EXHIBIT 13(A)
Consolidated Financial Statements
FIRST FINANCIAL CORPORATION
December 31, 1993
CONSOLIDATED BALANCE SHEETS
FIRST FINANCIAL CORPORATION
December 31,
1993 1992
----------------------
(In Thousands)
ASSETS
Cash $ 63,241 $ 62,114
Federal funds sold 21,873 29,100
Interest-earning deposits 25,768 31,067
CASH AND CASH EQUIVALENTS 110,882 122,281
Securities available-for-sale (at fair value):
Investment securities 84,487
Mortgage-related securities 178,362
Securities held-to-maturity:
Investment securities (fair value of
$143,448,000--1993 and $104,949,000--1992) 143,568 103,633
Mortgage-related securities (fair value of
$1,160,230,000--1993 and $1,314,270,000
--1992) 1,147,891 1,301,589
Loans receivable:
Held for sale 73,919 54,840
Held for investment 2,848,585 2,155,877
Foreclosed properties and repossessed
assets 6,817 14,198
Real estate held for investment or sale 16,810 17,101
Office properties and equipment 50,120 42,367
Intangible assets, less accumulated
amortization 31,392 23,278
Other assets 81,800 73,122
$4,774,633 $3,908,286
December 31,
1993 1992
----------------------
(In Thousands)
LIABILITIES
Deposits $4,050,520 $3,206,112
Borrowings 438,598 461,948
Advance payments by borrowers for
taxes and insurance 13,805 11,521
Other liabilities 37,025 34,610
TOTAL LIABILITIES 4,539,948 3,714,191
STOCKHOLDERS' EQUITY
Serial preferred stock, $1 par value,
3,000,000 shares authorized; none
outstanding
Common stock, $1 par value, 30,000,000
shares authorized; shares issued and
outstanding: 23,586,827--1993;
23,266,414--1992 23,587 23,266
Additional paid-in capital 27,340 26,749
Net unrealized holding gain on securi-
ties available-for-sale 2,701
Retained earnings (substantially
restricted) 181,057 144,080
TOTAL STOCKHOLDERS' EQUITY 234,685 194,095
-------- --------
$4,774,633 $3,908,286
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
FIRST FINANCIAL CORPORATION
Year Ended December 31,
1993 1992 1991
-----------------------------------------
(In Thousands,
Except Per Share Amounts)
Interest income:
Mortgage loans $160,372 $131,206 $143,574
Mortgage-related securities 86,052 83,040 67,650
Other loans 81,272 73,148 75,204
Investments 12,427 9,477 13,653
TOTAL INTEREST INCOME 340,123 296,871 300,081
Interest expense:
Deposits 169,741 174,042 199,768
Borrowings 19,993 7,854 3,981
TOTAL INTEREST EXPENSE 189,734 181,896 203,749
NET INTEREST INCOME 150,389 114,975 96,332
Provision for losses on loans 10,219 13,851 18,333
NET INTEREST INCOME AFTER PROVISIONS
FOR LOSSES ON LOANS 140,170 101,124 77,999
Non-interest income:
Loan fees and service charges 8,879 8,566 8,223
Deposit account service fees 7,567 5,933 5,053
Insurance and brokerage sales commissions 6,276 5,666 5,681
Service fees on loans sold 5,233 4,395 6,920
Net gain on sale of mortgage loans 7,997 4,859 3,241
Net gain (loss) on sale of securities
available-for-sale (422) 41 2,319
Other 2,191 2,749 2,894
TOTAL NON-INTEREST INCOME 37,721 32,209 34,331
177,891 133,333 112,330
Non-interest expense:
Compensation, payroll taxes and other
employee benefits 43,765 37,177 34,047
Occupancy 7,534 5,973 6,558
Data processing 7,462 6,622 6,339
Federal deposit insurance premiums 7,341 6,968 6,276
Amortization of intangible assets 6,427 3,713 2,790
Loan expense 6,059 4,234 3,947
Furniture and equipment 5,256 3,902 3,754
Telephone and postage 5,068 4,668 4,683
Marketing 3,801 2,572 3,077
Net cost of operations of foreclosed
properties 3,501 4,772 2,703
Other 9,590 8,110 7,221
TOTAL NON-INTEREST EXPENSE 105,804 88,711 81,395
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE 72,087 44,622 30,935
Income taxes 26,872 16,190 12,409
INCOME BEFORE CUMULATIVE EFFECT OF
A CHANGE IN ACCOUNTING PRINCIPLE 45,215 28,432 18,526
Cumulative effect on prior years of changing
the method of accounting for income taxes 5,600
NET INCOME $ 45,215 $ 34,032 $ 18,526
Earnings per share:
Primary:
Income before cumulative effect of a
change in accounting principle $ 1.88 $ 1.21 $ .80
Cumulative effect of accounting change .24
NET INCOME $ 1.88 $ 1.45 $ .80
Fully Diluted:
Income before cumulative effect of a
change in accounting principle $ 1.86 $ 1.19 $ .79
Cumulative effect of accounting change .24
NET INCOME $ 1.86 $ 1.43 $ .79
Dividends paid per share $ .35 $ .22 $ .16
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FIRST FINANCIAL CORPORATION
Net
Unrealized
Holding
Gain On
Additional Securities Total
Common Paid-In Available Retained Stockholders'
Stock Capital For Sale Earnings Equity
-------------------------------------------------------------
(In Thousands)
Balances at January 1, 1991 $22,979 $26,295 $100,302 $149,576
Net income 18,526 18,526
Cash dividends ($.16 per share) (3,682) (3,682)
Exercise of stock options 59 56 115
BALANCES AT DECEMBER 31, 1991 3,038 26,351 115,146 164,535
Net income 34,032 34,032
Cash dividends ($.22 per share) (5,098) (5,098)
Exercise of stock options 228 398 626
BALANCES AT DECEMBER 31, 1992 23,266 26,749 144,080 194,095
Net income 45,215 45,215
Cash dividends ($.35 per share) (8,238) (8,238)
Net unrealized holding gain
recognized upon reclassifi-
cation of securities to
available-for-sale portfolio
at December 31, 1993, net of
deferred income taxes of
$1,842,000 $ 2,701 2,701
Exercise of stock options 321 591 912
BALANCES AT DECEMBER 31, 1993 $23,587 $27,340 $ 2,701 $181,057 $234,685
See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FIRST FINANCIAL CORPORATION
Year Ended December 31,
1993 1992 1991
------------------------------------------------------
(In Thousands)
OPERATING ACTIVITIES
Net income $ 45,215 $ 34,032 $ 18,526
Adjustments to reconcile net income
to net cash provided by operating
activities:
Cumulative effect of change in
accounting principle (5,600)
Decrease (increase) in accrued
interest on loans 3,678 (107) 1,989
Decrease in accrued interest on
deposits (1,670) (3,783) (2,053)
Mortgage loans originated for sale (599,126) (392,515) (157,571)
Proceeds from sales of mortgage
loans held for sale 648,282 495,573 299,278
Provision for depreciation 5,516 4,441 4,044
Provision for losses on loans 10,219 13,851 18,333
Provision for losses on real
estate and other assets 3,564 5,019 3,082
Amortization of cost in excess of
acquired businesses 554 592 628
Amortization of core deposit
intangibles 5,873 3,121 2,162
Amortization of purchased mortgage
servicing rights 1,283 2,566 1,637
Net gain on sales of loans and other
assets (7,772) (5,023) (6,027)
Other (7,523) (72) (7,618)
NET CASH PROVIDED BY OPERATING ACTIVITIES 108,093 152,095 176,410
INVESTING ACTIVITIES
Proceeds from sales of investment
securities available-for-sale 45,000 20,012
Proceeds from maturities of investment
securities held-to-maturity 60,886 213,480 395,650
Purchases of available-for-sale
investment securities (80,000)
Purchases of investment securities held-
to-maturity (126,409) (280,109) (311,736)
Proceeds from sales of mortgage-related
securities available-for-sale 81,287 853 156,825
Principal payments received on
mortgage-related securities 364,046 287,538 137,152
Purchases of mortgage-related securities (240,640) (696,206) (616,306)
Proceeds from sale of consumer loans 30,679
Principal collected on loans
receivable 575,093 394,627 339,764
Loans originated for portfolio (1,029,303) (740,708) (359,258)
Additions to office properties and
equipment (5,546) (6,538) (5,314)
Proceeds from sales of foreclosed
properties and repossessed assets 17,832 22,763 13,259
Proceeds from sales of real estate
held for investment 293 569 3,897
CONSOLIDATED STATEMENTS OF CASH FLOWS--Continued
FIRST FINANCIAL CORPORATION
Year Ended December 31,
1993 1992 1991
--------------------------------------------
(In Thousands)
INVESTING ACTIVITIES--Continued
Business acquisitions, net of cash and
cash equivalents acquired of $443,795,000--
1993; $316,401,000--1992
Loans receivable (316,305) (146)
Investment securities held-to-maturity (22,775)
Mortgage-related securities available-
for-sale (81,287)
Mortgage-related securities held-to-
maturity (145,098)
Office properties and equipment (8,445) (397)
Real estate held for investment (3,400)
Intangible assets (14,541) (6,603)
Deposits and related accrued interest 970,162 327,134
Borrowings 71,897
Other--net (9,813) (187)
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 106,334 (467,318) (215,388)
FINANCING ACTIVITIES
Net increase (decrease) in deposits (124,084) (52,884) 54,484
Increase (decrease) in advance payments by
borrowers for taxes and insurance 831 2,572 (1,294)
Decrease in short-term borrowings (12,000) (3,700)
Proceeds of borrowings 826,500 1,014,920 97,500
Repayments of borrowings (921,747) (618,215) (76,908)
Proceeds from exercise of stock options 912 626 115
Payments of cash dividends to stockholders (8,238) (5,098) (3,682)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (225,826) 329,921 66,515
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (11,399) 14,698 27,537
Cash and cash equivalents at beginning of year 122,281 107,583 80,046
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 110,882 $ 122,281 $ 107,583
Supplemental disclosure of cash flow information:
Cash paid or credited to accounts during
period for:
Interest on deposits and borrowings $ 190,806 $ 184,310 $ 206,573
Income taxes 28,399 19,738 12,463
Non-cash investing activities:
Investment securities transferred to
available-for-sale portfolio (at amortized
cost) 48,338 20,012
Mortgage-related securities transferred
to available-for-sale portfolio (at
amortized cost) 175,383 812 154,506
Mortgage loans transferred to loans
held for sale portfolio 60,238 114,978 162,707
Loans receivable transferred to
foreclosed properties 7,350 14,963 9,710
See notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FIRST FINANCIAL CORPORATION
December 31, 1993
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business: First Financial Corporation (the Corporation) provides
a full range of financial services to individual customers
through its subsidiaries in Wisconsin and Illinois. The
Corporation is subject to competition from other financial
institutions. The Corporation and its subsidiaries also are
subject to the regulations of certain federal and state agencies
and undergo periodic examinations by those regulatory
authorities.
Basis Of Financial Statement Presentation: The consolidated
financial statements have been prepared in accordance with
generally accepted accounting principles and include the accounts
of the Corporation and its wholly-owned subsidiaries, First
Financial Bank, FSB (First Financial) and First Financial - Port
Savings Bank, FSB (Port), collectively the Banks, and their
subsidiaries, all of which are wholly-owned. Significant
intercompany accounts and transactions have been eliminated.
Investments in joint ventures, which are not material, are
accounted for on the equity method.
In preparing financial statements, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and
revenues and expenses for the period. Actual results could
differ significantly from those estimates. Material estimates
that are particularly susceptible to significant change in the
near-term relate to the determination of the allowance for loan
losses, the valuation of real estate acquired in connection with
foreclosures or in satisfaction of loans as well as the valuation
of intangible assets. In connection with the determination of the
allowance for loan losses and real estate owned, management
obtains independent appraisals for significant properties.
Investment And Mortgage Related Securities Held-To-Maturity And
Available-For-Sale: Management determines the appropriate
classification of debt securities at the time of purchase and
reevaluates such designation as of each balance sheet date. Debt
securities are classified as held-to-maturity when the
Corporation has the positive intent and ability to hold the
securities to maturity. Held-to-maturity securities are stated
at amortized cost.
Debt securities not classified as held-to-maturity are classified
as available-for-sale. Available-for-sale securities are stated
at fair value, with the unrealized gains and losses, net of tax,
reported as a separate component of stockholders' equity as of
December 31, 1993.
The amortized cost of debt securities classified as held-to-
maturity or available-for-sale is adjusted for amortization of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
premiums and accretion of discounts to maturity, or in the case
of mortgage-related securities, over the estimated life of the
security. Such amortization is included in interest income from
the related security.
Interest and dividends are included in interest income from the
related securities. Realized gains and losses, and declines in
value judged to be other-than-temporary are included in net
securities gains (losses). The cost of securities sold is based
on the specific identification method.
Short-term securities include certificates of deposit, commercial
paper, banker's acceptances and similar instruments.
The Corporation considers its interest-earning deposits which
have original maturities of three months or less to be cash
equivalents.
Interest, Fees, And Discounts On Loans: Interest on loans is
recorded using the accrual method. Allowances ($651,000--1993;
$1,193,000--1992) are established for uncollected interest on
loans for which any payments are more than 90 days past due.
Loan origination and commitment fees and certain direct loan
origination costs are being deferred and the net amounts
amortized as an adjustment to the related loan's yield. The
Corporation is amortizing these amounts, using the level yield
method, over the contractual life of the related loans.
Unearned discounts on consumer, home improvement and manufactured
housing loans are amortized over the term of the loans using a
method which approximates the level yield method.
The discounts on loans of acquired businesses are being amortized
using the level yield method, adjusted for prepayments.
Loans Held For Sale: Loans held for sale are recorded at the
lower of aggregate cost or market value and generally consist of
current production of certain fixed-rate first mortgage loans.
Fees received from the borrower are deferred and recorded as an
adjustment of the sales price.
Fees For Loans Serviced For Others: Servicing fees, on loans
sold to and serviced for others, are recognized when related loan
payments are received. Any premium or discount recorded at the
time of sale (reflecting the present value of the difference
between the contractual interest rate of the loans sold and the
yield to the investor, adjusted for an estimated normal servicing
fee) is recognized in loan servicing income over the estimated
lives of the related loans using the level yield method adjusted
periodically for prepayments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Purchased servicing rights resulting from the valuation of loan
servicing acquired in business acquisitions or in the purchase of
loan servicing rights from other financial institutions are
amortized over the estimated lives of the loans using the level
yield method, adjusted for prepayments and are shown as a
reduction of "Servicing Fees on Loans Sold" in the consolidated
statements of income.
Foreclosed Properties And Repossessed Assets: Real estate and
manufactured homes which were acquired by foreclosure or by deed
in lieu of foreclosure and other repossessed assets are carried
at the lower of cost or fair value. Costs relating to the
development and improvement of property are capitalized; holding
costs are charged to expense.
Allowances For Losses: Allowances for losses on loans,
foreclosed properties and repossessed assets are established when
a loss is probable and can be reasonably estimated. These
allowances are provided based on past experience and on
prevailing market conditions. Management's evaluation of loss
considers various factors including, but not limited to, general
economic conditions, loan portfolio composition, prior loss
experience, estimated sales price and holding and selling costs.
A substantial portion of the Banks' loans are collateralized by
real estate in Wisconsin and Illinois. Accordingly, the ultimate
collectibility of a substantial portion of the Banks' loan
portfolio and the recovery of a substantial portion of the
carrying amount of real estate owned are susceptible to changes
in market conditions in Wisconsin and Illinois.
Management believes that the allowances for losses on loans,
foreclosed properties and repossessed assets are adequate. While
management uses available information to recognize losses, future
additions to the allowances may be necessary based on changes in
economic conditions. In addition, various regulatory agencies,
as an integral part of their examination process, periodically
review the Banks' allowances for losses. Such agencies may
require the Banks to recognize additions to the allowances based
on their judgments of information available to them at the time
of their examination.
Real Estate Held For Investment Or Sale: Real estate held for
investment or sale includes land, buildings and equipment. These
investments are carried at the lower of initial cost plus
capitalized development period interest and real estate taxes,
less accumulated depreciation, or estimated fair value.
Depreciation And Amortization: The cost of office properties and
equipment and real estate held for investment or sale is being
depreciated principally by the straight-line method over the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
estimated useful lives of the assets. The cost of leasehold
improvements is being amortized on the straight-line method over
the lesser of the term of the respective lease or estimated
economic life.
Intangible Assets: The cost in excess of net assets of acquired
businesses is being amortized over twenty to twenty-five years
using the straight-line and accelerated methods. The cost in
excess of net assets of acquired businesses, aggregating
$3,070,000 and $3,624,000 at December 31, 1993 and 1992,
respectively, is net of accumulated amortization.
The premiums resulting from the valuation of core deposits
acquired in business combinations or in the purchase of branch
offices are amortized over the estimated useful life of seven to
ten years using the level yield method. Core deposit
intangibles, aggregating $28,322,000 and $19,654,000 at
December 31, 1993 and 1992, respectively, are net of accumulated
amortization.
Income Taxes: The Corporation and its subsidiaries file a
consolidated federal income tax return and separate state income
tax returns. Financial statement provisions are made in the
income tax expense accounts for deferred taxes applicable to
income and expense items reported in different periods than for
income tax purposes.
The Corporation accounts for income taxes using the liability
method. Deferred income tax assets and liabilities are adjusted
regularly to amounts estimated to be receivable or payable based
on current tax law and the Corporation's tax status.
Consequently, tax expense in future years may be impacted by
changes in tax rates and tax return limitations.
Earnings Per Share: Primary and fully diluted earnings per share
are based on the weighted average number of common shares
outstanding during each period and common equivalent shares
(using the treasury share method) outstanding at the end of each
period, as adjusted for two-for-one stock splits in 1993 and
1992. The Corporation's common equivalent shares consist
entirely of stock options. The resulting number of shares used
in computing primary earnings per share in 1993, 1992 and 1991 is
24,112,000, 23,498,000 and 23,114,000, respectively. The
resulting number of shares used in computing fully diluted
earnings per share in 1993, 1992 and 1991 is 24,369,000,
23,860,000 and 23,395,000, respectively.
Accounting Changes: Effective January 1, 1992, the Corporation
changed its method of accounting for income taxes from the
deferred method to the liability method required by Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." As permitted under this statement, prior years'
financial statements were not restated. The cumulative effect of
the adoption of SFAS No. 109 as of January 1, 1992 was to
increase net income by $5,600,000 or $0.24 per share for 1992.
The primary component of this credit resulted from the
recognition of a deferred tax asset in relation to the cumulative
excess of book loan loss provisions over certain limited amounts
previously claimed as income tax deductions, as defined by SFAS
No. 109.
In May, 1993, the Financial Accounting Standards Board (FASB)
issued SFAS No. 115, "Accounting for Certain Investments in Debt
and Equity Securities". As permitted under the Statement, the
Corporation has elected to adopt the provisions of the new
standard as of the end of its current fiscal year. In accordance
with SFAS No. 115, prior period financial statements have not been
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
restated to reflect the change in accounting principle. As a result
of adopting SFAS No.115, the December 31, 1993 balance of stockholders'
equity was increased by $2,701,000 (net of $1,842,000 in deferred income
taxes) to reflect the net unrealized holding gain on securities
classified as available-for-sale previously carried at the lower
of amortized cost or fair value.
Pending Accounting Change: In May, 1993, the FASB issued SFAS
No. 114, "Accounting by Creditors for Impairment of a Loan".
SFAS No. 114 requires that impaired loans be measured at the
present value of expected future cash flows discounted at the
loan's original effective interest rate or, as a practical
expedient, at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent.
SFAS No. 114 is effective for fiscal years beginning after
December 15, 1994. Management does not believe that the adoption
of SFAS No. 114 will have a material impact on the Corporation's
financial condition or results of operations.
Reclassifications: Certain 1991 and 1992 accounts have been
reclassified to conform to the 1993 presentations.
NOTE B--BUSINESS COMBINATIONS
On January 4, 1993, First Financial acquired Westinghouse Federal
Bank, FSB, d/b/a United Federal Bank (United), of Galesburg,
Illinois for an aggregate cash purchase price of approximately
$53.0 million. United was merged with and into First Financial.
The Corporation did not issue any stock as a result of this
transaction. The acquisition of United by First Financial has
been accounted for as a purchase with United's nineteen branch
offices now operating as branches of First Financial. The assets
and liabilities of United were recorded at their estimated fair
value at the date of acquisition; results of operations have been
included in the 1993 consolidated Corporation income from January
1, 1993. Prior to purchase accounting and post-acquisition
restructuring transactions, United had total assets, deposits and
stockholder's equity of $821,000,000, $694,000,000 and
$54,000,000, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE B--BUSINESS COMBINATIONS--Continued
Had the United acquisition been consummated on January 1, 1991,
the Corporation's operating results on a pro-forma basis before
the cumulative effect of a change in accounting principle, as
adjusted for the effect of fair market values used in the
purchase method of accounting, would have been as follows:
Year Ended December 31,
1992 1991
----------- -----------
(In Thousands, Except
Per Share Amounts)
Total income $397,086 $412,903
Net income 40,112 26,325
Earnings per share:
Primary 1.74 1.14
Fully dilute 1.72 1.13
Also, in August, 1993, First Financial completed the assumption
of deposits (approximately $268,000,000) and the purchase of the
branch facilities of the four Quincy, Illinois-area branches of
another thrift. The acquisition of these offices, now operating
as branches of First Financial, was accounted for as a purchase
and, consequently, the related accounts and results of operations
are included in the Corporation's consolidated financial
statements from the date of acquisition.
In two transactions during the first quarter of 1992, First
Financial completed the assumption of deposits (approximately
$327,000,000) and the purchase of the office facilities of ten
Peoria, Illinois-area branches. Each transaction was accounted
for as a purchase with the acquired offices now operating as
branch offices of First Financial; consequently, the related
accounts and results of operations are included in the
Corporation's consolidated financial statements from the date of
acquisition.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE C--INVESTMENT SECURITIES
The following is a summary of available-for-sale investment
securities and held-to-maturity investment securities.
Amortized Gross Unrealized Estimated
------------------------
Cost Gains Losses Fair Value
------------------------------------------------------------------------
(In Thousands)
At December 31, 1993:
Available-For-Sale:
U.S. Government and
federal agency
obligations $ 48,338 $1,608 $ 44 $ 49,902
Adjustable-rate mortgage
mutual fund 34,585 34,585
$ 82,923 $1,608 $ 44 $ 84,487
Held-To-Maturity:
Corporate and bank notes
receivable (investment
grade) $ 49,053 $ 328 $ 60 $ 49,321
U.S. Government and
federal agency
obligations 90,062 101 516 89,647
State and municipal
obligations 4,453 27 4,480
$143,568 $ 456 $ 576 $143,448
At December 31, 1992:
Held-to-maturity:
Corporate and bank notes
receivable (investment
grade) $ 52,020 $ 108 $194 $ 51,934
U.S. Government and
federal agency
obligations 40,828 1,411 11 42,228
Commercial paper 9,989 9,989
State and municipal
obligations 598 2 600
Certificates of deposit 198 198
$103,633 $1,521 $205 $104,949
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE C--INVESTMENT SECURITIES--Continued
The amortized cost and estimated fair value of investment
securities at December 31, 1993, by contractual maturity, are
shown below.
Available-For-Sale Held-To-Maturity
-------------------------------------------------------------
Estimated Estimated
Amortized Fair Amortized Fair
Cost Value Cost Value
------------- ------------- ------------- -------------
(In Thousands)
Due in one year or less $ 64,718 $ 65,170 $ 58,328 $ 58,066
Due after one year through
five years 14,210 14,329 84,790 84,932
Due after five years through
ten years 350 350
Due after ten years 3,995 4,988 100 100
$ 82,923 $ 84,487 $143,568 $143,448
During the years ended December 31, 1993 and 1992, investment
securities available-for-sale with a fair value at the date of
sale of $45,000,000 and $20,012,000, respectively, were sold.
The gross realized losses on such sales totaled $415,000 in 1993
and gross realized gains on such sales totaled $12,000 in 1992.
There were no sales of available-for-sale investment securities
in 1991.
Accrued interest on investment securities, including those
securities classified as federal funds sold, interest-earning
deposits and short-term securities, was $3,003,000 and $1,558,000
at December 31, 1993 and 1992, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE D--MORTGAGE-RELATED SECURITIES
The following is a summary of available-for-sale and held-to-
maturity mortgage-related securities.
Amortized Gross Unrealized Estimated
Cost Gains Losses Fair Value
-----------------------------------------------------------------
(In Thousands)
At December 31, 1993:
Available-for-sale:
Adjustable-rate mortgage-
backed securities $ 145,487 $ 2,762 $ 148,249
Adjustable-rate collater-
alized mortgage
obligations 29,896 217 30,113
$ 175,383 $ 2,979 $ 178,362
Held-to-maturity:
Mortgage-backed securities:
Adjustable-rate $ 972,092 $10,301 $4,580 $ 977,813
Fixed-rate 171,637 6,572 4 178,205
Collateralized mortgage
obligations:
Adjustable-rate 957 1 956
Fixed-rate 3,205 51 3,256
$1,147,891 $16,924 $4,585 $1,160,230
At December 31, 1992:
Mortgage-backed securities:
Adjustable-rate $1,140,581 $ 7,847 $3,193 $1,145,235
Fixed-rate 161,008 8,030 3 169,035
$1,301,589 $15,877 $3,196 $1,314,270
/TABLE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE D--MORTGAGE-RELATED SECURITIES--Continued
The following tables summarize aggregate mortgage-related
securities by issuer.
Amortized Gross Unrealized Estimated
Cost Gains Losses Fair Value
-----------------------------------------------------------------
(In Thousands)
At December 31, 1993:
Private issuers $1,165,421 $15,145 $4,580 $1,175,986
Federal Home Loan Mortgage
Corporation (FHLMC) 71,411 2,787 1 74,197
Federal National Mortgage
Association (FNMA) 68,133 1,201 2 69,332
Government National Mort-
gage Association (GNMA) 18,309 770 2 19,077
$1,323,274 $19,903 $4,585 $1,338,592
At December 31, 1992:
Private issuers $1,168,888 $ 9,746 $3,193 $1,175,441
FHLMC 108,865 5,153 114,018
FNMA 13,377 341 13,718
GNMA 10,459 637 3 11,093
$1,301,589 $15,877 $3,196 $1,314,270
At December 31, 1993, the private issuers category above includes
securities with an amortized cost of $1,080,000,000 which have
been AA rated by an independent rating agency. Other securities
in the private issuer category are, at a minimum, of investment
grade quality.
During the years ended December 31, 1993, 1992 and 1991,
mortgage-related securities available-for-sale with a fair value
at the date of sale of $81,287,000, $853,000 and $156,825,000,
respectively, were sold. The gross realized gains on such sales
totaled $14,000, $41,000 and $3,221,000 in 1993, 1992 and 1991,
respectively. The gross realized losses on such sales totaled
$21,000 and $901,000, respectively, in 1993 and 1991. The 1993
sales related to the restructuring of the mortgage-related
securities portfolio acquired in the United acquisition.
Accrued interest receivable on mortgage-related securities was
$7,285,000 and $8,637,000 at December 31, 1993 and 1992,
respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE E--LOANS RECEIVABLE
Loans receivable held for investment consist of the following:
December 31,
1993 1992
------------------------------------------
(In Thousands)
Real estate mortgage loans:
Residential (including multi-family) $1,855,298 $1,301,582
Commercial and other 93,528 97,204
Construction - residential (including
multi-family) 58,132 73,998
Construction - commercial 460 4,661
Total real estate mortgage loans 2,007,418 1,477,445
Consumer-related loans:
Credit card 209,414 178,436
Home equity 193,291 162,283
Education 167,385 163,261
Manufactured housing 165,017 133,195
Consumer 153,574 89,028
Other 111 3,298
Total consumer-related loans 888,792 729,501
Total loans before net items 2,896,210 2,206,946
Less:
Allowances for losses 23,266 17,067
Undisbursed loan proceeds 18,705 26,847
Deferred loan fees 2,591 2,357
Discount on loans of acquired businesses 1,979 3,546
Unearned discounts 1,084 1,252
47,625 51,069
$2,848,585 $2,155,877
The following table sets forth the composition of the commercial
real estate loan portfolio, including both conventional and
construction loans, by geographic location of the related
collateral properties.
December 31,
1993 1992
--------------------------- --------------------------
Percent Percent
Of Of
Property Location Amount Total Amount Total
------------------ ---------- --------- ---------- --------
(Dollars in Thousands)
Wisconsin $ 67,257 71.6% $ 79,311 77.9%
Illinois 6,816 7.3 2,967 2.9
Minnesota 4,749 5.1 4,941 4.8
Georgia 4,170 4.4 4,229 4.2
Tennessee 2,874 3.0 2,924 2.9
Arizona 2,029 2.1 2,029 2.0
Texas 1,854 2.0 1,887 1.8
Other 4,239 4.5 3,577 3.5
$ 93,988 100.0% $101,865 100.0%
Accrued interest on loans receivable was $16,895,000 and
$15,491,000 at December 31, 1993 and 1992, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE F--FORECLOSED PROPERTIES AND REPOSSESSED ASSETS
Foreclosed properties and repossessed assets are summarized as
follows:
December 31,
1993 1992
----------- ----------
(In Thousands)
Real estate owned $ 5,804 $11,527
Real estate judgments subject to redemption 2,236 2,761
Manufactured housing owned 115 256
Repossessed collateral assets 48 206
8,203 14,750
Less allowance for losses 1,386 552
$ 6,817 $14,198
NOTE G--ALLOWANCE FOR LOSSES
A summary of the activity in the allowance for loan losses follows:
Year Ended December 31,
1993 1992 1991
-------------- -------------- --------------
(In Thousands)
Balance at beginning of year $17,067 $16,706 $15,644
Acquired bank's allowance 4,885
Provisions 10,219 13,851 18,333
Charge-offs (10,294) (14,727) (18,643)
Recoveries 1,389 1,237 1,372
BALANCE AT END OF YEAR $23,266 $17,067 $16,706
A summary of the activity in the allowance for losses on
foreclosed properties and repossessed assets follows. The
provisions for losses are included in the Consolidated Statements
of Income in "Net Cost of Operations of Foreclosed Properties."
Year Ended December 31,
1993 1992 1991
-------------- -------------- --------------
(In Thousands)
Balance at beginning of year $ 552 $ 738 $1,023
Provisions 3,519 4,794 2,947
Charge-offs (2,685) (4,980) (3,232)
BALANCE AT END OF YEAR $1,386 $ 552 $ 738
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE H--OFFICE PROPERTIES AND EQUIPMENT
Office properties and equipment are summarized as follows:
December 31,
1993 1992
----------- ----------
(In Thousands)
Land and parking lot improvements $11,328 $ 8,796
Office buildings and improvements 44,785 36,510
Furniture and equipment 31,498 24,775
Leasehold improvements 2,171 1,660
89,782 71,741
Less allowances for depreciation and
amortization 39,662 29,374
$50,120 $42,367
NOTE I--DEPOSITS
Deposits are summarized as follows:
December 31, 1993 December 31, 1992
Weighted Weighted
Average Average
Amount Rate Amount Rate
------------ --------- ---------- ---------
(Dollars in Thousands)
Checking accounts:
Interest-bearing $ 280,401 1.76% $ 174,969 2.29%
Non-interest-bearing 82,637 -- 49,759 --
Total checking
accounts 363,038 1.36 224,728 1.78
Passbook accounts 812,138 2.76 751,811 3.74
Variable-rate insured
money market accounts 311,085 2.83 296,181 3.46
Certificate accounts:
Less than one year 400,478 3.64 321,034 4.19
One to two years 666,896 3.99 561,796 4.58
Two to three years 653,834 4.72 494,890 6.61
Three to four years 307,711 5.78 143,281 7.48
Four years or more 532,136 7.24 408,740 8.10
Total certificates 2,561,055 5.01 1,929,741 6.00
4,047,316 4.06% 3,202,461 4.94%
Accrued interest 3,204 3,651
$4,050,520 $3,206,112
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE I--DEPOSITS--Continued
Aggregate annual maturities of certificate accounts at
December 31, 1993 are as follows (in thousands):
Matures During
Year Ended
December 31,
1994 $1,488,542
1995 628,272
1996 245,467
1997 69,127
1998 123,484
Thereafter 6,163
$2,561,055
Interest expense on deposits consists of the following:
Year Ended December 31,
1993 1992 1991
------------ ------------- ------------
(In Thousands)
Passbook $ 25,953 $ 27,154 $ 14,275
Checking 5,427 4,658 7,445
Variable-rate insured
money market 9,497 10,921 16,547
Certificates 128,864 131,309 161,501
$169,741 $174,042 $199,768
NOTE J--BORROWINGS
At December 31, 1993, the Corporation has an unused line-of-
credit in the amount of $18,000,000. The line-of-credit is
available to the Corporation for working-capital purposes or for
potential future acquisitions. Under the terms of the line-of-
credit, which is available through April, 1994, interest on
outstanding notes would be payable at the lender's then
prevailing prime rate. The line-of-credit agreement contains
various covenants relative to the operations of the Corporation
and First Financial. Included among the covenants are
restrictions on levels of total borrowings and the interest-
bearing asset/liability ratio for the Corporation, on a
consolidated basis, and a requirement that First Financial
maintain a minimum risk-based regulatory capital of 8.0%. All of
such covenants are met at December 31, 1993. In addition, the
Corporation has pledged its stock in First Financial as
collateral for the line-of-credit.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE J--BORROWINGS-Continued
Borrowings are comprised of the following:
December 31,
1993 1992
------------------------ -------------------------
Weighted Weighted
Average Average
Maturity Amount Rate Amount Rate
-------------------------------------------------------------------------------
(Dollars in Thousands)
Federal Home Loan Bank: On Demand $140,500 3.24% $237,000 3.73%
1993 60,000 4.58
1994 60,053 5.18 50,000 4.78
1995 150,000 4.61 50,000 5.38
1996 21,228 6.48
1997 31 7.00 31 7.00
2000 162 7.00 162 7.00
Subordinated Notes 1999 54,997 8.51 55,000 8.51
Collateralized mortgage
obligations 2003 5,217 8.43
Industrial Development
Revenue Bonds: 1994 2,585 10.11
2021 6,410 7.04 7,170 7.03
$438,598 4.91% $461,948 4.87%
First Financial is required to maintain unencumbered first
mortgage loans in its portfolio aggregating at least 167% of the
amount of outstanding advances from the Federal Home Loan Bank as
collateral. In addition, these borrowings are collateralized by
Federal Home Loan Bank stock of $29,832,000 at December 31, 1993,
which is included in "Other Assets" in the consolidated balance
sheets.
Subordinated notes (the Notes) are payable at maturity on
November 1, 1999. Interest at the rate of 8% per annum is
payable monthly. The Notes are redeemable at par plus accrued
interest on or after November 1, 1995 in whole or in part at the
option of the Corporation. Under the terms of the indenture
relating to the Notes, the ability of the Corporation to incur
additional indebtedness, pay cash dividends or make other capital
distributions is limited under certain circumstances. The
indenture does not limit the ability of the Corporation's
subsidiaries to incur indebtedness (except for indebtedness that
is guaranteed by, or secured by, property of the Corporation).
Unamortized issuance costs relating to the Notes totaled
$1,625,000 and $1,903,000 at December 31, 1993, and 1992,
respectively, which is being amortized using the interest method.
UFS Capital Corporation, the Corporation's wholly-owned finance
subsidiary, has issued the collateralized mortgage obligations.
Principal repayments are scheduled in varying amounts through
January, 2003. The obligations are collateralized by mortgage-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE J--BORROWINGS--Continued
backed securities with a carrying value of $5,640,000 and a fair
value of $5,693,000 at December 31, 1993.
Industrial Development Revenue Bonds are payable in ten annual
installments ranging from $90,000 to $150,000 with additional
payments of $1,910,000 and $3,320,000 due October 1, 2012 and
2021, respectively. Interest is payable semi-annually. The
bonds were issued to refinance an apartment project which was
sold in 1992. The bonds are collateralized by mortgage-backed
securities with a carrying value of $9,278,000 at December 31,
1993. First Financial has a loan receivable from the buyer of
$5,947,000 at December 31, 1993, which is secured by a first
mortgage on the apartment project.
Aggregate annual payments on borrowings at December 31, 1993 are,
as follows (in thousands):
Matures During
Year Ended
December 31,
1994 $201,044
1995 150,491
1996 20,536
1997 136
1998 115
Thereafter through 2021 61,059
433,381
Collateralized Mortgage
Obligations 5,217
$438,598
NOTE K--INCOME TAXES
The provision for income taxes, for the years ended December 31,
consists of the following:
Deferred
Liability Method Method
1993 1992 1991
---------------------------------------------
(In Thousands)
Current:
Federal $26,029 $17,492 $12,624
State 3,043 692 2,404
29,072 18,184 15,028
Deferred (credit):
Federal (1,875) (2,005) (2,615)
State (325) 11 (4)
(2,200) (1,994) (2,619)
$26,872 $16,190 $12,409
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE K--INCOME TAXES--Continued
The provision for income taxes, for the years ended December 31,
differs from that computed at the federal statutory corporate tax
rate as follows:
Deferred
Liability Method Method
1993 1992 1991
------------------------------------------------
(In Thousands)
Income before income taxes and
cumulative effect of a change
in accounting principle $72,087 $44,622 $30,935
Tax at federal statutory rate (35%-
1993 and 34%-1992 and 1991) $25,230 $15,171 $10,518
Add (deduct) effect of:
State income taxes (net of
federal income taxes) 2,061 329 1,625
Goodwill amortization 301 291 213
Other (720) 399 53
INCOME TAX PROVISION $26,872 $16,190 $12,409
The components of the provision (credit) for deferred income
taxes, for the years ended December 31, and the deferred tax
asset (liability) as of December 31, are as follows:
Provision (Credit) For
Deferred Income Taxes Deferred Tax
Deferred Asset (Liability)
Liability Method Method December 31,
1993 1992 1991 1993 1992
---------------------------------------------------------------------------------
(In Thousands)
Deferred loan fees and other
loan yield adjustments $ (737) $(2,088) $(1,077) $ 3,255 $ 2,268
Excess tax depreciation 67 (172) (312) (1,575) (1,535)
Loan loss reserves (1,164) (673) (341) 8,737 7,355
Deferred compensation (154) (178) (237) 1,919 1,725
Excess book core deposit
intangible amortization (367) (240) 2,294 1,883
FHL Bank stock dividend (3) 462 398 (868) (851)
Internal Revenue Service
examination (1,350)
Market valuation adjustments (1,823)
Tax net operating loss
carryforwards 1,553 1,436
Other 431 (58) 300 (103) 251
(1,427) (2,947) (2,619) 13,389 12,532
Valuation allowance for
deferred tax assets (273) 953 (3,547) (3,333)
$(2,200) $(1,994) $(2,619) $ 9,842 $ 9,199
/TABLE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE K--INCOME TAXES--Continued
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes.
For financial reporting purposes, a valuation allowance has been
recognized to offset deferred tax assets related to state net
operating loss carryforwards of subsidiaries, core deposit
intangibles and other timing differences. When realized, the tax
benefit for these items will be used to reduce current tax
expense for that period.
Previously the Banks qualified under provisions of the Internal
Revenue Code which permitted as a deduction from taxable income
allowable bad debt deductions which significantly exceeded actual
experience and the financial statement loan loss provisions. A
deferred tax liability was not required on these excess tax bad
debt reserves. At December 31, 1993, the Banks' tax bad debt
reserves are approximately $73,395,000. Upon the adoption of
SFAS No. 109 as of January 1, 1992, the Banks were required to
establish a deferred tax liability for the excess of its tax bad
debt reserves over the balance at the close of the base year.
The amount of the base year reserves is considered to meet the
indefinite reversal criteria of Accounting Principle Board
Opinion No. 23, "Accounting for Income Taxes-Special Area," and
accordingly is not subject to deferred taxes. The Banks' base
year tax bad debt reserves are approximately $70,104,000. Income
taxes would be imposed at the then applicable rates if the Banks
were to use these reserves for any purpose other than to absorb
bad debt losses.
NOTE L--STOCKHOLDERS' EQUITY
The Board of Directors declared a two-for-one stock split of the
Corporation's common stock to stockholders of record on March 13,
1992, payable on April 16, 1992. This stock split was effected
in the form of a 100% stock dividend by the distribution of
shares. The par value of the common stock remained at $1.00. On
February 17, 1993, the Board of Directors declared an additional
two-for-one stock split payable on March 5, 1993 to stockholders
of record on February 24, 1993. All numbers of shares and per
share amounts included in the financial statements and notes
thereto have been adjusted to reflect these distributions.
The Board of Directors of the Corporation is authorized to issue
preferred stock in series and to establish the voting powers,
other special rights of the shares of each such series and the
qualifications and restrictions thereof. Preferred stock may
rank prior to the common stock as to dividend rights, liquidation
preferences or both, and may have full or limited voting rights.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE L--STOCKHOLDERS' EQUITY--Continued
Under Wisconsin state law, preferred stockholders would be
entitled to vote as a separate class or series in certain
circumstances, including any amendment which would adversely
change the specific terms of such series of stock or which would
create or enlarge any class or series ranking prior thereto in
rights and preferences. No preferred stock has been issued.
Deposits in the Banks are insured to the maximum allowable
amounts by the Savings Association Insurance Fund (SAIF) as
administered by the Federal Deposit Insurance Corporation (FDIC).
As SAIF-insured institutions, the Banks are required to meet
tangible, core and risk-based regulatory capital requirements as
determined by the Office of Thrift Supervision (OTS). Tangible
capital generally consists of stockholder's equity minus certain
intangible assets. Core capital generally consists of
stockholder's equity. The risk-based capital requirements
presently address credit risk related to both recorded assets and
off-balance sheet commitments and obligations.
The Banks' various OTS regulatory capital measurements at
December 31, 1993 are set forth below.
First
Financial Port
------------- --------
(In Thousands)
Bank's stockholder's equity $276,138 $7,400
Less:
Core deposit intangibles (28,322)
Goodwill (3,070)
Investment in subsidiaries
and activities not permitted for
national banks (1,792) (59)
Purchased mortgage servicing rights
adjustment (44)
Other (277)
TANGIBLE CAPITAL 242,633 7,341
Add: qualifying intangibles 28,322
CORE CAPITAL 270,955 7,341
Add: qualifying general allowances for
loan losses 19,674 524
RISK-BASED CAPITAL $290,629 $7,865
The following table compares the Banks' regulatory capital with
OTS capital requirements at December 31, 1993:
Actual Required Actual Required
Amount Amount Excess Ratio Ratio Excess
--------------------------------------------------------------------------------------------
(Dollars in Thousands)
First Financial:
Tangible capital $242,633 $ 69,881 $172,752 5.21% 1.50% 3.71%
Core capital 270,955 140,611 130,344 5.78 3.00 2.78
Risk-based capital 290,629 185,133 105,496 12.56 8.00 4.56
Port:
Tangible capital $ 7,341 $ 1,494 $ 5,847 7.38% 1.50% 5.88%
Core capital 7,341 2,987 4,354 7.38 3.00 4.38
Risk-based capital 7,865 4,325 3,540 14.55 8.00 6.55
/TABLE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE L--STOCKHOLDERS' EQUITY--Continued
The OTS has adopted a final rule which would add an interest-rate
risk component to the OTS risk-based capital requirement
effective July 1, 1994. The OTS has adopted another final rule,
effective March 4, 1994, disallowing any new core deposit
intangibles, acquired after the rule's effective date, from
counting as regulatory capital. Core deposit intangibles
acquired prior to the effective date have been grandfathered for
purposes of this rule. The OTS also has proposed to increase the
minimum required core capital ratio from the current 3.00% to a
range of 4.00% to 5.00% for all but the most healthy financial
institutions.
Under the terms of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA), the Banks are further subject
to the prompt corrective action (PCA) provisions of FDICIA.
Under FDICIA, thrift institutions are assigned, based upon
regulatory capital ratios and other subjective supervisory
criteria, to one of five PCA categories, ranging from "well
capitalized" to "critically undercapitalized". Institutions
assigned to the three lowest categories are subject to PCA
sanctions by the OTS. PCA sanctions include, among other items,
additional restrictions on dividends and capital distributions.
As of December 31, 1993, management believes that both Banks had
capital in excess of the requirements to be "well capitalized"
institutions under the PCA provisions of FDICIA.
Applicable rules and regulations of the OTS impose limitations on
dividends by the Banks. Within those limitations, certain "safe
harbor" dividends are permitted, subject to providing the OTS at
least 30 days' advance notice. The safe harbor amount is based
upon an institution's regulatory capital level. Thrift
institutions which have capital in excess of all fully phased-in
capital requirements before and after the proposed dividend are
permitted to make capital distributions during any calendar year
up to the greater of (i) 100% of net income to date during the
calendar year, plus one-half of the surplus over such
institution's fully-phased-in capital requirements at the
beginning of the calendar year, or (ii) 75% of net income over
the most recent four-quarter period. Additional restrictions
would apply to an institution which does not meet its fully
phased-in capital requirement before or after a proposed
dividend. In addition, as a result of the PCA provisions of
FDICIA, the OTS has indicated that it intends to review existing
regulations on dividends to determine whether amendments are
necessary based on such provisions. In the interim, the OTS has
indicated that it intends to determine the permissibility of
dividends consistent with the PCA provisions of FDICIA.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE M--EMPLOYEE BENEFIT PLANS
The Corporation has a stock option plan under which shares of
common stock are reserved for the grant of both incentive and
non-incentive stock options to directors, officers and employees.
The plan provides that option prices will not be less than the
fair market value of the stock at the grant date. The date on
which the options are first exercisable, generally two or more
years from the grant date, is determined by the Stock Option
Committee of the Board of Directors and expire no later than ten
years from the grant date.
A summary of stock option activity follows:
Number Of Option Price
Shares Per Share
----------------------------------------
Balance January 1, 1991 928,388 $ .85 - $ 4.19
Exercised (59,800) .85 - 3.69
Cancelled (21,560) 1.68 - 3.09
Balance December 31, 1991 847,028 .85 - 4.19
Granted 1,394,000 6.38 - 9.44
Exercised (230,876) .85 - 4.19
Cancelled (5,000) 3.09 - 8.00
Balance December 31, 1992 2,005,152 1.68 - 9.44
Granted 40,500 13.63 - 15.00
Exercised (348,741) 1.70 - 9.44
Cancelled (8,000) 6.38 - 9.44
BALANCE DECEMBER 31, 1993 1,688,911 $ 1.68 - $15.00
Options for 322,411 shares and 603,100 shares were exercisable at
December 31, 1993 and 1992, respectively. At December 31, 1993,
options for 784,500 shares were available for future grant.
The Corporation sponsors a defined-contribution profit sharing
plan which covers all full time Wisconsin-based employees who
have completed one year of service and are at least twenty-one
years old. Corporate contributions are discretionary. Expense
for this plan for 1993, 1992 and 1991 was $3,666,000, $2,950,000
and $1,650,000, respectively.
The Corporation sponsors a supplemental executive retirement plan
for certain executive officers, which is funded through life
insurance and provides additional benefits at retirement. At
December 31, 1993, the projected future obligation under this
plan amounted to $2,465,000, which is being accrued through a
combination of annual amortization of prior service costs plus
current annual provisions for additional service costs and
interest. Expense for this plan was $434,000 and $166,000 for
1993 and 1992, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE M--EMPLOYEE BENEFIT PLANS--Continued
The Corporation sponsors an unfunded defined-benefit retirement
plan for all outside directors. At December 31, 1993, the
projected future obligation under this plan totaled $1,271,000,
which is being accrued through a combination of annual
amortization of prior service costs plus current annual
provisions for additional service costs and interest. Expense
for this plan was $122,000, $280,000 and $273,000 in 1993, 1992
and 1991, respectively.
The Corporation also sponsors a defined-benefit pension plan
covering substantially all of its Illinois-based employees (the
Illinois Plan). Benefits are based upon a formula using years of
service and the participant's compensation during the term of
employment.
The following tables set forth the Illinois Plan's funded status
and amounts recognized in the consolidated financial statements:
December 31,
1993 1992
------------------------
(In Thousands)
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $2,289,000--1993 and
$1,766,000--1992 $ 2,373 $ 1,813
Plan assets at fair value, primarily fixed
income securities $ 3,939 $ 3,907
Projected benefit obligation 2,516 2,107
Plan assets in excess of projected
benefit obligation 1,423 1,800
Unrecognized net gain from past experience
different from that assumed and effects
of changes in assumptions 620 378
Unrecognized net transition asset (1,432) (1,560)
Prepaid pension cost included in other assets $ 611 $ 618
Net pension benefits for the Illinois Plan include the following
components:
Year Ended December 31,
1993 1992 1991
-----------------------------------------
(In Thousands)
Service cost--benefits earned during the
period $ 259 $ 87 $ 90
Interest cost on projected benefit
obligation 197 165 149
Actual return on plan assets (327) (302) (312)
Net amortization and deferral (122) (129) (111)
Net periodic pension expense (benefit) $ 7 $ (179) $(184)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE M--EMPLOYEE BENEFIT PLANS--Continued
The principal actuarial assumptions used to develop the net
pension benefit for the Illinois Plan were as follows:
Year Ended December 31,
1993 1992 1991
-------------------------------------
(In Thousands)
Weighted average discount rate 7.25% 8.00% 8.00%
Rate of increase in future compensation 5.00 6.00 6.00
Expected long-term rate of return on plan assets 7.75 8.00 8.00
The Corporation does not, as a policy, offer post-retirement
benefits other than profit sharing, pensions, and certain
supplemental retirement benefits noted above.
NOTE N--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Corporation is a party to financial instruments with off-
balance-sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments
include commitments to extend credit and financial guarantees and
involve, to varying degrees, elements of credit and interest-rate
risk in excess of the amount recognized in the consolidated
balance sheets. The contract amounts of those instruments
reflect the extent of involvement First Financial has in
particular classes of financial instruments.
The Corporation's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for
commitments to extend credit and financial guarantees written is
represented by the contractual amount of those instruments. The
Corporation uses the same credit policies in making commitments
and conditional obligations as it does for on-balance-sheet
instruments.
Financial instruments whose contract amounts represent credit
risk are as follows:
December 31,
1993 1992
----------------------------------
(In Thousands)
Commitments to extend credit:
Fixed rate (6.25% to 8.75% at
December 31, 1993) $ 52,079 $ 15,630
Adjustable rate 10,259 6,834
Commitments to purchase adjustable-rate
mortgage-related securities 87,753 25,000
Unused lines of credit:
Credit cards 702,364 550,668
Home equity 250,344 190,623
Loans sold with recourse 59,000 119,000
Financial guarantees written 10,951 18,346
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE N--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK--
Continued
Commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in
the contract. Commitments generally have fixed expiration dates
or other termination clauses and may require payment of a fee.
As some such commitments expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash
requirements. The Corporation evaluates each customer's
creditworthiness on a case-by-case basis. With the exception of
credit card lines-of-credit, the Corporation generally extends
credit only on a secured basis. Collateral obtained varies but
consists primarily of one- to four-family residences and income-
producing commercial properties.
Commitments to extend credit on a fixed-rate basis expose the
Corporation to a certain amount of interest-rate risk if market
rates of interest increase substantially during the commitment
period. Similar risks exist relative to loans classified as held
for sale, which totaled $73,919,000 at December 31, 1993. This
exposure, however, is mitigated by the hedge of firm commitments
to sell the majority of these loans. Commitments outstanding to
sell mortgage loans at December 31, 1993 amount to $111,500,000.
Financial guarantees represent agreements whereby, for an annual
fee, certain of the Banks' mortgage loans, investments and
mortgage-backed securities are pledged as collateral for
Industrial Development Revenue Bonds which were issued by
municipalities to finance commercial or multi-family real estate
owned by third parties. In the event the third party borrowers
default on principal or interest payments on the bonds, the Banks
are required to either pay the amount in default or acquire the
then outstanding bonds. First Financial and Port may foreclose
on the underlying real estate to recover amounts in default.
Management has considered these agreements in its review of the
adequacy of the allowance for losses. At December 31, 1993,
certain mortgage-related securities and investment securities
with a carrying value of approximately $5,394,000 were pledged as
collateral for bonds in the aggregate of $3,341,000. Additional
bond issues totaling $7,610,000 are supported by letters of
credit issued by First Financial in lieu of specific collateral.
The bond agreements have expiration dates through 2008.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE O--FAIR VALUES OF FINANCIAL INSTRUMENTS
SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments," requires disclosure of fair value information about
financial instruments, whether or not recognized in the balance
sheet, for which it is practicable to estimate that value. In
cases where quoted market prices are not available, fair values
are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of
future cash flows. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent
markets and, in many cases, could not be realized in immediate
settlement of the instrument. SFAS No. 107 excludes certain
financial instruments and all nonfinancial instruments from its
disclosure requirements. Accordingly, the aggregate fair value
amounts presented do not necessarily represent the underlying
value of the Corporation. The Corporation does not routinely
measure the market value of financial instruments because such
measurements represent point-in-time estimates of value. It is
generally not the intent of the Corporation to liquidate and
therefore realize the difference between market value and
carrying value and even if it were, there is no assurance that
the estimated market values could be realized. Thus, the
information presented is not particularly relevant to predicting
the Corporation's future earnings or cash flows.
The following methods and assumptions were used by the
Corporation in estimating its fair value disclosures for
financial instruments:
Cash and cash equivalents: The carrying amounts reported in
the balance sheet for cash and short-term instruments
approximate those assets' fair values.
Accrued interest income and expense: Accrued interest income
and expense are carried at the respective book value.
Investment and mortgage-related securities: Fair values for
investment and mortgage-related securities are based on quoted
market prices, where available. If quoted market prices are
not available, fair values are based on quoted market prices
of comparable instruments.
Loans receivable: For variable-rate mortgage loans that
reprice frequently and with no significant change in credit
risk, fair values are based on carrying values. The fair
values for residential mortgage loans are based on quoted
market prices of similar loans sold in conjunction with
securitization transactions, adjusted for differences in loan
characteristics. The fair values for commercial real estate
loans, rental property mortgage loans and consumer and other
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE O--FAIR VALUES OF FINANCIAL INSTRUMENTS--Continued
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.
Mortgage servicing rights: Due to the lack of practicability,
the fair value of mortgage loan servicing rights has not been
determined and is not presented below. These rights, which
consist of the Corporation's contractual right to service
loans for others, represent a distinct income producing
intangible asset that could be realized by selling those
rights to another institution. The value of those rights,
except to the extent that purchased mortgage servicing rights
exist, is not reflected in the Corporation's consolidated
balance sheets.
Federal Home Loan Bank stock: Federal Home Loan Bank stock is
carried at cost which is its redeemable value since the market
for this stock is limited.
Deposits: The fair values disclosed for interest-bearing and
non-interest-bearing checking accounts, passbook accounts and
money market accounts are, by definition, equal to the amount
payable on demand at the reporting date (i.e., their carrying
amounts). The fair values of fixed-rate certificates of
deposit are estimated using a discounted cash flow calculation
that applies interest rates currently being offered on
certificates to a schedule of aggregated expected monthly
maturities of the outstanding certificates of deposit.
Borrowings: The fair values of the Corporation's long-term
borrowings are estimated using discounted cash flow analyses,
based on the Corporation's current incremental borrowing rates
for similar types of borrowing arrangements.
Off-balance-sheet instruments: Fair values for the
Corporation's off-balance-sheet instruments (lending
commitments and unused lines of credit) are based on fees
currently charged to enter into similar agreements, taking
into account the remaining terms of the agreements, the
counterparties' credit standing and discounted cash flow
analyses. The fair value of these off-balance-sheet items
approximates the recorded amounts of the related fees and is
not material at December 31, 1993 and 1992.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE O--FAIR VALUES OF FINANCIAL INSTRUMENTS--Continued
The carrying amounts and fair values of the Corporation's
financial instruments consisted of the following.
December 31,
1993 1992
----------------------------------------------------------------------
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
(In Thousands)
Cash equivalents $ 47,641 $ 47,641 $ 60,167 $ 60,167
Investment securities available-
for-sale $ 84,487 $ 84,487
Investment securities held-to-
maturity $ 143,568 $ 143,448 $ 103,633 $ 104,949
Federal Home Loan Bank stock $ 29,832 $ 29,832 $ 22,244 $ 22,244
Mortgage-related securities
available-for-sale $ 178,362 $ 178,362
Mortgage-related securities
held-to-maturity $1,147,891 $1,160,230 $1,301,589 $1,314,270
Loans held for sale $ 73,919 $ 74,567 $ 54,840 $ 55,280
Loans receivable:
Real estate $1,973,172 $1,997,107 $1,436,947 $1,453,626
Credit cards 202,912 202,912 174,845 174,845
Home equity 192,862 192,862 163,397 163,397
Education 167,333 167,333 160,298 160,298
Manufactured housing 160,349 177,230 128,544 141,183
Consumer and other 151,957 152,177 91,846 93,321
$2,848,585 $2,889,621 $2,155,877 $2,186,670
Accrued interest receivable $ 27,183 $ 27,183 $ 25,686 $ 25,686
Deposits:
Checking $ 363,038 $ 363,038 $ 224,728 $ 224,728
Passbooks 812,138 812,138 751,811 751,811
Money market 311,085 311,085 296,181 296,181
Certificates 2,561,055 2,587,730 1,929,741 1,959,075
$4,047,316 $4,073,991 $3,202,461 $3,231,795
Borrowings:
Federal Home Loan Bank
advances $ 371,974 $ 373,317 $ 397,193 $ 397,251
Collateralized mortgage obli-
gations 5,217 5,296
Subordinated notes 54,997 55,547 55,000 55,000
Industrial development revenue
bonds 6,410 6,776 9,755 10,008
$ 438,598 $ 440,936 $ 461,948 $ 462,259
Accrued interest payable $ 4,535 $ 4,535 $ 5,285 $ 5,285
/TABLE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE P--MORTGAGE BANKING ACTIVITIES
Loans serviced for investors amounted to $1,302,000,000,
$1,311,000,000 and $1,556,000,000 at December 31, 1993, 1992 and
1991, respectively. These loans are not reflected in the
consolidated financial statements. The Banks originate mortgage
loans which, depending upon whether the loans meet the Banks'
investment objectives, may be sold in the secondary mortgage
market or to other private investors. All loans are currently
sold on a nonrecourse basis and the servicing of these loans is
retained by the Banks. At December 31, 1993, 1992 and 1991,
$59,000,000, $119,000,000 and $150,000,000, respectively, of the
serviced loans were sold with recourse. Of these recourse loans,
approximately $47,000,000, $104,000,000 and $128,000,000 were
federally-insured or federally-guaranteed at December 31, 1993,
1992 and 1991, respectively. In addition, management has
considered the remaining uninsured or non-guaranteed balance in
the determination of the adequacy of the allowance for losses.
Direct origination and servicing costs for mortgage banking
activities cannot be presented as these operations are integrated
with and not separable from the origination and servicing of
portfolio loans, and, as a result, cannot be accurately
estimated.
Mortgage banking activities are summarized as follows:
At Or For The Year Ended
December 31,
1993 1992 1991
------------------------------------------------------
(In Thousands)
Consolidated balance sheet information:
Mortgage loans held for sale $ 73,919 $ 54,840 $ 38,061
Unamortized purchased mortgage
servicing rights and capitalized
excess servicing (included in
"Other Assets") 473 1,756 4,322
Consolidated statement of income
information:
Service fees on loans
sold (gross) $ 6,621 $ 7,898 $ 9,830
Amortization of purchased
mortgage servicing rights
and capitalized excess
servicing (1,388) (3,503) (2,910)
Service fees on loans
sold (net) $ 5,233 $ 4,395 $ 6,920
Gain on sales of mortgage loans
held for sale $ 7,997 $ 4,859 $ 3,241
Consolidated statement of cash flow
information:
Mortgage loans originated for
sale $599,126 $392,515 $157,571
Mortgage loans transferred to
held for sale portfolio 60,238 114,978 162,707
Sales of mortgage loans held for
sale 648,282 495,573 299,278
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE Q--LITIGATION
The Banks are involved in certain lawsuits in the course of their
general lending business and other operations. The Corporation
believes there are sound defenses against the claims asserted
therein and is vigorously defending these actions. Management,
after review with its legal counsel, is of the opinion that the
ultimate disposition of its litigation will not have a material
effect on the Corporation's financial condition.
NOTE R--PENDING BUSINESS COMBINATION
On October 13, 1993, the Corporation entered into a definitive
agreement to acquire NorthLand Bank of Wisconsin, SSB
(NorthLand), of Ashland, Wisconsin, through an exchange of stock
valued in the aggregate in the range of 130 to 135 percent of
NorthLand's defined tangible stockholders' equity at closing,
subject to certain adjustments. Upon closing, NorthLand will be
merged into First Financial. The acquisition is subject to
approval by the shareholders of NorthLand. This transaction is
expected to close during the first quarter of 1994 and will be
accounted for as a pooling-of-interests. As of December 31,
1993, NorthLand had total assets and shareholders' equity of
$127.4 million (unaudited) and $11.4 million (unaudited),
respectively.
NOTE S--FIRST FINANCIAL CORPORATION PARENT COMPANY ONLY
FINANCIAL INFORMATION
BALANCE SHEETS
December 31,
1993 1992
-------------------------------
(In Thousands)
ASSETS
Cash and cash equivalents $ 4,878 $ 35,161
Investment in subsidiaries 282,983 212,755
Prepaid expenses and other assets 2,471 2,217
$290,332 $250,133
LIABILITIES
Subordinated notes $ 54,997 $ 55,000
Other liabilities 650 1,038
TOTAL LIABILITIES 55,647 56,038
STOCKHOLDERS' EQUITY
Common stock 23,587 23,266
Additional paid-in capital 27,340 26,749
Retained earnings 183,758 144,080
TOTAL STOCKHOLDERS' EQUITY 234,685 194,095
$290,332 $250,133
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
FIRST FINANCIAL CORPORATION
NOTE S--FIRST FINANCIAL CORPORATION PARENT COMPANY ONLY
FINANCIAL INFORMATION--Continued
STATEMENTS OF INCOME
Year Ended December 31,
1993 1992 1991
------------------------------------------
(In Thousands)
Interest income from subsidiaries $ 255 $ 758 $ 248
Interest expense on borrowings 4,736 1,696 552
NET INTEREST EXPENSE (4,481) (938) (304)
Equity in net income from subsidiaries 49,027 34,841 18,774
44,546 33,903 18,470
Management fees paid to subsidiaries 735
Other expenses 482 288 73
INCOME BEFORE INCOME TAXES 43,329 33,615 18,397
Income tax credits (1,886) (417) (129)
NET INCOME $45,215 $34,032 $18,526
STATEMENTS OF CASH FLOWS
Year Ended December 31,
1993 1992 1991
------------------------------------------
(In Thousands)
OPERATING ACTIVITIES
Net income $45,215 $34,032 $18,526
Adjustments to reconcile net income
to net cash used in operating
activities:
Equity in net income of subsidiaries (49,027) (34,841) (18,774)
Other (645) 159 (1,032)
NET CASH USED IN OPERATING ACTIVITIES (4,457) (650) (1,280)
INVESTING ACTIVITIES
Dividends from subsidiaries 5,500 23,200 1,000
Investment in subsidiaries (24,000) (26,000) (3,500)
NET CASH USED IN INVESTING ACTIVITIES (18,500) (2,800) (2,500)
FINANCING ACTIVITIES
Proceeds from short-term borrowings 8,000 6,300
Repayment of short-term borrowings (20,000)
Proceeds from issuance of
subordinated debt 53,051
Exercise of stock options 912 626 115
Cash dividends paid (8,238) (5,098) (3,682)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (7,326) 36,579 2,733
Increase (decrease) in cash and cash
equivalents (30,283) 33,129 (1,047)
Cash and cash equivalents at beginning
of year 35,161 2,032 3,079
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,878 $35,161 $ 2,032
REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS
Board of Directors and Stockholders
First Financial Corporation
We have audited the accompanying consolidated balance sheets of
First Financial Corporation and subsidiaries as of December 31,
1993 and 1992, and the related consolidated statements of income,
changes in stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1993. 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 in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of First Financial Corporation and
subsidiaries at December 31, 1993 and 1992, and the consolidated
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.
As discussed in Note A to the consolidated financial statements,
the Corporation changed its method of accounting for income taxes
in 1992 and its method of accounting for certain debt and equity
securities in 1993.
/s/ Ernst & Young
- ----------------------
January 17, 1994
Milwaukee, Wisconsin
MANAGEMENT AND AUDIT COMMITTEE REPORT
Management is responsible for the preparation, content and
integrity of the financial statements and all other financial
information included in this annual report. The financial
statements have been prepared in accordance with generally
accepted accounting principles.
The Corporation maintains a system of internal controls
designed to provide reasonable assurance as to the integrity of
financial records and the protection of assets. The system of
internal controls includes written policies and procedures,
proper delegation of authority, organizational division of
responsibilities and the careful selection and training of
qualified personnel. In addition, the internal auditors and
independent auditors periodically test the system of internal
controls.
Management recognizes that the cost of a system of internal
controls should not exceed the benefits derived and that there
are inherent limitations to be considered in the potential
effectiveness of any system. However, management believes that
the system of internal controls provides reasonable assurances
that financial transactions are recorded properly to permit the
preparation of reliable financial statements.
The Audit Committee of the Board of Directors is composed of
outside directors and has the responsibility for the
recommendation of the independent auditors for the Corporation.
The committee meets regularly with the independent auditors and
internal auditors to review the scope of their audits and audit
reports and to discuss any action to be taken. The independent
auditors and the internal auditors have free access to the Audit
Committee.
/s/ John C. Seramur
John C. Seramur
President and Chief Executive Officer
/s/ Thomas H. Neuschaefer
Thomas H. Neuschaefer
Senior Vice President
/s/ Dr. George R. Leach
Dr. George R. Leach
Chairman, Audit Committee
January 17, 1994
ITEM 14(a) -- FINANCIAL STATEMENT SCHEDULE
SCHEDULE II - GUARANTEES OF SECURITIES OF OTHER ISSUERS
FIRST FINANCIAL CORPORATION
December 31, 1993
Column A Column B Column C Column D Column E Column F Column G
Nature Of Any
Amount Default By Issuer
Owned By Of Securities
Person Amount In Guaranteed
Total Or Treasury In Principal,
Name Of Amount Persons Of Interest, Sinking
Issuer of Securities Title Of Issue Guaranteed For Which Issuer Of Fund Or Redeemption
Guaranteed By Person For Of Each Class Of And Statement Securities Nature Of Provisions, or
Which Statement Is Filed Securities Guaranteed Outstanding Is Filed Guaranteed Guarantee Payment Of
- ---------------------------------------------------------------------------------------------------------------------------
Industrial Development Revenue Bonds:
City of Greenfield, WI $3,185,000 Industrial
Edgewood Plaza Joint Development Revenue
Venture Refunding Bonds,
Series 1992 $ 3,085,000 None None P&I None
City of Maplewood, MN $4,525,000 Variable Rate
Angeles Partners 16, A Demand Multifamily
California Limited Housing Revenue Refund-
Partnership ing Bonds, Series 1993 4,525,000 None None P&I None
City of Maple Grove, MN
Maple Investments, a $2,300,000 Industrial
Minnesota General Part- Revenue Bonds, Series
nership 1986 2,105,000 None None P&I None
Housing Authority For $7,000,000 Convertible
The City of Waukesha, WI Variable Rate Demand
Caroline Apartments Multifamily Housing
Limited Partnership Revenue Bonds,
Series A 1,236,000 None None P&I None
TOTAL $10,951,000
P&I = Principal and Interest Payments on Securities Guaranteed.