United States Securities and Exchange Commission
FORM 10-K Washington, D.C. 20549
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the fiscal year ended December 31, 1997
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from to
Commission file number 0-14277
FIRST COMMERCE BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Nebraska 47-0683029
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
NBC Center, 1248 O Street, Lincoln, NE 68508
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (402) 434-4110
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.20 Par Value; Class B Common Stock, $.20 Par Value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. X Yes 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 amend-
ment to this Form 10-K.
As of March 6, 1998, the aggregate market value of the common stock held by
non-affiliates of the registrant was $172.8 million. For purposes of this com-
putation only, the market value per share has been determined to be $29.875 for
Class A shares and $30.00 for Class B shares, which is the closing
price on March 6, 1998. "Affiliates" have been deemed to include all officers,
directors and persons or groups of persons who have filed a Schedule 13-D with
respect to the Company's common stock.
Indicate the number of shares outstanding of the registrant's classes of common
stock, as of the latest practicable date.
Class Outstanding at March 6, 1998
Class A Common Stock, $.20 Par Value 2,591,336 shares
Class B Common Stock, $.20 Par Value 10,938,951 shares
DOCUMENTS INCORPORATED BY REFERENCE
1997 Annual Report to Shareholders - Parts I, II and IV
Proxy Statement for Annual Shareholder's Meeting to be held April 21, 1998 -
Part III
INDEX
PART I
Page Number in:
Form Annual
10-K Report
ITEM 1. Business
General 3
Statistical Disclosures
Distribution of Assets, Liabilities and
Shareholder's Equity; Interest Rates and
Interest Differential ------------------------ -----30
Investment Portfolio 35
Loan Portfolio 36
Summary of Loan Loss Experience 39
Deposits 21, 30 & 43
Return on Equity and Assets 32
Short-term Borrowings 21
ITEM 2. Properties 14
ITEM 3. Legal Proceedings 14
ITEM 4. Submission of Matters to a Vote of Security
Holders 15
Executive Officers 15
PART II
ITEM 5. Market for the Registrant's Common Stock and
Related Stockholder Matters 16
ITEM 6. Selected Financial Data 16
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation 16
ITEM 7A. Quantitative and Qualitative Disclosures About
Market Risk 16
ITEM 8. Financial Statements and Supplementary Data 16
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 16
PART III
ITEM 10. Directors and Executive Officers of the
Registrant 17
ITEM 11. Executive Compensation 17
ITEM 12. Security Ownership of Certain Beneficial Owners
and Management 17
ITEM 13. Certain Relationships and Related Transactions 17
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 18
Signatures 20
PART I
Discussions of certain matters contained in this Annual Report on Form
10-K may constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "Reform
Act"), and as such, may involve risks and uncertainties. These
forward-looking statements relate to, among other things, expectations
of the business environment in which First Commerce Bancshares, Inc.
("First Commerce" or the "Company") operates, projections of future
performance, perceived opportunities in the market, and statements
regarding the Company's mission and vision. The Company's actual
results, performance and achievements may differ materially from the
results, performance and achievements expressed or implied in such
forward-looking statements.
ITEM 1. BUSINESS
General
First Commerce Bancshares, Inc. is a bank holding company having its
principal place of business in the NBC Center, 1248 O Street, Lincoln,
Nebraska 68508. First Commerce was incorporated under the laws of the
State of Nebraska on May 2, 1985. First Commerce owns the following
number of shares (excluding directors' qualifying shares held by
Directors of the Banks, as to which shares First Commerce is required
to repurchase upon the resignation of the individual director in
accordance with a repurchase agreement) and percentage of outstanding
shares of the following banks:
No. of Shares Percent
National Bank of Commerce Trust &
Savings Association, Lincoln, Nebraska 499,300 99.86%
First National Bank & Trust Co. of
Kearney, Nebraska 19,772.5 98.86%
Overland National Bank of
Grand Island, Nebraska 88,180 97.98%
Western Nebraska National Bank,
North Platte, Nebraska 30,746 99.37%
City National Bank and Trust Co.,
Hastings, Nebraska 9,920 99.20%
First National Bank of West Point,
Nebraska 4,800 96.00%
The First National Bank of McCook,
Nebraska 6,000 100.00%
As of December 31, 1997, First Commerce reported consolidated total
assets of $2,251,100,000, total deposits of $1,649,494,000 and total
stockholders' equity of $232,580,000.
As of December 31, 1997 First Commerce and its subsidiaries had a
staff of approximately 1,108 employees on a full-time equivalent
basis. First Commerce considers its employee relations to be good.
The National Bank of Commerce Trust and Savings Association offers
trust services to each of the communities in which First Commerce
subsidiary banks are located under the trade name of First Commerce
Trust Services.
National Bank of Commerce Trust & Savings Association (the "Lincoln
Bank")
The Lincoln Bank traces its origin through mergers and acquisitions to
1902, and has been engaged in the banking business continuously since
that date. The Lincoln Bank conducts a general commercial banking
business from its offices in the NBC Center in Lincoln, Nebraska. The
Lincoln Bank's business includes the usual banking functions of
accepting demand and time deposits, and the extension of personal,
agricultural, commercial, installment and mortgage loans. In
addition, the Bank operates a Trust Department, which provides both
personal trust and corporate financing services; a Correspondent Bank
Department, which serves approximately 300 banks in the surrounding
area; and a MasterCard/VISA Credit Card Department. To accommodate
its customers, the Lincoln Bank operates seven detached facilities and
53 automated "Bank In The Box" teller machines located throughout the
Lincoln area.
The Lincoln Bank has five active non-banking subsidiaries. The
Lincoln Bank owns all of the issued and outstanding stock of (1) First
Commerce Technologies, Inc., which provides data processing services
to the Lincoln Bank, to the other subsidiary banks, and to
approximately 255 other banks; (2) Peterson Building Corporation,
which owns and operates the Rampark Parking Garage located adjacent to
the NBC Center; (3) Commerce Court, Inc., which owns the Commerce
Court building located adjacent to the NBC Center; (4) First Commerce
Mortgage Company, a company engaged in the purchasing of residential
loans to be packaged for resale as mortgage-backed securities, while
retaining the servicing rights of the underlying mortgages; and (5)
Cabela's LLC (80% ownership of voting stock; 50% total ownership), a
company formed in 1995 with Cabela's, a catalog sales company, for the
purpose of issuing a "co-branded" credit card. This joint venture had
72,000 active accounts as of December 31, 1997.
Lincoln is the capital city of the State of Nebraska, and the second
largest city in the state. The population of Lincoln according to the
1990 census was 192,600. The Lincoln Bank is one of five commercial
banks located in the central business district of the city. Being the
capital city of the State of Nebraska, Lincoln is the site of most
state agencies, and Lincoln is also the site of the University of
Nebraska-Lincoln, Nebraska Wesleyan University, and Union College.
The largest single employment category in Lincoln is governmental
service.
First National Bank & Trust Co. of Kearney (the "Kearney Bank")
The Kearney Bank traces its origin through mergers and acquisitions to
1917, and has engaged in the banking business continuously since that
date. The Kearney Bank conducts a general commercial banking business
from its offices in Kearney, Nebraska. The Kearney Bank's business
includes the usual banking functions of accepting demand and time
deposits, the extension of personal, agricultural, commercial,
installment and mortgage loans.
The Kearney Bank is located on the northeast corner of First Avenue
and 21st Street in the southern part of the central business district
of Kearney. The main banking premises was constructed in 1976. The
Kearney Bank presently operates three detached facilities and 13
automated "Bank In The Box" teller machines located throughout the
Kearney area.
Overland National Bank of Grand Island (the "Grand Island Bank")
The Grand Island Bank was granted a national charter in 1934, and has
been engaged in the banking business continuously since that date.
The Grand Island Bank conducts a general commercial banking business
from its offices in Grand Island, Nebraska, including the usual
banking functions of accepting demand and time deposits, and the
extension of personal, installment, agricultural, commercial and
mortgage loans.
The Grand Island Bank is located on the northwest corner of Third and
Wheeler Streets in the center of the downtown business district of
Grand Island. The building housing the main banking offices was
constructed in 1959. Additionally, the Grand Island Bank owns and
operates two detached drive-up facilities. The Bank owns all
facilities. The Grand Island Bank operates 11 automated "Bank In The
Box" teller machines located in Grand Island.
The Grand Island Bank has a loan/deposit production office in Wood
River, Nebraska and in Cairo, Nebraska. An ATM machine is located at
each of these locations.
Western Nebraska National Bank (the "North Platte Bank")
The North Platte Bank opened for business on September 17, 1963, and
since that time has conducted a general commercial banking business
from its banking office in North Platte, Nebraska. The North Platte
Bank's business includes the usual banking functions of accepting
demand and time deposits and the extension of personal, agricultural,
commercial, installment and mortgage loans.
The North Platte Bank is located at the corner of Third and Dewey
Streets in the downtown business district of North Platte. The North
Platte Bank owns the land and building composing the banking premises.
The North Platte Bank owns and operates three detached facilities in
North Platte.
On March 31, 1995, the Company acquired Western Banshares, Inc. with
offices in Alliance and Bridgeport, Nebraska. The two offices were
merged into North Platte National Bank. The name of the bank was
changed to Western Nebraska National Bank. The two offices in Alliance
and Bridgeport now operate as branches of the Western Nebraska
National Bank.
The North Platte Bank has loan/deposit production offices in Hyannis,
Mullen, and Valentine, Nebraska. The Valentine and Mullen offices
will be acquired by the proposed Valentine Bank in the event that
regulatory approval is obtained. See Western Nebraska National Bank -
In Organization (the "Valentine Bank").
The North Platte Bank has nine automated "Bank In The Box" teller
machines in North Platte, one each in Alliance, Bridgeport, Thedford,
Hyannis, Mullen, and Valentine, Nebraska.
A new main bank facility opened in downtown North Platte in April
1997. Total cost of this new facility was approximately $5.8 million.
City National Bank and Trust Co. (the "Hastings Bank")
The Hastings Bank opened for business in January of 1934, and has been
engaged in the banking business continuously since that date. The
Hastings Bank conducts a general commercial banking business from its
offices in Hastings, Nebraska, including the usual banking functions
of accepting demand and time deposits and the extension of personal,
installment, agricultural, commercial, and mortgage loans.
The Hastings Bank is located on the northwest corner of Third and
Lincoln Streets in the northwest part of the downtown business
district of Hastings. The building housing the main banking offices
is owned by the Hastings Bank and was constructed in 1969. The
Hastings Bank also owns and operates one detached banking facility
which is located near the city's only retail shopping center
approximately three miles to the north, and 11 automated "Bank In The
Box" teller machines.
First National Bank of West Point (the "West Point Bank")
The West Point Bank was chartered in 1885, and has been engaged in the
banking business continuously since that date. The West Point Bank
conducts a general commercial banking business from its office at 142
South Main Street, West Point, Nebraska, including the usual banking
functions of accepting demand and time deposits, and the extension of
personal, installment, agricultural, commercial, and mortgage loans.
The West Point Bank has one loan/deposit production office in Snyder,
Nebraska.
The West Point Bank operates one automated "Bank In The Box" teller
machine in West Point and one in Snyder, Nebraska.
The West Point Bank is located in the central business district of
West Point. The building which houses the main offices was
constructed in 1964 and was added onto in 1993. The building is owned
by the West Point Bank.
The First National Bank of McCook (the "McCook Bank")
The McCook Bank was chartered in 1885, and has been engaged in the
banking business continuously since that date. The McCook Bank
conducts a general commercial banking business from its office at 108
West D Street, McCook, Nebraska, including the usual banking functions
of accepting demand and time deposits, and the extension of personal,
installment, agricultural, commercial, and mortgage loans. The McCook
Bank has no detached drive-up facility, but operates three automated
"Bank In The Box" teller machines in McCook; and one each in
Culbertson, Nebraska; Burlington, Colorado; and Goodland, Kansas.
The McCook Bank is located in the downtown business district of
McCook. The building which houses the Bank's offices was constructed
in 1975, and is owned by the McCook Bank.
The McCook Bank opened a loan production office in Goodland, Kansas in
1997, and opened a loan production office in Burlington, Colorado in
January 1998.
Western Nebraska National Bank - In Organization (the "Valentine
Bank")
On March 4, 1998, First Commerce caused to be filed an application to
charter a new national bank in Valentine, Nebraska. It is proposed
that the Valentine Bank acquire the assets and assume the deposits of
the North Platte Bank's loan/deposit production offices in Valentine
and Mullen, Nebraska. The charter and the deposit assumption are
subject to approval of the Comptroller of the Currency. In addition,
the Federal Deposit Insurance Corporation must approve the new bank
for deposit insurance and the Federal Reserve Board must approve the
acquisition of the stock of the Valentine Bank by First Commerce.
First Commerce expects to receive all of these approvals, although
there can be no assurance that these approvals will be obtained.
Non Bank Subsidiaries
First Commerce is the owner of the NBC Center. Construction of the
eleven-story building was completed in March of 1976. The Lincoln
Bank leases the lower level and five floors of the building. The
remaining area of the building is leased to the public.
First Commerce owns 6,000 shares, or 100%, of the issued shares of
Commerce Affiliated Life Insurance Company, a company engaged in
underwriting, as reinsurer, credit insurance sold in connection with
the extensions of credit by bank subsidiaries.
First Commerce owns all the stock of First Commerce Investors, Inc.
First Commerce Investors, Inc. was incorporated in 1987 to provide
investment advisory services in connection with the management and
investment of assets held by the Company's subsidiary banks in a
fiduciary capacity and to provide other investment advisory services.
As of October 1997, First Commerce converted the Lincoln Bank's common
trust funds into mutual funds. The funds are advised by First
Commerce Investors. Four funds were created, all under the name of
the Great Plains Family of Funds. There are two equity funds and two
bond funds, with an international fund to be created later in 1998.
At December 31, 1997, assets in these funds totaled $412 million.
First Commerce owns 50% of the stock of Community Mortgage Co. Woods
Brothers Realty, Inc. (a real estate agency) owns the other 50%.
Community Mortgage Co. originates and sells residential real estate
loans.
Competition
First Commerce faces intense competition from other commercial banks
in all activities. In addition, other financial institutions compete
throughout Nebraska and the Midwest for most of the services First
Commerce provides, particularly as a result of recent legislation and
technological developments. Thrift institutions, as well as finance
companies, leasing companies, insurance companies, mortgage bankers,
investment banking firms, pension trusts and others provide
competition for certain banking and financial services. First
Commerce's subsidiary banks also compete for interest-bearing funds
with money market mutual funds and issuers of commercial paper and
other securities.
The Nebraska Bank Holding Company Act permits bank holding companies
to own and operate more than one subsidiary bank. Under the law, an
acquisition by a bank holding company of additional subsidiary banks
is permitted so long as after consummation of the acquisition, the
subsidiary banks of such bank holding company do not exceed nine in
number (subject to certain statutory exceptions) and do not have
deposits greater than 14% of total deposits of all banks, thrift
institutions and savings and loan associations in the State of
Nebraska as determined by the Nebraska Director of Banking and Finance
as of the most recent calendar year end. At December 31, 1997, First
Commerce had total deposits of approximately $1,649,494,000 which is
below the limitation.
The Nebraska Banking Act permits statewide branching, but only if the
branch bank is established through the acquisition of or merger with
another bank which has been chartered for more than eighteen months,
and if the acquired bank is converted to a branch bank. Branches may
be established de novo but only if located within the city or town in
which the Bank's main office is located (except in Sarpy and Douglas
Counties). Effective March 27, 1992, banks located in Sarpy and
Douglas Counties, Nebraska, may establish an unlimited number of
branches in and between both counties; banks in Lancaster County
(which includes NBC) may establish up to nine branches within the city
limits of the community in which the main office is located; and banks
in all other counties may establish up to six branches within the city
limits of their respective community.
Out-of-state bank holding companies located anywhere in the United
States may acquire Nebraska banks or Nebraska bank holding companies.
(See "Federal Legislation" below.)
In 1996, First Bank Systems, a Minnesota based banking organization,
completed the purchase of FirsTier Financial, Inc., one of First
Commerce's major competitors in the Lincoln and Nebraska markets. In
1997, US Bancorp merged with First Bank Systems.
Federal Legislation
The federal Riegle-Neal Interstate Banking and Branching Efficiency
Act of 1994 increased the ability of bank holding companies, including
First Commerce, to make interstate acquisitions and to operate
subsidiary banks. Commencing September 29, 1995, adequately
capitalized and adequately managed bank holding companies were
permitted to make acquisitions of banks located anywhere in the United
States without regard to the provisions of any state laws that may
presently prohibit such acquisitions. Interstate acquisitions are not
permitted, however, if the potential acquirer would control more than
10 percent of the insured deposits in the United States or more than
30 percent of insured deposits in the home state of the bank to be
acquired or in any state in which such bank has a branch. States may
enact statutes increasing the 30% limit and may also lower such limit
if they do so on a non-discriminatory basis. Nebraska's limit of 14%
applies to both in-state and out-of-state holding companies. States
will also be permitted to prohibit acquisitions of banks that have
been established for fewer than five years. The Nebraska legislature
has enacted such a five-year requirement. The Board of Governors of
the Federal Reserve System is required to consider the applicant's
record under the federal Community Reinvestment Act in determining
whether to approve an interstate banking acquisition.
Effective June 1, 1997, the above statute also permitted interstate
branch banking in all states by adequately capitalized and adequately
managed banks. However, a state could enact specific legislation
before June 1, 1997, prohibiting interstate branch banking in that
state, in which event banks headquartered in the state will not be
permitted to branch into other states. The Nebraska legislature has
not enacted any such "opt-out" legislation. However, Nebraska has
prohibited de novo interstate branching and has prohibited the
acquisition of a branch, as opposed to a whole bank, by an out-of-
state bank. Applications for interstate branching authority will be
subjected to regulatory scrutiny of compliance with both federal and
state community reinvestment statutes with respect to all of the banks
involved in the proposed transaction.
The effect of this may be to permit the further consolidation of the
Nebraska banking community and the acquisition of Nebraska banks and
bank holding companies by larger regional bank systems or major money
center banks. This may result in increased competition for deposits
and profitable loans. Further, the regional bank systems and major
money center banks may be able to offer a broader variety of services
than those presently offered by Nebraska banks.
Supervision and Regulation; Effect of Government Policies
Banking is a highly regulated industry, with numerous federal and
state laws and regulations governing the organization and operation of
banks and their affiliates. As a bank holding company, First Commerce
is subject to regulation under the Bank Holding Company Act of 1956,
which requires First Commerce to register with the Federal Reserve
Board and subjects First Commerce to the Board's examination and
reporting requirements. The Act requires prior approval of the
Federal Reserve Board for bank acquisitions (which includes the
acquisition of substantially all of the assets of any bank, or
ownership or control of any voting shares of any bank, if, after such
acquisition, a bank holding company would own, directly or indirectly,
more than five percent of the voting shares of such bank). The Act
limits the ability of First Commerce to engage in, or to acquire
direct or indirect control of the voting shares of any company engaged
in any non-banking activity. One of the principal exceptions to this
limitation is for activities found by the Federal Reserve Board, by
order or regulation, to be so closely related to banking or managing
or controlling banks as to be a proper incident thereto (such as
making or servicing loans, performing certain data processing
services, providing certain trust, fiduciary and investment services,
and engaging in certain leasing transactions).
First Commerce is also registered as a bank holding company under the
Nebraska Bank Holding Company Act.
Federal law also regulates transactions among First Commerce and its
subsidiaries, including the amount of a banking affiliate's loans to,
or investments in, an affiliate and the amount of advances to third
parties collateralized by securities of an affiliate. In addition,
various requirements and restrictions under federal law regulate the
operations of First Commerce and its subsidiaries. These laws, among
other things, require the maintenance of reserves against deposits,
impose certain restrictions on the nature and terms of loans, restrict
investments and other activities, regulate mergers, the establishment
of branches and related operations, and subject the Subsidiary Banks
to regulation and examination by the FDIC and the Comptroller of the
Currency. Banks organized under federal law are limited in the amount
of dividends which they may declare--depending upon the amount of
their capital, surplus, income and retained earnings--and, in certain
instances, such national banks must obtain regulatory approval before
declaring any dividends. In addition, under the Bank Holding Company
Act of 1956 and the Federal Reserve Board's regulations, a bank
holding company and its subsidiaries are prohibited from engaging in
certain tie-in arrangements in connection with any extension of
credit, lease or furnishing of services.
The banking industry also is affected by the monetary and fiscal
policies of regulatory authorities, including the Federal Reserve
Board. Through open market securities transactions, variations of the
discount rate, and the establishment of reserve requirements, the
Federal Reserve Board exerts considerable influence over the cost and
availability of funds obtained for lending and investing, and the
rates of interest paid by banks on their time and savings deposits.
The monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of bank holding companies
and their subsidiary banks in the past and are expected to continue to
do so in the future. In view of changing conditions in the national
economy and in the money markets, as well as the effect of actions by
monetary and fiscal authorities, including the Federal Reserve Board,
no prediction can be made as to possible future changes in interest
rates, deposit levels, or loan demand or as to the impact of such
changes on the business and earnings of any bank or bank holding
company.
The Company's seven subsidiary banks are all chartered as national
banks and, therefore, fall under the supervision and regulation of
both the Comptroller of the Currency and the Federal Deposit Insurance
Corporation. The Federal Deposit Insurance Corporation Act of 1991
(FDICIA) includes a variety of supervisory measures. FDICIA
prescribed a system of prompt regulatory action when any financial
institution falls below minimum capital standards. FDICIA also
requires regulatory agencies to prescribe standards related to
internal operations and management, including "internal controls
information and audit systems," "loan documentation," "credit
underwriting," "interest rate exposure," "asset growth," and such
other operational and management standards as the agencies deem
appropriate. FDICIA also requires that regulatory agencies prescribe
compensation standards for executive officers, employees, directors,
and principal shareholders of insured depository institutions. FDICIA
authorizes regulatory agencies to treat as an "unsafe and unsound
practice" any failure by an institution to correct a deficiency that
leads to a "less-than-satisfactory" examination rating for asset
quality, management, earnings, or liquidity. This permits the
agencies to bring an enforcement action against the institution and
impose sanctions.
Federal Reserve Board's Regulation O governs loans to directors,
officers and principal shareholders of member banks and their related
interests. FDICIA imposed a cap on total extensions of credit to
insiders equal to 100% of the institution's capital, although the
Federal Reserve has recently increased the cap to 200% of capital for
adequately capitalized banks with less than $100 million in deposits.
Incorporated in FDICIA was the Truth-in-Savings Act which applies to
depository accounts offered by depository institutions. This act
imposes requirements concerning disclosure of terms, conditions, fees,
and yields to advertisements and general solicitations, to periodic
account statements, and to certain dealings between customers or
potential customers and a depository institution. The Act aims to
achieve standardization of the method of calculating an "annual
percentage yield" and provides for civil liability and administrative
enforcement mechanisms.
From time to time, various proposals are made in the United States
Congress and the Nebraska Legislature, and before various bank
regulatory authorities which would, among other things, alter the
powers of, and restrictions on: different types of banking
organizations; expand the authority of regulators over certain
activities of bank holding companies; require the application of more
stringent standards with respect to the acquisition of banks; expand
the powers of bank holding companies with respect to interstate
acquisitions; affect the non-banking and securities activities
permitted to banks or bank holding companies; or restructure part or
all of the existing regulatory framework for banks, bank holding
companies and other financial institutions. It is impossible to
predict whether new legislation or regulations will be adopted and the
impact, if any, on the business of First Commerce.
Dividends
Under applicable federal statutes, the approval of the Comptroller is
required if the total of all dividends declared by a national bank in
a calendar year exceeds the aggregate of the Bank's "net profits," as
defined, for that year and its retained net profits for the two
preceding years. Under this formula, First Commerce's subsidiary
banks could declare aggregate dividends as of December 31, 1997,
without the further approval of the Comptroller, of approximately
$20,672,000.
Under Federal Reserve Board policy, First Commerce is expected to act
as a source of financial strength to each subsidiary bank and to
commit resources to support such banks in circumstances where it might
not do so absent such policy.
The FDIC and the Comptroller have authority under federal law to take
certain enforcement actions against a national bank found to be
engaged in conduct which, in their opinion, constitutes an unsafe or
unsound banking practice. Depending upon the financial condition of
the bank in question, and other factors, the payment of dividends or
other payments might under some circumstances be considered by the
FDIC and/or the Comptroller to be an unsafe or unsound banking
practice. In such case, the Comptroller could, among other things,
commence cease and desist proceedings and the FDIC could commence a
proceeding to terminate deposit insurance.
Capital Requirements
The Company and its subsidiaries are subject to various regulatory
requirements administered by the federal banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory - and
possibly additional discretionary - actions by regulators that, if
undertaken, could have a direct material effect on the Company's
financial statements. The regulations require that the Company and
its banking subsidiaries meet specific capital adequacy guidelines
that involve quantitative measures of the Company's assets,
liabilities, and certain off-balance-sheet items as calculated under
regulatory practices. The Company's and its banking subsidiaries'
capital classifications are subject to qualitative judgments by the
regulators about components, risks weightings, and other factors.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") provides for, among other things, greater authority for the
appointment of a conservator or receiver for undercapitalized
institutions. The prompt corrective action regulations of the statute
specify five capital categories with the highest rating being "well
capitalized." Generally, to be "well capitalized" under the prompt
corrective action provisions, an institution must have Tier 1 capital
to risk weighted assets and total capital to risk weighted assets of
6% and 10%, respectively, and Tier 1 capital to quarterly average
assets of 5%. At December 31, 1997, each of the Company's
subsidiary banks exceeded the financial requirements for the "well
capitalized" category under such regulations.
The Federal Reserve Board has issued risk-based and leverage capital
guidelines for bank holding companies like First Commerce. The risk-
based guidelines define a two-tier capital framework. Generally, Tier
1 capital consists of common and qualifying preferred shareholders'
equity, less goodwill. Generally, Tier 2 capital consists of
mandatory convertible debt, subordinated debt and other qualifying
term debt, preferred stock not qualifying for Tier 1 and the allowance
for loan losses, subject to certain limitations. The regulatory
minimum ratio for total capital is 8%, of which 4% must be Tier 1
capital. In addition, the minimum leverage ratio of Tier 1 capital to
quarterly average assets is 4%. On December 31, 1997, First
Commerce's total capital ratio was 14.9%, its Tier 1 ratio was 13.5%,
and its Tier 1 leverage ratio was 9.7%.
Foreign Operations
The Company and its subsidiaries do not engage in any material foreign
activities.
ITEM 2. PROPERTIES
First Commerce owns its headquarters building, the NBC Center, which
is located at 1248 O Streets, Lincoln, Nebraska, in the downtown
central business district of the city. Construction of the eleven-
story building was completed in March 1976. The Lincoln Bank leases
the lower level and five additional floors of the building. The
remaining area of the building is leased to the public.
At December 31, 1997, First Commerce's subsidiary financial
institutions operated a total of seven main banking houses (including
the Lincoln Bank's NBC Center location), 18 detached facilities, and
114 automated teller machines. All of the facilities are owned by the
respective banks, with the exception of the Lincoln Bank which is
housed in the First Commerce owned NBC Center.
Additional information with respect to premises and equipment is
presented on Page 20 of the Notes to Financial Statements in First
Commerce's 1997 Annual Report to Shareholders, which is incorporated
herein by reference.
For additional description of property owned and operated by First
Commerce and each subsidiary, see Item 1.
ITEM 3. LEGAL PROCEEDINGS
The nature of the business of First Commerce involves, at times, a
certain amount of litigation against First Commerce and its
subsidiaries involving matters arising in the ordinary course of
business; however, in the opinion of the management of First Commerce,
there are no proceedings pending to which First Commerce or any of its
subsidiaries is a party, or which its property is subject, which, if
determined adversely, would be material in relation to the financial
condition of First Commerce.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of First Commerce's security
holders during the fourth quarter of the fiscal year covered by this
report.
Executive Officers of the Registrant
The present executive officers of First Commerce, their respective
ages and the year each was first elected an officer, are set forth in
the following table:
Present Office Year First
Name Age or Position Elected Officer
James Stuart, Jr. 55 Chairman and Chief 1973
Executive Officer
Brad Korell 49 Executive Vice President 1990
Stuart Bartruff 43 Executive Vice President 1987
and Secretary (Principal
Financial Officer)
Mark Hansen 42 Senior Vice President 1994
Donald Kinley 47 Vice President and Treasurer 1977
(Principal Accounting Officer)
The occupations of the executive officers for the last five years are
as follows:
James Stuart, Jr. was elected Chairman of the Board and Chief
Executive Officer on January 19, 1988. Mr. Stuart, Jr. had served as
President and Chief Executive Officer of First Commerce since May 3,
1985. Mr. Stuart, Jr. also serves as Chairman and Chief Executive
Officer of the Lincoln Bank, Chairman of the North Platte Bank, and as
a director of the remaining subsidiary banks except the West Point
Bank.
Brad Korell has served as Executive Vice President of First Commerce
and as President of the Lincoln Bank since March 7, 1990. Prior to
March 1990, Mr. Korell had served as Executive Vice President and
Senior Loan Officer of the Lincoln Bank since December 1987.
Stuart Bartruff has served as Executive Vice President and Secretary
since April of 1994. Prior to April, 1994, Mr. Bartruff served as
Senior Vice President-Loan Services since 1988 and was elected
Secretary in May of 1992.
Mark Hansen was elected Senior Vice President of First Commerce on
June 21, 1994. Mr. Hansen has been an employee of the National Bank
of Commerce since 1977, beginning as a Loan Analyst and being promoted
to Corporate Lending Officer in 1980, Corporate Banking Manager in
1986, Senior Lender Officer in 1990, and Executive Vice President of
National Bank of Commerce in 1992, a title he still holds.
Donald Kinley was elected as Vice President and Treasurer in April
1993. Prior to that Mr. Kinley served as Vice President and Assistant
Treasurer for more than five years.
No family relationships exist between any of the executive officers.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Incorporated by reference from the First Commerce Annual Report to
Shareholders for the Year Ended December 31, 1997, Page 1 and Page 29.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from the First Commerce Annual Report to
Shareholders for the Year Ended December 31, 1997, Pages 30-33.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
Incorporated by reference from the First Commerce Annual Report to
Shareholders for the Year Ended December 31, 1997, Pages 34 through
47, and captioned as "Management's Discussion and Analysis."
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Incorporated by reference from the First Commerce Annual Report to
Shareholders for the Year Ended December 31, 1997, Pages 39 through
42, and captioned "Management's Discussion and Analysis--Market Risk."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference from the First Commerce Annual Report to
Shareholders for the Year Ended December 31, 1997, Pages 12 through
28.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the First Commerce Proxy Statement for
the Annual Meeting of Shareholders to be held April 21, 1998, under
the caption "1. Election of Class I Directors" commencing on Page 2.
For information concerning the Executive Officers, see Item 4 at Page
13.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the First Commerce Proxy Statement for
the Annual Meeting of Shareholders to be held April 21, 1998, under
the caption "Executive Compensation and Other Information."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the First Commerce Proxy Statement for
the Annual Meeting of Shareholders to be held April 21, 1998, under
the captions "Principal Shareholders" and "1. Election of Class I
Directors."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the First Commerce Annual Report to
Shareholders for the Year Ended December 31, 1997, Page 23, Footnote M
and incorporated by reference from the First Commerce Proxy Statement
for the Annual Meeting of Shareholders to be held April 21, 1998,
under the caption "Executive Compensation and Other Information."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
Financial Statements Page Reference
in Annual Report
to Shareholders *
Consolidated Balance Sheets as of December 31, 1997 and 1996 12
Consolidated Statements of Income for the
Three Years Ended December 31, 1997 13
Consolidated Statements of Stockholders'
Equity for the Three Years Ended December 31, 1997 14
Consolidated Statements of Cash Flows for
the Three Years Ended December 31, 1997 15
Notes to Consolidated Financial Statements 16
Independent Auditors' Report 28
Condensed financial statements for parent company only may be found in the Notes
to Consolidated Financial Statements, Note P, Pages 25 and 26. All other
schedules have been omitted because the required information is
presented in the financial statements or in the notes thereto, the amounts
involved are not significant or the required subject matter is not applicable.
* These items are included in First Commerce's 1997 Annual Report to Share-
holders on the pages indicated and are hereby incorporated by reference in this
Form 10-K. First Commerce's 1997 Annual Report to Shareholders is
an integral part of this Form 10-K.
Reports on Form 8-K
There were no Form 8-K's filed in the fourth quarter of 1997.
Exhibits
The following Exhibit Index lists the Exhibits to Form 10-K.
Exhibit Number Page No. or Incorporation
by Reference to
(3) Articles of Incorporation and By-Laws:
(a) Articles of Incorporation of First Commerce Exhibit 3.1 to Form S-1
Bancshares, Inc. No. 2-97513*
(b) Amendment to Articles of Incorporation dated Exhibit 3.1(a) to Form 8-K
October 19, 1993. dated October 19, 1993*
(c) Amendment to Articles of Incorporation dated Exhibit 3 (c) to Form S-4
April 19, 1994 No. 33-81190*
(d) By-Laws of First Commerce Bancshares, Inc. Exhibit 3.1 to Form S-1
No. 2-97513*
(4) Form of Indenture (including form of Capital Note) Exhibit 4(A) to Form S-1
relating to the issuance of $26,500,000 principal No. 33-47328*
amount of Capital Notes issued in Series between the
Registrant and Norwest Bank Nebraska, N.A., as Trustee.
(9) Not applicable.
(10)Material contracts.
(a) First Commerce Supplemental Executive
Retirement and Deferred Compensation Plan Exhibit 10(c) to Form 10-K
and Trust Agreement. for the year ended Decem-
ber 31, 1992.*
(b) Deferred Compensation Plan and Exhibit 10(d) to Form 10-K
Deferred Compensation Trust Agreement for the year ended Decem-
dated April 2, 1993 between ber 31, 1993.*
the Company and Bradley F. Korell.
(c) Deferred Compensation Plan and Deferred Exhibit 10(d) to Form 10-K
Compensation Trust Agreement dated April 2, 1993 for the year ended Decem-
between the Company and Mark W. Hansen. ber 31, 1993.*
(d) Deferred Compensation Plan and Deferred Exhibit 10(d) to Form 10-K
Compensation Trust Agreement dated April for the year ended Decem-
2, 1993 between the Company and Stuart ber 31, 1993.*
L. Bartruff.
(e) Dividend Reinvestment Plan and Employee Stock Exhibit 1 to Form 8-K
Purchase Plan. dated December 15, 1995.*
(11) Not applicable.
(12) Not applicable.
(13) Annual Report to Security Holders.
(16) Not applicable.
(18) Not applicable.
(19) Not applicable.
(22) Subsidiaries of the Registrant. See Item 1, Page 3.
(23) Not applicable.
(24) Not applicable.
(25) Not applicable.
(28) Not applicable.
(29) Not applicable.
*Exhibit has heretofore been filed with the Securities and Exchange Commission
and is incorporated herein as an exhibit by reference.
Financial Statement Schedules
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 14 (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.
FIRST COMMERCE BANCSHARES, INC.
By: James Stuart, Jr. Date: March 17, 1998
James Stuart, Jr.
Chairman, Chief Executive Officer
and Director
By: Stuart Bartruff Date: March 17, 1998
Stuart Bartruff
Executive Vice President and Secretary
(Principal Financial Officer)
By: Donald Kinley Date: March 17, 1998
Donald Kinley
Vice President and Treasurer
(Principal Accounting Officer)
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 and on the dates indicated.
David T. Calhoun Date: March 17, 1998
David T. Calhoun, Director
Connie Lapaseotes Date: March 17, 1998
Connie Lapaseotes, Director
___________________________ Date:
John G. Lowe, III, Director
John C. Osborne Date: March 17, 1998
John C. Osborne, Director
Richard C. Schmoker Date: March 17, 1998
Richard C. Schmoker, Director
William C. Schmoker Date: March 17, 1998
William C. Schmoker, Director
Kenneth W. Staab Date: March 17, 1998
Kenneth W. Staab, Director
Date:
James Stuart, Director
James Stuart, Jr. Date: March 17, 1998
James Stuart, Jr., Director
James Stuart, III Date: March 17, 1998
James Stuart, III, Director
Scott Stuart Date: March 17, 1998
Scott Stuart, Director