or merger of the Corporation with or into any other corporation or corporations, nor a reorganization of the Corporation alone, nor the sale or transfer by the Corporation of all or substantially all of its assets shall be deemed a "liquidation, dissolution or winding up of the Corporation" within the meaning of this paragraph 4. 5. Right of Holders of Series D Shares to Vote. (a) Except as hereinafter provided for and as otherwise from time to time required by law, the Series D Preferred Stock shall have no voting rights except for those which may be required by the laws of the State of Tennessee. (b) So long as any shares of Series D Preferred Stock remain outstanding, the consents of the holders of at least two-thirds (2/3ds) of the shares of Series D Preferred Stock outstanding at the time (voting separately as a class together with all other series of Preferred Stock of the Corporation ranking on a parity with the Series D Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable) given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following actions: (i) the authorization, creation or issuance of a new class or series of shares of capital stock of the Corporation having rights, preferences or privileges senior to the Series D Preferred Stock, or any increase in the number of authorized shares of any class or series having rights, preferences or privileges senior to the Series D Preferred Stock; or (ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Corporation's Charter which would materially and adversely affect any right, preference, privilege or voting power of the Series D Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized UPC Common Stock or Preferred Stock or the authorization, creation or issuance of any other series of UPC Common Stock or Preferred Stock, in each case ranking on a parity with, or junior to the Series D Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to "materially and adversely affect" such rights, preferences, privileges or voting powers of the Series D Preferred Stock. (c) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected (i) Page 12 of Union Planters Corporation Charter 13 all outstanding shares of Series D Preferred Stock shall have been redeemed or called for redemption and (ii) funds shall have been deposited in trust in an amount sufficient to effect such redemption as provided herein. 6. Redemption. (a) The shares of Series D Preferred Stock shall be redeemable, in whole or in part, only at the option of the Corporation by resolution of its Board of Directors but only with the prior consent of the Board of Governors of the Federal Reserve System, or of the appropriate Federal Reserve Bank acting under delegated authority, or their successors, at any time and from time to time on or after the third anniversary of the Effective Time of the Merger of SBI with and into Union Planters - SBI Acquisition Company at Twenty and 50/100 Dollars ($20.50) per share (the "Redemption Price"), plus all dividends accrued and unpaid on such Series D Preferred Stock from (but not including) the day of original issuance up to the Redemption Date (as defined below). Notwithstanding the foregoing sentence of this Section, the Corporation may acquire Series D Preferred Stock in any other lawful manner permitted by its Charter or Bylaws. (b) In the event that less than the entire amount of Series D Preferred Stock outstanding is to be redeemed at any one time, the shares to be redeemed shall be selected by lot or pro rata (as nearly as may be) or by any other method determined by the Board of Directors of the Corporation in its sole discretion to be equitable. (c) Notice of any redemption, whether whole or partial, shall be given by United States first class mail, postage prepaid, deposited in the mail not less than 30 nor more than 60 days prior to the Redemption Date, addressed to each holder of record of the shares selected for redemption at such holders' respective addresses as the same shall appear on the stock register of the Corporation. Each such notice shall state: (1) the date designated by the Board of Directors as the "Redemption Date"; (2) the number of shares of Series D Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the Redemption Price and the manner in which the Redemption Price is to be paid and delivered; (4) the place or places where certificates representing and evidencing such shares are to be surrendered for payment of the Redemption Price; and (5) that dividends on the shares to be redeemed will cease to accrue on such Redemption Date. No failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for redemption. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the holder receives the notice. On the Redemption Date, or on such earlier date as the Board of Directors shall designate for payment of the Redemption Price (unless the Corporation shall default in the payment of the Redemption Price as set forth in such notice), the holders of shares of Series D Preferred Stock selected for redemption and to whom notice has been duly given shall cease to be shareholders with respect to such shares of Series D Preferred Stock and shall have no interest in, or claim against the Corporation by virtue thereof and shall have no dividend, voting or other rights with respect to such shares except the right to receive the moneys payable upon such redemption from the Corporation or otherwise, without interest thereon, upon surrender (and proper endorsement, if required by the Corporation) of the certificates, and the shares represented thereby shall no longer be deemed to be outstanding. The Corporation's obligation to provide funds for redemption shall be deemed fulfilled if, on or before the Redemption Date, the Corporation shall have deposited with a bank or trust company (which may be an affiliate of the Corporation), having an office or agency in Memphis, Tennessee, having a capital and surplus of at least $50,000,000, or with any other such bank or trust company located in the continental United States as may be designated from time to time by the Corporation, funds necessary for such redemption, in trust, with irrevocable instructions that such funds be applied to the redemption of the shares of Series D Preferred Stock so called for redemption. Any interest accrued on such funds shall be paid to the Corporation from time to time. Any funds so deposited and unclaimed at the end of six years from such Redemption Date shall be repaid or released to the Corporation, after which the holder or holders of such shares of Series D Preferred Stock so called for redemption shall look only to the Corporation for payment of the Redemption Price. Upon redemption of Series D Preferred Stock in the manner set out herein, or upon the purchase of Series D Preferred Stock by the Corporation, the Series D Preferred Stock so acquired by the Corporation shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of Series D Preferred Stock. 7. Ranking. (a) Any class or series of stock of the Corporation shall be deemed to rank: (i) "senior to" the Series D Preferred Stock if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Series D Preferred Stock; and (ii) "on a parity with" the Series D Preferred Stock if the holders of such class or series of stock and the holders of the Series D Preferred Stock shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority one over the other whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share of such other class or series of stock are different from those of the Series D Preferred Stock. Page 13 of Union Planters Corporation Charter 14 (b) The Series D Preferred Stock shall rank on a parity with the Corporation's Series B Preferred Stock, the Corporation's Series C Preferred Stock and the Corporation's Series A Preferred Stock, if and when shares of such Series A Preferred Stock should be issued. 8. Conversion of Series D Preferred Stock. The registered holders of shares of Series D Preferred Stock shall have the right, at their option, to convert such shares into shares of UPC Common Stock (and, upon the occurrence of a certain type of merger, into other assets) on the following terms and conditions: (a) The registered holders of the Series D Preferred Stock shall have the right at any time after the date of its original issuance but prior to the Redemption Date designated in the notice of redemption given to such holders in accordance with the provisions of Section 6, to convert each share of the Corporation's Series D Preferred Stock registered in the name of such holders into one (1) share of the Corporation's Common Stock having a par value of $5.00 per share. The Series D Preferred Stock shall not be convertible into any other class or classes or any other series of any class or classes of capital stock (or any other equity or debt security) of the Corporation. (b) On presentation and surrender to the Corporation at any office or agency maintained for the transfer of the Series D Preferred Stock (the "Transfer Agent") of the certificates representing and evidencing Series D Preferred Stock so to be converted, duly endorsed for conversion, the holder of such Series D Preferred Stock shall be entitled, subject to the limitations herein contained, to receive in exchange therefor a certificate or certificates for fully paid and nonassessable shares, and cash for fractional shares (if any) of UPC Common Stock or other securities pursuant to subsection (d) below on the basis set forth. The Series D Preferred Stock shall be deemed to have been converted and the person converting the same shall be deemed to have become the holder of record of UPC Common Stock, for the purpose of receiving dividends and for all other purposes whatsoever as of the date when the certificate or certificates representing and evidencing such Series D Preferred Stock shall have been surrendered to the Transfer Agent as aforesaid. The holder of Series D Preferred Stock shall be responsible for selection of the method of delivery to the Transfer Agent of any share certificates intended to be surrendered for conversion and the Corporation shall have no risk or liability for the loss or late delivery of certificates for conversion. Properly endorsed certificates must be physically received by the Transfer Agent no later than the close of business on the Business Day next preceding the designated Redemption Date in order for the conversion to become effective. The Corporation shall not be required to make any such conversion, and no surrender of the Series D Preferred Stock shall be effective for such purposes, while the books for the transfer of either class of stock are closed for any purpose, but the surrender of such shares of Series D Preferred Stock for conversion during any period while such books are closed shall become effective for all purposes of conversion immediately upon the reopening of such books, as if the conversion had been made on the date such shares of Series D Preferred Stock were surrendered. (c) If at any time, or from time to time, the Corporation should (i) declare and pay on, or in respect of, the UPC Common Stock any dividend payable in shares of UPC Common Stock; or (ii) subdivide the outstanding shares of UPC Common Stock into a greater number of shares, or contract the number of outstanding shares of Series D Preferred Stock by combining such shares into a smaller number of shares; or (iii) contract the number of outstanding shares of the UPC Common Stock by combining such shares into a smaller number of shares, or (iv) subdivide the outstanding shares of Series D Preferred Stock into a greater number of shares of Series D Preferred Stock, the Conversion Ratio shall be proportionately adjusted as of such time. (d) If the Corporation should consolidate with, or merge into any corporation or reclassify outstanding shares of UPC Common Stock (other than by way of subdivision or contraction of such shares), each share of Series D Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property of the Corporation, or of the entity resulting from such consolidation or merger, to which a holder of the number of shares of UPC Common Stock deliverable upon conversion of such share of Series D Preferred Stock would have been entitled upon such consolidation, merger or reclassification, had the holder of such share of Series D Preferred Stock exercised his right of conversion and had such shares been issued and outstanding and had such holder been the holder of record of such UPC Common Stock at the time of such consolidation, merger or reclassification and the Corporation shall make lawful provision therefor as a part of such consolidation, merger or reclassification. (e) Whenever the conversion ratio or the type of consideration other than UPC Common Stock receivable by the holder upon conversion of the Series D Preferred Stock is required to be adjusted, as herein provided, the Corporation shall promptly file with the transfer agent for the UPC Common Stock and simultaneously provide to each holder of record of Series D Preferred Stock a statement signed by the President or a Vice President or the Secretary or the Treasurer setting forth the adjusted conversion ratio and, if applicable, a description of the consideration receivable upon consummation, determined as so provided. Such statement shall set forth in reasonable detail such facts as may be necessary to show the reason for and the manner of computing such adjustments. (f) The Corporation shall pay any and all taxes which may be imposed upon it with respect to the issuance and delivery of UPC Common Stock upon the conversion of the Series D Preferred Stock as herein provided. The Corporation shall not be required in any event to pay any transfer or other taxes by reason of the issuance of such UPC Common Stock in names other than those in which the Series D Preferred Stock surrendered for conversion may stand, and no such conversion Page 14 of Union Planters Corporation Charter 15 or issuance of UPC Common Stock shall be made unless and until the person requesting such issuance has paid to the Corporation the amount of any such tax, or has established to the satisfaction of the Corporation and its transfer agent, if any, that such tax has been paid or is not required. Upon any conversion of Series D Preferred Stock as herein provided, no adjustment or allowance shall be made for dividends on the Series D Preferred Stock so converted, and all rights to dividends, if any, shall cease and be deemed satisfied; provided, however, that nothing in this section shall be deemed to relieve the Corporation from its obligation to pay any dividends which shall have been declared and shall be payable to holders of Series D Preferred Stock of record as of a date prior to such conversion even though the payment date for such dividend may be subsequent to the date of conversion. (g) If any shares of Series D Preferred Stock should be converted into UPC Common Stock at a time when the UPC Common Stock into which such Series D Preferred Stock is convertible has attached or attributable thereto Rights issued pursuant to the UPC Share Purchase Rights Agreement, the surrender of such Series D Preferred Stock shall effectively cancel all Rights attached or attributable to the share(s) of Series D Preferred Stock so converted. 9. Reservation of UPC Common Stock. The Corporation shall, so long as any of the Series D Preferred Stock shall remain outstanding, reserve and keep available out of its authorized and unissued UPC Common Stock, solely for the purpose of effecting the conversion of the Series D Preferred Stock, such number of shares of UPC Common Stock as shall, from time to time, be sufficient to effect the conversion of all shares of the Series D Preferred Stock then outstanding. The Corporation shall, from time to time, increase its authorized UPC Common Stock and take such other actions as may be necessary to permit the issuance from time to time of the shares of the UPC Common Stock, as fully paid and nonassessable shares, upon the conversion of the Series D Preferred Stock in the manner herein provided. 10. Debt Obligations. The Corporation, at any time and from time to time, may authorize the issuance of debt obligations, whether or not subordinated, without the approval of any of its shareholders. 11. Definitions. For purposes of subparagraph (i) of Article Sixth of the Charter: (a) The term "outstanding", when used in reference to shares of stock, shall mean shares which are authorized and issued, excluding shares held by the Corporation or by a subsidiary of the Corporation (other than in a fiduciary capacity), and excluding shares called for redemption, funds for the redemption of which shall have been set aside by the Corporation or deposited in trust in the manner provided herein; (b) The amount of dividends "accrued" on any share of Series D Preferred Stock as of the last day of the applicable Quarterly Dividend Period (the "Quarterly Dividend Date") shall be deemed to be the amount of any unpaid dividends accumulated thereon to and including such Quarterly Dividend Date, whether or not earned or declared, and the amount of dividends "accrued" on any shares of Series D Preferred Stock as at any date other than a Quarterly Dividend Date shall be deemed to be (i) the amount of any unpaid dividends accumulated thereon to and including the last preceding Quarterly Dividend Date, whether or not earned or declared, plus (ii) an amount calculated on the basis of the annual dividend rate fixed for the shares of Series D Preferred Stock (9.5%) for the period subsequent to such last preceding Quarterly Dividend Date to and including the date as of which the calculation is made, based on a 360-day year of 12 consecutive 30-day months and the actual number of days elapsed in the latter period. SERIES E PREFERRED STOCK (j) Pursuant to the authority vested in the Board of Directors of Union Planters Corporation (the "Corporation") by the provisions of this Article Sixth of its Charter and by the provisions of the Tennessee Business Corporation Act, the Board of Directors of the Corporation does hereby create, authorize and provide for the issuance of a new series of preferred stock out of the Corporation's authorized class of 10,000,000 shares of preferred stock having no par value (the "Preferred Stock"), having the designation, relative participating, optional and other special rights, preferences, qualifications, limitations and restrictions provided hereafter: 1. Designation and Amount. The shares of such series shall be designated as the: 8% CUMULATIVE, CONVERTIBLE, PREFERRED STOCK, SERIES E (the "Series E Preferred Stock") and the number of shares of Preferred Stock constituting such Series E Preferred Stock shall be 3,340,000. Such number of shares of Series E Preferred Stock may be adjusted hereafter by appropriate action of the Board of Directors. The Series E Preferred Stock shall have a stated value of $25.00 per share (the "Stated Value"). 2. Dividends and Distributions. (a) The holders of shares of Series E Preferred Stock, in preference to the holders of the $5.00 par value common stock of the Corporation (the "UPC Common Stock") shall be entitled to receive when, as and if declared by the Board of Directors, out of funds legally available for the purpose, cumulative cash dividends payable quarterly at the annual rate of 8% of the Stated Value thereof on the fifteenth day (or, if such fifteenth day should not be a Business Day, on the next Business Day) of February, May, August and November in each year (a "Quarterly Dividend Payment Date"), in respect of the Quarterly Dividend Period next preceding such fifteenth day, and Page 15 of Union Planters Corporation Charter 16 no other dividend or dividends. Such dividends shall be payable to holders of record of the Series E Preferred Stock on such date as may be fixed by the Board of Directors which date shall not be more than 30 nor less than 10 days prior to the applicable Quarterly Dividend Payment Date. As used herein, a "Quarterly Dividend Period" means a period of three calendar months ending on the last day of January, April, July and October. Subject to the provisions of paragraph (c) of Article Sixth of the Charter, dividends on account of arrears for any past Quarterly Dividend Period(s) may be declared and paid at any time designated by the Board of Directors, without reference to any regular Quarterly Dividend Payment Date, to holders of record on such date as may be fixed by the Board of Directors, which date shall not be more than 30 nor less than 10 days preceding the designated payment date. The amount of dividend per share payable for any Quarterly Dividend Period less than a full Quarterly Dividend Period shall be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in the period with respect to which it is payable. (b) Preferred dividends upon shares of Series E Preferred Stock shall commence to accrue and be cumulative from the day upon which the original issuance of shares of Series E Preferred Stock shall occur. (c) No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments which may be in arrears. (d) For purposes hereof, a "Business Day" shall mean any day on which commercial banks in the City of Memphis, Tennessee, are required to be open for the transaction of their general banking businesses. 3. No Preemptive Rights. The holders of shares of Series E Preferred Stock shall not be entitled, as of right, to purchase or subscribe for any part of the unissued Series E Preferred Stock, any UPC Common Stock, or any other capital stock of the Corporation, or to purchase or subscribe for any bonds, certificates of indebtedness, debentures, or other securities convertible into, or carrying options, warrants or rights to purchase, any stock or other securities of the Corporation, or to purchase or subscribe for any stock or any securities of the Corporation purchased by the Corporation or by its nominee or nominees, or to have any other preemptive rights now or hereafter defined by the laws of the State of Tennessee. 4. Liquidation. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of Series E Preferred Stock shall be entitled to receive, after payment or provision for payment of all debts but before any distribution of assets may be made to the holders of UPC Common Stock or any other stock of the Corporation ranking junior to the Series E Preferred Stock as to the distribution of assets on liquidation, dissolution or winding up of the Corporation, out of assets of the Corporation available for distributions to its shareholders, $25.00 per share (the "Liquidation Value"), plus, in each case, accrued and unpaid dividends thereon from (but not including) the day of original issuance to the date of payment thereof. After such payment has been made in full to the holders of the outstanding shares of Series E Preferred Stock (or funds necessary for such payment have been set aside in trust for the account of such holders so as to be and to continue to be available therefor), the holders of Series E Preferred Stock shall be entitled to no further distributions, and the remaining assets of the Corporation shall be divided and distributed among the holders of UPC Common Stock (subject to any senior rights of any holders of any other capital stock of the Corporation entitled to participate with the UPC Common Stock as to the distribution of assets) then outstanding according to their respective rights as shareholders. If, upon any liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation, or proceeds thereof available for distribution among the holders of Series E Preferred Stock should be insufficient to permit payment in full of the preferential amount aforesaid and liquidating payments on any other Preferred Stock ranking, as to liquidation, dissolution or winding up, on a parity with the Series E Preferred Stock, then such assets, or the proceeds thereof, shall be distributed among the holders of Series E Preferred Stock and the holders of any such other Preferred Stock ranking on a parity with the Series E Preferred Stock ratably in accordance with the respective amounts which would be payable on such shares of Series E Preferred Stock and on any such other Preferred Stock ranking on a parity with the Series E Preferred Stock if all amounts payable thereon were paid in full. Neither the consolidation or merger of the Corporation with or into any other corporation or corporations, nor a reorganization of the Corporation alone, nor the sale or transfer by the Corporation of all or substantially all of its assets shall be deemed a "liquidation, dissolution or winding up of the Corporation" within the meaning of this paragraph 4. 5. Right of Holders of Series E Shares to Vote. (a) Except as hereinafter provided for and as otherwise from time to time required by law, the Series E Preferred Stock shall have no voting rights except for those which may be required by the laws of the State of Tennessee. (b) So long as any shares of Series E Preferred Stock remain outstanding, the consents of the holders of at least two-thirds (2/3ds) of the shares of Series E Preferred Stock outstanding at the time (voting separately as a class together with all other series of Preferred Stock of the Corporation ranking on a parity with the Series E Preferred Stock either as to dividends or the distribution of assets upon liquidation, dissolution or winding up and upon which like voting rights have been conferred and are exercisable) given in person or by proxy, either in writing or at any special or annual meeting called for the purpose, shall be necessary to permit, effect or validate any one or more of the following actions: Page 16 of Union Planters Corporation Charter 17 (i) the authorization, creation or issuance of a new class or series of shares of capital stock of the Corporation having rights, preferences or privileges senior to the Series E Preferred Stock, or any increase in the number of authorized shares of any class or series having rights, preferences or privileges senior to the Series E Preferred Stock; or (ii) the amendment, alteration or repeal, whether by merger, consolidation or otherwise, of any of the provisions of the Corporation's Charter which would materially and adversely affect any right, preference, privilege or voting power of the Series E Preferred Stock or of the holders thereof; provided, however, that any increase in the amount of authorized UPC Common Stock or Preferred Stock or the authorization, creation or issuance of any other series of UPC Common Stock or Preferred Stock, in each case ranking on a parity with, or junior to the Series E Preferred Stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to "materially and adversely affect" such rights, preferences, privileges or voting powers of the Series E Preferred Stock. (c) The foregoing voting provisions shall not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected (i) all outstanding shares of Series E Preferred Stock shall have been redeemed or called for redemption and (ii) funds shall have been deposited in trust in an amount sufficient to effect such redemption as provided herein. 6. Redemption. (a) The shares of Series E Preferred Stock shall be redeemable, in whole or in part, only at the option of the Corporation by resolution of its Board of Directors but only with the prior consent of the Board of Governors of the Federal Reserve System, or of the appropriate Federal Reserve Bank acting under delegated authority, or their successors, at any time and from time to time on or after March 1, 1997, at a price "Redemption Price" of $25.00 per share, plus all dividends accrued and unpaid on such Series E Preferred Stock from (but not including) the day of original issuance up to the Redemption Date (as defined below). Notwithstanding the foregoing sentence of this Section, the Corporation may acquire Series E Preferred Stock in any other lawful manner permitted by its Charter or Bylaws. (b) In the event that less than the entire amount of Series E Preferred Stock outstanding is to be redeemed at any one time, the shares to be redeemed shall be selected by lot or pro rata (as nearly as may be) or by any other method determined by the Board of Directors of the Corporation in its sole discretion to be equitable. (c) Notice of any redemption, whether whole or partial, shall be given by United States first class mail, postage prepaid, deposited in the mail not less than 30 nor more than 60 days prior to the Redemption Date, addressed to each holder of record of the shares selected for redemption at such holders' respective addresses as the same shall appear on the stock register of the Corporation. Each such notice shall state: (1) the date designated by the Board of Directors as the "Redemption Date"; (2) the number of shares of Series E Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of such shares to be redeemed from such holder; (3) the Redemption Price and the manner in which the Redemption Price is to be paid and delivered; (4) the place or places where certificates representing and evidencing such shares are to be surrendered for payment of the Redemption Price; and (5) that dividends on the shares to be redeemed will cease to accrue on such Redemption Date. No failure to mail such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for redemption. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the holder receives the notice. On the Redemption Date, or on such earlier date as the Board of Directors shall designate for payment of the Redemption Price (unless the Corporation shall default in the payment of the Redemption Price as set forth in such notice), the holders of shares of Series E Preferred Stock selected for redemption and to whom notice has been duly given shall cease to be shareholders with respect to such shares of Series E Preferred Stock and shall have no interest in, or claim against the Corporation by virtue thereof and shall have no dividend, voting or other rights with respect to such shares except the right to receive the moneys payable upon such redemption from the Corporation or otherwise, without interest thereon, upon surrender (and proper endorsement, if required by the Corporation) of the certificates, and the shares represented thereby shall no longer be deemed to be outstanding. The Corporation's obligation to provide funds for redemption shall be deemed fulfilled if, on or before the Redemption Date, the Corporation shall have deposited with a bank or trust company (which may be an affiliate of the Corporation), having an office or agency in Memphis, Tennessee, having a capital and surplus of at least $50,000,000, or with any other such bank or trust company located in the continental United States as may be designated from time to time by the Corporation, funds necessary for such redemption, in trust, with irrevocable instructions that such funds be applied to the redemption of the shares of Series E Preferred Stock so called for redemption. Any interest accrued on such funds shall be paid to the Corporation from time to time. Any funds so deposited and unclaimed at the end of six years from such Redemption Date shall be repaid or released to the Corporation, after which the holder or holders of such shares of Series E Preferred Stock so called for redemption shall look only to the Corporation for payment of the Redemption Price. Upon redemption of Series E Preferred Stock in the manner set out herein, or upon the purchase of Series E Preferred Stock by the Corporation, the Series E Preferred Stock so acquired by the Corporation shall be retired and canceled and shall be restored to the status of authorized but unissued shares of Preferred Stock, without designation as to series, and may thereafter be issued, but not as shares of Series E Preferred Stock. 7. Ranking. Page 17 of Union Planters Corporation Charter 18 (a) Any class or series of stock of the Corporation shall be deemed to rank: (i) "senior to" the Series E Preferred Stock if the holders of such class or series shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in preference or priority to the holders of Series E Preferred Stock; and (ii) "on a parity with" the Series E Preferred Stock if the holders of such class or series of stock and the holders of the Series E Preferred Stock shall be entitled to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, as the case may be, in proportion to their respective dividend rates or liquidation prices, without preference or priority one over the other whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share of such other class or series of stock are different from those of the Series E Preferred Stock. (b) The Series E Preferred Stock shall rank on a parity with the Corporation's Series B Preferred Stock, the Corporation's Series C Preferred Stock, the Corporation's Series D Preferred Stock and the Corporation's Series A Preferred Stock, if and when shares of such Series A Preferred Stock should be issued. 8. Conversion of Series E Preferred Stock. The registered holders of shares of Series E Preferred Stock shall have the right, at their option, to convert such shares into shares of UPC Common Stock (and, upon the occurrence of a certain type of merger, into other assets) on the following terms and conditions: (a) The registered holders of the Series E Preferred Stock shall have the right at any time after the date of its original issuance but prior to the Redemption Date designated in the notice of redemption given to such holders in accordance with the provisions of Section 6, to convert each share of the Corporation's Series E Preferred Stock registered in the name of such holders into 1.25 shares of the Corporation's Common Stock having a par value of $5.00 per share. The Series E Preferred Stock shall not be convertible into any other class or classes or any other series of any class or classes of capital stock (or any other equity or debt security) of the Corporation. (b) On presentation and surrender to the Corporation at any office or agency maintained for the transfer of the Series E Preferred Stock (the "Transfer Agent") of the certificates representing and evidencing Series E Preferred Stock so to be converted, duly endorsed for conversion, the holder of such Series E Preferred Stock shall be entitled, subject to the limitations herein contained, to receive in exchange therefor a certificate or certificates for fully paid and nonassessable shares, and cash for fractional shares (if any) of UPC Common Stock or other securities pursuant to subsection (d) below on the basis set forth. The Series E Preferred Stock shall be deemed to have been converted and the person converting the same shall be deemed to have become the holder of record of UPC Common Stock, for the purpose of receiving dividends and for all other purposes whatsoever as of the date when the certificate or certificates representing and evidencing such Series E Preferred Stock shall have been surrendered to the Transfer Agent as aforesaid. The holder of Series E Preferred Stock shall be responsible for selection of the method of delivery to the Transfer Agent of any share certificates intended to be surrendered for conversion and the Corporation shall have no risk or liability for the loss or late delivery of certificates for conversion. Properly endorsed certificates must be physically received by the Transfer Agent no later than the close of business on the Business Day next preceding the designated Redemption Date in order for the conversion to become effective. The Corporation shall not be required to make any such conversion, and no surrender of the Series E Preferred Stock shall be effective for such purposes, while the books for the transfer of either class of stock are closed for any purpose, but the surrender of such shares of Series E Preferred Stock for conversion during any period while such books are closed shall become effective for all purposes of conversion immediately upon the reopening of such books, as if the conversion had been made on the date such shares of Series E Preferred Stock were surrendered. (c) If at any time, or from time to time, the Corporation should (i) declare and pay on, or in respect of, the UPC Common Stock any dividend payable in shares of UPC Common Stock; or (ii) subdivide the outstanding shares of UPC Common Stock into a greater number of shares, or contract the number of outstanding shares of Series E Preferred Stock by combining such shares into a smaller number of shares; or (iii) contract the number of outstanding shares of the UPC Common Stock by combining such shares into a smaller number of shares, or (iv) subdivide the outstanding shares of Series E Preferred Stock into a greater number of shares of Series E Preferred Stock, the Conversion Ratio shall be proportionately adjusted as of such time. (d) If the Corporation should consolidate with, or merge into any corporation or reclassify outstanding shares of UPC Common Stock (other than by way of subdivision or contraction of such shares), each share of Series E Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property of the Corporation, or of the entity resulting from such consolidation or merger, to which a holder of the number of shares of UPC Common Stock deliverable upon conversion of such share of Series E Preferred Stock would have been entitled upon such consolidation, merger or reclassification, had the holder of such share of Series E Preferred Stock exercised his right of conversion and had such shares been issued and outstanding and had such holder been the holder of record of such UPC Common Stock at the time of such consolidation, merger or reclassification and the Corporation shall make lawful provision therefor as a part of such consolidation, merger or reclassification. Page 18 of Union Planters Corporation Charter 19 (e) Whenever the conversion ratio or the type of consideration other than UPC Common Stock receivable by the holder upon conversion of the Series E Preferred Stock is required to be adjusted, as herein provided, the Corporation shall promptly file with the transfer agent for the UPC Common Stock and simultaneously provide to each holder of record of Series E Preferred Stock a statement signed by the President or a Vice President or the Secretary or the Treasurer setting forth the adjusted conversion ratio and, if applicable, a description of the consideration receivable upon consummation, determined as so provided. Such statement shall set forth in reasonable detail such facts as may be necessary to show the reason for and the manner of computing such adjustments. (f) The Corporation shall pay any and all taxes which may be imposed upon it with respect to the issuance and delivery of UPC Common Stock upon the conversion of the Series E Preferred Stock as herein provided. The Corporation shall not be required in any event to pay any transfer or other taxes by reason of the issuance of such UPC Common Stock in names other than those in which the Series E Preferred Stock surrendered for conversion may stand, and no such conversion or issuance of UPC Common Stock shall be made unless and until the person requesting such issuance has paid to the Corporation the amount of any such tax, or has established to the satisfaction of the Corporation and its transfer agent, if any, that such tax has been paid or is not required. Upon any conversion of Series E Preferred Stock as herein provided, no adjustment or allowance shall be made for dividends on the Series E Preferred Stock so converted, and all rights to dividends, if any, shall cease and be deemed satisfied; provided, however, that nothing in this section shall be deemed to relieve the Corporation from its obligation to pay any dividends which shall have been declared and shall be payable to holders of Series E Preferred Stock of record as of a date prior to such conversion even though the payment date for such dividend may be subsequent to the date of conversion. (g) If any shares of Series E Preferred Stock should be converted into UPC Common Stock at a time when the UPC Common Stock into which such Series E Preferred Stock is convertible has attached or attributable thereto Rights issued pursuant to the UPC Share Purchase Rights Agreement, the surrender of such Series E Preferred Stock shall effectively cancel all Rights attached or attributable to the share(s) of Series E Preferred Stock so converted. 9. Reservation of UPC Common Stock. The Corporation shall, so long as any of the Series E Preferred Stock shall remain outstanding, reserve and keep available out of its authorized and unissued UPC Common Stock, solely for the purpose of effecting the conversion of the Series E Preferred Stock, such number of shares of UPC Common Stock as shall, from time to time, be sufficient to effect the conversion of all shares of the Series E Preferred Stock then outstanding. The Corporation shall, from time to time, increase its authorized UPC Common Stock and take such other actions as may be necessary to permit the issuance from time to time of the shares of the UPC Common Stock, as fully paid and nonassessable shares, upon the conversion of the Series E Preferred Stock in the manner herein provided. 10. Debt Obligations. The Corporation, at any time and from time to time, may authorize the issuance of debt obligations, whether or not subordinated, without the approval of any of its shareholders. 11. Definitions. For purposes of subparagraph (j) of Article Sixth of the Charter: (a) The term "outstanding", when used in reference to shares of stock, shall mean shares which are authorized and issued, excluding shares held by the Corporation or by a subsidiary of the Corporation (other than in a fiduciary capacity), and excluding shares called for redemption, funds for the redemption of which shall have been set aside by the Corporation or deposited in trust in the manner provided herein; (b) The amount of dividends "accrued" on any share of Series E Preferred Stock as of the last day of the applicable Quarterly Dividend Period (the "Quarterly Dividend Date") shall be deemed to be the amount of any unpaid dividends accumulated thereon to and including such Quarterly Dividend Date, whether or not earned or declared, and the amount of dividends "accrued" on any shares of Series E Preferred Stock as at any date other than a Quarterly Dividend Date shall be deemed to be (i) the amount of any unpaid dividends accumulated thereon to and including the last preceding Quarterly Dividend Date, whether or not earned or declared, plus (ii) an amount calculated on the basis of the annual dividend rate fixed for the shares of Series E Preferred Stock (8%) for the period subsequent to such last preceding Quarterly Dividend Date to and including the date as of which the calculation is made, based on a 360-day year of 12 consecutive 30-day months and the actual number of days elapsed in the latter period. COMMON STOCK (a) Shares of Common Stock may be issued at such time or times and for such consideration or considerations (not less than the par value thereof) as the Board of Directors may deem advisable subject to such limitations as may be set forth in the laws of the State of Tennessee or the Charter or the Bylaws of the Corporation. (b) Except as provided by law or this Charter, each holder of Common Stock shall have one vote in respect of each share of stock held by him of record on the books of the Corporation on all matters voted upon by the shareholders. Page 19 of Union Planters Corporation Charter 20 (c) Subject to the preferential dividend rights, if any, applicable to shares of Preferred Stock and subject to applicable requirements, if any, with respect to the setting aside of sums for purchase, retirement or sinking funds for Preferred Stock, the holders of Common Stock shall be entitled to receive, to the extent permitted by law, such dividends as may be declared from time to time by the Board of Directors. (d) In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of Preferred Stock, holders of Common Stock shall be entitled to receive all of the remaining assets of the Corporation of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. The Board of Directors may distribute in kind to the holders of Common Stock such remaining assets of the Corporation or may sell, transfer or otherwise dispose of all or any part of such remaining assets to any other person, corporation, trust, or other entity and receive payment therefor in cash, stock or obligations of such other corporation, trust or entity, or any combination thereof, and may sell all or any part of the consideration so received and distribute any balance thereof in kind to holders of Common Stock. Neither the merger or consolidation of the Corporation into or with any other corporation, nor the merger of any other corporation into it, nor any purchase or redemption of shares of stock of the Corporation of any class, shall be deemed to be a dissolution, liquidation or winding up of the Corporation for the purposes of this paragraph. (e) Such numbers of shares of Common Stock as may from time to time be required for such purpose shall be reserved for issuance (i) upon conversion of any shares of Preferred Stock or any other obligation of the Corporation convertible into shares of Common Stock which is at the time outstanding or issuable upon exercise of any options or warrants at the time outstanding, and (ii) upon exercise of any options or warrants at the time outstanding to purchase shares of Common Stock. SEVENTH: MINIMUM CAPITAL TO COMMENCE BUSINESS: The Corporation will not commence business until consideration of one thousand dollars ($1,000) has been received for the issuance of shares. EIGHTH: NO PREEMPTIVE RIGHTS: Neither the holders of Common Stock, nor the holders of Preferred Stock nor the holders of any securities convertible into, exchangeable for or carrying any rights to subscribe to any class of capital stock of the Corporation shall, as such holders, have any right to acquire, purchase or subscribe for any shares of the Common Stock or Preferred Stock of the Corporation or any class of capital stock or any securities convertible into, exchangeable for, or carrying any rights to subscribe to, shares of Common Stock or any such other class of capital stock of the Corporation, which it may hereafter issue or sell (whether out of the number of shares now or hereafter authorized by this Charter, or out of any shares of the Common Stock or other capital stock of the Corporation acquired by it after the issuance thereof, or otherwise), other than such right, if any, as the Board of Directors of the Corporation in its discretion may determine. NINTH: DIRECTORS: The number of directors of the Corporation shall be such number, not less than seven (7) nor more than twenty-five (25), as shall be provided from time to time in the Bylaws, provided that no amendment to the Bylaws decreasing the number of directors shall have the effect of shortening the term of any incumbent director, and provided further that no action shall be taken by the directors (whether through amendment of the Bylaws or otherwise) to increase the number of directors as provided in the Bylaws from time to time unless at least sixty-six and two-thirds percent (66-2/3%) of the directors then in office shall concur in said action. Directors need not be shareholders of the Corporation nor need they be residents of Tennessee. The Board of Directors shall be divided into three classes of directors which shall be designated Class I, Class II and Class III. Such classes shall be as nearly equal in number as the then total number of directors constituting the entire board shall permit, with the terms of office of all members of one class expiring each year. Should the number of directors fixed by the Bylaws not be equally divisible by three, the excess director or directors shall be assigned to Classes III or II as follows: (i) if there shall be an excess of one directorship over a number equally divisible by three, such extra directorship shall be classified in Class III; and (ii) if there be an excess of two directorships over a number equally divisible by three, one shall be classified in Class II and the other in Class III. At the annual meeting of shareholders in 1981: directors of Class I shall be elected to hold office for a term expiring at the next succeeding annual meeting; directors of Class II shall be elected to hold office for a term expiring at the second succeeding annual meeting; and directors of Class III shall be elected to hold office for a term expiring at the third succeeding annual meeting. At each annual meeting of shareholders after 1981, the successors to the members of the class of directors whose terms shall then expire shall be elected to hold office for a term expiring at the third succeeding annual meeting, except that the successor to any director who shall have been elected by the directors to fill a vacancy whose term shall expire at such meeting shall be elected by the shareholders for a term expiring at the same time as the terms of other members of the same class. Any director elected by the Board of Directors to fill a vacancy (whether or not such vacancy shall have been created by an increase in the number of directors) shall serve only until the next annual meeting of the shareholders. Notwithstanding the foregoing, any director whose term shall expire at any annual meeting shall continue to serve until such time as his successor shall have been duly elected and shall have qualified unless his position Page 20 of Union Planters Corporation Charter 21 on the Board shall have been abolished by action taken to reduce the size of the Board prior to said meeting. Should the number of members of the Corporation's Board as fixed by the Bylaws be reduced by amendment thereof, the Board shall designate, by the name of the incumbent(s), the position(s) to be abolished, the first being selected from Class II should the number of members of that Class exceed the number of members of Class I, the second being selected from Class III should the number of its members exceed the number of members of Class I, and others, in sequence from Classes I, II, III, I, II, III, etc. in that order. Should additional directorships be created pursuant to amendment of the Bylaws, they shall be allocated first to Class II and then to Class I as may be required to make equal the number of directorships in each class. Should the number of directorships be equal as among the three classes, newly created positions shall be assigned first to Class III, then to Class II, then to Class I, etc. Notwithstanding any other provisions of this Charter or the Bylaws (and notwithstanding the fact that some lesser percentage may be specified by law, the Charter or the Bylaws of this Corporation), the affirmative vote of the holders of sixty-six and two-thirds percent (66 2/3%) or more of the outstanding shares of capital stock of this Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required (a) to amend, alter, change or repeal this ARTICLE NINTH of the Charter or (b) to remove from office any director of this Corporation whether with or without cause. TENTH: NO CUMULATIVE VOTING FOR DIRECTORS: Directors shall be elected by a plurality of the votes cast in the election. No cumulative voting shall be permitted with respect to the election of directors. ELEVENTH: CERTAIN POWERS DEFINED: The following provisions are hereby adopted for the purpose of defining, limiting and regulating the powers of the Corporation and of its directors and shareholders: (a) All corporate powers of the Corporation shall be exercised by its Board of Directors except as otherwise provided by law, provided, however, that the Board of Directors, by a resolution adopted by a majority of the entire Board, may designate an Executive Committee consisting of five (5) or more directors, and other committees, consisting of five (5) or more directors, and may delegate to such committee or committees all such authority of the Board that it deems desirable, except that no such committee or committees, unless specifically so authorized by the Board, shall have and exercise the authority of the Board to: (1) adopt, amend or repeal the Bylaws; (2) submit to the shareholders of the Corporation any action requiring shareholders' authorization under the Tennessee Business Corporation Act; (3) fill vacancies in the Board or in any committee; (4) declare dividends or make other corporate distributions; nor (5) issue or reissue any Common Stock, or Preferred Stock, or any obligation of the Corporation exchangeable for or convertible into its capital stock of any class or any warrant, right or option to acquire the same. The Board may designate one or more directors as alternate members of any such committee, who may replace any absent member or members at any meeting of such committee. Each such committee shall serve at the pleasure of the Board. The designation of any such committee shall serve at the pleasure of the Board. The designation of any such committee and the delegation thereto of authority shall not relieve any director of any responsibility imposed by law. To the extent consistent with law, this Charter and the Bylaws of the Corporation relating to the conduct of meetings of the Board shall govern meetings of the Executive and other committees. (b) Whenever under the Tennessee Business Corporation Act shareholders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth the action so taken, signed by all of the persons or entities entitled to vote thereon. Directors may take any action which they are required or permitted to take under the Tennessee Business Corporation Act without a meeting in the same manner. (c) The Board of Directors shall have the power to adopt, amend or repeal the Bylaws of the Corporation by a majority vote of the entire Board, but any Bylaw so adopted by the Board may be further amended or repealed by action of the shareholders of the Corporation. The Bylaws may contain any provision for the regulation and management of the business or affairs of the Corporation not inconsistent with law and this Charter. (d) The Board of Directors shall have power from time to time to set apart out of any funds of the Corporation available for dividends a reserve or reserves for any proper purpose, and to abolish any such reserve. Page 21 of Union Planters Corporation Charter 22 (e) The Board of Directors from time to time shall determine whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the shareholders, and no shareholder shall have any right to inspect any account, book or document of the Corporation except as conferred by statute, the Bylaws or as authorized by resolution of the Board of Directors. (f) The Board of Directors of the Corporation, without the vote of the shareholders, may distribute to its shareholders out of its capital surplus a portion of its assets, in cash or in property, in accordance with and subject to the limitations imposed by Section 48-16-401 of the Tennessee Business Corporation Act, provided however, that no such distribution shall be made to the holders of any class of shares until adequate provision shall be made for any sinking fund requirements applicable to the retirement of Preferred Stock of the Corporation. (g) The Corporation shall have the right to purchase or otherwise acquire its own shares in accordance with Section 48-16-302 of the Tennessee Business Corporation Act to the extent of unreserved and unrestricted earned surplus available therefor, or, if such unreserved and unrestricted earned surplus is not available, to the extent of unreserved and unrestricted capital surplus available therefor. TWELFTH: INDEMNIFICATION OF CERTAIN PERSONS: To the fullest extent permitted by Tennessee law, the Corporation may indemnify or purchase and maintain insurance to indemnify any of its directors, officers, employees or agents and any persons who may serve at the request of the Corporation as directors, officers, employees, trustees or agents of any other corporation, firm, association, national banking association, state- chartered bank, trust company, business trust, organization or any other type of entity whether or not the Corporation shall have any ownership interest in such entity. Such indemnification(s) may be provided for in the Bylaws, or by resolution of the Board of Directors or by appropriate contract with the person involved. THIRTEENTH: CHARTER AMENDMENTS: The Corporation reserves the right to amend, alter, change or repeal any provision made in this Charter, in the manner now or hereafter prescribed by the laws of the State of Tennessee, and all rights conferred herein upon shareholders and the Board of Directors are granted subject to this reservation. FOURTEENTH: SPECIAL VOTE IN CERTAIN CASES: (a) Except as otherwise expressly provided in Paragraph 4 of this ARTICLE FOURTEENTH, the affirmative vote of the holders of sixty-six and two-thirds percent (66 2/3%) or more of the outstanding shares of capital stock of this Corporation entitled to vote generally in the election of directors, considered for the purposes of this ARTICLE FOURTEENTH as one class, shall be required to authorize: (1) any merger or consolidation of this Corporation with or into any other corporation, or other entity; or (2) any sale, lease, exchange, or other disposition of all or substantially all of the assets of this Corporation to or with any other corporation, person, or other entity, if, as of the "Date of Determination" as defined in this ARTICLE FOURTEENTH, such other corporation, person, or entity is the "Beneficial Owner," directly or indirectly, of ten percent (10%) or more of the outstanding shares of capital stock of this Corporation entitled to vote generally in the election of directors, considered for the purposes of this ARTICLE FOURTEENTH as one class. Such affirmative vote shall be required notwithstanding the fact that some lesser percentage may be specified in law or any agreement with any national securities exchange. (b) For purposes of this ARTICLE FOURTEENTH, any corporation, person, or other entity shall be deemed to be the "Beneficial Owner" of any shares of capital stock of this Corporation (i) which it or any "Affiliate" or "Associate" of it (as defined in this ARTICLE FOURTEENTH) has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants, or options, or otherwise, or (ii) which are "Beneficially Owned," directly or indirectly (including shares being owned through application of clause (i) above), by any other corporation, person or entity which is its "Affiliate" or "Associate" (as defined in this ARTICLE FOURTEENTH) or with which it or any "Affiliate" or "Associate" or it has any agreement, arrangement, or understanding for the purpose of acquiring, holding, voting, or disposing of the capital stock of this Corporation. For the purposes of this ARTICLE FOURTEENTH, the outstanding shares of any class of capital stock of this Corporation shall include shares deemed owned through the application of clauses (i) and (ii) above but shall not include any other shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants, or options, or otherwise. (c) The Board of Directors of this Corporation shall have the power and duty to determine for the purposes of this ARTICLE FOURTEENTH, on the basis of information then known to it, whether any corporation, person, or other entity "Beneficially Owns" ten percent (10%) or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, or is an "Affiliate" or an "Associate" (as defined in this ARTICLE FOURTEENTH) or another. Any such determination by the Board of Directors made in good faith shall be conclusive and binding for all purposes of this ARTICLE FOURTEENTH. Page 22 of Union Planters Corporation Charter 23 (d) The provisions of this ARTICLE FOURTEENTH shall not apply to any merger or consolidation of this Corporation with or into, or any sale, lease, exchange, or other disposition of any assets of this Corporation to, any corporation or entity of which a majority of the outstanding shares of all classes of capital stock entitled to vote generally in the election of directors, considered for this purpose as one class, is owned of record or beneficially by this Corporation and its subsidiaries. (e) As used in this ARTICLE FOURTEENTH, the following terms shall have the following meanings: (1) Affiliate. An "Affiliate" of, or a person "affiliated" with, a specific person, means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. (2) Associate. The term "Associate" used to indicate a relationship with any person, means (i) any corporation or organization (other than this Corporation or a majority-owned subsidiary of this Corporation) of which such person is an officer or partner or is, directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of equity securities, (ii) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity, (iii) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person, or (iv) any investment company registered under the Investment Company Act of 1940 for which such person or any affiliate of such person serves as investment adviser. (3) Date of Determination. The term "Date of Determination" means (i) the date on which a binding agreement (except for the fulfillment of conditions precedent, including, without limitation, votes of shareholders to approve such transaction) is entered into by this Corporation, as authorized by its Board of Directors, and another corporation, person or other entity providing for any merger or consolidation of this Corporation or any sale, lease, exchange or disposition of all or substantially all of the assets of this Corporation, as referred to in Paragraph 1 in this ARTICLE FOURTEENTH; or, (ii) if such an agreement as referred to in item (i) is amended so as to make it less favorable to this Corporation and its shareholders, the date on which such amendment is approved by the Board of Directors of this Corporation, or, (iii) in cases where neither item (i) nor item (ii) shall be applicable, the record date for the determination of shareholders of this Corporation entitled to notice of and to vote upon the transaction in question. The Board of Directors of this Corporation shall have the power and duty to determine for the purposes of this ARTICLE FOURTEENTH the Date of Determination as to any transaction. Any such determination by the Board of Directors made in good faith shall be conclusive and binding for all purposes of this ARTICLE FOURTEENTH. (f) The provisions of this ARTICLE FOURTEENTH as to the vote required for any action described herein, shall apply in addition to any other provision for a vote required with respect to such action by law or otherwise. Notwithstanding any other provisions of this Charter or the Bylaws (and notwithstanding the fact that some lesser percentage may be specified in law, the Charter, or the Bylaws), the affirmative vote of the holders of sixty-six and two-thirds percent (66 2/3%) or more of the outstanding shares of capital stock of this Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter, or repeal this ARTICLE FOURTEENTH. Page 23 of Union Planters Corporation Charter EX-3.(B) 3 UNION PLANTERS AMENDED & RESTATED BY-LAWS 1 AMENDED AND RESTATED BYLAWS OF UNION PLANTERS CORPORATION (A TENNESSEE CORPORATION) _______________________________________ ARTICLE I MEETINGS OF SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the shareholders of the Corporation for the election of Directors and for the transaction of such other business as may come before the meeting shall be held on the fourth Thursday in April of each year (subsequent to the year 1972) if not a legal holiday, and if a legal holiday at such time as shall be designated by the Board. If the annual meeting shall not be held on the day hereinabove provided for, the Board shall call a special meeting for the election of Directors as soon thereafter as convenient, and in any event not later than 30 days after said day. Section 2. Special Meetings. Special meetings of the shareholders, unless otherwise prescribed by law, may be called for any purpose or purposes whatsoever at any time by the Chairman of the Board, the President, the Secretary or the holders of not less than one tenth (1/10) of the shares entitled to vote at such meeting. Section 3. Notice of Meeting; Waiver of Notice. Written or printed notice stating the place, day, hour, purpose or purposes for which the meeting is called and the person or persons calling the meeting shall be delivered either personally or by mail or at the direction of the Chairman of the Board, the President, the Secretary or other person or persons calling the meeting to each shareholder entitled to vote at the meeting. If mailed, such notice shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting and shall be deemed to be delivered when deposited in the United States Mail addressed to the shareholder at his address as it appears on the stock transfer records of the Corporation, with postage thereon prepaid. If delivered personally, such notice shall be delivered not less than five (5) nor more than sixty (60) days before the date of the meeting and shall be deemed delivered when actually received by the shareholder. A certificate of the Secretary or other person giving the notice, or of a transfer agent of the Corporation, that the notice required by this Section has been given, in the absence of fraud, shall be prima facie evidence of the facts therein stated. Whenever the shareholders of this Corporation are authorized to take any action after notice 1 2 or after the lapse of a prescribed period of time, such action may be taken without notice and without the lapse of such period of time, if at any time before or after such action is completed each shareholder entitled to such notice or entitled to participate in the action to be taken, (or his attorney-in-fact or proxy holder), shall submit a signed waiver of notice of such requirement. When a meeting is adjourned to another time or place, it shall not be necessary to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken, and at the adjourned meeting any business may be transacted that might have been transacted on the original date of the meeting. However, if after the adjournment the Board shall fix a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record on the new record date entitled to vote at the meeting. Section 4. Place of Meetings. Meetings of the shareholders may be held at such place, either within or without the State of Tennessee, as may be set by the Board. If the Board shall fail to set the place of the meeting, the meeting shall be held at the principal office of the Corporation. Section 5. Quorum. At all meetings of the shareholders, the holders of a majority of the shares of stock of the Corporation entitled to vote, present in person or by proxy, shall constitute a quorum for the transaction of any business, except as otherwise provided by statute or by the Charter or these Bylaws. When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any of those present. A meeting may be adjourned despite the absence of a quorum. The absence from any meeting of holders of the number of shares of stock of the Corporation in excess of a majority thereof which may be required by the laws of the State of Tennessee or other applicable statute, the Charter, or these Bylaws, for action upon any given matter, shall not prevent action at such meeting upon any other matter or matters which may properly come before the meeting, if there shall be present thereat, in person or by proxy, holders of the number of shares of stock of the Corporation required for action in respect of such other matter or matters. Section 6. Organization. At each meeting of the shareholders, the Chairman of the Board or in his absence or inability to act, the Vice chairman, or in the absence or inability to act of the Chairman of the Board and the Vice Chairman, the President, shall act as Chairman of the meeting. The Secretary, or in his absence or inability to act, any person appointed by the Chairman of the meeting shall act as Secretary of the meeting and keep the minutes thereof. 2 3 Section 7. Order of Business. The order of business at all meetings of the shareholders shall be as determined by the Chairman of the meeting. Section 8. Voting; Consent of Shareholders in lieu of Meeting. Except as otherwise provided by statute or the Charter, each holder of record of shares of stock of the Corporation having voting power shall be entitled at each meeting of the shareholders to one vote upon each matter submitted to a vote for every share of such stock standing in his name on the record of shareholders of the Corporation: a. On the date fixed by the Board in accordance with Section 6 of Article VI hereof as the record date for the determination of the shareholders who shall be entitled to notice of and to vote at such meeting; or b. If such record date shall not have been fixed for the determination of shareholders entitled to notice of or entitled to vote at a meeting of shareholders, the date on which notice of the meeting is mailed shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof. Every shareholder entitled to vote at a meeting of shareholders or to express consent or dissent without a meeting may authorize another person or persons to act for him by proxy. Every proxy must be signed by the shareholder or his attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable prior to its use at the pleasure of the shareholder executing it, except as otherwise provided in this Section or by law. The authority of the holder of a proxy to act shall not be revoked by the incompetence or the death of the shareholder who executed the proxy unless, before the authority is exercised, written notice of an adjudication of such incompetence or the death of the shareholder who executed the proxy unless, before the authority is exercised, written notice of an adjudication of such incompetence or written notice of such death is received by the corporate officer responsible for maintaining the list of shareholders. A proxy authorized by a shareholder which is entitled "irrevocable proxy" an which states it is irrevocable is irrevocable when it is held by one of the following or a nominee of any of the following: (a) a pledge; (b) a person who has purchased or agreed to purchase the shares; 3 4 (c) a person designated by or under an agreement comporting with the law. Notwithstanding a provision in a proxy stating that it is irrevocable, the proxy becomes revocable after the pledge is redeemed or such agreement has terminated. A proxy may be revoked notwithstanding a provision making it irrevocable, by a purchaser of shares without knowledge of the existence of the provision unless the existence of the proxy and its irrevocability is noted conspicuously on the face or back of the certificate representing such shares. Whenever shareholders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth the action so taken, signed by all of the persons or entities entitled to vote thereon. If a vote shall be taken on any question, then unless required by statute, or determined by the Chairman of the meeting to be advisable, any such vote need not be by ballot. On a vote by ballot, each ballot shall be signed by the shareholder voting, or by his proxy, if there be such proxy, and shall state the number of shares voted. Section 9. List of Shareholders. A list of shareholders of the Corporation as of the record date, certified by the officer responsible for the preparation or by the Corporation's transfer agent, shall be open for inspection at any meeting of the shareholders. If the right to vote at any meeting is challenged, the Chairman of the meeting may rely on such list as evidence of the right of the persons challenged to vote at such meeting. Section 10. Inspectors of Election. The Board may, in advance of any meeting of shareholders, appoint two or more inspectors to act at such meeting or at any adjournment thereof. If the inspectors shall not be so appointed, or if any of them shall fail to appear or act, the Chairman of the meeting may, and on request of any shareholder entitled to vote thereat shall, appoint inspectors. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the results, and do such acts as are proper to conduct the election or vote with fairness to all shareholders. On request of the Chairman of the meeting or any shareholder 4 5 entitled to vote thereat, the inspectors shall make a report in writing of any challenge, request or matter determined by them, and shall execute a certificate of the facts found by them. No director or candidate for the office of director shall act as inspector of an election of directors. Inspectors need not be shareholders of the Corporation. Section 11. Examination of Corporate Records by Shareholders. Any person who shall have been a shareholder of record for at least six (6) months immediately preceding his demand, or who shall be the holder of record of at least five percent (5%) of all of the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person, or by agent or attorney, at any reasonable time or times, for any proper purpose, the Corporation's books and records of account and the minutes and records of meetings of shareholders, the Board and the Committees o the Board, and to make extracts therefrom. Notwithstanding the foregoing, upon proof of proper purpose by a shareholder of the Corporation, irrespective of the period of time during which such shareholder shall have been a shareholder of record and irrespective of the percentage of outstanding shares held by him, a court having equity jurisdiction in Shelby County, Tennessee, may compel the production for examination by such shareholder of the books, documents and records of the Corporation. By resolution the Board may adopt further policies in respect of the right of the shareholders of the Corporation to inspect said books and records provided that said policies shall not be more restrictive than the provisions of applicable law at the time. ARTICLE II BOARD OF DIRECTORS Section 1. General Powers. Except as otherwise provided by law or by the Charter, the business and affairs of the Corporation shall be managed by the Board of Directors. The Board may exercise all such authority and powers of the Corporation and do all such lawful acts and things as are not by statute or the charter directed or required to be exercised or done by the shareholders. Section 2. Number, Classification, Election, etc. The number of directors of the corporation shall be eighteen (18) who shall be divided into three classes designated Class I, Class II and Class III as follows: Class I consists of six (6) directors elected to hold office for a term expiring at the 1994 Annual Meeting of Shareholders at which their respective successors are to be elected for a term expiring at the 1997 Annual Meeting; 5 6 Class II consists of six (6) directors elected to hold office for a term expiring at the 1995 Annual Meeting of Shareholders at which their respective successors are to be elected for a term expiring at the 1998 Annual Meeting; and Class III consists of six (6) directors elected to hold office for a term expiring at the 1996 Annual Meeting of shareholders at which their respective successors are to be elected for a term expiring at the 1999 Annual Meeting. Thereafter, each class of directors shall be elected to hold office for terms expiring on the third annual meeting succeeding the annual meeting at which they were last elected. The successor to any director who shall have been elected by the directors to fill a vacancy on the Board shall serve only until the next annual meeting of shareholder for a term expiring at the same time as the terms of the other members of the same class. Notwithstanding the foregoing, any director whose term shall expire at any annual meeting shall continue to serve until such time as his successor shall have been duly elected and shall have qualified unless his position on the Board shall have been abolished by action taken to reduce the size of the Board prior to said meeting. No amendment of the Bylaws decreasing the number of directors shall have the effect of shortening the term of any director. All directors shall be at least 21 years of age. Mandatory retirement is established at age 70, except as to persons who were Directors on February 21, 1985, to be effective at the regular Annual Shareholders Meeting following the 70th birthday. Directors need not be shareholders of the Corporation or need they be residents of Tennessee. Except as otherwise provided by law or by the Charter, the directors shall be elected by written ballot at annual meetings of shareholders. Article NINTH of the Corporation's Charter, as amended by the shareholders on April 16, 1981, provides that the number of directors of the Corporation shall be as provided in these Bylaws from time to time but shall not be less than 7 nor more than 25 and establishes guidelines for increasing the number of directors by amendment of the Bylaws by two-thirds vote of the directors then in office. Section 3. Place of Meeting. Regular meetings of the Board shall be held at such place within or without the State of Tennessee as the Board may from time to time determine. Special meetings may be held at such place in Shelby County, Tennessee, as may be determined by the person calling said meeting. In all cases the place of the meeting shall be specified in the notice thereof. Section 4. Organization Meeting. The Board of Directors shall meet for the purpose of organization, the election of officers, and the transaction of other business as soon as practicable after each annual meeting of the shareholders, on the same day and at the same place where such annual meeting shall 6 7 be held. Notice of such meeting need not be given if held at said time and place. Such meeting may be held at any other time or place (within or without the State of Tennessee) which shall be specified in a notice thereof given as hereinafter provided in Section 7 of this ARTICLE II. Section 5. Regular Meetings. Regular meetings of the Board of Directors of this Corporation shall be held on the third Thursday of each month at 10:30 a.m., in the Second Floor Executive Conference Room, 67 Madison Avenue, Memphis, Tennessee. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which otherwise would be held on that day shall be held at the same hour on the next succeeding business day. Notice of regular meetings of the Board need not be given except as otherwise required by law. Section 6. Special Meetings. Special meetings of the Board may be called by the Chairman of the Board, the President, and Executive Vice President, the Secretary or any three or more Directors of the Corporation. Section 7. Notice of Meetings. Notice of each special meeting of the Board (and of each regular meeting for which notice shall be required) shall be given by the Secretary or by or under the supervision of the persons calling the meeting as hereinafter provided in this Section 7, in which notice shall be stated the time and place of the meeting. Notice of each such meeting shall be delivered to each director, either personally or by telephone, telegraph, cable or other method of communication, at least 24 hours before the time at which such meeting is to be held, or by first-class mail, postage prepaid, addressed to him at his residence or usual place of business, and deposited in the mail at least two days before the day on which the meeting is to be held. Notice of any such meeting need not be given to any director who shall, either before or after the meeting, submit a signed waiver of notice or who shall attend such meeting (other than for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened). Neither the business to be transacted at, nor the purpose of any regular or special meeting of the Board, need be specified in the notice or waiver of notice of such meeting unless otherwise required by law of the Bylaws. Section 8. Quorum and Manner of Acting. A majority of the entire Board shall be present in person at any meeting of the Board in order to constitute a quorum for the transaction of business at such meeting, and except as otherwise expressly required by the Charter, these Bylaws or any applicable statute, the act of a majority of the directors present at any meeting at which a quorum is present shall be act of the Board. In the absence of a quorum at any meeting of the Board, a majority of 7 8 the directors present thereat may adjourn such meeting to another time and place until a quorum shall be present thereat. Notice of the time and place of any such adjourned meeting shall be given to the directors who were not present at the time of the adjournment and, unless such time and place were announced at the meeting at which the adjournment was taken, to the other directors. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. Section 9. Organization. At each meeting of the Board, the Chairman of the Board, or, in his absence or inability to act, the Vice Chairman, or, in his absence or inability to act, the President, or in his absence or inability to act, another director chosen by a majority of the directors present shall act as Chairman of the meeting and preside thereat. The Secretary or, in his absence or inability to act, any person appointed by the Chairman shall act as Secretary of the meeting and keep the minutes thereof. Section 10. Resignations. Any director of the Corporation may resign at any time by giving written notice of his resignation to the Board or to the Chairman of the Board, the Vice Chairman or to the President or to the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 11. Vacancies. Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the Board for any reason (other than the removal of directors without cause or for cause) may be filled by vote of a majority of the directors then in office, although less than a quorum exists. Vacancies occurring on the Board by reason of the removal of directors without cause or for cause may be filled for the duration of the term of the class by vote of the shareholders, provided, however, if the shareholders shall fail to fill a vacancy so created, the vacancy shall be filled by the directors in the manner specified in the preceding sentence. No person who has attained the age of seventy (70) years shall be appointed to fill any vacancy. Section 12. Removal of Directors. Any or all of the directors of the Corporation may be removed with or without cause by vote of the holders of sixty-six and two-thirds percent (66 2/3%) or more of the outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors. 8 9 Section 13. Action by Written Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting on written consent, setting forth the action so taken, signed by all of the directors entitled to vote thereon. The instrument of consent shall be filed with the minutes of the proceedings of the Board of Directors. ARTICLE III EXECUTIVE AND OTHER COMMITTEES Section 1. Executive Committee. The Board may, by resolution adopted by a majority of the entire Board, designate an Executive Committee consisting of five (5) or more of the directors of the Corporation, which Committee shall have and may exercise all of the authority of the Board of Directors with respect to all matters other than: (a) The adoption, amendment or repeal of any Bylaw; (b) The submission to shareholders of any action requiring shareholders' authorization; (c) The filling of vacancies in the Board of Directors or in any committee thereof; (d) The declaration of dividends or making of other corporate distributions; (e) The issuance of Common Stock, Preferred Stock or any other obligation of the Corporation exchangeable for or convertible into its capital stock of any class or any warrant, right or option to acquire the same; or (f) the removal or replacement of any officer elected by the Board or appointed by the Chairman of the Board or President pursuant to authority conferred upon them or either of them by the Board. The Board may designate one or more directors as alternate members of the Executive Committee, who may replace any absent member or members at any meeting of such committee. The Executive Committee shall serve at the pleasure of the Board. The Executive Committee shall keep written minutes of its proceedings and shall report such minutes to the Board. All such proceedings shall be subject to revision or alteration by the Board; provided, however, that third parties shall not be prejudiced by such revision or alteration. Section 2. Other Committees. The Board may, by resolution adopted by a majority of the entire Board, designate other Committees, each consisting of three or more of the directors 9 10 of the Corporation, which Committees, except as otherwise proscribed by statute, shall have and may exercise the authority of the Board to the extent that such authority shall be conferred by resolutions designating such Committee or Committees adopted by vote of a majority of the entire Board. Section 3. General. A majority of any committee may determine its action and fix the time and place of its meetings, unless the Board shall otherwise provide. In the absence or disqualification of any member of any committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place and stead of any such absent or disqualified member. In determining the existence of a quorum, the Secretary of the Corporation shall not be counted unless he shall be a director of the Corporation and shall have been duly appointed as a member of such committee. The Board shall have the power at any time to change the membership of any committee, to fill all vacancies, to designate alternate members to replace any absent or disqualified member, or to dissolve any such committee. Nothing herein shall be deemed to prevent the Board from appointing one or more committees consisting in whole or in part of persons who are not directors of the Corporation; provided, however, that no such committee shall have or may exercise any authority or power of the Board in the management of the business or affairs of the Corporation. ARTICLE IV OFFICERS Section 1. Number and Qualifications. The officers of the Corporation shall include the Chairman of the Board, the Vice Chairman, the President, one or more Executive Vice Presidents, one or more Vice Presidents, the Treasurer and the Secretary. Any two or more offices may be held by the same person, except the offices of President and Secretary. Such officers shall be elected by the Board of Directors each year at the organizational meeting held after the Annual Meeting of shareholders, each to hold office until the meeting of the Board following the next Annual Meeting of the shareholders and until his successor shall have been duly elected and shall have qualified, or until his death, or until he shall have resigned or have been removed in the manner provided by law and these Bylaws. The Board may from time to time elect, or delegate to the Chairman of the Board the power to appoint such other officers (including one or more Assistant Vice Presidents, one or more Assistant Treasurers, and one or more Assistant Secretaries) and such agents, as may be necessary or desirable to carry on the business of the Corporation. Such other officers and agents shall have such duties and shall 10 11 hold their offices for such terms as may be prescribed by the Board or by the appointing authority. Section 2. Resignations. Any officer of the Corporation may resign at any time by giving written notice of his resignation to the Board, the Chairman of the Board, the Vice Chairman, the President or the Secretary. Any such resignation shall take effect at the time specified therein or, if the time when it shall become effective shall not be specified therein, immediately upon its receipt; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 3. Removal. Any officer or agent of the Corporation may be removed, either with or without cause, at any time, by the vote of the majority of the entire Board at any meeting of the Board, or, except in the case of an officer or agent elected or appointed by the Board, by the Chairman of the Board or the President. Section 4. Vacancies. A vacancy in any office, whether arising from death, resignation, removal or any other cause, may be filled by the Board at any regular or special meeting for the unexpired portion of the term of the office which shall be vacant, in the manner prescribed in these Bylaws for the regular election or appointment to such office. Section 5. The Chairman. The Chairman of the Board shall be the Chief Executive Officer of the Corporation and shall have the general and active management of the business of the Corporation and shall have general and active supervision and direction over the business and affairs of the Corporation and over its several officers, agents and employees, subject, however, to the control of the Board. He shall, if present, preside at each meeting of the Shareholders and of the Board. He shall perform all duties incident to the office of the Chairman of the Board and such other duties as may, from time to time, be assigned to him by the Board. The Chairman of the Board shall be authorized to do or cause to be done all things appropriate, including preparation, execution and filing of any Registration Statements or other documents to effectuate the registration of the Corporation's securities (when necessary or desirable) with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended, and to effectuate the registration of the Corporation's securities as may be necessary or desirable pursuant to the securities laws of any state. The Chairman is also authorized to execute and cause to be filed on behalf of the Corporation any reports which may be required by the securities laws or other laws of the United States or of any state pursuant to any regulations adopted with respect thereto. 11 12 Section 5(a). The Vice Chairman. The Vice Chairman shall have those duties assigned to him by the Chairman or the Board. In the case of the absence of the Chairman or his inability to act, the Vice Chairman shall perform the duties of the Chairman, and when so acting shall have all of the powers of, and be subject to all the restrictions upon, the Chairman. Section 6. The President. The President shall have general and active supervision and direction over the other officers, agents and employees and shall see that their duties are properly performed, subject, however, to the control of the Board. Concurrently with the Chairman of the Board, the president is hereby authorized to do or cause to be done all things appropriate, including preparation, execution and filing of the registration of the Corporation's securities (when necessary or desirable) with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended, and to effectuate registration of the Corporation's Securities as may be necessary or desirable pursuant to the securities laws of any state. The President is also authorized to execute and cause to be filed on behalf of the Corporation any reports which may be required by the securities laws or other laws of the United States or any state or pursuant to any regulations adopted with respect thereto. In the case of the absence of the Chairman of the Board and the Vice Chairman or their inability to act, the President shall perform the duties of the Chairman of the Board, and when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Chairman of the Board. He shall perform all duties incident to the office of the Chairman of the Board and such other duties as, from time to time, may be assigned to him by the Board or these Bylaws. Section 7. Executive Vice-President. At the request of the Chairman of the Board, the Vice Chairman and the President, or in the case of their absence or inability to act, the Executive Vice-President shall perform the duties of the Chairman of the Board, the Vice Chairman and the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Chairman of the Board, the Vice Chairman and the President. The executive Vice-President shall perform all duties incident to the office of Executive Vice-President and such other duties as from time to time may be assigned to him by the Board, the Chairman of the Board, the Vice Chairman, the President, or by these Bylaws. one Executive Vice-President shall be the chief financial officer of the Corporation. Section 8. Vice Presidents. Each Vice-President shall perform all such duties as from time to time may be assigned to him by the Board, the Chairman of the Board, the Vice Chairman or the president. Vice-Presidents shall have seniority based upon length of service as Vice-President. Unless the Board shall 12 13 otherwise provide, the Senior Vice-President shall perform the duties of the Executive Vice-President in case of his absence or inability to act, or if an Executive Vice-President shall not have been appointed by the Board. Section 9. The Treasurer. The Treasurer shall: (a) Have charge and custody of, and be responsible for, all the funds and securities of the Corporation; (b) Keep full and accurate records of receipts and disbursements in books belonging to the Corporation. (c) Cause all monies and other valuables to be deposited to the credit of the Corporation; (d) Receive, and give receipts for, monies due and payable to the Corporation from any source whatsoever; (e) Disburse the funds of the Corporation and supervise the investment of its funds as ordered or authorized by the proper vouchers therefor; and (f) In general, perform all the duties incident to the office of Treasurer, and such other duties as from time to time may assigned to him by the Board, the President, the Vice Chairman or the Chairman of the Board. Section 10. The Secretary. The Secretary shall: (a) Keep or cause to be kept in one or more books provided for the purpose, the minutes of all meetings of the Board, the committees of the Board and the shareholders; (b) See that all notices are duly given in accordance with the provisions of these Bylaws and as required by law; (c) Be custodian of the records and the seal of the Corporation and affix and attest the seal to all stock certificates of the Corporation (unless the seal of the Corporation on such certificates shall be facsimile as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal; (d) See that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; (e) In general, perform all the duties incident to the office of Secretary and such other duties as from time 13 14 to time may be assigned to him by the Board, the Chairman of the Board, the Vice Chairman or the President. Section 11. Officers' Bond or Other Security. If required by the Board, any officer of the Corporation shall give a bond or other security for the faithful performance of his duties, in such amount and with such surety or sureties as the Board may require. ARTICLE V INDEMNIFICATION The Corporation does hereby indemnify its directors and officers to the fullest extent permitted by the laws of the State of Tennessee and by ARTICLE TWELFTH of its Charter. The Corporation may indemnify any other person to the extent permitted by the Charter and by applicable law. ARTICLE VI SHARES, ETC. Section 1. Stock Certificates. Each shareholder of the Corporation shall be entitled upon request to have a certificate in such form conforming to law as shall be approved by the Board, representing the number of shares of stock of the Corporation owned by him. The certificates representing shares of stock shall be signed in the name of the Corporation by the Chairman of the Board or the President or a Vice-President or an Assistant Vice-President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and sealed with the seal of the Corporation (which seal may be a facsimile engraved or printed); provided, however, that where any such certificate is countersigned by a transfer agent and/or a registrar (other than the Corporation or one of its employees), the signatures of the Chairman of the Board, President, Vice-President, Secretary, or Treasurer upon such certificates may be facsimiles, engraved or printed. In case any officer who shall have signed such certificate shall have ceased to be such officer before such certificates shall be issued, they may nevertheless be issued by the Corporation with the same effect as if such officer were still in office at the date of their issue. Section 2. Books of Account and Record of Shareholders. There shall be kept correct and complete books and records of account, minutes of the proceedings of its shareholders, Board of Directors and the committees of the Board, and of all the business and transactions of the Corporation. There shall also be kept at the office of its transfer agent or at both, a record containing the names and addresses of all shareholders of the Corporation, the number of shares of stock held by each, and the 14 15 dates when they became the owners of record thereof. Such shareholder records may be in written form, on magnetic tape, disk pack storage, or in any other form capable of being converted into written form within a reasonable time for visual inspection. Section 3. Transfers of Shares. Transfers of shares of stock of the Corporation shall be made on the stock records of the Corporation only upon authorization by the registered holder thereof, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary or with a transfer agent or transfer clerk, and on surrender of the certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of all applicable taxes with respect to the transfer. Except as otherwise provided by law, the Corporation shall be entitled to recognize the exclusive right of a person in whose name any share or shares stand on the record of shareholders as the owner of such shares or shares for all purposes, including, without limitation, the right to receive dividends or other distributions, and to vote as such owner, and the Corporation shall not be bound to recognize any equitable or legal claim to or interest in any such share or shares on the part of any other person. Whenever any transfers of shares shall be made for collateral security and not absolutely, and written notice thereof shall be given to the Secretary or to such transfer agent or transfer clerk, such facts shall be stated in the entry of the transfer. Section 4. Regulations. The Board may make such additional rules and regulations, not inconsistent with applicable law, the Charter or these Bylaws, as it may deem expedient concerning the issue, transfer, and registration of certificates for shares of stock of the Corporation. It may appoint one or more transfer agents or one or more transfer clerks and one or more registrars, and may require all certificates for shares of stock to bear the signature or signatures of any of them. Section 5. Lost, Destroyed or Mutilated Certificates. The holder of any certificate(s) representing shares of the Corporation shall immediately notify the Corporation of any loss, destruction or mutilation of such certificate(s), and the corporation may issue a new certificate or certificates of stock in the place of any certificate theretofore issued by it which the owner thereof shall allege to have been lost or destroyed or which shall have been mutilated. As a condition precedent to the issuance of replacement certificates, such owner or his legal representative as principal shall give to the Corporation a bond with "open" (unlimited) penalty and in such form and with such surety or sureties as the person designated by the Board in his absolute discretion shall determine to be sufficient to indemnify the Corporation against any claim that may be made against it on account of the alleged loss or destruction of any such certificate, 15 16 need not be called to ratify or reject the selection by the Board of independent auditors and accountants in the above manner to fill a vacancy occurring between Annual Meeting as a result of the resignation of said auditors and accountants. The employment of such accountants shall be conditioned upon the right of the Corporation, either by the unanimous vote of the entire Board of Directors or by vote of a majority of the outstanding voting securities at any meeting called for the purpose, to terminate such employment without penalty. If the selection of accountants shall be rejected by the Shareholders or their employment be terminated by the Shareholders in the manner provided above, the vacancy so occurring may be filled by the vote of a majority of the outstanding voting securities either at the meeting at which the rejection or termination by the Shareholders occurred or, if not so filled, at a subsequent meeting which shall be called for the purpose. ARTICLE XI AMENDMENTS These Bylaws may be amended or repealed, in whole or in part, or new Bylaws may be adopted, by the Board of Directors at any meeting thereof by vote of a majority of the entire Board, unless a greater affirmative vote is required by the Charter; provided, however, that notice of such meeting shall have been given as provided in these Bylaws, which notice shall mention that amendment or repeal of the Bylaws, or the adoption of new Bylaws, is one of the purposes of the meeting. Any such Bylaws adopted by the Board may be amended or repealed, or new Bylaws may be adopted by vote of the shareholders of the Corporation, at any annual or special meeting thereof; provided, however, that notice of such meeting shall have been given as provided in these Bylaws, which notice shall mention that amendment or repeal of these Bylaws, or the adoption of new Bylaws, is one of the purposes of such meeting. ARTICLE XII SHAREHOLDER PROPOSALS TO BE PRESENTED AT ANNUAL MEETINGS Any proposal of a shareholder which is to be presented at any annual meeting of shareholders shall be sent so as to be received by the Corporation at its principal offices not less than one hundred twenty (120) days in advance of the date of the Corporation's proxy statement issued in connection with the previous year's annual meeting of shareholders. Updated January 20, 1994 18 EX-11 4 UNION PLANATERS COMP. OF PER SHARE EARNINGS 1 Exhibit 11 Page 1 Union Planters Corporation Computation of Earnings per Share
Years Ended December 31 ----------------------------------------- 1993 1992 1991 ---- ---- ---- (Dollars in thousands, except share and per share data) Primary Earnings Per Share - -------------------------- Computation for Statement of Earnings - ------------------------------------- Reconciliation of earnings to amounts used for primary earnings per share: Net earnings $ 63,063 $ 41,439 $ 27,508 Less: Preferred stock dividends Series B (352) (352) (352) Series C (1,790) (1,790) (661) Series D (494) (247) - Series E (5,832) (3,777) - ----------- ----------- ----------- Net earnings applicable to primary earnings per share $ 54,595 $ 35,273 $ 26,495 =========== =========== =========== Reconciliation of weighted average number of shares to amount used in primary earnings per share computation: Average shares outstanding 19,434,536 16,618,751 16,564,094 Average common equivalent shares: Assumed exercise of options 187,286 145,851 67,963 ----------- ----------- ---------- Primary average shares outstanding 19,621,822 16,764,602 16,632,057 =========== =========== ========== Primary earnings per share $2.78 $2.10 $1.59 ===== ===== =====
2 Exhibit 11 Page 2 Union Planters Corporation Computation of Earnings per Share
Years Ended December 31 ----------------------------------------- 1993 1992 1991 ---- ---- ---- (Dollars in thousands, except share and per share data) Fully Diluted Earnings Per Share - -------------------------------- Computation for Statement of Earnings - ------------------------------------- Earnings used for fully diluted earnings per share: Net earnings $ 63,063 $ 41,439 $ 27,508 Less: Preferred stock dividends Series C (1,790) (1,790) (661) ----------- ----------- ---------- Net earnings applicable to fully diluted earnings per share $ 61,273 $ 39,649 $ 26,847 =========== =========== ========== Reconciliation of weighted average number of shares to amount used in fully diluted earnings per share computation: Average shares outstanding 19,434,536 16,618,751 16,564,094 Average common equivalent shares: Assumed exercise of options 205,365 163,420 81,720 Assumed conversion of preferred stock: Series B 339,768 339,768 339,768 Series D 235,655 127,521 - Series E 3,618,515 2,359,290 - ----------- ---------- ---------- Fully diluted average shares outstanding 23,851,839 19,608,750 16,985,582 =========== ========== ========== Fully diluted earnings per share $2.57 $2.02 $1.58 ===== ===== =====
EX-13 5 ANNUAL REPORT TO SECURITY HOLDERS 1 [Logo] UNION PLANTERS CORPORATION 1993 ANNUAL REPORT 2 (MAP) 3 FINANCIAL HIGHLIGHTS UNION PLANTERS CORPORATION AND SUBSIDIARIES
- ----------------------------------------------------------------------------------------------- DECEMBER 31, 1993 1992 % CHANGE - ----------------------------------------------------------------------------------------------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) FOR THE YEAR Earnings before extraordinary item and accounting changes $ 61,268 $ 41,439 47.9% Extraordinary item, net of taxes (3,206) -- Accounting changes, net of taxes 5,001 -- Net earnings 63,063 41,439 52.2 PER COMMON SHARE Primary Earnings before extraordinary item and accounting changes $ 2.69 $ 2.10 28.1% Extraordinary item, net of taxes (.16) -- Accounting changes, net of taxes .25 -- Net earnings 2.78 2.10 32.4 Fully diluted Earnings before extraordinary item and accounting changes 2.49 2.02 23.3 Extraordinary item, net of taxes (.13) -- Accounting changes, net of taxes .21 -- Net earnings 2.57 2.02 27.2 Cash dividends .72 .60 20.0 Book value 18.96 16.34 16.0 Book value -- assuming conversion of convertible preferred stock 19.06 16.84 13.2 AT YEAR END Assets $6,318,186 $5,262,184 20.1% Earning assets 5,841,599 4,807,627 21.5 Loans, net of unearned income 2,935,215 2,231,839 31.5 Allowance for losses on loans 80,442 64,290 25.1 Deposits 5,251,366 4,450,176 18.0 Shareholders' equity 477,300 356,211 34.0 RATIOS Earnings before extraordinary item and accounting changes Return on average assets .98% .87% Return on average common equity 15.18 13.65 Net earnings Return on average assets 1.01 .87 Return on average common equity 15.70 13.65 Net interest income (taxable-equivalent) as a percentage of average earning assets 4.34 4.61 Allowance for losses on loans as a percentage of loans 2.74 2.88 Nonperforming loans as a percentage of loans .76 1.70 Nonperforming assets as a percentage of loans and foreclosed properties .92 1.99 Allowance for losses on loans as a percentage of nonperforming loans 362.83 168.97 Shareholders' equity to assets 7.55 6.77 Tier 1 capital to assets 7.10 6.85 - -----------------------------------------------------------------------------------------------
CONTENTS
PAGE ---- Letter to Shareholders................................................................ 2 Consolidated Financial Statements..................................................... 4 Notes to Consolidated Financial Statements............................................ 8 Report of Management.................................................................. 34 Report of Independent Accountants..................................................... 34 Selected Financial Data............................................................... 35 Management's Discussion and Analysis of Results of Operations and Financial Condition........................................................................... 36 Financial Tables...................................................................... 49 Selected Quarterly Data............................................................... 57 Communities Served.................................................................... 59 Executive Officers and Directors...................................................... 60
1 4 TO OUR SHAREHOLDERS FINANCIAL RESULTS We are very pleased to report record earnings for 1993 of $63.1 million, or $2.57 fully diluted earnings per share, compared to $41.4 million in 1992, or fully diluted earnings per share of $2.02. Our 1993 results include a net benefit of $.08 per share from accounting changes and an extraordinary item. For the year our return on average assets improved to 1.01% versus .87% in 1992 and our return on average common equity improved to 15.70% versus 13.65%. Our lead bank, Union Planters National Bank which will celebrate its 125th anniversary this year, earned a record $35.6 million compared to $27.1 million in 1992. The return on average assets for the year was 1.07%. Earnings benefited from a decline in the provision for losses on loans as the Bank's asset quality continued to improve. Our number of community banks increased from 20 to 31 in 1993 and the combined earnings of the group was $30.2 million compared to $24.2 million in the prior year. The return on average assets for the group was 1.01%. Earnings also benefited from the absence of additional provisions for litigation settlements and reduced legal expenses as most of the litigation claims from the late 80's have been resolved. At year end total assets were $6.3 billion compared to $5.3 billion a year ago. Total loans were $2.9 billion versus $2.2 billion and total deposits were $5.3 billion versus $4.5 billion. Total shareholders' equity at year end was $477 million compared to $356 million at the end of 1992. Our equity to assets ratio increased to 7.55% compared to 6.77% a year ago. We are in the "well-capitalized" (the highest rating accorded) category according to all regulatory definitions. ASSET QUALITY Asset quality measures for the Corporation are very strong. At year end nonperforming assets had declined to $27 million, down from $45 million at year end 1992. Nonperforming assets represented only .92% of total loans and foreclosed properties at year end compared to 1.99% a year ago. Our allowance for losses on loans at year end was $80.4 million compared to $64.3 million a year ago. At year end reserve coverage of nonperforming loans was approximately 360%. ACQUISITIONS Growth through acquisition continues to be an integral part of the Corporation's strategic plan. Since 1986 the Corporation has pursued a community bank acquisition strategy focused on well-managed community banks with significant market share in their local markets and a strategic fit with our existing operations. During 1993 we completed twelve acquisitions, assigning eleven of these to our Community Bank Group and merging one of them into Union Planters National Bank. Those joining the Community Bank Group were Bank of East Tennessee in Morristown, Tennessee; SaveTrust Federal Savings Bank in Dyersburg, Tennessee; Security Trust Savings & Loan Association in Knoxville, Tennessee; First Federal Savings Bank in Maryville, Tennessee; First State Bancshares, Inc. in Somerville, Tennessee; Farmers Union Bank in Ripley, Tennessee; Garrett Banchares, Inc. in Goodlettsville, Tennessee; Erin Bank & Trust Company in Erin, Tennessee; Hogue Holding Company, Inc. in Weiner, Arkansas; Central State Bancorp, Inc. in Lexington, Tennessee; and First Financial Services, Inc. in Brownsville, Tennessee. Merging into Union Planters National Bank were First Cumberland Bank in Madison, Tennessee and the Knoxville offices of Bank of East Tennessee. Since year end we have completed three acquisitions: (1) Mid-South Bancorp, Inc., the parent company of Simpson County Bank in Franklin, Kentucky; Adairville Banking Company in Adairville, Kentucky; The Peoples Bank of Elk Valley in Fayetteville, Tennessee; and First Citizens Bank in Franklin, Tennessee; (2) First National Bancorp of Shelbyville, Inc., in Shelbyville, Tennessee; and (3) Anderson County Bank in Clinton, Tennessee. These acquisitions have increased the Corporation's assets approximately $370 million. We currently have five pending acquisitions, all of which should be completed this year. Generally, markets in the Mid-South and Southeast where we currently operate are our primary areas of interest. Our approach of retaining the community name of these banks and holding the presidents and local boards of each bank accountable for their results has served us well. We have prudently balanced a centralized loan review and audit process with the need for customer decisions to be made in the local market. 2 5 NEW CHARTERS In November of 1993, the Board of Directors updated the three year strategic plan for the Corporation. As part of the plan, the Board approved the chartering of new banks in Chattanooga, Jackson, Knoxville, and Nashville, Tennessee. UPC currently has operations in each of these markets. All loans, deposits, and facilities in these markets, which are either a part of the branch system of Union Planters National Bank or one of the community banks, will be transferred to the newly chartered banks. These new banks will be no different, except perhaps as to size, than any of UPC's other subsidiary banks. Each will focus on its local market and have its own Board of Directors and management structure. This organization change will carry less overhead than a statewide community bank structure and a parallel statewide structure within Union Planters National Bank. The primary reason for chartering the new banks was not for cost benefits; however, but to maximize profits by providing better community and customer focus. As a consequence of this change and the additional board and committee meetings involved for the new banks, several of UPC's directors will not stand for re-election to the corporate board, but will instead serve on the Union Planters National Bank in Memphis Board and/or one or more of the newly formed bank boards. INCREASED COMMON DIVIDEND On January 20, 1994, the Board of Directors declared a quarterly common dividend of $.21 per share on Union Planters Common Stock outstanding, an increase of 16.7% over the previous quarterly dividend of $.18 per share. We are pleased to have had the opportunity to increase the dividend again this year. OUTLOOK FOR 1994 The last three years have been very rewarding for the banking industry and for Union Planters as the improving economy has helped asset quality and the falling interest rate environment has helped net interest income. Banks in general have enjoyed very high profitability levels and significant earnings growth. We expect asset quality trends to continue to be favorable in 1994, but margin trends are likely to be unfavorable for the industry. While we anticipate that 1994 will be another year of solid earnings for the industry, growth in earnings will likely be at a much slower rate. To offset net interest margin trends, we will be focusing on increasing our loan volume, opportunities to improve noninterest income, and controlling operating expenses. Throughout the organization, we will be emphasizing quality service and more effective selling to our existing customer base. The chartering of new banks in Chattanooga, Jackson, Knoxville, and Nashville and the conversion of all banks to a common data processing system should be completed during 1994. The former should provide a larger revenue stream through greater customer and market focus, while the latter should provide significant cost benefits. Taken together, they should put in place the foundation for further improvement in earnings in the years ahead. I encourage you to review the Financial Statements and Management's Discussion and Analysis for more details on our results and outlook. Thank you for your continued support. Yours very truly, /s/ Benjamin W. Rawlins, Jr. - ---------------------------- Benjamin W. Rawlins, Jr. Chairman and Chief Executive Officer 3 6 UNION PLANTERS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
DECEMBER 31, ------------------------- 1993 1992 ---------- ---------- (DOLLARS IN THOUSANDS) ASSETS Cash and due from banks..................................................... $ 225,626 $ 235,280 Interest-bearing deposits at financial institutions......................... 26,647 84,204 Federal funds sold and securities purchased under agreements to resell................................................................. 53,149 92,354 Trading account securities, at market....................................... 153,482 109,584 Loans held for resale....................................................... 56,053 91,543 Investment securities Held for sale (Market value: $600,491 and $485,581, respectively)......... 595,090 476,664 Held for investment (Market value: $2,060,769 and $1,753,953, respectively)............................................................ 2,021,963 1,721,439 Loans....................................................................... 2,951,885 2,247,354 Less: Unearned income................................................... (16,670) (15,515) Allowance for losses on loans....................................... (80,442) (64,290) ---------- ---------- Net loans............................................................ 2,854,773 2,167,549 Premises and equipment...................................................... 135,511 99,728 Accrued interest receivable................................................. 49,953 43,765 Goodwill and other intangibles.............................................. 40,794 32,638 Other assets................................................................ 105,145 107,436 ---------- ---------- TOTAL ASSETS......................................................... $6,318,186 $5,262,184 ---------- ---------- ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Noninterest-bearing....................................................... $ 750,093 $ 627,019 Certificates of deposit of $100,000 and over.............................. 334,173 281,120 Other interest-bearing.................................................... 4,167,100 3,542,037 ---------- ---------- Total deposits....................................................... 5,251,366 4,450,176 Short-term borrowings....................................................... 244,995 296,312 Federal Home Loan Bank advances............................................. 157,954 -- Long-term debt.............................................................. 117,276 77,156 Accrued interest, expenses, and taxes....................................... 41,893 45,333 Other liabilities........................................................... 27,402 36,996 ---------- ---------- TOTAL LIABILITIES.................................................... 5,840,886 4,905,973 ---------- ---------- Commitments and contingent liabilities (Notes 7, 15, 17, and 19)............ -- -- Shareholders' equity Preferred stock (Note 10) Convertible............................................................. 87,298 64,600 Nonconvertible.......................................................... 17,250 17,250 Common stock, $5 par value; 50,000,000 shares authorized; 19,656,924 issued and outstanding (16,788,758 in 1992).............................. 98,285 83,944 Additional paid-in capital................................................ 86,385 60,589 Retained earnings......................................................... 188,082 129,828 ---------- ---------- TOTAL SHAREHOLDERS' EQUITY........................................... 477,300 356,211 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................... $6,318,186 $5,262,184 ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these financial statements. 4 7 UNION PLANTERS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS
YEARS ENDED DECEMBER 31, ------------------------------------------- 1993 1992 1991 ----------- ----------- ----------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) INTEREST INCOME Interest and fees on loans.................................. $ 243,010 $ 199,881 $ 214,762 Interest on investment securities Taxable................................................... 116,025 106,139 79,253 Tax-exempt................................................ 24,448 16,148 13,354 Interest on deposits at financial institutions.............. 1,634 3,999 7,525 Interest on federal funds sold and securities purchased under agreements to resell................................ 4,602 4,280 6,606 Interest on trading account securities...................... 6,194 6,648 5,419 Interest on loans held for resale........................... 3,239 3,457 4,671 ----------- ----------- ----------- Total interest income................................ 399,152 340,552 331,590 ----------- ----------- ----------- INTEREST EXPENSE Interest on deposits........................................ 146,800 137,605 160,252 Interest on short-term borrowings........................... 6,287 6,942 12,809 Interest on Federal Home Loan Bank advances and long-term debt...................................................... 11,460 4,868 4,974 ----------- ----------- ----------- Total interest expense............................... 164,547 149,415 178,035 ----------- ----------- ----------- NET INTEREST INCOME.................................. 234,605 191,137 153,555 PROVISION FOR LOSSES ON LOANS................................. 9,689 18,557 24,835 ----------- ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOSSES ON LOANS.............................................. 224,916 172,580 128,720 ----------- ----------- ----------- NONINTEREST INCOME Service charges on deposit accounts......................... 28,721 20,843 19,394 Profits and commissions from trading activities............. 8,720 10,168 14,707 Investment securities gains................................. 4,581 13,246 3,344 Other income................................................ 42,777 39,016 32,165 ----------- ----------- ----------- Total noninterest income............................. 84,799 83,273 69,610 ----------- ----------- ----------- NONINTEREST EXPENSE Salaries and employee benefits.............................. 98,920 74,772 69,756 Net occupancy expense....................................... 15,909 13,136 10,556 Equipment expense........................................... 15,735 12,225 10,627 Other expense............................................... 93,916 99,085 73,832 ----------- ----------- ----------- Total noninterest expense............................ 224,480 199,218 164,771 ----------- ----------- ----------- EARNINGS BEFORE INCOME TAXES, EXTRAORDINARY ITEM, AND ACCOUNTING CHANGES....................... 85,235 56,635 33,559 Applicable income taxes....................................... 23,967 15,196 6,051 ----------- ----------- ----------- EARNINGS BEFORE EXTRAORDINARY ITEM AND ACCOUNTING CHANGES............................................ 61,268 41,439 27,508 Extraordinary item --defeasance of debt, net of taxes......... (3,206) -- -- Accounting changes, net of taxes.............................. 5,001 -- -- ----------- ----------- ----------- NET EARNINGS......................................... $ 63,063 $ 41,439 $ 27,508 ----------- ----------- ----------- ----------- ----------- ----------- EARNINGS PER COMMON SHARE PRIMARY Earnings before extraordinary item and accounting changes................................................. $ 2.69 $ 2.10 $ 1.59 Extraordinary item -- defeasance of debt, net of taxes.... (.16) -- -- Accounting changes, net of taxes.......................... .25 -- -- ----------- ----------- ----------- NET EARNINGS......................................... $ 2.78 $ 2.10 $ 1.59 ----------- ----------- ----------- ----------- ----------- ----------- FULLY DILUTED Earnings before extraordinary item and accounting changes................................................. $ 2.49 $ 2.02 $ 1.58 Extraordinary item -- defeasance of debt, net of taxes.... (.13) -- -- Accounting changes, net of taxes.......................... .21 -- -- ----------- ----------- ----------- NET EARNINGS......................................... $ 2.57 $ 2.02 $ 1.58 ----------- ----------- ----------- ----------- ----------- ----------- AVERAGE SHARES OUTSTANDING Primary..................................................... 19,621,822 16,764,602 16,632,057 Fully diluted............................................... 23,851,839 19,608,750 16,985,582
The accompanying notes are an integral part of these financial statements. 5 8 UNION PLANTERS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
ADDITIONAL PREFERRED COMMON PAID-IN RETAINED STOCK STOCK CAPITAL EARNINGS TOTAL --------- ------- ---------- -------- --------- (DOLLARS IN THOUSANDS) BALANCE, JANUARY 1, 1991.............................. $ 4,400 $85,456 $ 61,002 $ 86,177 $237,035 Net earnings........................................ -- -- -- 27,508 27,508 Cash dividends Common, $.48 per share............................ -- -- -- (7,985) (7,985) Series B Preferred, $8.00 per share............... -- -- -- (352) (352) Series C Preferred, $ .96 per share............... -- -- -- (661) (661) Purchase and retirement of 713,000 common shares.... -- (3,565) (2,538) (670) (6,773) Common shares issued under employee benefit plans and dividend reinvestment plan, net of shares repurchased....................................... -- 744 1,012 (940) 816 Sale of 690,000 shares of Series C Preferred Stock, net of issuance costs............................. 17,250 -- (840) -- 16,410 Net change in unrealized depreciation on marketable equity securities................................. -- -- -- 3,448 3,448 --------- ------- ---------- -------- --------- BALANCE, DECEMBER 31, 1991............................ 21,650 82,635 58,636 106,525 269,446 Net earnings........................................ -- -- -- 41,439 41,439 Cash dividends Common, $.60 per share............................ -- -- -- (9,965) (9,965) Series B Preferred, $8.00 per share............... -- -- -- (352) (352) Series C Preferred, $2.59 per share............... -- -- -- (1,790) (1,790) Series D Preferred, $ .97 per share............... -- -- -- (247) (247) Series E Preferred, $1.72 per share............... -- -- -- (3,777) (3,777) Common shares issued under employee benefit plans and dividend reinvestment plan, net of shares repurchased....................................... -- 1,309 4,603 (2,550) 3,362 Sale of 2,200,000 shares of Series E Preferred Stock, net of issuance costs...................... 55,000 -- (2,650) -- 52,350 Issuance of 253,655 shares of Series D Preferred Stock for the purchase of Southeastern Bancshares, Inc............................................... 5,200 -- -- -- 5,200 Net change in unrealized depreciation on marketable equity securities................................. -- -- -- 545 545 --------- ------- ---------- -------- --------- BALANCE, DECEMBER 31, 1992............................ 81,850 83,944 60,589 129,828 356,211 Net earnings........................................ -- -- -- 63,063 63,063 Cash dividends Common, $.72 per share............................ -- -- -- (13,015) (13,015) Series B Preferred, $8.00 per share............... -- -- -- (352) (352) Series C Preferred, $2.59 per share............... -- -- -- (1,790) (1,790) Series D Preferred, $1.95 per share............... -- -- -- (494) (494) Series E Preferred, $2.00 per share............... -- -- -- (5,832) (5,832) Common shares issued under employee benefit plans and dividend reinvestment plan, net of shares repurchased....................................... -- 1,208 5,633 (1,949) 4,892 Issuance of 2,000,785 shares of Common Stock for acquisitions (Note 2)............................. -- 10,004 2,318 18,296 30,618 Issuance of 908,522 shares of Series E Preferred Stock for acquisitions, net of issuance costs of $140,000 (Note 2)................................. 22,713 -- 7,274 -- 29,987 Issuance of 625,000 shares of Common Stock related to the conversion/acquisition of First Federal Savings Bank of Maryville, net of issuance costs of $564,000 (Note 2).............................. -- 3,125 10,561 -- 13,686 Net change in unrealized depreciation on marketable equity securities................................. -- -- -- 272 272 Other............................................... (15) 4 10 55 54 --------- -------- ---------- -------- --------- BALANCE, DECEMBER 31, 1993............................ $104,548 $98,285 $ 86,385 $188,082 $477,300 --------- -------- ---------- -------- --------- --------- -------- ---------- -------- ---------
The accompanying notes are an integral part of these financial statements. 6 9 UNION PLANTERS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, ------------------------------------- 1993 1992 1991 ----------- ----------- --------- (DOLLARS IN THOUSANDS) OPERATING ACTIVITIES Net earnings..................................................... $ 63,063 $ 41,439 $ 27,508 Reconciliation of net earnings to net cash provided by operating activities Cumulative effect of accounting changes, net of taxes........ (5,001) -- -- Provision for losses on loans and other real estate.......... 11,394 21,322 26,133 Depreciation and amortization................................ 12,484 9,978 8,297 Amortization and write-off of intangibles.................... 10,517 16,422 6,272 Provisions for abandoned property............................ -- 5,200 1,643 Provisions for litigation settlements........................ -- 9,000 7,600 Provisions for conversion of data processing systems......... 4,424 -- -- Net amortization (accretion) of investment securities........ 6,722 3,808 (2,444) Net realized gains on sale of investment securities.......... (4,581) (13,246) (4,947) Write-downs of investment securities......................... -- -- 1,603 Proceeds from sales and maturities of investment securities held for sale............................................. 794,918 350,795 -- Purchases of investment securities held for sale............. (594,583) (128,885) -- Deferred income tax benefit.................................. (684) (7,349) (3,750) (Increase) decrease in assets Trading account securities and loans held for resale.................................................. (8,408) (78,599) (68,604) Accrued interest receivable and other assets.............. 38,421 705 68,221 Decrease in accrued interest, expenses, taxes, and other liabilities............................................... (44,144) (19,236) (41,106) Other, net................................................... 1,079 1,717 390 ----------- ----------- --------- Net cash provided by operating activities................. 285,621 213,071 26,816 ----------- ----------- --------- INVESTING ACTIVITIES Net decrease (increase) in short-term investments................ 74,515 51,102 (39,185) Proceeds from sales of investment securities..................... -- 76,218 231,891 Proceeds from maturities of investment securities................ 1,025,889 455,381 244,049 Purchases of investment securities............................... (1,228,343) (1,507,454) (463,675) Net decrease (increase) in loans................................. (71,657) 244,175 176,792 Net cash received from purchases of financial institutions (Note 2).......................................... 72,121 568,758 -- Purchases of premises and equipment, net......................... (21,077) (16,416) (29,802) ----------- ----------- --------- Net cash provided (used) by investing activities.......... (148,552) (128,236) 120,070 ----------- ----------- --------- FINANCING ACTIVITIES Net decrease in deposits......................................... (310,454) (218,197) (130,579) Net (decrease) increase in short-term borrowings................. (63,605) 98,441 (80,499) Proceeds from Federal Home Loan Bank advances and long-term debt, net............................................................ 234,061 38,850 3,000 Repayment and defeasance of long-term debt....................... (42,615) (5,179) (9,680) Proceeds from issuance of preferred stock, net................... -- 52,350 16,410 Proceeds from issuance of common stock, net...................... 19,611 7,673 3,275 Purchase and retirement of common stock, net..................... (1,786) (4,311) (9,232) Cash dividends paid.............................................. (21,180) (15,315) (8,657) ----------- ----------- --------- Net cash used by financing activities..................... (185,968) (45,688) (215,962) ----------- ----------- --------- Net increase (decrease) in cash and cash equivalents............... (48,899) 39,147 (69,076) Cash and cash equivalents at the beginning of the period........... 327,634 288,487 357,563 ----------- ----------- --------- Cash and cash equivalents at the end of the period................. $ 278,735 $ 327,634 $ 288,487 ----------- ----------- --------- ----------- ----------- --------- SUPPLEMENTAL DISCLOSURES Cash paid for Interest..................................................... $ 163,934 $ 150,947 $ 179,017 Taxes........................................................ 23,308 20,863 12,168 Loans transferred to other real estate through foreclosure....... 7,290 6,178 15,985
The accompanying notes are an integral part of these financial statements. 7 10 UNION PLANTERS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of Union Planters Corporation (the Corporation) and its subsidiaries conform with generally accepted accounting principles and general practices within the financial services industry. The following is a summary of the more significant accounting policies of the Corporation. BASIS OF CONSOLIDATION. The consolidated financial statements include the accounts of the Corporation and its subsidiaries after elimination of significant intercompany accounts and transactions. The Corporation's principal subsidiary is Union Planters National Bank (UPNB). BASIS OF PRESENTATION. Prior period financial statements are restated to include the accounts of material acquisitions accounted for using the pooling of interests method of accounting. Business combinations accounted for as purchases are included in the consolidated financial statements from the respective dates of acquisition. Assets and liabilities of banks accounted for as purchases are adjusted to their fair market values at the dates of acquisition. Certain 1991 and 1992 amounts have been reclassified to conform with 1993 financial reporting presentation. STATEMENT OF CASH FLOWS. Cash and cash equivalents include cash and due from banks and federal funds sold. Federal funds sold in the amounts of $53,109,000, $92,354,000, and $59,570,000 at December 31, 1993, 1992, and 1991, respectively, are included in cash and cash equivalents. TRADING ACCOUNT SECURITIES. Trading account securities are stated at market and consist primarily of securities backed by the government-guaranteed portion of Small Business Administration (SBA) loans. Gains and losses on sales and market value adjustments related to these securities are included in profits and commissions from trading activities. INVESTMENT SECURITIES HELD FOR SALE. Investment securities held for sale consist of both debt and equity securities that may be sold in response to, or in anticipation of, changes in interest rates, prepayment risk, liquidity considerations, and other factors. These securities are carried at the lower of aggregate cost, adjusted for amortization of premiums and accretion of discounts, or market value (LOCOM). Unrealized net valuation adjustments, if any, are included in investment securities gains and losses. HELD FOR INVESTMENT. Investment securities carried at amortized cost consist of securities which management has the intent and ability to hold to maturity. These securities are stated at cost, adjusted for amortization of premium and accretion of discount, which are recognized as adjustments to interest income. Gains and losses on securities are recorded when realized on a specific identity basis or when, in the opinion of management, an unrealized loss is other than temporary in nature. All investment securities transactions are recorded using a method which approximates trade-date accounting. Collateralized Mortgage Obligations (CMO) and Mortgage-Backed Securities (MBS) represent a significant portion of the investment securities portfolio. Premiums and discounts on CMO and MBS are analyzed in relation to the corresponding prepayments rate, both historical and estimated, using a method which approximates the effective yield method. Effective January 1, 1994, the Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities". This statement requires that securities be classified as either held to maturity securities, which are reported at amortized cost; trading securities, which are reported at fair value, with unrealized gains and losses included in earnings; or available for sale securities, which are reported at fair value, with unrealized gains and losses excluded from earnings and reported as a separate component of shareholders' equity. In connection with the adoption of this statement, the Corporation transferred all of the securities currently in the held for investment category, except for obligations of states and political subdivisions, to the available for sale category. Had SFAS No. 115 been adopted at December 31, 1993, shareholders' equity would have increased by approximately $11.0 million. There was no impact on earnings upon the adoption of this statement. LOANS. Loans are stated at the principal amount outstanding except for loans held for resale which are stated at the lower of cost or market. Interest income on loans is accrued using constant yield methods, except for unearned income which is recorded as income using a method which approxi- 8 11 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) mates the interest method. Loan origination fees and direct loan origination costs are deferred and recognized over the life of the related loans as adjustments to interest income. NONPERFORMING LOANS. Nonperforming loans consist of nonaccrual loans and renegotiated loans which have been restructured in accordance with the criteria set forth in SFAS No. 15 "Accounting by Debtors and Creditors for Troubled Debt Restructurings". Loans, other than installment and mortgage loans, are generally placed on nonaccrual status and interest is not recorded if, in management's opinion, payment in full of principal or interest is not expected or when payment of principal or interest is more than 90 days past due, unless it is both well-secured and in the process of collection. Upon adverse change in the account status (e.g., loan is past due, filing of bankruptcy or wage earner, repossession of collateral, foreclosure, or death of the borrower), installment and mortgage loans (including accrued interest) are written down to the net realizable value of the underlying collateral. Such loans are reviewed periodically for further write-downs until fully liquidated. Income recognized on revolving credit loans is discontinued upon adverse change, and the loans are fully charged off if no payment is received in 180 days. ALLOWANCE FOR LOSSES ON LOANS. The allowance for losses on loans represents management's estimate of potential losses inherent in the existing loan portfolio. The allowance for losses on loans is increased by the provision for losses on loans charged to expense and reduced by loans charged off, net of recoveries. The provision for losses on loans is determined based on management's assessment of several factors: current and anticipated economic conditions and the related impact on specific borrowers and industry groups, historical loan loss experience, the level of classified and nonperforming loans, reviews and evaluations of specific loans, changes in the nature and volume of the loan portfolio, and the results of regulatory examinations. PREMISES AND EQUIPMENT. Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation provisions are computed using the straight-line method and are charged to operating expense over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the initial term of the respective lease or the estimated useful life of the improvement. Costs of major additions and improvements are capitalized. Interest expense incurred on funds expended on major construction projects is capitalized as a cost of such projects during the construction period. Expenditures for maintenance and repairs are charged to operations as incurred. GOODWILL AND OTHER INTANGIBLES. The unamortized costs in excess of the fair market value of acquired net tangible assets are included in goodwill and other intangibles. Identifiable intangibles, including premiums on purchased deposits and assets, are amortized over the estimated periods benefited. The remaining costs (goodwill) are generally amortized on a straight-line basis over 15 years. For acquisitions where the fair market value of net assets acquired exceeds the purchase price, the resulting negative goodwill is allocated proportionally to noncurrent, nonmonetary assets. MORTGAGE SERVICING RIGHTS. Mortgage servicing rights represent the cost of mortgage servicing purchased from others. These costs are amortized in proportion to, and over the period of, estimated net servicing income based on the historical and projected prepayments of the underlying loans. At December 31, 1993 and 1992, mortgage servicing rights were $3,563,000 and $4,892,000, respectively. OTHER REAL ESTATE. Property acquired through foreclosure is stated at the lower of the recorded amount of the loan or the estimated net realizable value, reduced by estimated selling costs. When a reduction of the recorded amount to the net realizable value is required at the time of foreclosure, the difference is charged to the allowance for losses on loans. Any subsequent reduction is charged to other real estate expense, and a valuation reserve is established for the potential declines in appraised values. Other real estate is recorded net of the valuation reserve. Revenues and expenses associated with operating or disposing of other real estate are recorded in the period in which they are incurred. At December 31, 1993 and 1992, other real estate totaled $4,358,000 and $6,326,000, respectively. EMPLOYEE BENEFIT PLANS. The Corporation sponsors two qualified employee benefit plans for substantially all employees of the Corporation and its subsidiaries. One is a 401K plan with matching employer contributions based on length of service. Employer contributions, provided through a Flexible Benefits Plan, may also be directed to the 401K plan at the election of the employee. The second is a noncontributory employee stock ownership plan, which is funded by discretionary employer contributions approved by the Board of Directors. All costs of the plans are expensed as incurred. 9 12 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Effective January 1, 1993, the Corporation adopted the provisions of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" and SFAS No. 112, "Employers' Accounting for Postemployment Benefits". These standards require that the expected costs of postretirement and postemployment benefits be charged to expense during the years that the employee renders service which is a change from the previous policy of recognizing these costs on a cash basis. The Corporation elected to recognize the accumulated postretirement and postemployment benefit obligation upon adoption which approximated $8.3 million ($5.1 million after tax) and $1.3 million ($807,000 after tax), respectively. INCOME TAXES. The Corporation files a consolidated federal income tax return with its subsidiaries, with the exception of credit life insurance subsidiaries which file separate returns. State income taxes are computed on either a separate company basis or consolidated basis depending upon state laws. The Corporation and its subsidiaries file a consolidated state return for all business in the state of Tennessee. Income tax expense is based on income reported for financial accounting purposes, and includes deferred taxes resulting from the recognition of certain transactions in different periods for tax reporting purposes in accordance with SFAS No. 109, "Accounting for Income Taxes". Effective January 1, 1993, the Corporation adopted the provisions of SFAS No. 109 and recorded the cumulative effect of the accounting change of $10.9 million. INTEREST RATE SWAP AGREEMENTS. Interest rate swap agreements are used as part of the Corporation's interest rate risk management strategy by hedging on-balance-sheet financial instruments. To qualify as a hedge the following criteria must be met: (i) the asset or liability to be hedged exposes the institution, as a whole, to interest rate risk; (ii) the interest rate swap acts to reduce the interest rate risk by moving the institution closer to being insensitive to interest rate changes; and (iii) the interest rate swap is designated and effective as a hedge. Fees related to swap agreements are amortized on the interest method over the life of the swap. If the instrument being hedged is disposed of, the swap agreement is marked to market with any resulting gain or loss included in the determination of the gain or loss from the disposition. If the interest rate swap agreement is terminated, the gain or loss is deferred and amortized over the remaining life of the specific hedged asset or liability. EARNINGS PER SHARE. Primary earnings per common share are adjusted for all preferred stock dividends. Primary earnings per common share is computed based on the weighted average common shares outstanding and common stock equivalents arising from the assumed exercise of outstanding stock options, unless their effect would be antidilutive. Fully diluted earnings per common share is computed using the weighted average common shares and equivalents. Common stock equivalents are increased by the assumed conversion of convertible preferred stock into common stock as if converted at the beginning of the period, unless the effect would be antidilutive. Earnings for fully diluted earnings per common share are adjusted for preferred stock dividends on nonconvertible preferred stock. NOTE 2. MERGERS AND ACQUISITIONS CONSUMMATED ACQUISITIONS Poolings of Interests During 1993, the Corporation consummated four acquisitions which were accounted for using the pooling of interests method of accounting. The table below summarizes the acquisitions.
TOTAL EQUITY DATE SHARES TOTAL ASSETS AT AT INSTITUTION ACQUIRED ISSUED JANUARY 1, 1993 JANUARY 1, 1993 - ----------------------------------------------- -------- --------- --------------- --------------- (DOLLARS IN MILLIONS) Garrett Bancshares, Inc. (GBI)................. 5/31/93 613,088 $173.7 $ 4.8 Hogue Holding Company, Inc. (HHC).............. 9/1/93 219,274 38.5 4.4 Central State Bancorp, Inc. (CSB).............. 9/1/93 630,355 107.8 10.7 First Financial Services, Inc. (FFS)........... 10/1/93 447,906 86.0 8.4 --------- --------------- --------------- 1,910,623 $406.0 $28.3 --------- --------------- --------------- --------- --------------- ---------------
The consolidated financial statements for 1993 include the results of operations of the above entities. Prior year amounts have not been restated due to immateriality. Eliminations have been made 10 13 NOTE 2. MERGERS AND ACQUISITIONS (CONTINUED) for material intercompany transactions with the pooled companies. During 1993, the above pooled institutions contributed approximately $10.1 million, $1.5 million, and $2.1 million to net interest income, noninterest income and net earnings, respectively, of the Corporation through their respective dates of acquisition. On January 1, 1994, the Corporation consummated the acquisition of Mid-South Bancorp, Inc. (MSB), the parent company of Simpson County Bank in Franklin, Kentucky; Adairville Banking Company in Adairville, Kentucky; General Trust Company in Nashville, Tennessee; The Peoples Bank of Elk Valley in Fayetteville, Tennessee; and First Citizens Bank in Franklin, Columbia, and Mt. Pleasant, Tennessee. The Corporation issued 839,542 shares of its Common Stock in this transaction which was accounted for as a pooling of interests. MSB had total assets and total shareholders' equity of $185 million and $12 million, respectively, at December 31, 1993. Prior period financial statements have not been restated for this acquisition due to immateriality. Purchase Acquisitions The Corporation acquired four institutions in 1992 and eight institutions in 1993 that were accounted for as purchases. The table below summarizes the acquisitions:
TOTAL ASSETS DATE PURCHASE RESULTING AT DATE OF INSTITUTION ACQUIRED CONSIDERATION PRICE INTANGIBLES ACQUISITION - --------------------------------- -------- --------------- -------- ----------- ------------ (DOLLARS IN MILLIONS) Metropolitan Federal Savings and Loan Association (Metropolitan)(a) and (f)...... 3/27/92 Cash $ 16.5 $16.5 $603 Fidelity Bancshares, Inc. (Fidelity)(f).................. 3/30/92 Cash 77.4 -- 822 Southeastern Bancshares, Inc. (SBI)(b)....................... 7/1/92 253,655 Shares 5.2 1.1 77 of Series D Preferred Stock Bank of Commerce (BOC)........... 11/1/92 Cash 9.9 2.1 89 Bank of East Tennessee (BOET)(c)...................... 1/1/93 648,786 Shares 25.3 7.0 231 of Series E Preferred Stock Security Trust Federal Savings and Loan Association and SaveTrust Federal Savings Bank (Security Trust/SaveTrust)..... 1/1/93 Cash 22.0 3.0 261 First Federal Savings Bank (Maryville)(d)................. 2/26/93 625,000 Shares NM(d) -- 187 of Common Stock (Conversion/ Acquisition) First State Bancshares, Inc. (FSB)(e)....................... 3/12/93 Cash and Common 3.9 .4 34 Stock (90,162 shares) First Cumberland Bank............ 3/15/93 Cash .2 -- 20 Farmers Union Bank (Farmers Union)......................... 4/1/93 Cash 9.5 4.2 78 Erin Bank & Trust Company (Erin)................. 6/1/93 259,736 Shares 8.3 2.1 43 of Series E Preferred Stock
(a) The Corporation, through UPNB, assumed approximately $585 million in insured deposit liabilities (including accrued interest payable) of the former Metropolitan Federal Savings and Loan Association. The purchase and assumption transaction was facilitated through the Resolution Trust Corporation (RTC) which declared UPNB the successful bidder. UPNB also acquired approximately $82 million in assets and received cash from the RTC totaling approximately $487 million. (b) SBI is the parent company of DeKalb County Bank and Trust Company (DeKalb). (c) The Corporation previously held 17.93% of the common stock of BOET ($3.4 million). On January 1, 1993, the Corporation purchased an additional 43.93% of the common stock of BOET in exchange for the Corporation's Series E Preferred Stock 11 14 NOTE 2. MERGERS AND ACQUISITIONS (CONTINUED) ($11.1 million). Effective May 3, 1993, the Corporation acquired the remaining outstanding common stock of BOET in exchange for the Corporation's Series E Preferred Stock ($10.8 million). (d) Maryville was a mutual savings bank which, pursuant to a conversion/acquisition, converted to a federal stock charter. All of the stock of Maryville was acquired by the Corporation in exchange for a capital contribution equalling approximately $14.1 million derived in part from the proceeds of a public offering of the Corporation's Common Stock made in connection with the conversion/acquisition. (e) FSB is the parent company of First State Bank of Fayette County (Somerville). (f) Merged into UPNB. NM -- Not meaningful. Intangibles are being amortized primarily using the straight line method over periods ranging from 10 to 15 years. The amortization for the Metropolitan intangibles was accelerated in both 1992 and 1993 due to unexpected deposit run-off. The fair market value of the net assets of Fidelity at the date of acquisition exceeded the purchase price resulting in negative goodwill of approximately $16 million which was deducted from the noncurrent, nonmonetary assets (primarily premises and equipment) of Fidelity. The recording of the acquisition of Maryville resulted in negative goodwill of approximately $9.4 million, $8.1 million of which was deducted from noncurrent, nonmonetary assets (premises and equipment, fair value adjustment of loans, prepaid software, and mortgage servicing rights). The remaining negative goodwill of $1.3 million was recorded in other liabilities and is being accreted over seven years. The following unaudited pro forma information summarizes the effect of the above described acquisitions assuming consummation of each transaction on January 1, 1992. The unaudited pro forma results are not necessarily representative of the actual results that would have occurred or which may occur in the future had the transactions been effected on January 1, 1992. The pro forma information does not include the historical results of Metropolitan since it was a failed financial institution.
UNAUDITED PRO FORMA YEARS ENDED DECEMBER 31, ------------------------- 1993 1992 --------- --------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Net interest income................................................ $ 237,237 $ 228,412 Provision for losses on loans...................................... (12,508) (35,642) Noninterest income................................................. 85,178 96,946 Noninterest expense................................................ (226,917) (243,462) --------- --------- Earnings before income taxes, extraordinary item, and accounting changes.......................................................... 82,990 46,254 Applicable income taxes............................................ (24,160) (14,894) --------- --------- Earnings before extraordinary item and accounting changes.......... 58,830 31,360 Extraordinary item and accounting changes, net of taxes............ 1,795 -- --------- --------- Net earnings....................................................... $ 60,625 $ 31,360 --------- --------- --------- --------- Earnings per common share before extraordinary item and accounting changes Primary....................................................... $ 2.53 $ 1.32 Fully diluted................................................. 2.35 1.32* Net earnings Primary....................................................... 2.62 1.32 Fully diluted................................................. 2.43 1.32*
* Assumed conversion is antidilutive; therefore, it is not presented. 12 15 NOTE 2. MERGERS AND ACQUISITIONS (CONTINUED) The following details the net cash received from purchases of financial institutions:
YEARS ENDED DECEMBER 31, ----------------------------- 1993 1992 ----------- ----------- (DOLLARS IN THOUSANDS) Fair value of assets acquired........................... $ 1,245,602 $ 1,589,540 Liabilities assumed..................................... (1,148,122) (1,480,572) Issuance of Common Stock................................ (30,618) -- Issuance of Preferred Stock............................. (30,127) (5,200) Less previous investment in entities acquired........... (3,387) (3,173) ----------- ----------- Cash paid for purchases of other financial institutions.......................................... 33,348 100,595 Cash and cash equivalents acquired...................... (105,469) (669,353) ----------- ----------- Net cash received from purchases of financial institutions..................................... $ (72,121) $ (568,758) ----------- ----------- ----------- -----------
PENDING ACQUISITIONS The Corporation has signed definitive agreements pursuant to which it would acquire the entities listed below, and subject to various approvals and satisfaction of certain contractual conditions precedent, all are expected to be consummated in the first half of 1994. The number of shares of Common Stock to be issued in connection with these acquisitions is subject to change depending on the price of the Corporation's Common Stock.
ANTICIPATED APPROXIMATE METHOD OF TOTAL INSTITUTION CONSIDERATION ACCOUNTING ASSETS - ------------------------------------------- ---------------------- ------------ ------------ (IN MILLIONS) Tennessee Bancorp, Inc., Parent Company of Cash equal to 1.5 Purchase $ 92 Tennessee National Bank in Columbia, times net book value Tennessee (TBI) at closing First National Bancorp of Shelbyville, Approximately 975,000 Pooling of 164 Inc., Parent Company of First National shares of Common Stock Interests Bank of Shelbyville in Shelbyville, Tennessee (FNB)(a) Clin-Ark Bancshares, Inc., Parent Company Approximately 227,768 Pooling of 48 of First National Bank of Clinton in shares of Common Stock Interests Clinton, Arkansas (CBI) Anderson County Bank in Clinton, Tennessee Approximately $2.8 Purchase 19 (ACB)(a) million in cash Liberty Bancshares, Inc., Parent Company of Approximately Pooling of 170 Liberty Federal Savings Bank in Paris, 1,322,000 shares of Interests Tennessee (LBI) Common Stock Earle Bankshares, Inc., Parent Company of Approximately 375,000 Pooling of 40 First Southern Bank in Earle, Arkansas shares of Common Stock Interests (EBI) BANCFIRST Corporation, Parent Company of Approximately Pooling of 262 BANKFIRST Federal Savings Bank in 2,054,000 shares of Interests Decatur, Alabama(b) Common Stock
(a) Consummated March 1, 1994. (b) Signed January 27, 1994. SALES OF BRANCHES In the third quarter of 1993, the Corporation sold four of the Kentucky branches (three in Paducah and one in Clinton) of its subsidiary, Security Trust. The Corporation has also entered into a definitive agreement to sell the two remaining Kentucky branches of Security Trust. The sales involved approximately $105 million of deposits, approximately $3 million of loans, and approximately $1 million of premises and equipment. The transactions are not considered significant to the Corporation's 13 16 NOTE 2. MERGERS AND ACQUISITIONS (CONTINUED) balance sheet or operating results and are expected to result in a reduction of Security Trust's goodwill and purchased mortgage servicing rights. NOTE 3. RESTRICTIONS ON CASH AND DUE FROM BANKS The Corporation's banking subsidiaries are required to maintain noninterest-bearing average reserve balances with the Federal Reserve Bank. Average balances required to be maintained for such purposes during 1993 and 1992 were $41 million and $33 million, respectively. NOTE 4. INVESTMENT SECURITIES The carrying values and market values of investment securities are as follows:
DECEMBER 31, 1993 ------------------------------------------ UNREALIZED CARRYING ---------------- MARKET VALUE GAINS LOSSES VALUE ---------- ------- ------ ---------- (DOLLARS IN THOUSANDS) HELD FOR SALE U.S. Government obligations U.S. Treasury securities............................ $ 110,739 $ 514 $ 3 $ 111,250 Securities of U.S. Government agencies Collateralized mortgage obligations.............. 141,853 694 105 142,442 Mortgage-backed securities....................... 233,961 3,516 74 237,403 Other............................................ 91,058 823 8 91,873 Other stocks and securities........................... 17,479 88 44 17,523 ---------- ------- ------ ---------- Total investment securities held for sale...... $ 595,090 $ 5,635 $ 234 $ 600,491 ---------- ------- ------ ---------- ---------- ------- ------ ---------- HELD FOR INVESTMENT U.S. Government obligations U.S. Treasury securities............................ $ 693,612 $ 7,222 $ 244 $ 700,590 Securities of U.S. Government agencies Collateralized mortgage obligations.............. 341,645 767 992 341,420 Mortgage-backed securities....................... 356,140 4,188 152 360,176 Other............................................ 121,691 1,732 37 123,386 ---------- ------- ------ ---------- Total U.S. Government obligations.............. 1,513,088 13,909 1,425 1,525,572 ---------- ------- ------ ---------- Obligations of states and political subdivisions...... 441,509 27,064 845 467,728 ---------- ------- ------ ---------- Other securities Federal Reserve Bank/Federal Home Loan Bank stock....................................... 25,134 -- -- 25,134 Collateralized mortgage obligations................. 39,036 177 114 39,099 Other............................................... 3,196 40 -- 3,236 ---------- ------- ------ ---------- Total other securities......................... 67,366 217 114 67,469 ---------- ------- ------ ---------- Total investment securities held for investment.................................. $2,021,963 $41,190 $2,384 $2,060,769 ---------- ------- ------ ---------- ---------- ------- ------ ----------
DECEMBER 31, 1992 ------------------------------------------ UNREALIZED CARRYING ---------------- MARKET VALUE GAINS LOSSES VALUE ---------- ------- ------ ---------- (DOLLARS IN THOUSANDS) HELD FOR SALE U.S. Government obligations U.S. Treasury securities............................ $ 51,196 $ 362 $ 69 $ 51,489 Securities of U.S. Government agencies Collateralized mortgage obligations.............. 108,676 1,642 28 110,290 Mortgage-backed securities....................... 258,117 7,121 -- 265,238 Other............................................ 53,337 4 102 53,239 Other stocks and securities........................... 5,338 -- 13 5,325 ---------- ------- ------ ---------- Total investment securities held for sale...... $ 476,664 $ 9,129 $ 212 $ 485,581 ---------- ------- ------ ---------- ---------- ------- ------ ----------
14 17 NOTE 4. INVESTMENT SECURITIES (CONTINUED)
DECEMBER 31, 1992 ------------------------------------------ UNREALIZED CARRYING ---------------- MARKET VALUE GAINS LOSSES VALUE ---------- ------- ------ ---------- (DOLLARS IN THOUSANDS) HELD FOR INVESTMENT U.S. Government obligations U.S. Treasury securities............................ $ 595,133 $10,323 $ 62 $ 605,394 Securities of U.S. Government agencies Collateralized mortgage obligations.............. 572,621 5,114 378 577,357 Mortgage-backed securities....................... 168,650 2,812 131 171,331 Other............................................ 55,242 306 53 55,495 ---------- ------- ------ ---------- Total U.S. Government obligations.............. 1,391,646 18,555 624 1,409,577 ---------- ------- ------ ---------- Obligations of states and political subdivisions...... 294,507 15,265 909 308,863 ---------- ------- ------ ---------- Other securities Federal Reserve Bank/Federal Home Loan Bank stock....................................... 11,680 -- -- 11,680 Collateralized mortgage obligations................. 20,699 299 95 20,903 Other............................................... 2,907 28 5 2,930 ---------- ------- ------ ---------- Total other securities......................... 35,286 327 100 35,513 ---------- ------- ------ ---------- Total investment securities held for investment..................................... $1,721,439 $34,147 $1,633 $1,753,953 ---------- ------- ------ ---------- ---------- ------- ------ ----------
For the years ended December 31, 1993 and 1992, the Corporation has gross realized gains of $4,953,000 and $13,663,000, respectively, and gross realized losses of $372,000 and $417,000, respectively. Investment securities having a carrying value of approximately $591 million and $505 million at December 31, 1993 and 1992, respectively, were pledged to secure public and trust funds on deposit and securities sold under agreements to repurchase. During 1993, the Corporation transferred $240 million of securities held for investment to the held for sale portfolio. The transfers were made because of regulatory concerns regarding certain securities, the restructure of the portfolios of certain financial institutions acquired, and in anticipation of the adoption of SFAS No. 115. The maturities and weighted yields of investment securities as of December 31, 1993 are as follows:
MATURING ------------------------------------------------------------------------- AFTER ONE BUT AFTER FIVE BUT WITHIN ONE WITHIN FIVE WITHIN TEN YEAR YEARS YEARS AFTER TEN YEARS -------------- ---------------- --------------- ---------------- AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD ------ ----- -------- ----- ------- ----- -------- ----- (TAXABLE-EQUIVALENT BASIS/DOLLARS IN THOUSANDS) HELD FOR SALE U.S. Government obligations U.S. Treasury securities..... $1,006 5.86 % $109,470 4.40 % $ 263 6.40 % $ -- -- % Securities of U.S. Government agencies Collateralized mortgage obligations............. -- -- -- -- -- -- 141,853 4.95 Mortgage-backed securities.............. -- -- 14,517 8.50 16,018 6.26 203,426 5.22 Other..................... 6,907 4.24 26,447 5.62 9,161 6.38 48,543 4.50 ------ -------- ------- -------- Total U.S. Government obligations........ 7,913 4.45 150,434 5.01 25,442 6.31 393,822 5.03 Other stocks and securities.... 383 3.20 -- -- 8,636 6.21 8,460 3.88 ------ -------- ------- -------- Total investment securities held for sale............... $8,296 4.39 % $150,434 5.01 % $34,078 6.28 % $402,282 5.01 % ------ -------- ------- -------- ------ -------- ------- --------
15 18 NOTE 4. INVESTMENT SECURITIES (CONTINUED)
MATURING ----------------------------------------------------------------------------------- WITHIN ONE AFTER ONE BUT AFTER FIVE BUT YEAR WITHIN FIVE YEARS WITHIN TEN YEARS AFTER TEN YEARS ----------------- ----------------- ----------------- ----------------- AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD -------- ----- -------- ----- -------- ----- -------- ----- (TAXABLE-EQUIVALENT BASIS/DOLLARS IN THOUSANDS) HELD FOR INVESTMENT U.S. Government obligations U.S. Treasury securities...... $238,601 4.99% $454,511 4.70% $ 500 7.58 % $ -- -- % Securities of U.S. Government agencies Collateralized mortgage obligations............... -- -- 33,209 5.56 67,411 5.26 241,025 5.22 Mortgage-backed securities............... 1,549 4.90 20,344 7.32 10,988 8.46 323,259 4.82 Other....................... 29,093 4.90 69,363 5.49 6,057 6.75 17,178 4.98 -------- -------- -------- -------- Total U.S. Government obligations.......... 269,243 4.98 577,427 4.93 84,956 5.79 581,462 4.99 Obligations of states and political subdivisions........ 23,493 8.59 94,427 9.86 54,486 9.64 269,103 9.00 Other securities Federal Reserve Bank/Federal Home Loan Bank stock........ -- -- -- -- -- -- 25,134 4.79 Collateralized mortgage obligations................. 68 10.25 27 10.25 27,234 6.27 11,707 7.00 Other......................... 1,960 6.81 631 6.04 205 8.40 400 9.60 -------- -------- -------- -------- Total other securities........... 2,028 6.93 658 6.22 27,439 6.28 37,241 5.54 -------- -------- -------- -------- Total investment securities at amortized cost....... $294,764 5.28% $672,512 5.63% $166,881 7.13 % $887,806 6.23 % -------- -------- -------- -------- -------- -------- -------- --------
The weighted average yields are calculated by dividing the sum of the individual security yield weights (effective yield times book value) by the total book value of the securities. The taxable-equivalent yield gives effect to the disallowance of interest expense, for federal income tax purposes, related to certain tax-free securities. The maturities of mortgage-backed securities and collateralized mortgage obligations have not been adjusted for prepayments, and generally represent obligations which are expected to have principal weighted averages of five years or less or are variable rate instruments. NOTE 5. LOANS Loans are summarized as follows:
DECEMBER 31, ------------------------- 1993 1992 ---------- ---------- (DOLLARS IN THOUSANDS) Commercial, financial, and agricultural............................. $ 664,362 $ 549,049 Real estate -- construction......................................... 82,971 54,353 Real estate -- mortgage Secured by 1-4 family residential................................. 1,022,263 752,405 Other mortgage.................................................... 517,886 386,802 Home equity......................................................... 86,356 83,936 Consumer Credit cards and other plans...................................... 99,103 71,115 Other consumer.................................................... 450,780 331,451 Foreign government.................................................. 2,250 1,750 Direct lease financing.............................................. 25,914 16,493 ---------- ---------- Total loans.................................................... $2,951,885 $2,247,354 ---------- ---------- ---------- ----------
16 19 NOTE 5. LOANS (CONTINUED) Nonperforming loans are summarized as follows:
DECEMBER 31, ------------------- 1993 1992 ------- ------- (DOLLARS IN THOUSANDS) Nonaccrual loans......................................................... $14,646 $36,698 Restructured loans....................................................... 7,525 1,351 ------- ------- Total............................................................... $22,171 $38,049 ------- ------- ------- -------
In the fourth quarter of 1992, UPNB consummated the restructuring of a troubled loan to another financial institution. UPNB had previously received certain notes, equity securities, and other rights from the borrower in exchange for a nonaccrual and partially charged-off loan. Subsequently, UPNB liquidated the notes and equity securities and exercised contractual rights which resulted in a recovery of $7 million in principal previously charged-off and realized pretax gains of approximately $901,000 and $3.5 million in 1993 and 1992, respectively. Total interest earned on nonaccrual and restructured loans in 1993 and 1992 was $1,238,000 and $2,233,000, respectively. Interest income that would have been earned under the original terms of these loans in 1993 and 1992 was $1,947,000 and $2,695,000, respectively. There were no significant outstanding commitments related to the above restructured loans at December 31, 1993. Certain of the Corporation's bank subsidiaries, principally UPNB, have granted loans to the Corporation's directors, executive officers, and their affiliates. These loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and do not involve more than normal risks of collectability. The aggregate dollar amount of these loans was $33,065,000 and $35,145,000 at December 31, 1993 and 1992, respectively. During 1993, $141,144,000 of new loans and advances under credit lines were made to directors, executive officers, and their affiliates; repayments totaled approximately $143,224,000. NOTE 6. ALLOWANCE FOR LOSSES ON LOANS The changes in the allowance for losses on loans are summarized as follows:
1993 1992 1991 -------- -------- -------- (DOLLARS IN THOUSANDS) Balance, January 1......................................... $ 64,290 $ 47,934 $ 50,921 Increase due to acquisitions............................. 16,607 15,678 -- Provision for losses on loans............................ 9,689 18,557 24,835 Recoveries of loans previously charged off............... 8,681 14,212 7,496 Loans charged off........................................ (18,825) (32,091) (35,318) -------- -------- -------- Balance, December 31....................................... $ 80,442 $ 64,290 $ 47,934 -------- -------- -------- -------- -------- --------
NOTE 7. PREMISES AND EQUIPMENT, LEASED ASSETS, AND LEASE COMMITMENTS Premises and equipment are summarized as follows:
DECEMBER 31, --------------------- 1993 1992 -------- -------- (DOLLARS IN THOUSANDS) Land................................................................... $ 27,167 $ 19,944 Buildings and improvements............................................. 88,578 76,533 Leasehold improvements................................................. 7,266 5,027 Equipment.............................................................. 72,539 59,882 Construction in progress............................................... 16,301 4,331 -------- -------- 211,851 165,717 Less accumulated depreciation and amortization......................... 76,340 65,989 -------- -------- Total premises and equipment......................................... $135,511 $ 99,728 -------- -------- -------- --------
Included in the above is approximately $14.2 million related to a new headquarters building for UPNB. The total project cost is estimated to be approximately $17.6 million, including land, construction costs, furniture, fixtures and equipment, and site improvements. 17 20 NOTE 7. PREMISES AND EQUIPMENT, LEASED ASSETS, AND LEASE COMMITMENTS (CONTINUED) A summary of rent expense for operating leases is summarized as follows:
YEARS ENDED DECEMBER 31, ---------------------------- 1993 1992 1991 ------ ------ ------ (DOLLARS IN THOUSANDS) Operating lease rent expense..................................... $6,773 $4,822 $4,532 Less sublease rental income...................................... 365 286 176 ------ ------ ------ Net rent expense............................................... $6,408 $4,536 $4,356 ------ ------ ------ ------ ------ ------
At December 31, 1993, minimum future rental commitments for leases which are being accounted for as operating leases were as follows:
OPERATING LEASES ---------------------- (DOLLARS IN THOUSANDS) 1994..................................................................... $ 6,660 1995..................................................................... 4,932 1996..................................................................... 2,372 1997..................................................................... 2,051 1998..................................................................... 1,729 Later years.............................................................. 8,251 ---------- Total minimum lease payments........................................... $ 25,995 ---------- ----------
NOTE 8. SHORT-TERM BORROWINGS Short-term borrowings are summarized as follows:
DECEMBER 31, ------------------------------ 1993 1992 1991 -------- -------- -------- (DOLLARS IN THOUSANDS) Year-end balance Federal funds purchased and securities sold under agreements to repurchase............................................. $234,031 $287,802 $185,898 Commercial paper............................................. 10,941 8,325 11,466 Other short-term borrowings.................................. 23 185 146 -------- -------- -------- Total short-term borrowings............................... $244,995 $296,312 $197,510 -------- -------- -------- -------- -------- -------- Federal funds purchased and securities sold under agreements to repurchase Daily average balance..................................... $222,136 $211,662 $235,662 Weighted average interest rate............................ 2.69% 3.13% 5.21% Maximum outstanding at any month end...................... $277,833 $287,802 $299,098 Weighted average interest rate at December 31............. 2.83% 2.96% 3.90%
NOTE 9. FEDERAL HOME LOAN BANK ADVANCES AND LONG-TERM DEBT FEDERAL HOME LOAN BANK (FHLB) ADVANCES The Corporation's banking and thrift subsidiaries obtained in 1993 various advances from the FHLB totaling $158.0 million at December 31, 1993, under Blanket Agreements for Advances and Security Agreements (the Agreements). The Agreements entitle the Corporation's subsidiaries to borrow funds from the FHLB to fund mortgage loan programs and satisfy other funding needs. Of the amounts borrowed at December 31, 1993, $118 million were at variable rates and $40 million were at fixed rates with interest rates ranging from 3.2% to 8.0% and maturities ranging from 1997 to 2017. At December 31, 1993, FHLB advances that mature within one year, one to five years, and after five years were $3.1 million, $22.0 million, and $132.9 million, respectively. The value of collateral (primarily mortgage loans) under the Agreements must be 150% of the $158.0 million outstanding at December 31, 1993. 18 21 NOTE 9. FEDERAL HOME LOAN BANK ADVANCES AND LONG-TERM DEBT (CONTINUED) LONG-TERM DEBT Long-term debt is summarized as follows:
DECEMBER 31, ---------------------- 1993 1992 -------- ------- (DOLLARS IN THOUSANDS) 6.25% Subordinated Notes due 2003..................................... $ 74,479 $ -- 8 1/2% Subordinated Notes due 2002.................................... 40,250 40,250 10 1/8% Subordinated Capital Debentures due 1999...................... -- 34,042 Obligations under capital leases...................................... 2,294 2,684 Mortgage indebtedness................................................. 105 -- Notes payable......................................................... 148 180 -------- ------- Total long-term debt................................................ $117,276 $77,156 -------- ------- -------- -------
In October 1993, the Corporation filed a shelf registration statement for $150 million of the Corporation's subordinated debt securities. On November 2, 1993, the Corporation issued $75 million of 6.25% Subordinated Capital Notes due 2003 (6.25% Notes) at 99.305%. Interest on the 6.25% Notes is payable semiannually on May 1 and November 1. The 6.25% Notes are not redeemable prior to maturity and will mature on November 1, 2003. The 6.25% Notes are subordinated to all present and future senior indebtedness of the Corporation and payment may be accelerated only in the case of the bankruptcy of the Corporation. Debt issuance costs of $838,000 are included in other assets and are being amortized over a ten year life. The 6.25% Notes qualify for Tier 2 capital under regulatory risk-based capital guidelines. The Corporation also entered into an interest rate swap agreement with a notional amount of $50 million to convert a portion of its fixed-rate debt to a floating LIBOR rate for two and one-half years. In October 1992, the Corporation completed a public offering of $40.25 million of 8 1/2% Subordinated Notes (8 1/2% Notes). The 8 1/2% Notes mature on October 1, 2002, and interest is payable quarterly. Debt issuance costs of $1.2 million and $1.4 million, respectively, at December 31, 1993 and 1992 are included in other assets and are being amortized over a seven-year life. The 8 1/2% Notes are unsecured debt obligations of the Corporation and are subordinated in right of payment to all senior indebtedness of the Corporation. The Corporation, at its option, may redeem the 8 1/2% Notes on or after October 1, 1997, at par value plus accrued interest, upon 30 days notice. The Corporation is obligated to repay 100% of the principal amount plus accrued interest, up to an aggregate amount of $1 million, of 8 1/2% Notes tendered for prepayment by the personal representatives of deceased holders in any one year. The 10 1/8% Subordinated Capital Debentures (10 1/8% Debentures) were issued in a public offering in 1989. In November 1993, the Corporation used approximately $39 million of the net proceeds of the 6.25% Notes to in-substance defease the 10 1/8% Debentures. Direct obligations of the U.S. Government were purchased and placed in an irrevocable trust which provides cash flows matching the principal and interest debt service required to retire the 10 1/8% Debentures. At December 31, 1993, the outstanding balance of the 10 1/8% Debentures totaled $34 million which is not reflected in the accompanying financial statements. This transaction resulted in an extraordinary loss in the fourth quarter of 1993 of $5.2 million ($3.2 million net of taxes). Annual principal repayment requirements for long-term debt for the years 1994 through 1998 are $628,000, $466,000, $305,000, $273,000, and $296,000, respectively. Line of Credit In June 1993, the Corporation entered into an unsecured $25 million credit agreement which expires May 31, 1996. No borrowings were outstanding at December 31, 1993. The line of credit is for working capital purposes and as a commercial paper backup. The credit agreement contains performance measurements and restrictive covenants relating to dividends, acquisitions, sale of assets, and indebtedness which the Corporation must meet. The Corporation's dividends are restricted to no more than 60% of consolidated net earnings for the preceding fiscal year. 19 22 NOTE 10. SHAREHOLDERS' EQUITY PREFERRED STOCK The Corporation's preferred stock is summarized as follows:
DECEMBER 31, -------------------- 1993 1992 -------- ------- (DOLLARS IN THOUSANDS) PREFERRED STOCK, WITHOUT PAR VALUE, 10,000,000 SHARES AUTHORIZED CONVERTIBLE Series A Preferred Stock, 250,000 shares authorized, none issued...... $ -- $ -- Series B, $8.00 Nonredeemable, Cumulative, Convertible Preferred Stock (stated at liquidation value of $100 per share), 44,000 shares issued and outstanding............................................. 4,400 4,400 Series D, 9.5% Redeemable, Cumulative, Convertible Preferred Stock (stated at liquidation value of $20.50 per share), 253,655 shares issued and outstanding............................................. 5,200 5,200 Series E, 8% Cumulative, Convertible Preferred Stock (stated at liquidation value of $25 per share), 3,107,922 and 2,200,000 shares issued and outstanding at December 31, 1993 and 1992, respectively....................................................... 77,698 55,000 -------- ------- Total convertible preferred stock............................. 87,298 64,600 -------- ------- NONCONVERTIBLE Series C, 10 3/8% Increasing Rate, Redeemable, Cumulative Preferred Stock (stated at liquidation value of $25 per share), 690,000 shares issued and outstanding...................................... 17,250 17,250 -------- ------- Total nonconvertible preferred stock.......................... 17,250 17,250 -------- ------- Total preferred stock.................................... $104,548 $81,850 -------- ------- -------- -------
SERIES A PREFERRED STOCK (SHARE PURCHASE RIGHTS PLAN). In 1989, the Board of Directors of the Corporation adopted a Share Purchase Rights Plan and distributed a dividend of one Preferred Share Purchase Right (Right) for each outstanding share of the Corporation's $5 par value Common Stock and for each share issued thereafter. The Rights are generally designed to deter coercive takeover tactics and to encourage all persons interested in acquiring control of the Corporation to deal with each shareholder on a fair and equal basis. Each Right trades in tandem with its respective share of common stock until the occurrence of certain events, in which case it would separate from the common stock and entitle the registered holder, subject to the terms of the Rights Agreement, to purchase certain equity securities at a price below their market value. The Corporation has authorized 250,000 shares of Series A Preferred Stock for issuance under the Share Purchase Rights Plan, none of which have been issued. SERIES B PREFERRED STOCK. The Corporation issued 44,000 shares of $8.00 Nonredeemable, Cumulative, Convertible Preferred Stock, Series B (Series B Preferred Stock), $100 per share liquidation value, in a private transaction in connection with the acquisition of Steiner Bank in 1989. Such shares bear a dividend rate of $8.00 per share per annum; dividends are cumulative and are payable quarterly. The holders of shares of Series B Preferred Stock have the right, at their option, after November 30, 1994, (and in limited circumstances prior thereto) to convert each share into 7.722 shares (339,768 shares in total) of the Corporation's Common Stock. The Series B Preferred Stock is not subject to any sinking fund provisions and has no preemptive rights. Holders of Series B Preferred Stock have no voting rights except as may be required by law and in certain other limited circumstances. SERIES D PREFERRED STOCK. In July 1992, in connection with the acquisition of SBI (see Note 2), the Corporation issued 253,655 shares of 9.5% Redeemable, Cumulative, Convertible Preferred Stock, Series D (Series D Preferred Stock) in a private offering. Such shares have no par value but have a stated value of $20.50 per share on which dividends accrue at 9.5% per annum. Dividends are cumulative and payable quarterly. Such shares have a liquidation preference of $20.50 per share plus unpaid dividends accrued thereon and, at the Corporation's option, with the prior approval of the Federal Reserve, are subject to redemption by the Corporation at any time and from time to time on or after July 1, 1995. At any time prior to redemption, each share of Series D Preferred Stock is convertible at the option of the holder into one share of the Corporation's Common Stock. Holders of the Series D Preferred Stock have no voting rights except as may be required by law and in certain other limited circumstances. 20 23 NOTE 10. SHAREHOLDERS' EQUITY (CONTINUED) SERIES E PREFERRED STOCK. In February 1992, the Corporation completed a public offering of 2,200,000 shares of 8% Cumulative, Convertible Preferred Stock, Series E (Series E Preferred Stock). Such shares have a stated value of $25 per share, on which dividends accrue at a rate of 8% per annum; dividends are cumulative and are payable quarterly. The Series E Preferred Stock is not subject to any sinking fund provisions and has no preemptive rights. Such shares have a liquidation preference of $25 per share plus unpaid dividends accrued thereon, and with the prior approval of the Federal Reserve, may be redeemed by the Corporation in whole or in part at any time after March 31, 1997 at $25.00 per share. At any time prior to redemption, each share of Series E Preferred Stock is convertible, at the option of the holder, into 1.25 shares of the Corporation's Common Stock. Holders of Series E Preferred Stock have no voting rights except for those provided by law and in certain other limited circumstances. On January 1, 1993, the Corporation acquired an additional 43.93% of Bank of East Tennessee (BOET) in exchange for 331,741 shares of the Corporation's Series E Preferred Stock. The Corporation acquired the remaining outstanding stock of BOET on May 3, 1993 in exchange for an additional 317,045 shares of Series E Preferred Stock. The Corporation also acquired Erin Bank & Trust Company in exchange for 259,736 shares of Series E Preferred Stock on June 1, 1993. See Note 2 for additional information regarding these acquisitions. SERIES C PREFERRED STOCK. In August 1991, the Corporation completed a public offering of 690,000 shares of 10 3/8% Increasing Rate, Redeemable, Cumulative Preferred Stock, Series C (Series C Preferred Stock). The Series C Preferred Stock has a stated value of $25 per share. Dividends are cumulative and payable quarterly at a rate of $.648 per quarter increasing to $.680 beginning November 1, 1994, to $.711 beginning November 1, 1995, and to $.742 beginning November 1, 1996. The Series C Preferred Stock is not convertible, is not subject to any sinking fund provisions, and has no preemptive rights. On or after October 31, 1994, the Corporation may, with the prior approval of the Federal Reserve, redeem any or all outstanding Series C Preferred Stock at $25 per share plus all dividends accrued and unpaid to the date fixed for redemption. Holders of the Series C Preferred Stock have no voting rights except as may be required by law and except in certain other limited circumstances. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN The Dividend Reinvestment and Stock Purchase Plan (the Plan) authorizes the issuance of 500,000 shares of authorized but previously unissued common stock to shareholders who choose to invest all or a portion of their cash dividends or make optional cash purchases. On certain investment dates, shares may be purchased with reinvested dividends and optional cash payments at a price of 95% and 100%, respectively, of their fair market value, without brokerage commissions. Shares issued under this Plan totaled 68,188, 93,407, and 95,029 shares in 1993, 1992, and 1991, respectively. SUBSCRIPTION AGREEMENT In 1987, the Corporation entered into an agreement with Santa Cruz Resources, Inc. (SCR) under which SCR would acquire up to 21% of the Corporation's Common Shares. SCR ultimately acquired 2,963,000 of the Corporation's common shares. The agreement imposed several restrictions on SCR. During 1990 and 1991, the Corporation repurchased 2.7 million of the shares and released SCR from the agreement. 21 24 NOTE 11. UNION PLANTERS CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION CONDENSED BALANCE SHEET
DECEMBER 31, --------------------- 1993 1992 -------- -------- (DOLLARS IN THOUSANDS) ASSETS Noninterest-bearing cash in subsidiary bank.......................... $ 799 $ 623 Demand note receivable from subsidiary bank.......................... 101,356 57,971 Advances to and receivable from subsidiaries......................... 2,955 9,221 Investment securities held for sale.................................. 1,324 4,834 Investment in Union Planters National Bank........................... 251,583 216,024 Investment in other banking subsidiaries............................. 218,926 159,210 Investment in savings and loan subsidiaries.......................... 27,846 -- Investment in nonbank subsidiaries................................... 2,817 (2,802) Other assets......................................................... 6,483 8,067 -------- -------- TOTAL ASSETS...................................................... $614,089 $453,148 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY Commercial paper..................................................... $ 10,941 $ 8,325 Long-term debt....................................................... 114,729 74,292 Loans from and payables to subsidiary banks.......................... 362 53 Other liabilities.................................................... 10,757 14,267 Shareholders' equity................................................. 477,300 356,211 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................ $614,089 $453,148 -------- -------- -------- --------
22 25 NOTE 11. UNION PLANTERS CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION (CONTINUED) CONDENSED STATEMENT OF EARNINGS
YEARS ENDED DECEMBER 31, ---------------------------------- 1993 1992 1991 -------- -------- -------- (DOLLARS IN THOUSANDS) INCOME Dividends from banking subsidiaries...................... $ 28,092 $ 20,656 $ 21,335 Management fees from subsidiaries........................ 7,198 5,902 5,682 Interest from banking subsidiaries....................... 1,358 1,523 791 Interest and dividends on investments, loans, and interest-bearing deposits............................. 62 279 319 Investment securities gains (losses)..................... -- 38 (1,603) Other income............................................. 1,283 43 266 -------- -------- -------- Total income.......................................... 37,993 28,441 26,790 -------- -------- -------- EXPENSES Interest expense Short-term borrowings................................. 235 306 375 Long-term debt........................................ 7,447 4,504 4,539 Loan from bank subsidiary............................. -- 28 172 Salaries and employee benefits........................... 6,029 4,973 5,264 Legal fees and provision for litigation settlements...... 321 3,924 (1,457) Other expense............................................ 5,363 3,906 2,742 -------- -------- -------- Total expenses........................................ 19,395 17,641 11,635 -------- -------- -------- EARNINGS BEFORE INCOME TAXES, EXTRAORDINARY ITEM, ACCOUNTING CHANGES, AND UNDISTRIBUTED EARNINGS OF SUBSIDIARIES........................................ 18,598 10,800 15,155 Tax benefit................................................ (4,092) (2,271) (2,885) -------- -------- -------- EARNINGS BEFORE EXTRAORDINARY ITEM, ACCOUNTING CHANGES, AND UNDISTRIBUTED EARNINGS OF SUBSIDIARIES........................................ 22,690 13,071 18,040 Extraordinary item-defeasance of debt, net of taxes........ (3,206) -- -- Accounting changes, net of taxes........................... 2,479 -- -- -------- -------- -------- EARNINGS BEFORE UNDISTRIBUTED EARNINGS OF SUBSIDIARIES........................................ 21,963 13,071 18,040 Undistributed earnings of subsidiaries..................... 41,100 28,368 9,468 -------- -------- -------- NET EARNINGS.......................................... $ 63,063 $ 41,439 $ 27,508 -------- -------- -------- -------- -------- --------
23 26 NOTE 11. UNION PLANTERS CORPORATION (PARENT COMPANY ONLY) FINANCIAL INFORMATION (CONTINUED) CONDENSED STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, ---------------------------------- 1993 1992 1991 -------- -------- -------- (DOLLARS IN THOUSANDS) OPERATING ACTIVITIES Net earnings............................................. $ 63,063 $ 41,439 $ 27,508 Equity in undistributed earnings of subsidiaries......... (41,100) (28,368) (9,468) Cumulative effect of accounting changes.................. (2,479) -- -- Write-down of investment securities...................... -- -- 1,603 Deferred income tax benefit.............................. (1,898) -- (167) Other, net............................................... 3,908 3,268 (581) -------- -------- -------- Net cash provided by operating activities............. 21,494 16,339 18,895 -------- -------- -------- INVESTING ACTIVITIES Net decrease (increase) in short-term investments........ -- 15,000 (11,223) Proceeds from sales of investment securities............. 123 4,710 41 Net increase in investment in and receivables from subsidiaries.......................................... (16,916) (48,624) (6,243) Purchases of premises and equipment...................... -- (211) (29) -------- -------- -------- Net cash used in investing activities................. (16,793) (29,125) (17,454) -------- -------- -------- FINANCING ACTIVITIES Net increase (decrease) in commercial paper.............. 2,616 (3,141) 4,163 Proceeds from issuance of long-term debt, net............ 73,641 38,850 3,000 Repayment and defeasance of long-term debt............... (34,042) (4,121) (9,499) Net loan from bank subsidiary............................ -- (1,947) -- Proceeds from issuance of preferred stock, net........... -- 52,350 16,410 Proceeds from issuance of common stock, net.............. 19,611 7,673 3,275 Purchases and retirement of common stock, net............ (1,786) (4,311) (9,232) Cash dividends paid...................................... (21,180) (15,315) (8,657) -------- -------- -------- Net cash provided (used) by financing activities...... 38,860 70,038 (540) -------- -------- -------- Net increase in cash and cash equivalents.................. 43,561 57,252 901 Cash and cash equivalents at the beginning of the year..... 58,594 1,342 441 -------- -------- -------- Cash and cash equivalents at the end of the year........... $102,155 $ 58,594 $ 1,342 -------- -------- -------- -------- -------- --------
Non-Cash Investing Activities. See Note 2 regarding acquisitions in 1993 and 1992. NOTE 12. RESTRICTIONS ON DIVIDENDS AND LOANS FROM SUBSIDIARIES The amount of dividends which the Corporation's subsidiaries may pay is limited by applicable laws and regulations. For the subsidiary national banks, regulatory approval is required if dividends declared in any year exceed net earnings of the current year (as defined under the National Bank Act) plus retained net profits for the preceding two years. The payment of dividends by state bank subsidiaries is regulated by applicable laws in Alabama, Arkansas, Mississippi, Kentucky, and Tennessee and the regulations of the Federal Deposit Insurance Corporation (FDIC). The payment of dividends by savings and loan subsidiaries (see Note 2) is subject to the regulations of the Office of Thrift Supervision (OTS). The Corporation has adopted for its state-chartered bank subsidiaries internal dividend policies that have received approval from the various state banking commissioners, subject to restrictions. The current policy for Alabama, Arkansas, and Mississippi subsidiary banks requires a minimum ratio of 7% tangible equity capital (equity less goodwill and other intangibles) to tangible assets and paying dividends only equal to the excess without prior approval. The internal policy adopted for Tennessee banks requires a 6% tangible equity capital to tangible assets ratio and a 7% tangible primary capital (tangible equity plus the allowance for losses on loans) to tangible assets ratio be maintained by the subsidiaries. At January 1, 1994, the banking subsidiaries could have paid dividends to the Corporation aggregating $74.3 million, excluding the MSB acquisition consummated January 1, 1994, without prior 24 27 NOTE 12. RESTRICTIONS ON DIVIDENDS AND LOANS FROM SUBSIDIARIES (CONTINUED) regulatory approval. The actual amount of dividends paid will be limited to a lesser amount by management in order to maintain compliance with capital guidelines and to maintain strong capital positions in each of the banking subsidiaries. Future dividends will be dependent on the level of earnings of the subsidiary financial institutions. The Corporation's banking subsidiaries are limited by Federal law in the amount of credit which they may extend to their affiliates, including the Corporation. Loans to a single affiliate may not exceed 10%, and loans to all affiliates may not exceed 20% of an individual bank's net assets plus its allowance for losses on loans. Such loans must be collateralized by assets having market values of 100% to 130% of the loan amount depending on the nature of the collateral. NOTE 13. SIGNIFICANT OPERATING BUSINESS LINES The Corporation is primarily engaged in the commercial and retail banking business. Broker/dealer operations formerly constituted a significant portion of the Corporation's business. In the fourth quarter of 1990, the broker/dealer operations, formerly conducted by Union Planters Investment Bankers Corporation and its subsidiaries (UPIBC), were restructured, and on January 2, 1991, the Corporation became a limited partner in Vining-Sparks IBG, Limited Partnership (VSIBG) with Vining-Sparks Securities, Inc. (VSS). VSIBG engages in securities broker/dealer activities of the types formerly carried on by VSS and UPIBC. The Corporation transferred the Capital Markets and SBA Loan Trading Operations of UPIBC to UPNB, and they now function as part of UPNB's banking operations. The broker/dealer operations are now limited to the Corporation's passive investment in VSIBG which is included in other assets at $5.5 million and $5.2 million, respectively, at December 31, 1993 and 1992. The Corporation's proportionate share of earnings (29%) from VSIBG is included in other noninterest income. In 1992 and 1991, UPIBC incurred litigation expenses and provided for litigation settlements totaling $8.6 million and $11.3 million, respectively, arising from its restructured operations. A significant portion of that litigation has now been settled. Revenues from the broker/dealer operations were $3.6 million, $3.9 million, and $2.0 million, respectively, in 1993, 1992, and 1991. In 1993, the broker/dealer operations had pretax earnings of $3.4 million compared to pretax losses of $4.7 million and $9.3 million, respectively, in 1992 and 1991. 25 28 NOTE 14. OTHER NONINTEREST INCOME AND EXPENSE The major components of other noninterest income and expense are summarized as follows:
YEARS ENDED DECEMBER 31, ----------------------------- 1993 1992 1991 ------- ------- ------- (DOLLARS IN THOUSANDS) OTHER NONINTEREST INCOME Mortgage servicing income..................................... $ 7,558 $ 8,458 $ 7,514 Merchant credit card fees..................................... 5,920 5,278 4,393 Trust service income.......................................... 5,661 5,079 5,278 VSIBG partnership earnings.................................... 3,652 3,920 2,031 Credit life insurance commissions............................. 2,749 2,468 2,313 Brokerage fee income.......................................... 1,520 1,288 977 Sale of servicing............................................. 1,035 639 941 Gain on troubled debt restructuring (Note 5).................. 901 3,513 -- Computer service income....................................... 482 786 1,217 Other......................................................... 13,299 7,587 7,501 ------- ------- ------- Total other noninterest income............................. $42,777 $39,016 $32,165 ------- ------- ------- ------- ------- ------- OTHER NONINTEREST EXPENSE FDIC insurance assessments.................................... $12,738 $ 9,127 $ 6,788 Amortization of goodwill and other intangibles................ 7,318 5,351 3,478 Other contracted services..................................... 6,537 5,042 4,556 Advertising and promotion..................................... 5,438 4,816 4,114 Postage and carrier........................................... 5,191 4,024 3,715 Stationery and supplies....................................... 5,126 3,974 3,606 Merchant credit card charges.................................. 4,611 3,929 3,130 Provisions for conversion of data processing systems(a)....... 4,424 -- -- Communications................................................ 4,226 3,454 2,907 Brokerage and clearing fees................................... 3,942 3,815 3,974 Amortization and write-offs of mortgage servicing rights(b)... 3,199 11,071 2,794 Other personnel services...................................... 2,504 2,118 1,232 Merger related expenses(c).................................... 2,113 -- -- Dues, subscriptions, and contributions........................ 2,309 1,616 1,681 Legal fees.................................................... 2,307 5,213 4,263 Other real estate expense..................................... 2,255 3,228 2,351 Travel........................................................ 1,791 1,394 1,587 Federal Reserve fees.......................................... 1,740 1,733 1,678 Taxes other than income taxes................................. 1,451 816 849 Insurance..................................................... 1,298 1,019 935 Miscellaneous charge-offs..................................... 1,206 1,112 760 Provisions for litigation settlements......................... -- 9,000 7,600 Provisions for abandoned property............................. -- 5,200 1,643 Other......................................................... 12,192 12,033 10,191 ------- ------- ------- Total other noninterest expense............................ $93,916 $99,085 $73,832 ------- ------- ------- ------- ------- -------
(a) During 1993, the Corporation entered into a contract for conversion of the software systems used by its subsidiaries to a common system. A provision of $4.4 million was recorded for the write-off of existing systems contracts as well as conversion costs. (b) In 1992, includes $8.2 million of accelerated amortization of purchased mortgage servicing rights due to accelerated prepayments of the underlying mortgage loans. (c) One-time expenses related to acquisitions (primarily termination of an acquired pension plan). NOTE 15. EMPLOYEE BENEFIT PLANS 401K RETIREMENT SAVINGS PLAN. The Corporation's 401K Retirement Savings Plan (401K Plan) is available to employees having one or more years of service who work in excess of 1,000 hours a year. Employees may voluntarily contribute 1 to 16 percent of their gross compensation on a pretax basis up to a maximum of $8,994 in 1993, subject to certain Internal Revenue Service restrictions (amount may change from year to year based on cost of living index), and the Corporation makes a matching 26 29 NOTE 15. EMPLOYEE BENEFIT PLANS (CONTINUED) contribution of 50 to 100 percent of the amounts contributed by the employee depending upon his or her eligible years of service. The Corporation's matching contribution is limited to employee contributions of up to 6% of their compensation. The Corporation's Flexible Benefit Program allows employees to allocate a portion of their available benefit dollars to the 401K Plan as additional employer contributions. The Corporation's contributions to the 401K Plan for 1993, 1992, and 1991 were $1.8 million, $1.6 million, and $1.5 million, respectively. EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. The Employee Stock Ownership Plan and Trust (ESOP) is noncontributory and covers employees having one or more years of service who work in excess of 1,000 hours a year. The amounts of contributions to the ESOP are determined annually by the Board of Directors, and were $2 million, $1.6 million, and $1.6 million for 1993, 1992, and 1991, respectively. At December 31, 1993, the ESOP held 1,068,469 shares of the Corporation's Common Stock, all of which was allocated to participants. STOCK INCENTIVE PLANS. Employees and directors of the Corporation and its subsidiaries are eligible to receive options or restricted stock grants under the 1992 Stock Incentive Plan (1992 Plan). A maximum of 1,600,000 shares of the Corporation's Common Stock may be issued through the exercise of nonstatutory or incentive stock options and as restricted stock awards. The option price is the fair market value of the shares at the date of grant. Options granted generally become exercisable in installments of 20% each year beginning one year from date of grant. The 1992 Plan replaced the 1983 Stock Incentive Plan which had essentially the same provisions as the 1992 Plan. The 1983 Plan expired March 9, 1993; however, options issued through that date continue to be outstanding and exercisable under the terms of the grants. Additional information, with respect to stock options issued under the 1983 and 1992 Plans, is as follows:
YEARS ENDED DECEMBER 31, ----------------------- 1993 1992 --------- --------- Options Outstanding, beginning of year..................... 479,419 627,878 Granted............................................ 287,532 206,756 Exercised.......................................... (165,104) (337,030) Cancelled or surrendered........................... (14,237) (18,185) --------- --------- Outstanding, end of year........................... 587,610 479,419 --------- --------- --------- --------- Options becoming exercisable during the year......... 237,730 289,716 --------- --------- --------- --------- Options exercisable at end of year................... 432,310 369,139 --------- --------- --------- ---------
Exercise prices ranged from $6.88 to $28.00 in 1993 and from $6.88 to $24.00 in 1992. RETIREE HEALTH CARE AND LIFE INSURANCE. The Corporation provides certain health care and life insurance benefits to retired employees who have completed twenty years of unbroken full-time service immediately prior to retirement and who have attained age 60 or more. Health care benefits are provided partially through an insurance company (for retirees age 65 or more) and partially through direct payment of claims. Prior to January 1, 1993, health care premiums and claims and life insurance benefits ($2,500 per claim) were recognized as expense when paid. In 1992 and 1991, retiree health care and life insurance costs were $390,000 and $336,000, respectively. Effective January 1, 1993, the Corporation adopted SFAS No. 106 which requires that retiree health care and life insurance benefits be charged to expense during the years in which the employee renders service. The Corporation elected to recognize the accumulated benefit obligation in the first quarter of 1993 which approximated $8.3 million ($5.1 million after tax). The current expense for 1993 was $632,000. Postretirement benefit cost (in thousands) for 1993 was determined assuming a discount rate of 8% and an expected return on plan assets of 5%: Service cost......................................................... $ 170 Interest cost of accumulated postretirement benefit obligation....... 682 Return on plan assets................................................ (220) ----- Total...................................................... $ 632 ----- -----
27 30 NOTE 15. EMPLOYEE BENEFIT PLANS (CONTINUED) The following table sets forth the Plans' funded status and the amounts reported in the Corporation's consolidated balance sheet:
DECEMBER 31, JANUARY 1, 1993 1993 ------------ ---------- (DOLLARS IN THOUSANDS) Fair value of Plan assets........................................... $ 5,757 $ 4,200 Accumulated postretirement benefit obligation (APBO): Retirees.......................................................... 7,061 6,149 Fully eligible plan participants.................................. 181 211 Other active plan participants.................................... 3,357 2,047 ------------ ---------- Total APBO................................................ 10,599 8,407 ------------ ---------- APBO in excess of Plan assets............................. $ (4,842) $ (4,207) ------------ ---------- ------------ ---------- Reconciliation of fund's status to reported amounts: Accrued liability included in balance sheet, including unfunded portion of transition obligation............................... $ (3,190) $ (4,207) Unrecognized net gain (loss)...................................... (1,652) -- ------------ ---------- APBO in excess of plan assets............................. $ (4,842) $ (4,207) ------------ ---------- ------------ ----------
The assumed discount rate used to measure the APBO was 7% at December 31, 1993 and 8% at January 1, 1993. The weighted average health care cost trend rate in 1993 is 13%, gradually declining to an ultimate rate in 2001 of 5%. A one percentage point increase in the assumed health care cost trend rates for each future year would have increased the aggregate of the service and interest cost components of the 1993 net periodic postretirement benefit cost by $109,000 and would have increased the APBO as of December 31, 1993 by $858,000. The Corporation established a Voluntary Employees Beneficiary Association (VEBA) and through December 31, 1993, has made contributions into such VEBA of $5.7 million, the maximum amount deductible for federal income tax purposes. The VEBA is expected to earn 5% on trust assets consisting of U.S. Government obligations, bank obligations, commercial instruments, and repurchase agreements secured by U.S. Treasury obligations. Additional contributions will be made to the VEBA annually which will be the source of funding for future postretirement benefits. POSTEMPLOYMENT BENEFITS. The Corporation also adopted SFAS No. 112 as of January 1, 1993, which requires that such costs be charged to expense over the relevant service period. The Corporation's analysis determined this liability to be $1.3 million ($807,000 net of tax benefit thereon) at January 1, 1993, consisting primarily of postemployment medical claims and related administrative expenses in excess of expected premiums to be paid by employees. The liability amount was adjusted to $600,000 at December 31, 1993, due to a significant decrease in 1993 claims. The liability amount will be reviewed annually and adjusted as management may deem necessary based on actual experience. Annual expenses for these benefits are not expected to vary significantly from the amounts which have previously been expensed as incurred. ACQUIRED INSTITUTIONS. Certain of the financial institutions acquired sponsor various employee benefit and retirement plans. Such plans have been or are in the process of being terminated and the employees now participate in the aforementioned Corporation plans. At December 31, 1993, certain institutions acquired in 1993 still have outstanding plans, including defined benefit pension plans, 401K plans and ESOPs. The liabilities, if any, for such terminations have been recorded as of December 31, 1993. 28 31 NOTE 16. INCOME TAXES The components of income tax expense are as follows:
YEARS ENDED DECEMBER 31, ----------------------------- 1993 1992 1991 -------- -------- ------- (DOLLARS IN THOUSANDS) Current tax expense (benefit) Federal....................................................... $ 18,170 $ 18,928 $ 9,870 State......................................................... 5,113 3,617 (69) -------- -------- ------- Total current tax expense.................................. 23,283 22,545 9,801 -------- -------- ------- Deferred tax benefit Federal....................................................... (11,677) (7,349) (3,750) State......................................................... (4,231) -- -- -------- -------- ------- Total deferred tax benefit................................. (15,908) (7,349) (3,750) -------- -------- ------- Total income tax expense.............................. $ 7,375 $ 15,196 $ 6,051 -------- -------- ------- -------- -------- -------
For 1993, income tax expense (benefit) included in the financial statements is summarized as follows: Applicable income taxes........................................... $ 23,967 Tax benefit related to extraordinary item......................... (2,040) Tax benefit related to the cumulative effect of changes in accounting methods.............................................. (14,552) -------- Total income tax expense................................ $ 7,375 -------- --------
Deferred tax assets/liabilities are comprised of the following:
AS OF DECEMBER 31, --------------------- 1993 1992 ------- ------- (DOLLARS IN THOUSANDS) Deferred tax assets Losses on loans and other real estate................................ $27,022 $20,491 Provisions for litigation settlements................................ 1,349 3,427 Postretirement and postemployment benefits........................... 1,478 -- Amortization of intangibles.......................................... 1,547 27 Net operating loss carryforwards for tax purposes.................... 2,094 -- Depreciation......................................................... 3,129 2,022 Debt defeasance...................................................... 2,023 -- Unrecognized tax benefits............................................ -- (8,666) Other deferred items................................................. 8,901 9,110 ------- ------- Total deferred tax assets.................................... 47,543 26,411 ------- ------- Deferred tax liabilities Other deferred items................................................. 7,912 5,831 ------- ------- Net deferred tax asset....................................... $39,631 $20,580 ------- ------- ------- -------
The change in the deferred tax asset during the year is a result of the changes in methods of accounting discussed in Note 1, the addition of deferred tax assets of acquired companies, and current period deferred tax expense of $684,000, which includes $805,000 deferred tax benefit attributable to the increase in the federal income tax rate and $1,520,000 deferred tax benefit from legislated changes in the treatment of intangible assets. The realization of a portion of the deferred tax asset is based upon management's conclusion that future operating profits will generate sufficient taxable income to offset the related deductions and loss carryforwards. 29 32 NOTE 16. INCOME TAXES (CONTINUED) Income tax expense as a percent of earnings before income taxes is reconciled with the statutory federal income tax rate of 35% for 1993 and 34% for 1992 and 1991 as follows:
YEARS ENDED DECEMBER 31, ------------------------------- 1993 1992 1991 ------- ------- ------- (DOLLARS IN THOUSANDS) Computed "expected" tax..................................... $29,833 $19,256 $11,410 State income taxes, net of net operating loss carryovers and federal tax benefit....................................... 3,486 2,387 (46) Separate subsidiary company prior year losses utilized...... -- (226) (294) Tax-exempt interest, net.................................... (9,347) (5,821) (5,126) Amortization of goodwill.................................... 1,466 1,626 1,170 Other, net.................................................. (1,471) (2,026) (1,063) ------- ------- ------- Applicable income tax............................. $23,967 $15,196 $ 6,051 ------- ------- ------- ------- ------- -------
Income tax expense applicable to securities transactions was $1.8 million for 1993, $5.0 million for 1992, and $1.9 million for 1991. Effective January 1, 1993, the Corporation adopted SFAS No. 109. The impact of the cumulative tax effect of this change in accounting method was $10.9 million. Reference is made to Note 1 for further discussion of accounting changes. NOTE 17. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK In the normal course of business, the Corporation is a party to various types of financial instruments in order to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These instruments involve, to varying degrees, elements of credit and interest rate risk and are not reflected in the accompanying consolidated financial statements. For certain instruments, the exposure to credit loss is limited to the contractual amount of the instrument. The following table presents the contractual amounts of this type of instrument.
CONTRACT AMOUNT DECEMBER 31, ------------------- 1993 1992 ---- ---- (DOLLARS IN MILLIONS) FINANCIAL INSTRUMENTS WHOSE CONTRACT AMOUNTS REPRESENT CREDIT RISK Commitments to extend credit (excluding credit card plans)......... $480 $400 Commitments to extend credit under credit card plans............... 207 152 Standby, commercial, and similar letters of credit................. 23 34
Commitments to extend credit are legally binding agreements to lend to customers for specific purposes, at specific rates, with fixed expiration and review dates if the conditions in the agreement are met. Since many of the commitments normally expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Corporation subjects such activity to the same credit quality and monitoring controls as its lending activities. Collateral held, if any, varies but may include accounts receivable, inventory, property, plant and equipment, income producing properties, or securities. Letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Corporation in some cases holds various types of collateral to support those commitments for which collateral is deemed necessary. Other off-balance-sheet instruments entered into are forward and futures contracts, interest rate swap agreements, and commitments to purchase or sell when-issued securities. The following table presents the notional amounts of these types of instruments. 30 33 NOTE 17. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (CONTINUED)
NOTIONAL AMOUNT DECEMBER 31, ------------------- 1993 1992 ---- ---- (DOLLARS IN MILLIONS) FINANCIAL INSTRUMENTS WHOSE NOTIONAL CONTRACT AMOUNTS EXCEED THE AMOUNTS OF ACTUAL CREDIT RISK Forward and futures contracts...................................... $ 38 $ 20 Interest rate swap agreements...................................... 300 -- When-issued securities Commitments to sell.............................................. 56 44 Commitments to purchase.......................................... 87 73
Forward and futures contracts are contracts for delayed delivery of securities or money market instruments in which the seller agrees to make delivery at a specified future date of a specified instrument, at a specified price or yield. Risks arise from the possible inability of the counterparties to meet the terms of their contracts and from movements in securities values and interest rates. An interest rate swap generally involves the exchange of fixed for floating rate interest payment streams on a specified notional principal amount of assets or liabilities for an agreed upon period of time without the exchange of the underlying principal amounts. Notional principal amounts often are used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. During 1993, the Corporation entered into the following interest rate swap agreements which are used to manage its interest-rate risk. The Corporation receives fixed rate payments and pays variable rate payments.
DECEMBER 31, 1993 ---------------------------- NOTIONAL VARIABLE RATE FIXED RATE MATURITY INSTRUMENT HEDGED AMOUNT PAID RECEIVED DATE - ----------------------------------------- -------------- ------------- ---------- -------- (IN MILLIONS) Commercial loans......................... $150 3.31% 5.21% 1/99 Investment securities.................... 100 3.50 4.44 6/95 Long-term debt........................... 50 3.56 4.46 5/96 ------ Total.......................... $300 ------ ------
When-issued securities are commitments to either purchase or sell securities that have not yet been issued. The trades are contingent upon the actual issuance of the security. These transactions represent conditional commitments made by the Corporation, and risk arises from the possible inability of the counterparties to meet the terms of their contracts and from movements in securities values and interest rates. As part of its mortgage banking operations, the Corporation services residential real estate loans. In its capacity as servicer of these loans, the Corporation is responsible for foreclosure and the related costs of foreclosure. These costs are expensed as incurred and are shown as servicing foreclosure expense in other noninterest expense. In the normal course of business, the Corporation sells mortgage loans and makes certain limited representations and warranties to the purchaser. Management does not expect any significant losses to arise from these representations and warranties. CONCENTRATIONS OF CREDIT RISK. Through its subsidiary banks in Tennessee, Arkansas, Mississippi, and Alabama, the Corporation grants commercial, agricultural, residential, and consumer loans to customers throughout those states. The amount and percentage of total loans outstanding by the state in which the subsidiaries were headquartered at December 31, 1993 were as follows: Tennessee $2.4 billion (81%), Arkansas $281 million (10%), Mississippi $254 million (9%), and Alabama $12 million (less than 1%). Although the Corporation has a diversified loan portfolio, the ability of its debtors to honor their contracts is to some extent dependent upon economic conditions found throughout the above states and the surrounding areas. 31 34 NOTE 18. FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying values and fair values of the Corporation's financial instruments are summarized as follows:
DECEMBER 31, 1993 DECEMBER 31, 1992 ----------------------- ----------------------- CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) FINANCIAL ASSETS Cash and cash equivalents................. $ 278,735 $ 278,735 $ 327,634 $ 327,634 Interest-bearing deposits at financial institutions........................... 26,647 26,647 84,204 84,231 Trading account securities................ 153,482 153,482 109,584 109,584 Loans held for sale....................... 56,053 56,053 91,543 91,543 Investment securities..................... 2,617,053 2,661,260 2,198,103 2,239,534 Net loans................................. 2,854,773 2,904,139 2,167,549 2,196,944 FINANCIAL LIABILITIES Demand deposits........................... 2,916,374 2,916,374 2,365,027 2,365,027 Time deposits............................. 2,334,992 2,358,494 2,085,149 2,098,537 Short-term borrowings..................... 244,995 244,995 296,312 296,312 Federal Home Loan Bank advances........... 157,954 157,723 -- -- Long-term debt, excluding capital lease obligations............................ 114,982 114,982 74,472 74,731 OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS Forward and futures contracts............. -- 190 -- 14 When-issued securities Commitments to sell.................... -- 4 -- -- Commitments to purchase................ -- -- -- -- Interest rate swaps....................... -- 277 -- --
The following methods and assumptions were used by the Corporation in estimating the fair value for financial instruments: CASH AND CASH EQUIVALENTS. The carrying amount for cash and cash equivalents approximates the fair value of the assets. INTEREST-BEARING DEPOSITS AT FINANCIAL INSTITUTIONS AND INVESTMENT SECURITIES. Fair values of these instruments are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on the quoted values of similar instruments. TRADING ACCOUNT SECURITIES. These instruments are carried in the consolidated balance sheet at values which approximate their fair value based on quoted market prices of similar instruments. LOANS HELD FOR SALE. These instruments are carried in the consolidated balance sheet at the lower of cost or market. The fair value of these instruments is based on subsequent liquidation values of the instruments which did not result in any significant gains or losses. LOANS. The fair values of loans are estimated using discounted cash flow analyses, and using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality and risk. DEMAND DEPOSITS. The fair values of these instruments (i.e., checking accounts, savings accounts, money market deposit accounts, and NOW accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount). TIME DEPOSITS. The fair values of time deposits (i.e., certificates of deposit, IRAs, investment savings, etc.) are estimated using a discounted cash flow calculation that applies interest rates currently being offered on these instruments to a schedule of aggregated expected monthly maturities on time deposits. SHORT-TERM BORROWINGS. The carrying amount of short-term borrowings (i.e., federal funds purchased, securities sold under agreements to repurchase, commercial paper, and other short-term borrowings) approximates their fair values. FEDERAL HOME LOAN BANK ADVANCES. The fair value of these advances is estimated using discounted cash flow analyses, and using the FHLB quoted rates of borrowing for advances with similar terms. 32 35 NOTE 18. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED) LONG-TERM DEBT. The fair value of long-term debt is based on quoted market prices for the Corporation's publicly traded debt. OFF-BALANCE-SHEET FINANCING INSTRUMENTS. Fair values of off-balance-sheet instruments are based on current settlement values (forward contracts); quoted market prices (futures and interest rate swaps); and current market values for when-issued securities. The fair value of interest rate swaps represents the unrealized gain in these contracts. The fair value of commitments to extend credit and letters of credit (see Note 17) are not presented, since management believes the fair value to be insignificant as the instruments are expected to expire unused and the fees charged on such instruments are not significant. NOTE 19. CONTINGENT LIABILITIES Management is of the opinion that the Corporation has accrued liabilities sufficient to cover the estimated costs associated with the ultimate resolution of the pending matters discussed below. Additionally, various other legal proceedings against the Corporation and its subsidiaries have arisen in the ordinary course of business. Management is of the opinion, based upon present information, including evaluations of outside counsel, that the Corporation's financial position will not be materially affected by the ultimate resolution of these other legal matters. The Corporation and/or various subsidiaries are parties to various pending civil actions, all of which are being defended vigorously, as follows: In 1988, the Corporation rescinded and terminated a purported agreement for the acquisition of a Louisiana bank holding company, Great American Corporation (GAC). The Corporation and a subsidiary were made parties to several civil actions relating to the failed acquisition. In the second quarter of 1993 consummation of the settlement of all pending civil actions involving the Corporation and a subsidiary arising from the attempted acquisition of GAC was effected. The costs of such settlement did not exceed amounts previously reserved for such purpose. UPNB, a member of the MasterCard and VISA organizations, was a co-defendant or cross-claim defendant in two related civil actions arising out of its previous utilization of a third party, Electronic Transaction Network, Inc.(E-Net), to solicit and assist in the administration of credit card transaction processing arrangements with several thousand consumer merchants located throughout the United States. During the third quarter of 1993, a definitive agreement was entered into for the settlement of all pending litigation against UPNB in connection with its former relationship with E-Net, without the payment of any sum by UPNB. The Corporation's former broker/dealer subsidiaries are among the more than 80 defendants in various lawsuits alleging violations of Federal and other securities laws in connection with the underwriting and sale between 1986 and early 1990 of $400 million of housing revenue bonds issued by the Health, Educational, and Housing Facility Board of the City of Memphis, Tennessee, and seven other taxable municipal bond issues. One of such subsidiaries participated in the underwriting of the Memphis issue and is a defendant in purported class claims based on that issue. Several individual actions against these subsidiaries alleging violations in secondary market sales of such issues have been consolidated in the litigation. The bonds were rated AAA by Standard & Poors at the time of issuance, and maintained such rating until January, 1990, when the bonds were downgraded. The market price of the bonds has since declined significantly. Based on the information currently known, the Corporation is of the opinion that it has meritorious defenses and has instructed counsel to vigorously defend the lawsuits. The pending individual actions, even in the aggregate, are not deemed by management to be material to the Corporation's financial position. Certain subsidiaries of the Corporation were threatened in 1989 with a civil action by the FDIC for the estate of a closed savings association. If filed, the action would reportedly seek compensatory damages of at least $37 million, and other relief including an injunction against transferring or encumbering any assets until any judgments have been paid, based upon allegations of wrongdoing in the sale of covered call options to the closed savings association. An agreement between all parties to the threatened action providing for the forebearance of the filing of such action and the tolling of applicable statutes of limitation, entered into in 1989, continues in effect. The Corporation has furnished the FDIC with information assertedly demonstrating the lack of merit in the threatened action and believes that such action, if nevertheless filed, can be resolved without material loss. 33 36 MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING The accompanying financial statements and related financial information in this annual report were prepared by the management of Union Planters Corporation 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. Management maintains and depends upon internal accounting systems and related systems of internal controls. The internal control systems are designed to ensure that transactions are properly authorized and recorded in the Corporation's financial records and to safeguard the Corporation's assets from material loss or misuse. The Corporation utilizes a professional staff of auditors who monitor compliance with and assess the effectiveness of the system of internal accounting controls and coordinate overall audit coverage. The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with representatives of the Corporation's independent accountants and management to review accounting policies, control procedures, and audit and regulatory examination reports. The independent accountants have free access to the Committee, with and without the presence of management, to discuss the results of their audit work and their evaluation of the adequacy of internal controls and the quality of financial reporting. The financial statements have been audited by Price Waterhouse, independent accountants, who were engaged to express an opinion as to the fairness of presentation of such financial statements. /s/ Benjamin W. Rawlins, Jr. /s/ Jack W. Parker - ---------------------------- ------------------ Benjamin W. Rawlins, Jr. Jack W. Parker Chairman of the Board and Executive Vice President and Chief Executive Officer Chief Financial Officer
REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Union Planters Corporation In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of earnings, of changes in shareholders' equity and of cash flows present fairly, in all material respects, the financial position of Union Planters Corporation and its subsidiaries at December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1993 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Corporation's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Note 1 to the consolidated financial statements, in 1993 the Corporation adopted three new accounting standards that changed its method of accounting for postretirement benefits, postemployment benefits and income taxes. /s/ PRICE WATERHOUSE - -------------------- PRICE WATERHOUSE Memphis, Tennessee January 20, 1994, except as to Note 2 which is as of March 1, 1994 34 37 SELECTED FINANCIAL DATA
YEARS ENDED DECEMBER 31, (1) -------------------------------------------------------------- 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) INCOME STATEMENT DATA Net interest income...................................... $ 234,605 $ 191,137 $ 153,555 $ 134,324 $ 123,155 Provision for losses on loans............................ 9,689 18,557 24,835 19,166 49,229 Profits and commissions from trading activities.......... 8,720 10,168 14,707 24,268 36,700 Investment securities gains (losses)..................... 4,581 13,246 3,344 (341) (1,294) Other noninterest income................................. 71,498 59,859 51,559 46,069 42,121 Noninterest expense...................................... 224,480 199,218 164,771 160,805 177,833 ---------- ---------- ---------- ---------- ---------- Earnings (loss) before income taxes, extraordinary item, and accounting changes................................. 85,235 56,635 33,559 24,349 (26,380) Applicable income taxes (benefit)........................ 23,967 15,196 6,051 1,639 (4,111) ---------- ---------- ---------- ---------- ---------- Earnings (loss) before extraordinary item and accounting changes................................................ 61,268 41,439 27,508 22,710 (22,269) Extraordinary item-defeasance of debt, net of taxes...... (3,206) -- -- -- -- Accounting changes, net of taxes......................... 5,001 -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net earnings (loss)...................................... $ 63,063 $ 41,439 $ 27,508 $ 22,710 $ (22,269) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- PER COMMON SHARE DATA (2) Primary Earnings (loss) before extraordinary item and accounting changes................................... $ 2.69 $ 2.10 $ 1.59 $ 1.20 $ (1.19) Extraordinary item-defeasance of debt, net of taxes.... (.16) -- -- -- -- Accounting changes, net of taxes....................... .25 -- -- -- -- Net earnings (loss).................................... 2.78 2.10 1.59 1.20 (1.19) Fully diluted Earnings (loss) before extraordinary item and accounting changes................................... 2.49 2.02 1.58 1.20 (1.19) Extraordinary item-defeasance of debt, net of taxes.... (.13) -- -- -- -- Accounting changes, net of taxes....................... .21 -- -- -- -- Net earnings (loss).................................... 2.57 2.02 1.58 1.20 (1.19) Cash dividends........................................... .72 .60 .48 .48 .48 Book value............................................... 18.96 16.34 14.99 13.61 12.46 Book value assuming conversion of convertible preferred stock.................................................. 19.06 16.84 14.95 13.60 12.46 BALANCE SHEET DATA (AT PERIOD END) Total assets............................................. $6,318,186 $5,262,184 $3,786,839 $4,004,710 $4,002,614 Loans, net of unearned income............................ 2,935,215 2,231,839 1,912,914 2,129,083 1,995,383 Allowance for losses on loans............................ 80,442 64,290 47,934 50,921 46,871 Investment securities.................................... 2,617,053 2,198,103 1,147,803 1,155,266 1,019,759 Deposits................................................. 5,251,366 4,450,176 3,211,261 3,341,840 3,129,567 Long-term debt (3) Parent Company......................................... 114,729 74,292 38,163 44,662 34,500 Subsidiary Banks....................................... 160,501 2,864 3,922 4,103 39,021 Total shareholders' equity............................... 477,300 356,211 269,446 237,035 240,591 Average assets........................................... 6,249,339 4,742,832 3,839,744 4,053,820 3,988,348 Average shareholders' equity............................. 446,994 329,492 247,859 243,783 265,233 Average shares outstanding (in thousands) Primary.............................................. 19,622 16,765 16,632 18,641 18,761 Fully diluted........................................ 23,852 19,609 16,986 18,981 18,761 PROFITABILITY AND CAPITAL RATIOS Before extraordinary item and accounting changes Return on average assets............................... .98% .87% .72% .56% NM% Return on average common equity........................ 15.18 13.65 11.18 9.34 NM Net earnings Return on average assets............................... 1.01% .87% .72% .56% NM% Return on average common equity........................ 15.70 13.65 11.18 9.34 NM Net interest income (taxable-equivalent) to average earning assets......................................... 4.34 4.61 4.63 4.00 3.81 Loans/deposits........................................... 55.89 50.15 59.57 63.71 63.76 Common and preferred dividend payout ratio............... 34.07 38.93 32.71 40.81 NM Equity/assets (period end)............................... 7.55 6.77 7.12 5.92 6.01 Average shareholders' equity/average total assets........ 7.15 6.95 6.46 6.01 6.65 Tier 1 capital to risk-weighted assets................... 14.85 13.81 12.19 9.57 NA Total capital to risk-weighted assets.................... 18.59 16.33 14.93 12.17 NA Leverage ratio........................................... 7.10 6.85 6.94 5.71 5.76 ASSET QUALITY RATIOS Allowance/period end loans............................... 2.74% 2.88% 2.51% 2.39% 2.35% Nonperforming loans/total loans.......................... .76 1.70 1.37 .98 .88 Allowance/nonperforming loans............................ 362.83 168.97 182.98 244.77 267.65 Nonperforming assets/loans and foreclosed property....... .92 1.99 1.90 1.62 1.26 Provision/average loans.................................. .35 .86 1.23 .93 2.50 Net charge-offs/average loans............................ .37 .83 1.38 1.10 2.25
NA -- Not available NM -- Not meaningful (1) Reference is made to "Basis of Presentation" in Note 1 to the consolidated financial statements. (2) Share and per share amounts have been retroactively restated for a two-for-one stock split effected March 3, 1989 and for acquisitions accounted for as poolings of interests. (3) Long-term debt includes subordinated notes and debentures, obligations under capital leases, mortgage indebtedness, and notes payable with maturities greater than a year. Subsidiary banks' long-term debt in 1993 is primarily FHLB advances. 35 38 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION CORPORATE OVERVIEW Union Planters Corporation (the Corporation), a $6.3 billion multi-bank holding company and savings and loan holding company incorporated in 1971 under the laws of Tennessee and headquartered in Memphis, Tennessee, is the third largest independent bank holding company headquartered in Tennessee. The Corporation's activities are conducted through its lead bank, Union Planters National Bank (UPNB), and 28 community banks and three savings and loan subsidiaries (collectively, the Community Banks) located in Tennessee, Mississippi, Arkansas, and Alabama (see Table 15). Subsequent to December 31, 1993 and through March 1, 1994, the Corporation acquired two bank holding companies and one stand-alone bank, resulting in the Corporation having two subsidiary banks in Kentucky and four additional banks in Tennessee. A listing of the individual communities served by the Corporation's banking subsidiaries is presented on page 59 of this report. The Corporation, through its subsidiaries, provides a diversified range of banking and financial services in the communities in which it operates, including consumer, commercial and corporate lending, retail banking, mortgage banking and other ancillary financial services normally furnished by full-service financial institutions. Primarily through UPNB, the Corporation also is engaged in mortgage servicing; investment management and trust services; the issuance and servicing of credit and debit cards; and the origination, packaging, and securitization of loans, primarily the government-guaranteed portions of Small Business Administration (SBA) loans. This section of the annual report provides a narrative discussion and analysis of the Corporation's results of operations and financial condition for the last three years. The foregoing financial statements and related notes and the financial tables which follow this discussion should be considered an integral part of this analysis. ACQUISITIONS Acquisitions have been and are expected to continue to be an important part of the expansion of the Corporation's business. Over the last three years, the Corporation has acquired 16 financial institutions which have increased total assets by approximately $2.9 billion. Reference is made to Note 2 to the financial statements and Tables 3 and 15 for additional information concerning the institutions acquired. Management's philosophy has been to provide additional diversification of the revenue sources and earnings of the Corporation through the acquisition of small-and medium-size financial institutions, allowing them to, where practicable, remain separate entities, and to retain their names and boards of directors as well as substantial autonomy in their day-to-day operations which permits the institutions to grow within their markets without disruption. Certain larger strategic acquisitions, Metropolitan and Fidelity (Note 2 to the financial statements), have also been made. This philosophy has made the Corporation an attractive acquiror of financial institutions. Certain functions such as loan review, audit, payroll, insurance management, data processing, and investment portfolio management are centralized. Management believes that this philosophy provides the institution with an environment which promotes high performance. All of the Corporation's Community Banks have been acquired since 1986 and are generally located in nonmetropolitan towns and communities, with the exception of the Metropolitan and Fidelity acquisitions, and provide banking services and loan products to such communities with an emphasis on single-family residential mortgages, consumer, and small commercial lending. Of the 31 Community Banks owned at December 31, 1993, 18 have the largest deposit share and seven have the second largest deposit share in their respective markets providing UPC with a strong competitive position in those markets. The Corporation expects to continue to take advantage of the consolidation of the financial industry by further developing its franchise through acquisitions. Future acquisitions, as have certain acquisitions in the past, may entail the payment by the Corporation of consideration in excess of the book value of the underlying assets being acquired and may result in the issuance of additional shares of the Corporation's Common and Preferred Stock or the incurring of additional indebtedness by the Corporation, which may rank senior to outstanding subordinated debt, and could have a dilutive effect on earnings or book value per share of the Corporation in the short-term. 36 39 In 1994, the Corporation plans to organize and capitalize as four separate Tennessee operating subsidiaries the regional locations of UPNB in Middle Tennessee (Nashville and Murfreesboro), East Tennessee (Knoxville), Jackson, and Chattanooga in order to enhance profitability in these regions by providing better community and customer focus. The new banks will operate the same as the Corporation's other subsidiary banks. UPNB's assets will decline approximately $1.5 billion to approximately $2.0 billion following the capitalization of the new entities. Dividends from UPNB are expected to provide the funding for the capitalization of the separate banks. The Corporation also has plans to merge four existing banking subsidiaries into two of the newly created subsidiaries. These mergers are expected to be made because of their geographic proximity to the institutions being formed. These mergers are expected to take place over the next few years. Management believes the Corporation's consolidated balance sheet and results of operations will not be significantly impacted by these transactions. 1993 PERFORMANCE SUMMARY The Corporation reported record net earnings of $63.1 million in 1993, a 52% increase over net earnings of $41.4 million in 1992, compared to net earnings of $27.5 million in 1991. Fully diluted earnings per common share were $2.57 in 1993, compared to $2.02 and $1.58 in 1992 and 1991, respectively. Returns on average assets (ROA) and on average common equity (ROE), key measurements of profitability in the banking industry, were 1.01% and 15.70%, respectively, in 1993, versus .87% and 13.65%, respectively, in 1992. ROA and ROE in 1991 were .72% and 11.18%, respectively. Included in net earnings in 1993 was a net benefit of $1.8 million, or $.08 per fully diluted common share, from the cumulative effect of certain accounting changes partially offset by an extraordinary item related to the in-substance defeasance of debt. Reference is made to Notes 9, 15, and 16 for additional information regarding these items. The improvement in earnings in 1993 resulted from continued growth of net interest income through acquisitions and existing operations, a lower provision for losses on loans related to a significant improvement in asset quality, and a reduction in provisions for resolution of litigation and certain operating expenses. The impact of banks acquired accounted for approximately one fourth of the improvement in net earnings. The growth in earnings between 1991 and 1992 was due to a favorable interest rate environment, acquisitions, investment securities gains, and lower provisions for losses on loans partially offset by one-time expenses and increased expenses from acquisitions. UPNB had net earnings of $35.6 million in 1993, compared to $27.1 million in 1992. ROA and ROE in 1993 were 1.07% and 15.26%, respectively, compared to .89% and 14.07%, respectively, in 1992. The Community Banks had net earnings of $30.2 million in 1993, compared to $24.2 million in 1992. ROA and ROE for the Community Banks were 1.01% and 11.86%, respectively, compared to 1.36% and 16.71%, respectively, in 1992. The Community Banks' decline in ROA and ROE in 1993 was due primarily to one-time charges related to institutions acquired in 1993 and provisions for conversion to a new data processing system. Table 1 summarizes the operating results for each of the major operating units of the Corporation for each of the last five years. Additionally, Table 2 presents for the last five years the specific contributions to fully diluted earnings per common share. A more detailed analysis of results of operations and financial condition follows. EARNINGS ANALYSIS NET INTEREST INCOME Net interest income is the single most significant component of the Corporation's earnings. For purposes of this discussion, net interest income has been adjusted to a fully taxable-equivalent basis for certain tax-exempt loans and investment securities. Reference is made to Tables 4 and 5 which present the Corporation's average balance sheet and rate and volume analysis for each of the years in the three-year period ended December 31, 1993. In 1993, net interest income increased 24% from 1992, primarily as a result of acquisitions. A favorable interest rate environment and acquisitions were the primary reasons for the 24% growth of 37 40 net interest income between 1991 and 1992. Net interest income was $247.9 million in 1993, compared to $200.0 million in 1992 and $161.3 million in 1991. Taxable-equivalent interest income increased 18% in 1993 to $412.5 million and increased 3% in 1992 to $349.4 million, due primarily to the growth of earning assets from the Corporation's acquisitions. Average earning assets were $5.7 billion in 1993, compared to $4.3 billion and $3.5 billion in 1992 and 1991, respectively. Loans and investment securities represented 49% and 45%, respectively, of average earning assets in 1993, compared to 50% and 42%, respectively, in 1992 and 58% and 32%, respectively, in 1991. The shift in the mix of average earning assets to investment securities is primarily due to the acquisition of deposits from the RTC (Metropolitan, Note 2 to the financial statements) in 1992 which provided approximately $500 million in cash which was invested in investment securities. Acquisitions of other institutions with low loan-to-deposit ratios, strong competition for good quality loans, run-off of indirect consumer lending (a segment of lending no longer emphasized), pay-offs of mortgage loans because of heavy refinancing activity, and a reduction by management in the number of large loan relationships have all contributed to the mix change. The taxable-equivalent yield on average earning assets has declined from 9.75% in 1991 to 7.21% in 1993. This is due to the declining interest rate environment over the last three years which has resulted in funds being invested at lower rates as higher earning assets mature or reprice. This downward trend is expected to continue unless a significant increase in interest rates should occur. Loan volume is beginning to increase and should improve with the economy which would help offset the decline in yield on earning assets. Interest income has also increased due to an increase in average interest-free deposits (demand deposits) of $190 million and $81 million in 1993 and 1992, respectively, which provided additional investable funds. Approximately 60% of the increase is attributable to acquisitions and the remaining portion is attributable to growth due to the low interest rate environment. Individuals are not as concerned with balances in noninterest bearing accounts as they are when interest rates are higher. Corporate customers are required to keep higher compensating balances because of the low interest credits for their balances. Mortgage servicing-related demand deposits have not increased significantly between 1992 and 1993; however, they are at historically high levels due essentially to the high volume of refinancing activity in both years. A rising interest rate environment would result in a decline in such deposits, since refinancing activity would be expected to decline. In 1993, interest expense increased 10% to $164.5 million following a 16% decline in interest expense in 1992. The increase in 1993 is primarily the result of a $1.2 billion increase in average interest-bearing liabilities to $5.0 billion. The majority of the increase relates to acquisitions which increased interest-bearing deposits. Also increasing interest expense was a $100 million increase in average Federal Home Loan Bank (FHLB) advances in 1993 which were made to lock in interest rate spreads by borrowing low cost funds from the FHLB and investing the proceeds in higher yielding assets. The decline in interest expense between 1991 and 1992 was due primarily to a decline in market interest rates partially offset by an increase in interest-bearing deposits mostly attributable to acquisitions. The rates paid for interest-bearing liabilities have continued to decline over the last three years. In 1991, the average rate paid on interest-bearing liabilities was 5.78%, declining to 3.92% in 1992 and to 3.29% in 1993. Management expects rates to begin to gradually increase over the next twelve months. The repricing of earning assets in the current low interest rate environment has put downward pressure on the net interest margin in 1993. This follows two years of growth in the margin due to a declining interest rate environment in which interest-bearing liabilities repriced downward faster than interest-earning assets did which was offset in 1992 by a decline related primarily to the Metropolitan transaction in the first quarter of 1992. In 1993, the repricing of earning assets at lower interest rates continued while the repricing of interest-bearing liabilities at lower interest rates was not as dramatic. The interest rate spread in 1993 was 3.92%, compared to 4.13% in 1992 and 3.97% in 1991. Over the last three years, the net interest margin declined from 4.63% in 1991 to 4.61% in 1992 and 4.34% in 1993. The decline of the net interest margin is expected to continue in 1994, unless significant loan growth should occur. Generally rising interest rates will result in continued downward pressure on the 38 41 net interest margin as interest-bearing liabilities are expected to reprice before interest-earning assets. Loan demand is beginning to increase which should partially offset any negative impact from rising interest rates. Reference is made to the "Asset/Liability Management" discussion for additional information regarding how the Corporation is positioned to react to changing interest rates. In 1993, the Corporation entered into three off-balance-sheet interest rate swaps to lessen the Corporation's sensitivity to interest rate fluctuations (see Note 17 to the financial statements). The impact of these interest rate swaps on the Corporation's net interest income was not significant in 1993. PROVISION FOR LOSSES ON LOANS The provision for losses on loans (the provision) is the charge to earnings to increase the allowance for losses on loans to the level required to cover potential losses inherent in the loan portfolio. Management's policy is to maintain the allowance for losses on loans at a level considered necessary to absorb all estimated losses inherent in the loan portfolio. Reference is made to "Allowance for Losses on Loans", "Nonperforming Assets" and "Potential Problem Assets" discussions for additional information regarding items that may impact the provision. In 1993, the provision was $9.7 million, down $8.9 million from $18.6 million in 1992 which compared to $24.8 million in 1991. The decline in the provision is reflective of improving asset quality. Financial institutions acquired during 1993 increased the provision by approximately $3.9 million. Excluding the impact of acquisitions, management does not expect the provision to increase significantly in 1994. NONINTEREST INCOME Noninterest income increased 2% in 1993, compared to a 20% increase in 1992. Excluding securities gains, the increase in 1993 was 15% compared to 6% in 1992. The components of noninterest income are detailed in the statement of earnings and Note 14 to the financial statements. The increase in noninterest income in 1993 is primarily attributable to acquisitions which increased noninterest income approximately $8.8 million, derived primarily from service charges on deposit accounts, mortgage servicing income, credit life insurance commissions, and safe deposit rentals. Also contributing to the increase were the revenues of the SBA Loan Trading operation which increased $2.0 million in 1993 to $6.6 million. This operation purchases, pools, and securitizes the government-guaranteed portions of SBA loans. Partially offsetting these increases was a decline in the revenues from the Capital Markets operation which decreased $3.4 million to $2.1 million in 1993. Capital Markets purchases, pools, and securitizes portfolios of whole mortgage loans, consumer paper, and other financial instruments and sells the resulting securities in the open market. Revenues of the Capital Markets operation have declined over the past three years due to increased competition and the low interest rate environment. Both the SBA and Capital Markets operations' revenues are volatile from quarter-to-quarter and year-to-year and future levels cannot be predicted with any certainty. Noninterest income also declined $2.6 million from 1992 to 1993 due to noninterest income of $3.5 million and $901,000, respectively, which was related to a troubled debt restructuring. Mortgage servicing income declined $900,000 in 1993 to $7.6 million due to the low interest rate environment which has resulted in a record level of refinancing of mortgage loans. Merchant credit card fees continued to grow in 1993. Trust service income increased 12% in 1993, following a 4% decline in 1992. In 1992, revenues increased $3.5 million due to the troubled debt restructuring mentioned above. Revenues from the SBA Loan Trading operation increased $2.2 million in 1992 to $4.6 million, compared to $2.4 million in 1991. Also contributing to the increase were increased earnings of $1.9 million from VSIBG, the limited partnership formed when the Corporation restructured its broker/dealer operations in 1990. Service charges on deposit accounts increased $1.4 million to $20.8 million in 1992, compared to $19.4 million in 1991. The increase in service charge income was essentially due to acquisitions. Partially offsetting these increases was a 1992 decrease in revenues from the Capital Markets operation of $6.8 million to $5.5 million, compared to total revenues of $12.3 million in 1991. Investment securities gains were $4.6 million in 1993, compared to $13.2 million in 1992 and compared to $3.3 million in 1991. Securities gains in all three years were due to various restructuring activities within the investment securities portfolio. 39 42 Noninterest income is expected to continue to grow primarily through acquisitions but also through growth of existing operations and development of new products. Securities gains or losses from the available for sale portfolio may occur as a result of changing economic conditions and other factors deemed to require portfolio restructuring. Mortgage servicing income is expected to continue to decline until the refinancing activity slows. Revenues from merchant credit card fees, trust income, and service charges on deposits are expected to continue to increase. NONINTEREST EXPENSE Noninterest expenses increased 13% in 1993 to $224.5 million, following a 21% increase in 1992 to $199.2 million from $164.8 million in 1991. The components of noninterest expense are detailed in the statement of earnings and Note 14 to the financial statements. Included in the increase in expenses in 1993, 1992, and 1991 were certain unusual expenses as follows:
1993 1992 1991 ---- ----- ----- (DOLLARS IN MILLIONS) Data processing conversion costs......................... $4.4 $ -- $ -- Merger related expenses.................................. 2.1 -- -- Write-off of intangibles................................. 1.2 -- 1.1 Provisions for litigation settlements.................... -- 9.0 7.6 Provisions for abandoned property........................ -- 5.2 1.6 Accelerated amortization of other intangibles............ 1.4 1.6 -- Accelerated amortization of mortgage servicing rights.... .5 8.2 -- ---- ----- ----- Total.......................................... $9.6 $24.0 $10.3 ---- ----- ----- ---- ----- -----
Salaries and employee benefits which are the largest component of noninterest expense were $98.9 million in 1993, a 32% increase from $74.8 million in 1992 and compared to $69.8 million in 1991. The majority of the increase is related to acquisitions. In 1993, acquisitions accounted for almost 75% of the increase. Full-time-equivalent employees have increased from 2,161 in 1991 to 2,539 in 1992 and to 3,003 in 1993. Acquired institutions increased full-time-equivalent employees by 487 in 1993. Effective January 1, 1993, the Corporation adopted the provisions of SFAS No. 106 and SFAS No. 112 which changed the accounting for postretirement and postemployment benefits (Note 15 to the financial statements). The Corporation elected to expense on January 1, 1993, the accumulated postretirement and postemployment obligations of $9.6 million ($5.9 million after taxes) instead of amortizing the obligation to expense over 20 years as permitted by the new standards. The ongoing impact of these accounting changes is not expected to increase expenses significantly over current levels. Occupancy and equipment expense increased 25% in 1993, following a 20% increase in 1992. The increases are primarily related to acquisitions which have significantly increased the number of branch locations (see the inside front cover of this report for a listing of the branch locations). The increase in these expenses was limited due to "negative goodwill" resulting from the Fidelity acquisition in 1992 which allowed the Corporation to write down the fixed assets of Fidelity by the amount of negative goodwill which resulted in lower occupancy and equipment expense of approximately $2.3 million annually. UPNB completed the Union Planters Administrative Center at the end of 1991, and in February 1994, completed a new headquarters building. The addition of these two new buildings is not expected to significantly impact the Corporation's total occupancy and equipment expenses because existing buildings have been sold and operating efficiencies are being realized from the new buildings. Other noninterest expenses decreased $5.2 million in 1993 to $93.9 million, following an increase of $25.3 million between 1991 and 1992 to $99.1 million. The major changes relate to the unusual and one-time charges noted above and to the impact of acquisitions. The most significant other changes in other noninterest expense are: (i) FDIC insurance assessment expense which increased $3.6 million in 1993 to $12.7 million, compared to $9.1 million and $6.8 million in 1992 and 1991, respectively, due to an increase by the FDIC in its premium rate in 1991 and higher levels of deposits primarily attributable to acquisitions; (ii) legal fees, which have been a significant part of noninterest expense, decreased $2.9 million in 1993 to $2.3 million, compared to 40 43 $5.2 million and $4.3 million in 1992 and 1991, respectively, attributable to the final resolution of a significant amount of litigation; (iii) other real estate expenses declined 30% in 1993 to $2.3 million from $3.2 million in 1992 and $2.4 million in 1991, primarily due to improving asset quality; (iv) merchant credit card charges grew 17% to $4.6 million in 1993, compared to $3.9 million in 1992 and $3.1 million in 1991 (increased in relation to merchant credit card fee income which also increased over these periods). Other noninterest expenses (detailed in Note 14 to the financial statements) have increased primarily due to acquisitions. Management is committed to controlling and reducing noninterest expenses where possible. With the downward pressure on the net interest margin, management is evaluating ways to further reduce noninterest expenses. Tight controls remain in effect on discretionary expenses. The one-time expenses identified previously are not expected to impact future earnings. In the last half of 1993, management made a decision to convert all of the Corporation's subsidiaries to a common data processing system. As noted above, the Corporation provided for data processing conversion costs in 1993 of $4.4 million. Once the conversion is completed, the Corporation's ongoing operating costs are expected to be reduced significantly. Management has estimated annual cost savings of approximately $6.0 million from the conversion of existing institutions to the new data processing system. However, there can be no assurance that savings of that magnitude will be realized. As the Corporation acquires financial institutions, provisions will be required to convert their data processing systems to the common system. The impact of such provisions cannot be estimated at this time. TAXES In the first quarter of 1993, the Corporation adopted SFAS No. 109, "Accounting for Income Taxes" (see Note 16 to the financial statements). Applicable income taxes consist of provisions for federal and state income taxes. Applicable income taxes before the cumulative effect of accounting changes and the extraordinary item were $24.0 million in 1993, compared with $15.2 million and $6.1 million, respectively, in 1992 and 1991. Effective tax rates before the cumulative effects of accounting changes and the extraordinary item for 1993, 1992, and 1991 were 28.1%, 26.8%, and 18.0%, respectively. The variances from statutory rates are attributable primarily to income from tax-exempt investment securities and loans and utilization of both federal and state net operating loss carryforwards. The tax provision for 1993 was also affected by the enactment of tax law changes which became effective during the third quarter of 1993. This legislation resulted in a $2.9 million reduction in the tax provision for current operations. These changes were primarily due to the deduction of previously nondeductible amortization of certain intangible assets and the impact on the deferred tax asset of the increase in the federal tax rate to 35%. These benefits have been partially offset by the increase in the federal tax rate to 35% for the current year provision. For additional information regarding the Corporation's effective tax rate and the composition of income tax expense for the last three years, see Note 16 to the financial statements. The realization of approximately $7.4 million of the deferred tax asset of $39.6 million is dependent upon generation of future taxable income sufficient to offset these deductions. Management believes that, based upon historical earnings and anticipated future earnings, normal operations will continue to generate sufficient future taxable income to realize all of these benefits. Because this income should be generated without requiring changes to the current operating environment of the Corporation, no extraordinary strategies are deemed necessary by management to generate sufficient income for purposes of realizing the deferred tax asset. The criteria for recognition of the deferred tax asset for regulatory capital purposes are more stringent than for financial statement purposes and allow only limited anticipation of future taxable income. Approximately $1.9 million of the Corporation's deferred tax asset has been disallowed for regulatory capital purposes. See Table 13 for the risk-based capital computation. FINANCIAL CONDITION ANALYSIS During 1993, the Corporation's balance sheet grew significantly as the Corporation completed twelve acquisitions. At December 31, 1993, total assets were $6.3 billion compared to $5.3 billion at December 31, 1992. Average total assets were $6.2 billion in 1993, compared to $4.7 billion in 1992. The 41 44 following is a more detailed discussion of the changes in the financial condition of the Corporation between 1993 and 1992. MONEY MARKET INVESTMENTS Money market investments include interest-bearing deposits at financial institutions, federal funds sold, securities purchased under agreements to resell, trading account securities, and loans held for sale. These investments provide the Corporation with a ready source of liquidity. Table 12 details these investments at December 31 for each of the last three years and Table 4 presents the average balances, interest income, and weighted average yields for the last three years. At December 31, 1993, these investments totaled $289 million and averaged $357 million in 1993 with an average yield of 4.39%. This compares to $378 million at December 31, 1992 and an average balance of $343 million in 1992 with an average yield of 5.37%. The most significant components of these investments are federal funds sold and trading account securities, which are primarily the government-guaranteed portions of SBA loans. INVESTMENT SECURITIES Prior to January 1, 1994, investment securities included securities held for sale and securities held for investment. At December 31, 1993, investment securities represented 45% of total earning assets. Note 4 to the financial statements details the components of the investment portfolio at December 31, 1993 and 1992, and the maturities and weighted average yields at December 31, 1993. Table 4 presents the average balance, tax-equivalent interest income, and tax-equivalent yield of investment securities for each of the last three years. Effective January 1, 1994, the Corporation adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities" which is discussed in Note 1 to the financial statements. Upon adoption of SFAS No. 115, the Corporation transferred all securities currently in the held for sale and held for investment portfolios, except for obligations of states and political subdivisions, to the available for sale category. The total amount of securities transferred on January 1, 1994 to the available for sale portfolio from the held for sale and held for investment portfolios was $2.2 billion ($595 million and $1.6 billion, respectively). Held for Sale At December 31, 1993, held for sale securities were $595 million, compared to $477 million at December 31, 1992. The held for sale portfolio had unrealized gains of $5.6 million and unrealized losses of $234,000 at year end 1993 which compared to $9.1 million and $212,000, respectively, at year end 1992. The decline in the amount of unrealized gains is primarily attributable to changes in the composition of the portfolio. Held for sale securities (available for sale securities under SFAS No. 115) may be sold in response to changes in interest rates, liquidity needs, or asset/liability strategies. The largest component of this portfolio is $234 million of mortgage-backed securities. In the low interest rate environment, the Corporation has some exposure to prepayments for these securities and monitors the portfolio on an ongoing basis. Proceeds from the sales and maturities of these securities totaled $795 million in 1993, resulting in net realized gains of $2.8 million. Held for Investment Securities held for investment totaled $2.0 billion at December 31, 1993, compared to $1.7 billion at December 31, 1992. Unrealized gains and losses in this portfolio totaled $41.2 million and $2.4 million, respectively, at December 31, 1993, compared to $34.1 million and $1.6 million, respectively, at December 31, 1992. The increases in this portfolio were primarily in obligations of state and political subdivisions (49% of the increase) and U.S. Treasury securities (33% of the increase). Proceeds from in-substance maturities (sales of securities within 90 days of maturity) and calls of these securities totaled $1.0 billion in 1993, resulting in net realized gains of $1.8 million. LOANS Loans are the largest component of the Corporation's earning assets. At December 31, 1993, loans totaled $2.9 billion, compared to $2.2 billion at December 31, 1992. Average loans were $2.8 billion in 1993, compared to $2.2 billion in 1992, with average yields of 8.79% and 9.30%, respectively. Table 7 presents the composition of the loan portfolio for each of the last five years. The Corporation's 42 45 acquisitions have significantly impacted loans. Acquisitions completed in 1993 added $649 million to loans (see Table 3). During the past three years, adverse economic conditions and strong competition have resulted in limited opportunities to make quality loans. Moreover, to lessen risk, management has reduced the in-house lending limits to large borrowers. The growth in the loan portfolio from acquisitions has been primarily in real estate loans secured by 1-4 family residential properties and consumer loans. The growth through acquisitions has been partially offset by a decline in single family residential loans, predominately adjustable-rate loans, due to refinancing activity caused by the low interest rate environment. During the fourth quarter of 1993, some growth occurred in commercial lending. The Community Banks have provided some growth in 1993. Average loans, excluding the impact of acquisitions, increased $71 million in 1993. Management expects loan growth to increase in 1994 as the economy continues to improve. Emphasis will continue to be placed on expanding the portfolio of residential real estate and consumer loans. Commercial lending activity is also expected to increase in 1994. ALLOWANCE FOR LOSSES ON LOANS The allowance for losses on loans (the allowance) at December 31, 1993, was $80.4 million, or 2.74% of loans, compared to $64.3 million, or 2.88% of loans at December 31, 1992. Management's policy is to maintain the allowance at a level deemed sufficient to absorb estimated losses in the loan portfolio. The adequacy of the allowance is reviewed in detail quarterly taking into account current and anticipated economic conditions and the related impact on specific borrowers and industry groups, historical loan loss experience, the level of classified and nonperforming loans, reviews and evaluations of specific loans, changes in the nature and volume of the loan portfolio, and the results of regulatory examinations. In the Corporation's due diligence investigation of potential acquisition candidates, this same type of evaluation is made to determine whether the institutions being acquired have the same reserve standards as the Corporation. Tables 8 and 10 present detailed information regarding the allowance for each of the last five years. The significant increase in the allowance in 1993 was the result of acquisitions which increased the allowance by $16.6 million. Net charge-offs as a percentage of average loans declined to .37% in 1993, compared to .83% in 1992 which reflects the improving asset quality trend. Gross charge-offs declined $13.3 million to $18.8 million in 1993 (including $6.2 million for 1993 acquisitions), primarily in the commercial loan category. Recoveries of previously charged-off loans were $8.7 million in 1993, down from $14.2 million in 1992. Recoveries in 1992 included a $7.0 million recovery of one loan resulting from the consummation of a troubled debt restructuring. Excluding the impact of acquisitions, management does not expect any significant increase in charge-offs or the provision for losses on loans in 1994. Credit quality has improved significantly in the last twelve months and no significant negative trends have been noted. If significant loan growth should occur, some increase in the provision for losses on loans would be expected. LOAN CONCENTRATIONS Management believes that the Corporation's loan portfolio is adequately diversified. Diversification is considered important because it reduces the risks associated with changing economic conditions. The Corporation's Community Banks and UPNB serve communities in Tennessee, Northern Mississippi, Northeast Arkansas, Kentucky, and Alabama. At December 31, 1993, the Corporation had no concentrations equaling 10% or more of loans in any single industry. The Corporation's largest concentration of loans is in single family residential loans (35%) which historically have had low loss experience. Over the last several years, management has also made efforts to diversify the loan portfolio between large and smaller sized loans to lessen the Corporation's risk exposure. Management believes that this objective has been achieved, since at December 31, 1993, the Corporation had only $228 million of loans ($381 million of commitments) where the relationship exceeded $5 million. NONPERFORMING ASSETS Nonperforming assets consist of nonaccrual and restructured loans, other real estate owned, and other foreclosed properties. Table 9 presents an analysis of nonperforming assets and loans 90 days or 43 46 more past due for the last five years. Note 1 to the financial statements describes the Corporation's policy for placing loans on nonperforming status. Nonperforming assets declined significantly in 1993 and were $27.0 million, or .92% of loans and foreclosed properties at December 31, 1993, compared to $44.5 million, or 1.99% of loans and foreclosed properties at December 31, 1992. Nonperforming loans were $22.2 million, or .76% of loans, compared to $38.0 million, or 1.70% of loans, at December 31, 1992. Institutions acquired in 1993 accounted for approximately $4.2 million of the total nonperforming assets at December 31, 1993. Nonaccrual loans represent the largest component of nonperforming assets and totaled $14.6 million at year end 1993 compared to $36.7 million at year end 1992. The allowance for losses on loans as a percentage of nonperforming loans was 363% at year end 1993, compared to 169% at year end 1992. At December 31, 1993, the largest amounts of nonaccrual loans were concentrated in 1-4 family residential loans ($4.5 million), commercial real estate loans ($3.6 million), and commercial loans ($2.5 million). Excluding the impact of acquisitions, management does not anticipate any significant increase in the level of nonaccrual loans in 1994. The increase in restructured loans in 1993 relates primarily to one $6.0 million loan which was renegotiated during the second quarter of 1993. The borrower is in compliance with the restructured terms and has demonstrated an ability to make payments over a period of time. If the performance continues, the Corporation expects to return the loan to performing status. Foreclosed properties declined $1.7 million to $4.8 million at December 31, 1993. POTENTIAL PROBLEM ASSETS Potential problem assets consist of assets which are generally secured and not currently considered nonperforming, and include those assets where information about possible credit problems has caused management to have serious doubts as to the ability of such borrowers to comply with present repayment terms. Historically, these assets have been loans that become nonperforming. At December 31, 1993, the Corporation had potential problem assets (all of which were loans) totaling $6.5 million which are not expected to significantly impact asset quality of the Corporation. DEPOSITS The Corporation's deposit base is its primary source of liquidity. Total deposits consist of deposits from the communities the Corporation serves with no significant out-of-market deposits. Tables 4 and 6 present the average balances and average rates paid on the Corporation's deposits. Average total deposits increased 30% in 1993 to $5.3 billion, compared to $4.1 billion in 1992. At December 31, 1993, total deposits were $5.3 billion, compared to $4.5 billion at December 31, 1992. Average deposits increased primarily due to acquisitions in 1993 which increased total deposits approximately $1.0 billion. Excluding the impact of acquisitions, deposits have declined approximately $232 million between 1992 and 1993. The low interest rate environment over the last three years has caused consumers to evaluate their interest-bearing deposits versus other investment alternatives which has resulted in some disintermediation of deposits from the banking system. Emphasis is being placed by management on nontraditional investment products in an attempt to retain customers considering leaving the deposit system. All categories of average deposits increased in 1993, principally from acquisitions. Acquisitions were the primary reason for the increase in average interest-bearing deposits of 29% between 1992 and 1993. Average noninterest-demand deposits increased 37%, primarily from acquisitions but also from growth due to the low interest rate environment. The current environment requires commercial customers to maintain larger balances to offset the impact of lower earnings credit rates and individuals are not as concerned with noninterest-bearing balances as they are in a higher interest rate environment. Finally, mortgage-related demand deposits are at historically high levels because of prepayments due to refinancing activity. SHAREHOLDERS' EQUITY Shareholders' equity increased $121.1 million in 1993 to $477.3 million at December 31, 1993. The ratio of shareholders' equity to total assets at December 31, 1993 and 1992 was 7.55% and 6.77%, 44 47 respectively. Common and preferred stock issued in connection with acquisitions accounted for $74 million of the increase. Additionally, shareholders' equity increased $5 million due to stock issued through stock options, employee benefit plans, and the Corporation's dividend reinvestment plan. Retained net earnings (earnings less dividends paid) increased shareholders' equity by $42 million. Total dividends paid in 1993 totaled $21 million which represented a 34% dividend payout ratio and compares to dividends paid of $16 million in 1992 which represented a 39% dividend payout ratio. CAPITAL ADEQUACY The key to continued growth and profitability for the Corporation is to maintain an adequate level of capital. Capital adequacy is determined based upon the level of capital as well as asset quality, liquidity, earnings history, economic conditions, and the level of acquisition activity. The Federal Reserve Board (Federal Reserve), the Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), and the Federal Deposit Insurance Corporation (FDIC) have adopted capital guidelines governing the Corporation and its subsidiary banks and savings and loan institutions. These guidelines require the maintenance of an amount of capital based on risk-weighted assets in order that certain higher risk categories of assets will have more capital backing them than lower risk assets. Capital is also required to be maintained for certain off-balance-sheet activities such as loan commitments and letters of credit. The regulatory capital guidelines divide capital into two tiers, Tier 1 and Tier 2 capital. Tier 1 capital consists of common shareholders' equity, noncumulative perpetual preferred stock, a limited amount of cumulative perpetual preferred stock, and minority interests in consolidated subsidiaries less certain intangibles and one-half of investments in unconsolidated subsidiaries. In certain other instances, other deductions may be required such as a disallowed portion of a deferred tax asset or, until approved for inclusion, the net adjustment to equity for the fair value adjustment to available for sale investment securities (SFAS No. 115). Tier 2 capital includes a portion of the allowance for losses on loans, preferred stock not qualifying as Tier 1 capital, and qualifying subordinated debt. In determining the risk-based capital requirements, assets are assigned risk weights of zero to 100 percent, depending on the regulatory assigned levels of credit risk associated with such assets. Off-balance-sheet items are included in the calculation of risk-adjusted assets through conversion factors established by the regulatory agencies. At December 31, 1993, the Corporation's Tier 1 and Total capital to risk-weighted assets ratios were 14.85% and 18.59%, respectively, well above required regulatory minimums. These ratios compare to 13.81% and 16.33%, respectively, at December 31, 1992. In addition to the risk-weighted capital requirements, the regulatory agencies have established a leverage capital requirement. This is calculated by dividing Tier 1 capital by unadjusted quarterly average total assets. At December 31, 1993, the Corporation's leverage ratio was 7.10%, compared to 6.85% at December 31, 1992, which exceeded the required regulatory minimums. The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) established five capital categories for banks, savings and loan associations, and bank holding companies. Institutions are classified into the capital categories based on their leverage ratio and Tier 1 and Total capital risk- weighted ratios. At December 31, 1993, the Corporation and its subsidiary financial institutions qualified for the "well-capitalized" capital category. LIQUIDITY Liquidity for a financial institution is the ability to meet cash flow requirements for deposit withdrawals, new loans, and loan commitments, and to take advantage of attractive investment opportunities. The Corporation's primary sources of liquidity are its deposit base and money market investments which were discussed previously. Liquidity is also achieved through short-term borrowing, borrowing under available credit lines, and the issuance of securities and debt instruments in the marketplace. The parent company's primary source of liquidity is management fees and dividends from subsidiaries. Note 12 to the financial statements provides a discussion of the restrictions upon the Corporation's subsidiaries ability to pay dividends and extend credit to the parent company. The number of subsidiary financial institutions owned by the Corporation provides a diversified base for the payment of dividends should one or more of the subsidiaries have capital needs and be unable to pay dividends to the parent company. 45 48 During 1993, the parent company issued $75 million of 6.25% Subordinated Notes due 2003 under a $150 million shelf registration statement and received net proceeds of approximately $74 million. Approximately $39 million of the proceeds were used to in-substance defease the Corporation's 10 1/8% Subordinated Debentures due 1999 (see Note 9 to the financial statements). At December 31, 1993, the parent company had cash and cash equivalents totaling $102 million compared to $59 million at December 31, 1992, which management believes provides the parent company with adequate liquidity. Additional liquidity will be provided from management fees and dividends from subsidiaries. The liquidity needs of the parent company are for the payment of operating expenses of the parent company, dividends on outstanding Common and Preferred Stock, repayment of debt, debt service, and funding for acquisitions. Additionally, management has the option to call for redemption on or after October 31, 1994, the Series C Preferred Stock currently outstanding, assuming approval were granted by the Federal Reserve, although there can be no assurance that such approval would be granted. Based on the current interest rate environment and the Corporation's existing capital levels, it is probable that the Corporation's right of redemption will be exercised. ASSET/LIABILITY MANAGEMENT Asset/liability management is considered to be one of the most important aspects of the Corporation's efforts to sustain profitability. The goal of the Corporation's asset/liability management is to maximize net interest income within acceptable levels of interest rate risk and liquidity. To achieve this goal, a proper balance must be maintained between assets and liabilities with respect to size, maturity, repricing, rates of return, and degrees of risk. The Corporation's Funds Management Committee oversees the conduct of global asset/liability management for the Corporation. This committee reviews the asset/liability structure and interest rate sensitivity of each affiliated financial institution and that of the consolidated Corporation. While the Corporation grants wide latitude to the management of its affiliated financial institutions, it is the policy of the Corporation that each affiliate establish policies for the proper conduct of balance sheet management. These policies contain, at a minimum, limits on rate sensitivity, guidelines for liquidity maintenance, and capital ratio guidelines. The Corporation performs rate-sensitivity analysis regularly to show repricing amounts for the first twelve months, years one to two, years two through five, and in a single category for all amounts occurring more than five years from the analysis date. Table 11 presents the Corporation's rate- sensitivity analysis at December 31, 1993. Balance sheet simulation analysis is also conducted to determine the impact on net interest income for the next twelve months under several interest rate scenarios. Projecting net interest income on one simulation which holds rates and volumes constant indicates a declining net interest income versus 1993 as normal roll-off and repricing of earning assets occurs at lower than historical market rates. When this projection is subjected to immediate and parallel yield curve shifts in interest rates ("rate shock") of 200 basis points, first rising and then falling, the annual impact of the "rate shock" at December 31, 1993, on the Corporation's net interest income was a positive $134,000 pre-tax and a negative $5.6 million pre-tax, respectively, which is well within the Corporation's policy limits. OFF-BALANCE-SHEET INSTRUMENTS The Corporation uses off-balance-sheet instruments in order to manage interest rate risk and generate fee income. Loan commitments, letters of credit, futures and forward contracts, when-issued securities, and interest rate swaps are not carried on the balance sheet. The income and expense related to these instruments are reflected in the income statement. Note 17 to the financial statements provides information on these off-balance-sheet instruments. FAIR VALUE OF FINANCIAL INSTRUMENTS The required disclosures regarding the fair value of financial instruments are included in Note 18 to the financial statements along with a summary of the methods and assumptions used by the Corporation in determining the fair values. The differences between the fair values and book values are primarily caused by differences between contractual and market interest rates. Fair values have 46 49 varied from period-to-period due to the composition of the balance sheet and the current interest rate environment. Management's opinion is that the information required in the SFAS No. 107 disclosure does not meaningfully reflect the underlying value of the Corporation due to the requirements of SFAS No. 107 in the application of fair value accounting. Comparisons of the fair value of the Corporation with other financial institutions may not be meaningful due to differences in the assumptions and methods used in determining fair values. Therefore, this information is not used by management to manage the Corporation and its banking subsidiaries. Other methods, including the asset/liability management philosophy discussed previously, are used. FOURTH QUARTER 1993 RESULTS Net earnings for the fourth quarter of 1993 were $13.0 million, an increase of 13% over the same period in 1992. Fully diluted earnings per common share were $.52, compared to $.55 a year ago. Net earnings for the fourth quarter of 1993 included an extraordinary loss, net of taxes, of $3.2 million, or $.06 per fully diluted share, from the in-substance defeasance of the Corporation's 10 1/8% Subordinated Capital Debentures due 1999. Earnings before the extraordinary item were $16.2 million, a 41% increase over the same period in 1992. Returns on average assets and average common equity before the extraordinary loss were 1.02% and 15.11%, respectively, compared to .90% and 14.42%, respectively, for the fourth quarter of 1992. The improvement in fourth quarter results was due to continued growth of net interest income, a lower provision for losses on loans, and growth of noninterest income. Table 14 includes comparative quarterly operating results for the fourth quarter of 1993 as well as for the previous seven quarters. Net interest income for the fourth quarter of 1993 increased 11% to $57.9 million, compared to $52.0 million for the fourth quarter of 1992. The increase was primarily due to acquisitions. The provision for losses on loans declined $6.1 million to $710,000 for the fourth quarter of 1993 which is reflective of the Corporation's improving asset quality. Investment securities gains were $642,000 for the fourth quarter of 1993, compared to $1.2 million in 1992. Other noninterest income increased 1% in the fourth quarter of 1993, primarily due to acquisitions. Other noninterest income for the fourth quarter of 1992 included nonrecurring income of $3.5 million related to a troubled debt restructuring. Noninterest expenses increased 11% in the fourth quarter of 1993 to $55.1 million. The increase was primarily attributable to companies acquired. Fourth quarter 1993 expenses included nonrecurring expenses of approximately $1.5 million, compared to $1.7 million in the fourth quarter of 1992. DIVIDENDS The Corporation paid cash dividends on its Common Stock totaling $13.0 million, or $.72 per share in 1993, compared to $10.0 million, or $.60 per share in 1992. Dividends totaling $8.5 million were paid or accrued on the Corporation's Preferred Stock outstanding, compared to $6.2 million in 1992. The increase in the Preferred Stock dividends was due to the issuance of additional shares of Preferred Stock in 1993. In January 1994, the Board of Directors increased the regular quarterly dividend on the Corporation's Common Stock to $.21 per share ($.84 annually). The Corporation's primary sources of cash available to pay dividends are cash and cash equivalents of the parent company and management fees and dividends from subsidiaries. The only current contractual restriction on the Corporation's ability to pay dividends is a credit agreement which limits dividends to 60% of the previous year's net earnings. Management does not expect this restriction to affect the current dividend policy. CAPITAL EXPENDITURES In the normal course of business, the Corporation replaces furniture and equipment and builds new branch locations to better serve its customers. Management has planned capital expenditures for 1994 totaling approximately $7.5 million. These expenditures are in various stages of planning and are not expected to have a significant impact on the Corporation's future operating results. CONTINGENT LIABILITIES The Corporation and its subsidiaries are defendants in various lawsuits. A discussion of the significant legal matters can be found in Note 19 to the financial statements. During 1991 and 1992, the 47 50 Corporation made provisions for litigation settlements totaling $9.0 million and $7.6 million, respectively. Management does not expect any additional material provisions for litigation for the foreseeable future. In 1992 and 1993, a significant number of these lawsuits were finally resolved using previously established provisions for litigation settlements. Management is of the opinion that the Corporation's financial position will not be materially affected by the ultimate resolution of litigation pending or known to be threatened at December 31, 1993. IMPACT OF PROPOSED ACCOUNTING STANDARDS SFAS No. 114 -- Accounting by Creditors for Impairment of a Loan In May 1993, SFAS No. 114 was issued. It is applicable to all creditors and loans, and addresses the accounting for the impairment of loans, uncollateralized as well as collateralized, except large groups of smaller-balance, homogeneous loans (e.g. consumer and mortgage loans) that are collectively evaluated for impairment, loans carried at fair value or at lower of cost or fair value, leases, and debt securities as defined by SFAS No. 115. Such loans are required to be measured based upon the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or fair value of the underlying collateral if the loan should be collateral dependent. This statement also applies to all loans that have been restructured in accordance with SFAS No. 15. SFAS No. 114 is effective for fiscal years beginning after December 31, 1994, with earlier adoption encouraged. Management has not quantified the impact of SFAS No. 114 on the financial statements but does not expect it to be material to the financial position or operating results of the Corporation. Statement of Position No. 93-6 (SOP 93-6) -- Employers' Accounting for Employee Stock Ownership Plans In November 1993, SOP 93-6 was issued and is effective for fiscal years beginning after December 31, 1993. The SOP prescribes certain accounting and disclosures required for employer stock ownership plans (ESOP) that contain unallocated shares (i.e. leveraged ESOPs). The Corporation has reviewed the provisions of SOP 93-6 and does not believe that the adoption of such will have a material impact on the Corporation's financial position or results of operation as all shares held by the Corporation's ESOP are allocated to its participants (see Note 15 to the financial statements). 48 51 TABLE 1. SUMMARY OF CONSOLIDATED RESULTS
YEARS ENDED DECEMBER 31, (1) --------------------------------------------------------------- 1993 1992 1991 1990 1989 --------- --------- --------- -------- -------- (DOLLARS IN THOUSANDS) COMMERCIAL BANKING Union Planters National Bank Net interest income............................... $ 121,633 $ 117,199 $ 91,060 $ 82,469 $ 82,791 Provision for losses on loans..................... (4,473) (15,520) (22,864) (18,046) (46,525) Noninterest income................................ 51,228 49,346 51,875 41,393 33,281 Noninterest expense............................... (119,823) (115,568) (100,577) (94,276) (84,263) --------- --------- --------- -------- -------- Operating earnings (loss)..................... 48,565 35,457 19,494 11,540 (14,716) Investment securities gains (losses).............. 2,860 11,626 4,052 699 (48) Gain on sale of collateral related to a troubled debt............................................ 901 3,513 -- -- -- Accelerated amortization of mortgage servicing rights.......................................... (500) (8,200) -- -- -- Accelerated amortization of other intangibles..... (1,203) (1,379) -- -- -- Provisions for conversion of data processing systems......................................... (1,547) -- -- -- -- Write-off of intangibles.......................... (28) -- -- -- (4,051) Provision for litigation settlements.............. -- -- (675) (225) -- Provisions for abandoned property................. -- (5,200) (1,643) -- -- --------- --------- --------- -------- -------- Earnings (loss) before income taxes........... 49,048 35,817 21,228 12,014 (18,815) --------- --------- --------- -------- -------- Community Bank Subsidiaries Net interest income............................... 119,235 76,973 66,468 52,751 38,456 Provision for losses on loans..................... (5,216) (3,037) (1,971) (1,120) (2,704) Noninterest income................................ 23,274 13,306 12,169 9,825 6,877 Noninterest expense............................... (90,408) (53,202) (48,691) (39,637) (28,491) --------- --------- --------- -------- -------- Operating earnings............................ 46,885 34,040 27,975 21,819 14,138 Investment securities gains (losses).............. 1,721 1,582 895 (1,080) (1,335) Accelerated amortization of other intangibles..... (182) (270) -- -- -- Provisions for conversion of data processing systems......................................... (2,877) -- -- -- -- Merger related expenses........................... (2,113) -- -- -- -- Write-off of intangibles.......................... (1,181) -- (1,053) -- -- Reversion of excess assets of pension plans....... -- -- -- -- 2,521 --------- --------- --------- -------- -------- Earnings before income taxes.................. 42,253 35,352 27,817 20,739 15,324 --------- --------- --------- -------- -------- BROKER/DEALER Profits and commissions from trading activities..... -- -- -- 19,024 36,700 Less: Commissions paid.............................. -- -- -- (8,555) (22,225) --------- --------- --------- -------- -------- Net profits and commissions................... -- -- -- 10,469 14,475 Net interest income................................. -- -- -- 1,461 1,653 Noninterest income.................................. 3,652 3,920 2,031 203 1,996 Noninterest expenses................................ (222) (1,923) (2,088) (14,433) (22,612) --------- --------- --------- -------- -------- Operating earnings (loss)..................... 3,430 1,997 (57) (2,300) (4,488) Provisions for litigation settlements............... -- (6,675) (9,250) -- (5,200) Write-off of goodwill............................... -- -- -- -- (3,462) Loss on managed options account..................... -- -- -- -- (1,141) Provisions for property write-downs................. -- -- -- (272) (750) --------- --------- --------- -------- -------- Earnings (loss) before income taxes........... 3,430 (4,678) (9,307) (2,572) (15,041) --------- --------- --------- -------- -------- PARENT COMPANY Net interest income (expense)....................... (6,263) (3,035) (3,973) (2,357) 255 Noninterest income, excluding subsidiary dividends(2)...................................... 1,284 42 264 3 51 Noninterest expense (3)............................. (4,517) (4,576) (3,192) (3,618) (4,243) --------- --------- --------- -------- -------- Operating earnings (loss)..................... (9,496) (7,569) (6,901) (5,972) (3,937) Investment securities gains (losses)................ -- 38 (1,603) 40 89 (Provisions) reversals for litigation settlements... -- (2,325) 2,325 100 (4,000) --------- --------- --------- -------- -------- Earnings (loss) before income taxes........... (9,496) (9,856) (6,179) (5,832) (7,848) --------- --------- --------- -------- -------- EARNINGS (LOSS) BEFORE INCOME TAXES, EXTRAORDINARY ITEM, AND ACCOUNTING CHANGES..................................... 85,235 56,635 33,559 24,349 (26,380) Applicable income (taxes) benefit..................... (23,967) (15,196) (6,051) (1,639) 4,111 --------- --------- --------- -------- -------- EARNINGS (LOSS) BEFORE EXTRAORDINARY ITEM AND ACCOUNTING CHANGES.......................... 61,268 41,439 27,508 22,710 (22,269) Extraordinary item -- defeasance of debt, net of taxes............................................... (3,206) -- -- -- -- Accounting changes, net of taxes Postretirement/Postemployment obligations........... (5,925) -- -- -- -- Income taxes........................................ 10,926 -- -- -- -- --------- --------- --------- -------- -------- NET EARNINGS (LOSS)........................... $ 63,063 $ 41,439 $ 27,508 $ 22,710 $(22,269) --------- --------- --------- -------- -------- --------- --------- --------- -------- --------
(1) Individual line items will not total to the consolidated statement of earnings amounts due to eliminating entries. (2) Net of intercompany dividends from bank subsidiaries of $28.1 million, $20.7 million, $21.3 million, $19.7 million, and $31.8 million in 1993 through 1989, respectively. (3) Management fees charged to subsidiaries of $7.2 million, $5.9 million, $5.6 million, $4.3 million, and $4.1 million in 1993 through 1989, respectively, have been netted against noninterest expense. 49 52 TABLE 2. CONTRIBUTION TO FULLY DILUTED EARNINGS PER SHARE
YEARS ENDED DECEMBER 31, ----------------------------------------------- 1993 1992 1991 1990 1989 ------- ------- ------- ------- ------- Net interest income-FTE................................................. $ 10.40 $ 10.20 $ 9.50 $ 7.50 $ 6.98 Provision for losses on loans........................................... (0.41) (0.95) (1.46) (1.01) (2.62) ------- ------- ------- ------- ------- Net interest income after provision for losses on loans-FTE............. 9.99 9.25 8.04 6.49 4.36 ------- ------- ------- ------- ------- Noninterest income Service charges on deposits........................................... 1.20 1.06 1.14 0.89 0.79 Profits and commissions from trading activities....................... 0.37 0.52 0.87 1.28 1.96 Investment securities gains (losses).................................. 0.19 0.68 0.20 (0.02) (0.07) Other income............................................................ 1.79 1.99 1.88 1.54 1.45 ------- ------- ------- ------- ------- Total noninterest income........................................ 3.55 4.25 4.09 3.69 4.13 ------- ------- ------- ------- ------- Noninterest expense Salaries and employee benefits........................................ (4.15) (3.81) (4.10) (4.07) (4.26) Net occupancy expense................................................. (0.67) (0.67) (0.62) (0.58) (0.59) Equipment expense..................................................... (0.66) (0.62) (0.63) (0.62) (0.66) Other expense......................................................... (3.93) (5.06) (4.35) (3.20) (3.97) ------- ------- ------- ------- ------- Total noninterest expense....................................... (9.41) (10.16) (9.70) (8.47) (9.48) ------- ------- ------- ------- ------- Earnings (loss) before income taxes-FTE, extraordinary item, and accounting changes............................................ 4.13 3.34 2.43 1.71 (0.99) Applicable income taxes-FTE............................................. (1.56) (1.23) (0.81) (0.51) (0.20) ------- ------- ------- ------- ------- Earnings (loss) before extraordinary item and accounting changes....................................................... 2.57 2.11 1.62 1.20 (1.19) Extraordinary item and accounting changes, net of taxes................. 0.08 -- -- -- -- Preferred stock dividends............................................... (0.08) (0.09) (0.04) -- -- ------- ------- ------- ------- ------- Net earnings (loss)............................................. $ 2.57 $ 2.02 $ 1.58 $ 1.20 $ (1.19) ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Change in net earnings applicable to fully diluted earnings per share using previous year average shares outstanding........................ $ 1.10 $ 0.75 $ 0.22 $ 2.40 $ (2.38) Change in average shares outstanding.................................... (0.55) (0.31) 0.16 (0.01) (0.01) ------- ------- ------- ------- ------- Change in net earnings.......................................... $ 0.55 $ 0.44 $ 0.38 $ 2.39 $ (2.39) ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Average fully diluted shares (in thousands)............................. 23,852 19,609 16,986 18,981 18,761 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- FTE -- Fully taxable-equivalent
TABLE 3. ACQUISITIONS COMPLETED IN 1993 BALANCES AT RESPECTIVE DATES OF ACQUISITION
SECURITY TOTAL TRUST/ IMPACT ON BOET SAVETRUST MARYVILLE GBI(1) OTHERS(2) UPC -------- --------- --------- -------- -------- ---------- (DOLLARS IN THOUSANDS) ASSETS Interest-bearing deposits at financial institutions.................................. $ 1,103 $ 9,502 $ -- $ 397 $ 5,996 $ 16,998 Loans, net of unearned income................... 124,861 105,317 113,644 102,944 202,387 649,153 Allowance for losses on loans................... (2,636) (1,889) (3,496) (2,156) (6,430) (16,607) -------- --------- --------- -------- -------- ---------- Net loans..................................... 122,225 103,428 110,148 100,788 195,957 632,546 Investment securities........................... 61,848 126,454 54,915 47,536 131,434 422,187 Intangible assets............................... 7,009 4,396 -- -- 6,783 18,188 Cash and cash equivalents....................... 27,988 10,087 17,741 13,200 50,408 119,424 Other real estate owned, net.................... -- 610 868 710 1,183 3,371 Premises and equipment.......................... 7,292 4,365 -- 8,120 8,020 27,797 Other assets.................................... 3,480 2,131 3,002 2,955 7,610 19,178 -------- --------- --------- -------- -------- ---------- TOTAL ASSETS.................................. $230,945 $260,973 $186,674 $173,706 $407,391 $1,259,689 -------- --------- --------- -------- -------- ---------- -------- --------- --------- -------- -------- ---------- LIABILITIES Deposits........................................ $196,088 $233,611 $168,960 $163,214 $349,771 $1,111,644 Other interest-bearing liabilities.............. 7,156 -- -- 4,251 7,496 18,903 Other liabilities............................... 2,401 5,383 3,627 1,485 4,679 17,575 -------- --------- --------- -------- -------- ---------- TOTAL LIABILITIES............................. $205,645 $238,994 $172,587 $168,950 $361,946 $1,148,122 -------- --------- --------- -------- -------- ---------- -------- --------- --------- -------- -------- ---------- PURCHASE PRICE/CAPITAL CONTRIBUTION/EQUITY AT RESPECTIVE DATES OF ACQUISITION FOR POOLINGS.... $ 25,300 $ 21,979 $ 14,087 $ 4,756 $ 45,445 $ 111,567 -------- --------- --------- -------- -------- ---------- -------- --------- --------- -------- -------- ----------
(1) Amounts are as of January 1, 1993 for GBI, since it was accounted for as a pooling of interests. (2) Includes FSB, FCB, Farmers Union, and Erin, which were accounted for as purchases. Also included are January 1, 1993 amounts for HHC, CSB, and FFS which were accounted for as poolings of interests. See Note 2 to the financial statements for additional information. 50 53 TABLE 4. AVERAGE BALANCE SHEET AND INTEREST RATES
YEARS ENDED DECEMBER 31, ---------------------------------------------------------------------------------------- 1993 1992 1991 ---------------------------- ---------------------------- ---------------------------- INTEREST FTE INTEREST FTE INTEREST FTE AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE ---------- -------- ------ ---------- -------- ------ ---------- -------- ------ (DOLLARS IN THOUSANDS) ASSETS Interest-bearing deposits at financial institutions............. $ 43,560 $ 1,634 3.75% $ 80,682 $ 3,999 4.96 % $ 108,675 $ 7,525 6.92 % Federal funds sold and securities purchased under agreements to resell............................. 143,758 4,602 3.20 115,557 4,280 3.70 118,492 6,606 5.58 Trading account securities(1)........ 120,061 6,194 5.16 105,116 6,648 6.32 63,286 5,419 8.56 Loans held for resale................ 49,699 3,239 6.52 41,817 3,457 8.27 51,369 4,671 9.09 Investment securities Taxable securities................. 2,200,847 116,025 5.27 1,601,510 106,139 6.63 939,658 79,253 8.43 Tax-exempt securities(1)........... 382,994 36,640 9.57 234,213 23,912 10.21 181,703 19,582 10.78 ---------- -------- ---------- -------- ---------- -------- Total investment securities.... 2,583,841 152,665 5.91 1,835,723 130,051 7.08 1,121,361 98,835 8.81 ---------- -------- ---------- -------- ---------- -------- Loans, net of unearned income (1) and (2)................................ 2,777,032 244,133 8.79 2,161,804 200,983 9.30 2,018,146 216,299 10.72 ---------- -------- ---------- -------- ---------- -------- Total earning assets(1)........ 5,717,951 412,467 7.21 4,340,699 349,418 8.05 3,481,329 339,355 9.75 -------- -------- -------- Cash and due from banks.............. 255,854 198,659 178,411 Premises and equipment............... 131,304 91,579 76,722 Allowance for losses on loans........ (80,933) (63,285) (51,530) Other assets......................... 225,163 175,180 154,812 ---------- ---------- ---------- TOTAL ASSETS................... $6,249,339 $4,742,832 $3,839,744 ---------- ---------- ---------- ---------- ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Money market accounts................ $1,326,050 $ 30,679 2.31% $1,092,551 $ 31,109 2.85 % $ 900,361 $ 41,994 4.66 % Savings deposits..................... 795,362 19,288 2.43 468,222 12,828 2.74 338,795 13,611 4.02 Certificates of deposit of $100,000 and over........................... 341,775 13,659 4.00 267,362 12,603 4.71 257,971 17,602 6.82 Other time deposits.................. 2,126,592 83,174 3.91 1,719,340 81,065 4.71 1,291,081 87,045 6.74 Short-term borrowings Federal funds purchased and securities sold under agreements to repurchase.................... 222,136 5,983 2.69 211,662 6,631 3.13 235,662 12,278 5.21 Other.............................. 9,107 304 3.34 8,450 311 3.68 9,177 531 5.79 Federal Home Loan Bank advances...... 100,280 3,592 3.58 -- -- -- -- -- -- Long-term debt Subordinated capital notes and debentures....................... 81,126 7,447 9.18 41,311 4,340 10.51 34,162 3,720 10.89 Other.............................. 4,540 421 9.27 6,341 528 8.33 14,018 1,254 8.95 ---------- -------- ---------- -------- ---------- -------- Total interest-bearing liabilities.................. 5,006,968 164,547 3.29 3,815,239 149,415 3.92 3,081,227 178,035 5.78 Noninterest-bearing demand deposits.... 709,855 -- 519,885 -- 438,482 -- ---------- -------- ---------- -------- ---------- -------- Total sources of funds......... 5,716,823 164,547 4,335,124 149,415 3,519,709 178,035 -------- -------- -------- Other liabilities...................... 85,522 78,216 72,176 Shareholders' equity................... 446,994 329,492 247,859 ---------- ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......... $6,249,339 $4,742,832 $3,839,744 ---------- ---------- ---------- ---------- ---------- ---------- NET INTEREST INCOME(1)................. $247,920 $200,003 $161,320 -------- -------- -------- -------- -------- -------- INTEREST RATE SPREAD(1)................ 3.92% 4.13 % 3.97 % ------ ------ ------ ------ ------ ------ NET INTEREST MARGIN(1)................. 4.34% 4.61 % 4.63 % ------ ------ ------ ------ ------ ------ TAXABLE-EQUIVALENT ADJUSTMENTS Loans................................ $ 1,123 $ 1,102 $ 1,537 Securities........................... 12,192 7,764 6,228 -------- -------- -------- $ 13,315 $ 8,866 $ 7,765 -------- -------- -------- -------- -------- --------
(1) Taxable-equivalent yields are calculated assuming a 35% income tax rate in 1993 and a 34% income tax rate in 1992 and 1991. State taxes are calculated at 6% without any tax-exempt exclusion. (2) Including loans on nonaccrual status. 51 54 TABLE 5. ANALYSIS OF VOLUME AND RATE CHANGES
1993 VERSUS 1992 1992 VERSUS 1991 --------------------------------- -------------------------------- INCREASE INCREASE (DECREASE) (DECREASE) DUE TO CHANGE IN:(1) DUE TO CHANGE IN:(1) -------------------- TOTAL -------------------- TOTAL AVERAGE AVERAGE INCREASE AVERAGE AVERAGE INCREASE VOLUME RATE (DECREASE) VOLUME RATE (DECREASE) --------- -------- ---------- -------- -------- ---------- (DOLLARS IN THOUSANDS) INTEREST INCOME Interest-bearing deposits at other financial institutions.................................. $ (1,548) $ (817) $ (2,365) $ (1,676) $ (1,850) $ (3,526) Federal funds sold and securities purchased under agreements to resell.................... 954 (632) 322 (160) (2,166) (2,326) Trading account securities...................... 869 (1,323) (454) 2,911 (1,682) 1,229 Loans held for resale........................... 587 (805) (218) (816) (398) (1,214) Investment securities Taxable securities............................ 34,467 (24,581) 9,886 46,653 (19,767) 26,886 Tax-exempt securities......................... 14,319 (1,591) 12,728 5,407 (1,077) 4,330 --------- -------- ---------- -------- -------- ---------- Total investment securities................. 48,786 (26,172) 22,614 52,060 (20,844) 31,216 --------- -------- ---------- -------- -------- ---------- Loans........................................... 54,585 (11,435) 43,150 14,684 (30,000) (15,316) --------- -------- ---------- -------- -------- ---------- TOTAL INTEREST INCOME....................... 104,233 (41,184) 63,049 67,003 (56,940) 10,063 --------- -------- ---------- -------- -------- ---------- INTEREST EXPENSE Money market accounts........................... 5,984 (6,414) (430) 7,728 (18,613) (10,885) Savings deposits................................ 8,078 (1,618) 6,460 4,297 (5,080) (783) Certificates of deposit of $100,000 and over.... 3,163 (2,107) 1,056 620 (5,619) (4,999) Other time deposits............................. 17,298 (15,189) 2,109 24,320 (30,300) (5,980) Federal funds purchased and securities sold under agreements to repurchase................ 316 (964) (648) (1,149) (4,498) (5,647) Other short-term borrowings..................... 23 (30) (7) 9 (229) (220) Federal Home Loan Bank advances................. 3,592 -- 3,592 -- -- -- Subordinated capital notes and debentures....... 3,716 (609) 3,107 755 (135) 620 Other long-term debt............................ (162) 55 (107) (644) (82) (726) --------- -------- ---------- -------- -------- ---------- TOTAL INTEREST EXPENSE...................... 42,008 (26,876) 15,132 35,936 (64,556) (28,620) --------- -------- ---------- -------- -------- ---------- CHANGE IN NET INTEREST INCOME..................... $ 62,225 $(14,308) $ 47,917 $ 31,067 $ 7,616 $ 38,683 --------- -------- ---------- -------- -------- ---------- --------- -------- ---------- -------- -------- ---------- PERCENTAGE INCREASE IN NET INTEREST INCOME OVER PRIOR PERIOD.................................... 23.96% 23.98% ---------- ---------- ---------- ----------
(1) The change in interest due to both rate and volume has been allocated to change due to volume and change due to rate in proportion to the relationship of the absolute dollar amounts of the change in each. TABLE 6. AVERAGE DEPOSITS(1)
DECEMBER 31, -------------------------------------------------------------- 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) Noninterest-bearing demand................................. $ 709,855 $ 519,885 $ 438,482 $ 431,966 $ 420,733 Money market(2)............................................ 1,326,050 1,092,551 900,361 884,607 789,473 Savings(3)................................................. 795,362 468,222 338,795 304,253 265,421 Other time(4).............................................. 2,126,592 1,719,340 1,291,081 1,260,007 1,116,997 ---------- ---------- ---------- ---------- ---------- TOTAL AVERAGE CORE DEPOSITS............................ 4,957,859 3,799,998 2,968,719 2,880,833 2,592,624 Certificates of deposit of $100,000 and over............... 341,775 267,362 257,971 314,355 395,041 ---------- ---------- ---------- ---------- ---------- TOTAL AVERAGE DEPOSITS................................. $5,299,634 $4,067,360 $3,226,690 $3,195,188 $2,987,665 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(1) Table 4 presents the average rate paid on the above deposit categories for the three years ended December 31, 1993. (2) Includes money market savings accounts and super NOW accounts. (3) Includes regular savings accounts, NOW accounts, and premium savings accounts. (4) Includes certificates of deposit of less than $100,000, investment savings deposits, IRA's, and Christmas Club accounts. 52 55 TABLE 7. COMPOSITION OF THE LOAN PORTFOLIO
DECEMBER 31, -------------------------------------------------------------- 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) DOMESTIC LOANS Commercial, financial, and agricultural.................. $ 664,362 $ 549,049 $ 566,307 $ 739,289 $ 797,101 Real estate -- construction.............................. 82,971 54,353 54,678 74,267 95,313 Real estate -- mortgage Secured by 1-4 family residential...................... 1,022,263 752,405 458,133 464,988 388,117 Other mortgage loans................................... 517,886 386,802 325,773 296,214 239,389 Home equity.............................................. 86,356 83,936 51,831 46,695 35,320 Consumer Credit cards and other related plans................... 99,103 71,115 62,807 58,826 53,120 Other consumer loans................................... 450,780 331,451 368,298 439,787 391,055 Direct lease financing................................... 25,914 16,493 32,728 36,274 28,314 ---------- ---------- ---------- ---------- ---------- Total domestic loans................................. 2,949,635 2,245,604 1,920,555 2,156,340 2,027,729 FOREIGN LOANS.............................................. 2,250 1,750 12,710 2,000 2,363 ---------- ---------- ---------- ---------- ---------- TOTAL LOANS.......................................... 2,951,885 2,247,354 1,933,265 2,158,340 2,030,092 Less: Unearned income.................................. 16,670 15,515 20,351 29,257 34,709 ---------- ---------- ---------- ---------- ---------- TOTAL LOANS, NET OF UNEARNED INCOME.................. $2,935,215 $2,231,839 $1,912,914 $2,129,083 $1,995,383 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TABLE 8. ALLOCATION OF THE ALLOWANCE FOR LOSSES ON LOANS BY CATEGORY OF LOANS AND THE PERCENTAGE OF LOANS BY CATEGORY TO TOTAL LOANS OUTSTANDING
DECEMBER 31, ------------------------------------------------------------------------------------------------------------------ 1993 1992 1991 1990 1989 --------------------- --------------------- ---------------------- --------------------- --------------------- PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE OF LOANS TO OF LOANS TO OF LOANS TO OF LOANS TO OF LOANS TO AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS ------- ------------ ------- ------------ ------- ------------ ------- ------------ ------- ------------ (DOLLARS IN THOUSANDS) Commercial, financial, and agricultural.. $25,538 22% $22,219 26% $17,388 29% $21,419 34% $20,521 39% Real estate -- construction.. 1,527 3 1,216 1 2,794 3 1,554 4 1,704 5 Real estate -- mortgage... 38,972 52 28,500 54 15,794 41 15,839 35 13,848 31 Consumer..... 13,845 22 12,000 18 11,358 25 11,569 25 10,343 24 Foreign...... 35 -- 25 -- 45 -- 54 -- 31 -- Direct lease financing.. 525 1 330 1 555 2 486 2 424 1 ------- --- ------- --- ------- --- ------- --- ------- --- Total.... $80,442 100% $64,290 100% $47,934 100% $50,921 100% $46,871 100% ------- --- ------- --- ------- --- ------- --- ------- --- ------- --- ------- --- ------- --- ------- --- ------- ---
Note: The allocation of the allowance is presented based in part on evaluations of specific loans, past history, and economic conditions within specific industries or geographic areas. Since all of these factors are subject to change, the current allocation of the allowance is not necessarily indicative of the breakdown of future losses. 53 56 TABLE 9. NONACCRUAL, RESTRUCTURED, AND PAST DUE LOANS AND FORECLOSED PROPERTIES
DECEMBER 31, ------------------------------------------------------- 1993 1992 1991 1990 1989 ------- ------- ------- ------- ------- (DOLLARS IN THOUSANDS) Nonaccrual loans................................................ $14,646 $36,698 $24,204 $18,206 $14,826 Restructured loans.............................................. 7,525 1,351 1,993 2,598 2,686 ------- ------- ------- ------- ------- Total nonperforming loans................................... 22,171 38,049 26,197 20,804 17,512 ------- ------- ------- ------- ------- Foreclosed property Other real estate owned, net of reserve for losses............ 4,358 6,326 10,063 13,680 7,498 Other foreclosed properties................................... 434 171 247 171 265 ------- ------- ------- ------- ------- Total foreclosed properties................................. 4,792 6,497 10,310 13,851 7,763 ------- ------- ------- ------- ------- Total nonperforming assets.................................. $26,963 $44,546 $36,507 $34,655 $25,275 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Loans 90 days or more past due and not on nonaccrual status..... $ 4,771 $ 3,368 $ 4,071 $ 9,281 $ 5,444 ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- Nonperforming loans as a percentage of loans.................... 0.76% 1.70% 1.37% 0.98% 0.88% Nonperforming assets as a percentage of loans plus foreclosed properties.................................................... 0.92 1.99 1.90 1.62 1.26 Allowance for losses on loans as a percentage of nonperforming loans......................................................... 362.83 168.97 182.98 244.77 267.65 Loans 90 days or more past due and not on nonaccrual status as a percentage of loans........................................... .16 .15 .21 .44 .27
TABLE 10. ALLOWANCE FOR LOSSES ON LOANS
YEARS ENDED DECEMBER 31, ------------------------------------------------------------------ 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) Balance at beginning of period......................... $ 64,290 $ 47,934 $ 50,921 $ 46,871 $ 41,063 Loans charged off Commercial, financial, and agricultural.............. 9,476 20,690 18,481 19,423 25,265 Real estate-construction............................. 34 361 710 1,305 614 Real estate-mortgage................................. 2,508 3,844 3,712 2,334 10,642 Consumer............................................. 6,798 7,176 12,384 7,515 11,210 Direct lease financing............................... 9 20 31 129 133 ---------- ---------- ---------- ---------- ---------- Total charge-offs.................................. 18,825 32,091 35,318 30,706 47,864 ---------- ---------- ---------- ---------- ---------- Recoveries on loans previously charged off Commercial, financial, and agricultural.............. 4,476 10,135 2,729 3,992 1,558 Real estate-construction............................. 49 108 23 195 49 Real estate-mortgage................................. 611 444 441 476 753 Consumer............................................. 3,506 3,464 2,590 3,326 1,225 Foreign.............................................. -- -- 1,568 -- -- Direct lease financing............................... 39 61 145 13 5 ---------- ---------- ---------- ---------- ---------- Total recoveries................................... 8,681 14,212 7,496 8,002 3,590 ---------- ---------- ---------- ---------- ---------- Net charge-offs........................................ 10,144 17,879 27,822 22,704 44,274 Provision charged to expense........................... 9,689 18,557 24,835 19,166 49,229 Increase due to acquisitions........................... 16,607 15,678 -- 7,588 853 ---------- ---------- ---------- ---------- ---------- Balance at end of period............................... $ 80,442 $ 64,290 $ 47,934 $ 50,921 $ 46,871 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Loans, net of unearned income, at end of period........ $2,935,215 $2,231,839 $1,912,914 $2,129,083 $1,995,383 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Average loans, net of unearned income, during period... $2,777,032 $2,161,804 $2,018,146 $2,063,925 $1,966,799 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Ratios: Allowance at end of period to loans, net of unearned income............................................. 2.74% 2.88% 2.51% 2.39% 2.35% Allowance at end of period to average loans, net of unearned income.................................... 2.90 2.97 2.38 2.47 2.38 Net charge-offs to average loans, net of unearned income............................................. .37 .83 1.38 1.10 2.25
54 57 TABLE 11. RATE SENSITIVITY ANALYSIS AT DECEMBER 31, 1993
INTEREST-SENSITIVE WITHIN --------------------------------------------------------------------------------------- 0-30 31-90 91-180 181-365 1-2 2-5 OVER NONINTEREST- DAYS(B) DAYS DAYS DAYS YEARS YEARS 5 YEARS BEARING TOTAL -------- ----- ------ ------- ----- ------ ------- ------------- ------ (DOLLARS IN MILLIONS) ASSETS Loans and leases......... $ 642 $ 327 $ 272 $ 457 $ 265 $ 583 $ 391 $ 15 $2,952 Investment securities.... 320 278 320 504 490 367 338 -- 2,617 Other earning assets..... 183 53 53 -- -- -- -- -- 289 Other assets............. -- -- -- -- -- -- -- 460 460 -------- ----- ------ ------- ----- ------ ------- ------------- ------ TOTAL ASSETS..... $1,145 $ 658 $ 645 $ 961 $ 755 $ 950 $ 729 $ 475 $6,318 -------- ----- ------ ------- ----- ------ ------- ------------- ------ -------- ----- ------ ------- ----- ------ ------- ------------- ------ SOURCES OF FUNDS Money market deposits.... $ 151 $ 298 $ -- $ 349 $ 20 $ 502 $ -- $ -- $1,320 Other savings and time deposits.............. 431 565 571 337 230 656 57 -- 2,847 Time deposits over $100,000.............. 72 72 80 49 20 39 2 -- 334 Short-term borrowings.... 245 -- -- -- -- -- -- -- 245 Federal Home Loan Bank advances.............. 101 20 4 1 3 13 16 -- 158 Long-term debt........... -- -- -- -- -- -- 117 -- 117 Noninterest-bearing deposits.............. -- -- -- -- -- -- -- 750 750 Other liabilities........ -- -- -- -- -- -- -- 70 70 Shareholders' equity..... -- -- -- -- -- -- -- 477 477 -------- ----- ------ ------- ----- ------ ------- ------------- ------ TOTAL SOURCES OF FUNDS.......... $1,000 $ 955 $ 655 $ 736 $ 273 $1,210 $ 192 $ 1,297 $6,318 -------- ----- ------ ------- ----- ------ ------- ------------- ------ -------- ----- ------ ------- ----- ------ ------- ------------- ------ INTEREST RATE SWAPS........ $ -- $(150) $ (150) $ -- $ 100 $ 200 $ -- $ -- $ -- INTEREST RATE SENSITIVITY GAP...................... 145 (447) (160) 225 582 (60) 537 (822) -- CUMULATIVE INTEREST RATE SENSITIVITY GAP.......... 145 (302) (462) (237) 345 285 822 -- -- CUMULATIVE GAP AS A PERCENTAGE OF TOTAL ASSETS............. 2% (5)% (7)% (4)% 5% 5% 13% --% --%
MANAGEMENT HAS MADE THE FOLLOWING ASSUMPTIONS IN THE ABOVE ANALYSIS: (1) Assets and liabilities are generally scheduled according to their earliest repricing period when the repricing is less than the contractual maturity. (2) Nonaccrual loans are included in the noninterest-bearing category. (3) Fixed-rate mortgage loan maturities are based on the principal prepayment patterns of comparable mortgage-backed securities. (4) The scheduled maturities of mortgage-backed securities and CMO'S incorporate principal prepayments of these securities using current and consensus interest rate forecasts in conjunction with the latest three month historical prepayment speeds. (5) Securities held for sale are currently treated in the same manner as comparable securities in the investment securities portfolio in that they are scheduled according to their contractual maturities or earliest repricing period if sooner; however, the maturities of callable agencies are scheduled according to their call dates when valued at a premium to par. (6) Money market deposits and savings deposits that have no contractual maturities are scheduled according to the Corporation's best estimate of their repricing sensitivity to changes in market rates. This varies by product type and market. (7) If all money market, NOW, and savings deposits had been included in the 0-30 Days category above, the cumulative gap as a percentage of total assets would have been negative (27%), (27%), (30%), (20%), (10%), and positive 4%, respectively, for the 0-30 days, 31-90 days, 91-180 days, 181-365 days, 1-2 years, and 2-5 years categories at December 31, 1993. 55 58 TABLE 12. INVESTMENT SECURITIES AND MONEY MARKET ASSETS
DECEMBER 31, ------------------------------------ 1993 1992 1991 ---------- ---------- ---------- (DOLLARS IN THOUSANDS) U.S. Government obligations U.S. Treasury securities................................. $ 804,351 $ 646,329 $ 264,623 Securities of U.S. Government agencies................... 1,286,348 1,216,643 644,603 ---------- ---------- ---------- Total U.S. Government obligations................ 2,090,699 1,862,972 909,226 Obligations of state and political subdivisions............ 441,673 294,564 190,573 Other investment securities................................ 84,681 40,567 48,004 ---------- ---------- ---------- Total investment securities...................... 2,617,053 2,198,103 1,147,803 Interest-bearing deposits at financial institutions........ 26,647 84,204 134,947 Federal funds sold and securities purchased under resale agreements............................................... 53,149 92,354 59,570 Trading account securities................................. 153,482 109,584 90,271 Loans held for resale...................................... 56,053 91,543 32,257 ---------- ---------- ---------- Total investment securities and money market assets......................................... $2,906,384 $2,575,788 $1,464,848 ---------- ---------- ---------- ---------- ---------- ----------
TABLE 13. RISK-BASED CAPITAL
DECEMBER 31, ------------------------------------ 1993 1992 1991 ---------- ---------- ---------- (DOLLARS IN THOUSANDS) TIER 1 CAPITAL Shareholders' equity..................................... $ 477,300 $ 356,211 $ 269,446 Minority interest in a consolidated subsidiary........... 1,588 1,588 500 Less goodwill and one-half of investment in unconsolidated subsidiaries........................... (31,097) (8,493) (6,938) Less disallowed deferred tax asset....................... (1,861) -- -- ---------- ---------- ---------- TOTAL TIER 1 CAPITAL............................. 445,930 349,306 263,008 TIER 2 CAPITAL Allowance for losses on loans............................ 38,067 32,027 27,232 Qualifying long-term debt................................ 74,479 32,000 32,000 Less one-half of investment in unconsolidated subsidiaries.......................................... (136) (147) (129) ---------- ---------- ---------- TOTAL CAPITAL.................................... $ 558,340 $ 413,186 $ 322,111 ---------- ---------- ---------- ---------- ---------- ---------- RISK-WEIGHTED ASSETS....................................... $3,003,001 $2,529,912 $2,157,866 ---------- ---------- ---------- ---------- ---------- ---------- RATIOS Equity to assets......................................... 7.55% 6.77% 7.12% Leverage ratio........................................... 7.10 6.85 6.94 Tier 1 capital to risk-weighted assets................... 14.85 13.81 12.19 Total capital to risk-weighted assets.................... 18.59 16.33 14.93
56 59 TABLE 14. SELECTED QUARTERLY DATA
1993 QUARTERS ENDED (1) AND (2) ---------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL -------- ------- ------------ ----------- -------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Net interest income....................... $57,963 $59,649 $ 59,049 $57,944 $234,605 Provision for losses on loans............. (2,823 ) (4,667) (1,489) (710) (9,689) Noninterest income........................ 19,404 23,214 21,467 20,714 84,799 Noninterest expense....................... (54,637 ) (56,589) (58,149) (55,105) (224,480) -------- ------- ------------ ----------- -------- Earnings before income taxes, extraordinary item, and accounting changes................................. 19,907 21,607 20,878 22,843 85,235 Applicable income taxes................... 6,413 7,052 3,877 6,625 23,967 -------- ------- ------------ ----------- -------- Earnings before extraordinary item and accounting changes...................... 13,494 14,555 17,001 16,218 61,268 Extraordinary item, net of taxes.......... -- -- -- (3,206) (3,206) Accounting changes, net of taxes.......... 5,001 -- -- -- 5,001 -------- ------- ------------ ----------- -------- Net earnings.................... $18,495 $14,555 $ 17,001 $13,012 $ 63,063 -------- ------- ------------ ----------- -------- -------- ------- ------------ ----------- -------- PER COMMON SHARE DATA Earnings per common share before extraordinary item and accounting changes Primary.............................. $ .60 $ .63 $ .75 $ .71 $ 2.69 Fully diluted........................ .57 .59 .68 .65 2.49 Net earnings Primary.............................. .85 .63 .75 .55 2.78 Fully diluted........................ .78 .59 .68 .52 2.57 Dividends............................... .18 .18 .18 .18 .72 UPC COMMON STOCK DATA(3) High trading price...................... $ 29.13 $ 29.25 $ 30.00 $ 28.75 $ 30.00 Low trading price....................... 22.50 22.63 25.00 23.63 22.50 Closing price........................... 29.00 25.75 29.00 25.13 25.13 Trading volume (in thousands)(4)........ 3,059 1,926 2,008 2,800 9,793
1992 QUARTERS ENDED (1) ---------------------------------------------------------- MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 TOTAL -------- ------- ------------ ----------- -------- (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Net interest income....................... $40,596 $47,577 $ 50,920 $52,044 $191,137 Provision for losses on loans............. (6,067 ) (3,900) (1,777) (6,813) (18,557) Noninterest income........................ 17,058 19,120 26,079 21,016 83,273 Noninterest expense....................... (39,561 ) (49,428) (60,411) (49,818) (199,218) -------- ------- ------------ ----------- -------- Earnings before income taxes.............. 12,026 13,369 14,811 16,429 56,635 Applicable income taxes................... 2,977 3,421 3,880 4,918 15,196 -------- ------- ------------ ----------- -------- Net earnings.................... $ 9,049 $ 9,948 $ 10,931 $11,511 $ 41,439 -------- ------- ------------ ----------- -------- -------- ------- ------------ ----------- -------- PER COMMON SHARE DATA Earnings per common share Primary.............................. $ .48 $ .50 $ .55 $ .57 $ 2.10 Fully diluted........................ .47 .48 .52 .55 2.02 Dividends............................... .15 .15 .15 .15 .60 UPC COMMON STOCK DATA(3) High trading price...................... $ 15.50 $ 20.13 $ 20.75 $ 24.75 $ 24.75 Low trading price....................... 13.75 14.63 17.50 17.75 13.75 Closing price........................... 15.13 18.38 18.88 24.25 24.25 Trading volume (in thousands)(4)........ 1,888 2,313 1,322 2,066 7,589
(1) Certain quarterly amounts have been reclassified to conform with current financial reporting presentation. (2) Quarterly amounts for 1993 have been restated for acquisitions accounted for using the pooling of interests method of accounting in 1993. (3) Union Planters Corporation's Common Stock is listed on the New York Stock Exchange (NYSE), and is traded under the symbol UPC. All share prices represent closing prices as reported by the NYSE. There were approximately 5,400 holders of the Corporation's Common Stock as of December 31, 1993. (4) Trading volume represents the total daily volume for the period shown as reported by NYSE. 57 60 TABLE 15. UNION PLANTERS CORPORATION'S BANKING SUBSIDIARIES
DECEMBER 31, 1993 ----------------------------------- ASSETS LOANS DEPOSITS EQUITY ------ ------ -------- ------ (DOLLARS IN MILLIONS) TENNESSEE Union Planters National Bank................................. $3,495 $1,428 $2,657 $251.6 Merchants State Bank in Humboldt............................. 208 94 188 15.3 First Federal Savings Bank in Maryville...................... 185 104 170 13.4 Bank of Goodlettsville....................................... 178 91 163 13.8 The First National Bank of Crossville........................ 158 66 144 11.1 Citizens Bank in Cookeville.................................. 150 79 137 11.3 Security Trust Federal Savings Bank in Knoxville............. 133 58 109 11.1 Bank of Roane County in Harriman............................. 130 73 120 8.9 Central State Bank in Lexington.............................. 108 57 100 6.9 First State Bank of Brownsville.............................. 91 45 75 9.3 Bank of East Tennessee in Morristown......................... 87 19 72 7.8 Bank of Commerce in Woodbury................................. 80 33 72 6.9 DeKalb County Bank and Trust Company in Alexandria........... 75 42 69 5.8 Farmers Union Bank in Ripley................................. 69 34 55 8.5 Citizens Bank & Trust Company in Wartburg.................... 61 36 53 4.5 First Citizens Bank of Hohenwald............................. 53 30 45 3.9 SaveTrust Federal Savings Bank in Dyersburg.................. 42 23 31 3.3 Bank of Trenton and Trust Company............................ 42 18 38 2.5 Erin Bank & Trust Company.................................... 39 14 34 4.6 First State Bank of Fayette County in Somerville............. 33 15 30 2.3 Cumberland City Bank......................................... 27 14 25 2.1 Pickett County Bank and Trust Company in Byrdstown........... 24 13 22 1.5 ------ ------ -------- ------ Total.............................................. $5,468 $2,386 $4,409 $406.4 ------ ------ -------- ------ ------ ------ -------- ------ MISSISSIPPI United Southern Bank of Clarksdale........................... $ 329 $ 169 $ 298 $ 28.3 First National Bank in New Albany............................ 145 85 133 11.3 ------ ------ -------- ------ Total.............................................. $ 474 $ 254 $ 431 $ 39.6 ------ ------ -------- ------ ------ ------ -------- ------ ARKANSAS North Arkansas Bancshares, Inc. (NABS) Mercantile Bank in Jonesboro............................... $ 253 $ 175 $ 223 $ 23.2 First State Bank of Newport................................ 60 26 53 7.1 Bank of Weiner............................................. 37 19 32 4.5 Searcy County Bank in Marshall............................. 36 15 32 3.7 The Bank of Rector......................................... 29 14 27 2.6 Mercantile Bank in Mammoth Spring.......................... 29 15 26 2.7 Mercantile Bank in Hardy................................... 24 17 21 1.8 ------ ------ -------- ------ Total.............................................. $ 468 $ 281 $ 414 $ 45.6 ------ ------ -------- ------ ------ ------ -------- ------ ALABAMA Steiner Bank in Birmingham................................... $ 24 $ 12 $ 15 $ 2.6 ------ ------ -------- ------ ------ ------ -------- ------
Subsequent to December 31, 1993 and through March 1, 1994, the Corporation consummated the acquisitions of Mid-South Bancorp, Inc. (locations in Tennessee and Kentucky), First National Bancorp of Shelbyville, Inc. (Tennessee), and Anderson County Bank (Tennessee). See Note 2 to the financial statements. 58 61 UNION PLANTERS CORPORATION COMMUNITIES SERVED
OFFICES ------- TENNESSEE UNION PLANTERS NATIONAL BANK Antioch, Bartlett, Brentwood, Chattanooga, Clinton, Collierville, Cordova, Dickson, Eagleville, Franklin, Gallatin, Germantown, Goodlettsville, Hendersonville, Jackson, Knoxville, Lebanon, Madison, Memphis, Milan, Mt. Juliet, Murfreesboro, Nashville, Oak Ridge, and Smyrna..................................... 90 MERCHANTS STATE BANK Dyersburg, Gibson, Humboldt, Martin, Ripley, Rutherford, Union City, and Yorkville.......... 13 FIRST FEDERAL SAVINGS BANK Alcoa and Maryville............................ 3 BANK OF GOODLETTSVILLE Goodlettsville, Springfield, and White House... 4 FIRST NATIONAL BANK OF SHELBYVILLE* Monteagle, Shelbyville, and Tracy City......... 5 THE FIRST NATIONAL BANK OF CROSSVILLE Crossville and Fairfield Glade................. 5 CITIZENS BANK IN COOKEVILLE Algood, Baxter, Cookeville, and Monterey....... 6 SECURITY TRUST FEDERAL SAVINGS AND LOAN ASSOCIATION Clinton, Greeneville, Kingston, Knoxville, Morristown, and Oak Ridge...................... 7 BANK OF ROANE COUNTY Harriman, Kingston, Lenoir City, Oliver Springs, and Rockwood................................... 5 CENTRAL STATE BANK Jackson and Lexington.......................... 4 FIRST STATE BANK Brownsville and Stanton........................ 4 BANK OF EAST TENNESSEE Morristown and Talbott......................... 6 BANK OF COMMERCE IN WOODBURY Auburntown and Woodbury........................ 3 DEKALB COUNTY BANK & TRUST COMPANY Alexandria, Celina, Dowelltown, and Smithville..................................... 5 FARMERS UNION BANK Ripley......................................... 3 CITIZENS BANK & TRUST COMPANY IN WARTBURG Oliver Springs, Sunbright, and Wartburg........ 3 FIRST CITIZENS BANK OF HOHENWALD................... 3 OFFICES ------- SAVETRUST FEDERAL SAVINGS BANK Dyersburg and Newbern.......................... 3 BANK OF TRENTON AND TRUST COMPANY.................. 1 ERIN BANK & TRUST COMPANY.......................... 1 FIRST CITIZENS BANK* Columbia, Franklin, and Mt. Pleasant........... 3 FIRST STATE BANK OF FAYETTE COUNTY IN SOMERVILLE... 1 CUMBERLAND CITY BANK............................... 1 THE PEOPLES BANK OF ELK VALLEY IN FAYETTEVILLE*.... 1 PICKETT COUNTY BANK AND TRUST COMPANY IN BYRDSTOWN........................................ 1 ANDERSON COUNTY BANK IN CLINTON*................... 1 MISSISSIPPI UNITED SOUTHERN BANK Batesville, Clarksdale, Drew, Friars Point, Lambert, Lula, Olive Branch, Oxford, Pope, Sledge, and Tutwiler........................... 16 FIRST NATIONAL BANK IN NEW ALBANY Ashland, Blue Mountain, Hickory Flat, New Albany, Ripley, and Tupelo..................... 9 KENTUCKY SIMPSON COUNTY BANK IN FRANKLIN*................... 4 ADAIRVILLE BANKING COMPANY*........................ 1 ARKANSAS MERCANTILE BANK IN JONESBORO Bono, Brookland, and Jonesboro................. 9 FIRST STATE BANK OF NEWPORT Newport and Tuckerman.......................... 3 BANK OF WEINER Fisher and Weiner.............................. 2 SEARCY COUNTY BANK Leslie and Marshall............................ 2 THE BANK OF RECTOR................................. 1 MERCANTILE BANK IN MAMMOTH SPRING.................. 1 MERCANTILE BANK IN HARDY Hardy and Sidney............................... 2 ALABAMA STEINER BANK IN BIRMINGHAM......................... 2 ------- TOTAL.............................................. 234 ------- -------
* Acquired subsequent to December 31, 1993 59 62
- ----------------------------------------------------------- ---------------------------------------------------------------- - ----------------------------------------------------------- ---------------------------------------------------------------- UNION PLANTERS CORPORATION/ UNION PLANTERS NATIONAL BANK UNION PLANTERS NATIONAL BANK REGIONAL BRANCHES DIRECTORS UNION PLANTERS UNION PLANTERS UNION PLANTERS CORPORATION NATIONAL BANK NATIONAL BANK ALBERT M. AUSTIN EXECUTIVE OFFICERS CHATTANOOGA, TN NASHVILLE, TN Chairman BENJAMIN W. RAWLINS, THOMAS W. FLENNIKEN STANLEY D. OVERTON Cannon, Austin JR. Regional President Regional Chairman and Cannon, Inc. Chairman & CEO ADVISORY DIRECTORS ADVISORY DIRECTORS MARVIN E. BRUCE J. ARMISTEAD SMITH Chairman & CEO Vice Chairman STEVE A. BOVELL ANITA BALTIMORE TBC Corporation President Vice President of Business JACKSON W. MOORE Capstone Properties, Inc. Dev. GEORGE W. BRYAN President Interior Design Services, Inc. Senior Vice JOHN F. GERM President JAMES A. GURLEY President WILLIAM R. BRUCE Sara Lee Corporation Executive Vice Campbell & Associates, Inc. Attorney President Baker, Worthington, Crossley ROBERT B. COLBERT, DOROTHY P. HICKS Stansberry & Woolf JR.* JACK W. PARKER Real Estate Broker Retired Fletcher Bright Company JUDSON G. COLLINS Signal Apparel Executive Vice Retired Broadcaster Co., Inc. President and DALE F. STUDER Chief Financial President CHARLES W. COOK, JR. HANFORD F. FARRELL, Officer Studer Investments Regional President JR. Union Planters National Bank Chairman M. KIRK WALTERS DR. HARRY D. WAGNER Farrell-Cooper Senior Vice President, President DAN W. DENNEY Mining Compan Treasurer, and Chief Fortune Practice Management Partner Accounting Officer of Chattanooga Wilson County Motor Company JAMES L. HARPER** ------------------------------ Partner J. F. SPRINGFIELD ------------------------------ JAMES L. HARPER Harper-Maes and Secretary and Partner Associates General Counsel UNION PLANTERS Harper-Maes and Associates --------------------------------- NATIONAL BANK PARNELL S. LEWIS, --------------------------------- JACKSON, TN JOE L. HOOPER JR. HARBERT R. ALEXANDER Retired Savings Bank Executiv President UNION PLANTERS Regional President Anderson-Tully NATIONAL BANK VADEN M. LACKEY, JR. Company ADVISORY DIRECTORS Attorney ADVISORY DIRECTORS Stokes & Bartholomew, P.A. C.J. LOWRANCE, III WILLIAM E. ALLEN President DR. C. C. HUMPHREYS President JOHN T. ROCHFORD Lowrance Brothers President Emeritus Devilbiss Air Power Company President & Co., Inc Memphis State Rochford Realty and University THOMPSON DABNEY Construction Company, Inc. R. BRAD MARTIN Chairman Chairman & CEO LLOYD B. LOVITT, W.P. Dabney & Son Furniture T. C. SUMMERS Proffitts, Inc. JR. Chairman/Owner Owner and President CHARLES E. DUNHAM T.C. Summers, Inc. JACKSON W. MOORE Jacobson & Lovitt Retired ------------------------------ President Development Co. ------------------------------ Union Planters CARL KIRKLAND Corporation ROBERT D. MCCALLUM President & CEO UNION PLANTERS Consultant Kirkland Consolidated, Inc. NATIONAL BANK STANLEY D. OVERTON KNOXVILLE, TN Vice Chairman J.T. MURFF DONALD LAYCOOK Union Planters Investor President J. ARMISTEAD SMITH National Bank Laycook Printing Company Regional Chairman THOMAS R. PRICE C. PENN OWEN, JR. Attorney at Law J.H. LUCKEY CHARLES T. BRYANT Managing Partner The Winchester Partner Regional President Bowdre Place Law Firm C.E. Luckey & Sons ADVISORY DIRECTORS KENNETH W. PLUNK** TIMMONS L. TREADWELL, THOMAS S. REED President III Owner DAVID G. BROWN Union Planters Managing Partner Reed & Associates, Inc. Owner National Bank Treadwell & Harry Brown, Brown & West Real A.U. TAYLOR, III Estate BENJAMIN W. RAWLINS, President JR. City Lumber Company LINDA L. BROWN Chairman & CEO Owner Union Planters JOHN W. WILLIAMS Linda Brown Realty Company Corporation and Manager Union Planters Jackson Utility Division RICHARD A. DEW, MD National Bank ------------------------------ Methodist Medical Center ------------------------------ DR. V. LANE RAWLINS UNION PLANTERS CARL C. ENSOR, JR. President NATIONAL BANK Retired Memphis State MURFREESBORO, TN Former Banker University KATHY S. POTTER Regional President B. JAMES GEORGE DONALD F. SCHUPPE President Retired Managing ADVISORY DIRECTORS Beta Development Corporation Partner Memphis Office JAMES H. BAILEY, III RUBY A. MILLER Price Waterhouse Architect Agent Johnson and Bailey Architects, State Farm Insurance Company J. ARMISTEAD SMITH P.C. Vice Chairman and STANLEY C. ROY, CPA President of the JEFFREY S. HENRY Certified Public Accountant Community Bank Colonel Group Tennessee Army National Guard MILUS R. SKIDMORE Union Planters Investor Corporation SAM H. INGRAM Entrepreneur Board of Regents LESLIE M. STRATTON, State of Tennessee DR. BOB F. THOMAS III Professor President MARGARET NEAL THOMPSON Roane State Community College Leslie M. Stratton Regional Director Company TN/KY Division ARCHIE F. WEAVER Rehability Corporation President MIKE P. STURDIVANT* Coronado Stone-Weaver President Enterprises Due West Gin Co., Inc. RICHARD A. TRIPPEER, JR. President R. A. Trippeer, Inc. * Director of Union Planters Corporation only. ** Director of Union Planters National Bank only.
60 63 - --------------------------- --------------------------- --------------------------- --------------------------- - --------------------------- --------------------------- --------------------------- --------------------------- BANK OF GOODLETTSVILLE CITIZENS BANK & TENNESSEE BANKING GOODLETTSVILLE, TN (CONT'D) CENTRAL STATE BANK TRUST CO. SUBSIDIARIES LEXINGTON, TN WARTBURG, TN (CONT'D) BANK OF COMMERCE TIMOTHY M. GARRETT WOODBURY, TN Vice Chairman BILLY MAX WOODS ROY MCNEAL Bank of Goodlettsville President & CEO Secretary to the Board STEVE A. SMITH Funeral Director Citizens Bank & Trust Co. Chairman, President & CEO Cole and Garrett Funeral DIRECTORS Retired Pharmacist Home, Inc. DIRECTORS THOMAS E. BUNCH BILLY M. RICE TONY D. GREGORY Retired Postmaster President & CEO WILLIAM H. BRYSON Executive Vice President Citizens Bank & Trust Co. Attorney at Law Bank of Goodlettsville HAROLD GRIGGS Owner FRED J. ROETTGER CHRISTINE DILLON DANIEL R. HAWKINS Griggs Big Star Super Chairman Executive Vice President President and CEO Market Citizens Bank & Trust Co. Bank of Commerce Bank of Goodlettsville Martin Marietta Engineer JAMES W. GURLEY MARSHALL E. DUGGIN --------------------------- Vice President -- Cashier WAYNE SOLOMON Attorney at Law --------------------------- Central State Bank Owner, Schubert Funeral BANK OF ROANE COUNTY Home ROY FUSTON HARRIMAN, TN THOMAS HOLMES Owner LARRY W. BYRKIT Owner ARLAND SPEARS Fuston's Antiques President & CEO Holmes Ford, Inc. Retired Fuston's Variety Store DIRECTORS JOHN MELTON --------------------------- AUSTIN JENNINGS Vice President --------------------------- Owner LARRY W. BYRKIT Central State Bank CUMBERLAND CITY BANK Jennings Jewelers President & CEO CUMBERLAND CITY, TN Bank of Roane County ELMER L. STEWART G. WENDELL KENNEDY Attorney ROBERTA D. HOLLEY Retired Postal C. S. HARVEY, JR. President & CEO Worker/Farmer President CAROL A. STONE Harvey's Furniture & Vice President DIRECTORS DONALD PASCHAL Appliance Central State Bank Farmer DR. HARPER L. COLE JAMES M. HENRY BOBBY TATE Retired Educator STEVE A. SMITH President Vice President Chairman, President & CEO Tennessee Resource Valley Central State Bank W.E. DOUGHERTY Bank of Commerce Retired Postmaster CHARLES W. JOHNSON LAWTON REX TODD WILLIAM SMITH Retired Vice President H. RYAN HOLLEY Vice Chairman Rockwood Electric Utility Central State Bank Chairman Bank of Commerce Cumberland City Bank WILLIAM A. NEWCOMB BILLY MAX WOODS GORDON SUMMAR Attorney at Law President & CEO ROBERTA D. HOLLEY Farmer Newcomb & Murphy Central State Bank President & CEO Cumberland City Bank ADVISORY DIRECTOR GILBERT D. PICKEL ADVISORY DIRECTOR President G. L. LANDISS, JR. R.H. BURKE Century 21, Pickel KENNETH L. AUSTIN Retired Postal Service - ------------------------ Partners, Inc. Vice President - ------------------------ Central State Bank STEPHEN T. LEWIS C. G. SEXTON Cashier BANK OF EAST TENNESSEE Sexton Automotive Group --------------------------- Cumberland City Bank MORRISTOWN, TN --------------------------- BROWDER G. WILLIAMS CITIZENS BANK --------------------------- CHARLES T. BRYANT Attorney at Law COOKEVILLE, TN --------------------------- President & CEO Chairman DEKALB COUNTY BANK Bank of Roane County GLENN H. RAMSEY AND TRUST COMPANY DIRECTORS Chairman & CEO ALEXANDRIA, TN GEORGE E. WILSON, III URSELL B. ATKINS President DIRECTORS TOMMY ANDERTON Agency Manager Roane Hosiery, Inc. Chairman, President & CEO Hamblen County Farm GARY W. CARWILE Bureau --------------------------- President DIRECTORS --------------------------- Carwile Mechanical CHARLES T. BRYANT BANK OF TRENTON Contractors TOMMY ANDERTON President & CEO AND TRUST COMPANY Chairman, President & CEO Bank of East Tennessee TRENTON, TN ROBERT C. DAVIS DeKalb County Bank & Pharmacist/Owner Trust Company KENNETH D. CARPENTER DOTTY M. JONES Medical Center Pharmacy Manager President & CEO DAN ANDREWS Appalachian Electric WILLIAM C. FRANCIS Bank Consultant Cooperative DIRECTORS Physician William C. Francis, M.D., R. V. BELLENFANT JERRY C. CRANFORD WILLIAM HAYNES P.C. Retired Director of Manufacturing Retired Universal Furniture CHARLES W. KIBBONS, JR. ALVA T. HARRELL WINTER HODGES Personal Investments CPA SAMUEL F. GRIGSBY, SR. President Marlin-Edmondson, P.C. Chairman of the Board Westwin, Inc. L. W. LEGGE, JR. Bank of East Tennessee President ANTHONY T. MOORE Farmer RICHARD INGRAM L. W. Legge Insurance Chairman, President & CEO President Agency First Federal Savings Bank SAMUEL F. GRIGSBY, JR. Ingram's IGA, Inc. Executive Vice President JAMES T. MARTIN LARRY E. VICKERS Bank of East Tennessee DOTTY M. JONES President President President & CEO Citizens Bank L. E. Vickers and WILLIAM H. INMAN Bank of Trenton and Trust Associates Retired Judge Company GLENN H. RAMSEY Data Processing Company Chairman & CEO JOE H. SANFORD HUNTER PARTEE Citizens Bank TOM WILEY Former Farm Credit Manager Retired Director of Operations GARY SASSER Designs by Norvell, Inc. WILLIAM F. YOUNG GEORGE RASBERRY President President Owner Averitt Express, Inc. --------------------------- Young's Furniture Company Rasberry Motors --------------------------- ADVISORY DIRECTORS - --------------------------- C.B. SINGLETON, JR. ERIN BANK & TRUST COMPANY - --------------------------- Chairman of the Board H.S. BARNES ERIN, TN Bank of Trenton and Trust LEON T. DELOZIER BANK OF GOODLETTSVILLE Company E.H. HOOPER BYDE SIMPSON GOODLETTSVILLE, TN WALLACE PRESCOTT President & CEO ELEANOR B. SADLER DANIEL R. HAWKINS W.R. WHITAKER, JR. DIRECTORS President and CEO --------------------------- --------------------------- JOHNNY D. BAGGETT DIRECTORS CITIZENS BANK & Executive Vice President TRUST CO. Erin Bank & Trust Company JACQUELINE W. ALSTON WARTBURG, TN Vice President C. W. MITCHUM, JR. Bank of Goodlettsville BILLY M. RICE Pharmacist President & CEO Partner, Mitchum Drug KENNETH T. ANDERSON Company Senior Vice President DIRECTORS Bank of Goodlettsville RAYMOND BUXTON JOHN C. GARRETT, III Retired Chemist Chairman Bank of Goodlettsville WILLIAM L. HARPER Martin Marietta Chemist
61 64 - ------------------------- ------------------------- ------------------------- ------------------------- - ------------------------- ------------------------- ------------------------- ------------------------- ERIN BANK & TRUST FIRST FEDERAL SAVINGS BANK FIRST STATE BANK PICKETT COUNTY COMPANY MARYVILLE, TN (CONT'D) BROWNSVILLE, TN (CONT'D) BANK AND TRUST COMPANY ERIN, TN (CONT'D) BYRDSTOWN, TN R. VERNON MOBLEY JERRY C. HILL RONALD C. RICHARDS Retired Rural Carrier President President TIMOTHY J. BARNHILL Colonial Development, Inc. Richards Agency, President & CEO BYDE SIMPSON Incorporated President & CEO HOMER L. ISBELL DIRECTORS Erin Bank & Trust Retired Physician ELEANOR ROOKS Company Retired Educator TIMOTHY J. BARNHILL ROBERT R. KNOLL President & CEO JOSEPH H. SPENCER Dentist DALLAS SMOTHERS Pickett County Bank and Attorney Dr. Robert R. Knoll, Manager Trust Company Retired Circuit Court DDS, P.C. Haywood Farmers Judge Cooperative COLEMAN CROUCH DON E. PETERSON Co-Owner HOMER A. THOMAS Vice President JERE WILLIAMSON, JR. Green Meadows Angus Retired Lawler-Wood, Inc. Executive Vice President Farms General Insurance Agency First State Bank JAMES N. PROFFITT, JR. DOUGLAS GARRETT - ------------------------- CPA and Partner ------------------------- Owner - ------------------------- Proffitt & Goodson, Inc. ------------------------- Garrett's Pharmacy FARMERS UNION BANK B. R. SULLIVAN FIRST STATE BANK OF HERBERT GROCE RIPLEY, TN President and CEO FAYETTE COUNTY Retired First Federal Savings SOMERVILLE, TN Tennessee Farmers Co-op S. N. ANTHONY, JR. Bank Co-Owner President & CEO PAUL B. DAWSON, JR. Green Meadows Angus J. DAVID WALKER President & CEO Farms DIRECTORS Owner General Live Stock DIRECTORS ROY H. KOGER S. N. ANTHONY, JR. Operation Retired President & CEO FRANK BOSWELL Executive Vice President Farmers Union Bank ------------------------- Owner Pickett County Bank and ------------------------- Somerville Farm Supply Trust Company S. N. ANTHONY, III THE FIRST NATIONAL Owner, Koger Farms President BANK OF CROSSVILLE PAUL B. DAWSON, JR. S. N. Anthony, Inc. CROSSVILLE, TN President & CEO ------------------------- Insurance First State Bank of ------------------------- FRED J. FLICK Fayette County RANDY LANKFORD President & CEO SAVETRUST FEDERAL SAVINGS Owner THOMAS H. FOWLER BANK Lankford Realty Company DIRECTORS Landowner DYERSBURG, TN L. W. POSTON, JR. DIANE D. BROWN J. PAYSON MATTHEWS, III G. W. HAMPTON Contractor Senior Vice President Attorney at Law Chairman, President & CEO The First National Bank JOSEPH H. WALKER, III of Crossville FRANK S. MCKNIGHT DIRECTORS Chancery Court Judge Physician, Morris Clinic J. W. BROWN WILLIAM A. ADCOCK - ------------------------- Chairman REUBEN S. RHEA CEO - ------------------------- The First National Bank President AWM, Inc. FIRST CITIZENS BANK of Crossville Rhea Oil Company HOHENWALD, TN Farmer RALPH W. FARMER FRED J. FLICK Woodburn Farms Attorney at Law ANNETTE PEERY President & CEO Farmer Moore Jones President & CEO The First National Bank ------------------------- Hamilton & Lay of Crossville ------------------------- DIRECTORS MERCHANTS STATE BANK HOWARD C. GUTHRIE J. H. GRAHAM, III HUMBOLDT, TN Athletic Director DAVID ADCOX Chief Financial Officer Dyersburg State President Southeast Mat Company CLINT O. WILLIAMS Community College Highland Corporation President & CEO L. BURRELL HARRIS G. W. HAMPTON DAN ANDREWS Vice President DIRECTORS Chairman, President & CEO Bank Consultant Brown Insurance Group SaveTrust Federal JACK ALBRIGHT, JR. Savings Bank DON BARBER THOMAS E. LOONEY Retired Owner and Manager Attorney at Law Hale-Albright Men's Store JOHN H. HOFF Barber Oil Co. Looney & Looney Insurance Agent FRED BAIER, JR. Bradshaw & Company ROBERT BURKLOW J. ROBERT MITCHELL, JR. Owner Insurors Burklow & Associates Owner Farmers Seed Company Mitchell Drug Company JOHNNIE D. SORRELL DOUGLAS CHAPMAN FELIX R. DOWSLEY Vice President Senior Vice President RALPH PADGETT Retired SaveTrust Federal Savings First Citizens Bank Owner Dowsley Insurance and Bank Plateau Truck & Tractor Realty GEORGE S. MILES Company ------------------------- Financial Consultant and THOMAS D. DUNLAP ------------------------- Vice Chairman of the WILLIAM D. SELECMAN, Attorney and Landowner Board D.D.S. SECURITY TRUST FEDERAL First Citizens Bank Private Practice W. RALPH JONES, III SAVINGS & LOAN ASSOCIATION President KNOXVILLE, TN RICKY MORROW COSBY STONE Jones Manufacturing Owner Managing Partner Company LANNY T. PAYNE Morrow's Foodtown and TAP Publishing Company Chairman, President, and Dairy Queen Restaurant CHARLES R. LEWIS Chief Executive Officer ------------------------- Director Emeritus ANNETTE PEERY ------------------------- DIRECTORS President and CEO HAROLD W. MCLEARY, JR. First Citizens Bank FIRST STATE BANK Attorney at Law J. MICHAEL ANDERSON BROWNSVILLE, TN Director MARYLAND SPEARS CLINT O. WILLIAMS President Distributor JERE EAST President & CEO Hilltop Enterprises, Inc. Yogie's Purity Milk President Merchants State Bank MICHAEL SPITZER DIRECTORS ADVISORY DIRECTORS Attorney at Law Keaton, Turner, and KENNETH COZART JAMES ATKINS Spitzer Certified Public FRED BAIER, JR. Accountant JAMES CRENSHAW GLENN WOODALL LARRY FOWLKES Owner JERE EAST W. W. HASSELL Woodall Grading and President L. H. HERNDON, JR. Engraving Co., Inc. First State Bank J. GUS HICKS - ------------------------- ED JONES - ------------------------- C. THOMAS HOOPER, III Attorney at Law FIRST FEDERAL SAVINGS BANK MARYVILLE, TN ALLEN KING Farmer B. R. SULLIVAN President and CEO PATRICK H. MANN, JR. Attorney at Law DIRECTORS PETER MASCOLO DARRELL D. AKINS President President and Co-owner Kleer Vu Industries, Akins & Tombras of Inc. Knoxville RAILEY POWELL THOMAS B. CLICK President Owner Powell Hardwood McCammon Ammons Funeral Manufacturing Company Home
62 65 - --------------------------- --------------------------- --------------------------- --------------------------- - --------------------------- --------------------------- --------------------------- --------------------------- SECURITY TRUST FEDERAL UNITED SOUTHERN BANK FIRST STATE BANK THE BANK OF RECTOR SAVINGS & LOAN ASSOCIATION CLARKSDALE, MS (CONT'D) OF NEWPORT RECTOR, AR KNOXVILLE, TN (CONT'D) NEWPORT, AR LANNY T. PAYNE KENNETH O. WILLIAMS RONALD L. BENSON Chairman, President, and Owner TOMMY HARGROVE President Chief Executive Officer Swan Lake Farms President Security Trust Federal DIRECTORS Savings & Loan Association ADVISORY DIRECTORS DIRECTORS RONALD L. BENSON GLORIA S. RAY BATESVILLE, POPE AND SLEDGE MORRIS CRANDALL President Director Richard H. McMahan Farmer The Bank of Rector President M. M. Randolph Greater Knoxville Sports R. F. Rowsey, Jr. STEPHEN GRAHAM JOE CALVIN Corporation Dr. Jack B. Stewart, Jr. Farmer Attorney at Law Mary L. Troxler GEORGE H. RIEGER E. G. Walker, Jr. SHIRLEY HAIGWOOD DANNY FORD Director James S. Whitaker Farmer Glen Sain Motor Sales, Inc. President Southern Employee Benefit OLIVE BRANCH TOMMY HARGROVE DANNY HOLIFIELD Services Gilbert Allen President Farmer Lawrence Curbo First State Bank of Newport RANDY E. ROBERSON Gordon Davidson G. L. LIEBLONG Executive Vice President Ruth Gadd PHIL HOUT Chairman Security Trust Federal Harold Nichols Attorney at Law North Arkansas Bancshares, Savings & Loan Thomas Williams Inc. Association DAVID L. JOHNSTON DREW Retired (Banker) --------------------------- MICHAEL J. ROTHMAN James Steven Clark --------------------------- Director William J. Dubard G. L. LIEBLONG MERCANTILE BANK President Prentiss Lewis Chairman MAMMOTH SPRING, AR Nursing Careers, Inc. Dr. Travis Richardson North Arkansas Bancshares, A. W. Shurden Inc. BILL PACE J. ARMISTEAD SMITH Billy Joe Waldrup President Vice Chairman JOE DAVID SMITH Union Planters Corporation LAMBERT Veterinarian DIRECTORS President Danny Baxley Community Bank Group C. B. Cobb, Jr. ROBERT VANHOOK RICHARD GARRISON Ray C. Crawford Director and Owner Cattle Farmer - --------------------------- Barry S. Haynes Van Atkins/Campbell Bell - --------------------------- Newell Inman Stores BILL HASS MISSISSIPPI BANKING Robert K. Mehrle Attorney at Law SUBSIDIARIES FORREST WISE TUTWILER Retired (Industry) G. L. LIEBLONG FIRST NATIONAL BANK James Brand Chairman NEW ALBANY, MS Gus Berryhill --------------------------- North Arkansas Bancshares, Floyd Swindoll --------------------------- Inc. CHARLES P. DAVIS P. H. Thornton, III President & CEO BANK OF WEINER BILL PACE --------------------------- WEINER, AR President DIRECTORS --------------------------- Mercantile Bank ARKANSAS BANKING NILES BISE BILLY H. BRELAND SUBSIDIARIES President & CEO WENDELL RAGSDALE Certified Public Accountant MERCANTILE BANK Auto Parts Store JONESBORO, AR DIRECTORS CHARLES P. DAVIS --------------------------- President & CEO G. L. LIEBLONG NILES BISE --------------------------- First National Bank Chairman & CEO President & CEO MERCANTILE BANK Bank of Weiner HARDY, AR THOMAS H. HAMILTON, III DIRECTORS Salesman CHARLES E. GIVENS BOB EVINS MARYSTEL APPLETON Cart Well Company President JOE K. ROBBINS, JR. Bobilldick Farms President Dr. E. L. Hogue DIRECTORS Robbins Farms, Inc. ROY COOPER Physician Cooper Construction Company BOB EVINS LESTER F. SUMNERS JOHN MARCUS HOGUE President Attorney at Law JOHN FREEMAN Baskin-Robbins/Grizzly Mercantile Bank President and COO Adams BBQ - --------------------------- Mercantile Bank FLOYD HANNON, JR. - --------------------------- G. L. LIEBLONG Retired UNITED SOUTHERN BANK LYNN GREENE Chairman CLARKSDALE, MS Lynn Greene's Big Star North Arkansas Bancshares, KEVIN KING Inc. Attorney at Law C. WILLIS CONNELL, JR. TOMMY LAWRENCE Chairman & CEO Manager HERBERT ZIEGENHORN G. L. LIEBLONG Par 5, Inc. Farmer Chairman DIRECTORS North Arkansas Bancshares, G. L. LIEBLONG --------------------------- Inc. C. WILLIS CONNELL, JR. Chairman --------------------------- Chairman & CEO North Arkansas Bancshares, SEARCY COUNTY BANK --------------------------- United Southern Bank Inc. MARSHALL, AR --------------------------- ALABAMA BANKING WILLIS L. FRAZER J. C. MAHON NEIL WILKINS SUBSIDIARY President & COO Retired District Manager President STEINER BANK United Southern Bank Riceland Foods BIRMINGHAM, AL DIRECTORS FLETCHER S. HAYNES DR. EUGENE SMITH B. K. GOODWIN, III Farmer Retired President J. VIRGIL BLAIR President & CEO Arkansas State University Retired W. S. HEATON, JR. DIRECTORS Farmer M. G. SPURLOCK GEORGE E. DANIEL Farm Real Estate Daniel Hardware B. K. GOODWIN, III WILL LEWIS, JR. President & CEO Partner DR. DOUGLAS WOOD BOB DERICKSON Steiner Bank J. E. Neilson Company Wood, Wood & Young Vision Retired Clinic ARNOLD L. STEINER ED PEACOCK, III G. L. LIEBLONG Retired President President Chairman Steiner Bank United Southern Bank North Arkansas Bancshares, Clarksdale Office Inc. MARY S. STEINER M. P. STURDIVANT ANCIL MAYS President Buck Mays Dept. Store Due West Gin Co., Inc. NEIL WILKINS President Searcy County Bank
63 66 CORPORATE INFORMATION ANNUAL MEETING Thursday, April 28, 1994 at 10 a.m. Union Planters Administrative Center Assembly Room C 7130 Goodlett Farms Parkway Memphis, Tennessee 38018 CORPORATE OFFICES 7130 Goodlett Farms Parkway Memphis, TN 38018 (901) 383-6000 CORPORATE MAILING ADDRESS P.O. Box 387 Memphis, TN 38147 TRANSFER AGENT & REGISTRAR Union Planters National Bank Corporate Trust Operations 6200 Poplar Avenue Suite 300 Memphis, TN 38119 DIVIDEND PAYING AGENT Union Planters National Bank INDEPENDENT ACCOUNTANTS Price Waterhouse STOCK LISTINGS Common NYSE Symbol: UPC Wall Street Journal: Unplantr Series E Convertible Preferred NASDAQ NMS Symbol: UPCPO Wall Street Journal: Unplantr pfE FOR FINANCIAL INFORMATION CONTACT Jack W. Parker Executive Vice President and Chief Financial Officer (901) 383-6781 FORM 10-K Copies of the Corporation's Annual Report on Form 10-K as filed with the Securities and Exchange Commission are available on request by writing or calling the Marketing Division at (901) 383-6780. DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN The Plan allows Union Planters shareholders to reinvest their dividends in Union Planters common stock at a 5% discount from market. No brokerage commissions or service charges are paid by shareholders. The plan also permits those participating in the plan to buy additional shares with optional cash payments and no brokerage commissions. Full details are available by calling (901) 383-6960 or writing Union Planters Corporate Trust Operations. The Corporation's banking subsidiaries are members of the FDIC and are Equal Housing Lenders. UPC and its subsidiaries are Equal Opportunity Employers. 64 67 UNION PLANTERS CORPORATION P.O. BOX 387 MEMPHIS, TENNESSEE 38147 68 Description of map on inside front cover of the Annual Report The inside front cover of Exhibit 13 (Union Planters Corporation's Annual Report to Shareholders for 1993) contains a map of the states of Kentucky, Arkansas, Tennessee, Mississippi, and Alabama showing the headquarters of Union Planters Corporation and Union Planters National Bank; Union Planters National Bank Regional Branches; and Community Banks' Headquarters. EX-21 6 UNION PLANTERS SUBSIDIARIES OF THE REGISTRANT 1 UNION PLANTERS CORPORATION, Registrant, Exhibit 21 A bank holding company and a savings and loan holding company Page 1 of 2
Name of Registrant State or Jurisdiction Percentage of and Subsidiaries Under Laws of Which Organized Voting Securities Owned - ------------------ ----------------------------- ----------------------- Union Planters Corporation (Registrant) Tennessee Union Planters National Bank (a) United States (1) 99.90% Chickasaw Capital Corporation (b) Tennessee 100.00% Investment Group Mortgage Corporation (b and g) Tennessee 100.00% Union Planters Investment Bankers Corporation (a and g) Tennessee 100.00% Union Planters Investment Bankers Group, Inc. (c and g) Tennessee 100.00% UMIC, Inc. (c and g) Tennessee 100.00% UMIC Securities Corporation (c and g) Tennessee 100.00% Bank of Roane County (a) Tennessee 100.00% First National Bank of Crossville (a) United States 100.00% Merchants State Bank (a) Tennessee 100.00% Bank of Trenton and Trust Company (a) Tennessee 100.00% Fairless, Hinton & Harbert, Inc. (d) Tennessee 100.00% Southeastern Bancshares, Inc. (a) Tennessee 100.00% DeKalb County Bank & Trust Company (e) Tennessee 100.00% First Citizens Bank of Hohenwald (a) Tennessee 100.00% Citizens Bank, Cookeville, Tennessee (a) Tennessee 100.00% Pickett County Bank and Trust Company (a) Tennessee 100.00% United Southern Bank (a) Mississippi 100.00% First National Bank, New Albany, MS (a) United States 100.00% Cumberland City Bank (a) Tennessee 100.00% Citizens Bank & Trust Company, Wartburg, Tennessee (a) Tennessee 100.00% Steiner Bank (a) Alabama 100.00% Planters Life Insurance Company (f) Arizona 100.00% Guardian Realty Company (f) Alabama 100.00% North Arkansas Bancshares, Inc. (a) Arkansas 100.00% Mercantile Bank, Hardy (h) Arkansas 100.00% Mercantile Bank, Mammoth Spring (h) Arkansas 100.00% The Bank of Rector (h) Arkansas 100.00% Searcy County Bank (h) Arkansas 100.00% First State Bank, Newport (h) Arkansas 100.00% Mercantile Corporation (h) Arkansas 100.00% Advance Data (i) Arkansas 50.00% Mercantile Bank, Jonesboro (h) Arkansas 100.00% Mercantile Realty, Inc. (j) Arkansas 100.00% Bank of Weiner (h) Arkansas 100.00% First Federal Savings Bank of Maryville, Tennessee (a) United States 100.00% Foothills Financial Services (k) Tennessee 100.00% Southwestern Investment Company (a) Tennessee 100.00% Union Planters-Great American Acquisition Tennessee 100.00% Corporation (a and g) Bank of East Tennessee (a) Tennessee 100.00% Southeastern Credit Life Insurance Company (l) Arizona 100.00% Security Trust Federal Savings and Loan Association (a) United States 100.00% S.T. Service Corporation (m) Tennessee 100.00% Commerce Capital Corporation (m) Tennessee 100.00% SaveTrust Federal Savings Bank (a) United States 100.00% First Service Corporation (n) Tennessee 100.00%
2 UNION PLANTERS CORPORATION, Registrant, Exhibit 21 (Continued) Page 2 of 2 First State Bancshares, Inc. (a) Tennessee 100.00% First State Bank of Fayette County (o) Tennessee 100.00% First Cumberland Bank (a and g) Tennessee 100.00% Farmers Union Bank (a) Tennessee 100.00% Garrett Bancshares, Inc. (a) Tennessee 100.00% Bank of Goodlettsville (p) Tennessee 100.00% Erin Bank & Trust Company (a) Tennessee 100.00% First Financial Services, Inc. (a) Tennessee 100.00% First State Bank (q) Tennessee 100.00% First State Leasing, Inc. (r) Tennessee 100.00% Bank of Commerce, Woodbury, Tennessee (a) Tennessee 100.00% Bancom Services, Inc. (s and g) Tennessee 100.00% Central State Bancorp, Inc. Tennessee 100.00% Central State Bank (t) Tennessee 100.00% Mid-South Bancorp, Inc. (a) Kentucky 100.00% Simpson County Bank (u) Kentucky 100.00% Adairville Banking Company (u) Kentucky 100.00% General Trust Company (u) Tennessee 100.00% First Citizens Bank (u) Tennessee 88.22% The Peoples Bank of Elk Valley (u) Tennessee 99.01% Anderson County Bank (a) Tennessee 100.00% First National Bancorp of Shelbyville (a) Tennessee 100.00% First National Bank of Shelbyville (v) Tennessee 100.00% First Leasing Corp. of Shelbyville (w) Tennessee 100.00%
(1) Balance held by Directors of the Bank as directors' qualifying shares (a) Subsidiary of Union Planters Corporation (b) Subsidiary of Union Planters National Bank (c) Subsidiary of Union Planters Investment Bankers Corporation (d) Subsidiary of Bank of Trenton and Trust Company (e) Subsidiary of Southeastern Bancshares, Inc. (f) Subsidiary of Steiner Bank (g) Inactive subsidiary (h) Subsidiary of North Arkansas Bancshares, Inc. (i) A partnership of which Mercantile Corporation owns a 50% interest (j) Subsidiary of Mercantile Bank, Jonesboro (k) Subsidiary of First Federal Savings Bank of Maryville, Tennessee (l) Subsidiary of Bank of East Tennessee (m) Subsidiary of Security Trust Federal Savings and Loan Association (n) Subsidiary of SaveTrust Federal Savings Bank (o) Subsidiary of First State Bancshares, Inc. (p) Subsidiary of Garrett Bancshares, Inc. (q) Subsidiary of First Financial Services, Inc. (r) Subsidiary of First State Bank (s) Subsidiary of Bank of Commerce (t) Subsidiary of Central State Bancorp, Inc. (u) Subsidiary of Mid-South Bancorp, Inc. (v) Subsidiary of First National Bancorp of Shelbyville (w) Subsidiary of First National Bank of Shelbyville EX-23 7 UNION PLANTERS CONSENT OF PRICE WATERHOUSE 1 Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the previously filed Registration Statements on Form S-3 (No. 33-27814) and Form S-8 (Nos. 2-87392, 33-23306, 33-35928, and 33-53454) of Union Planters Corporation of our report dated January 20, 1994 appearing on page 34 of the Annual Report to Shareholders which is incorporated in this Annual Report on Form 10-K. PRICE WATERHOUSE Memphis, Tennessee March 24, 1994 -----END PRIVACY-ENHANCED MESSAGE-----