UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[X] Annual Report Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
[ ] Transition Report Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number: 0-7931
FIRST COMMERCE CORPORATION
(exact name of registrant as specified in its charter)
Louisiana 72-0701203
(State of incorporation) (I.R.S. Employer Identification No.)
210 Baronne Street, New Orleans, Louisiana 70112
(address of principal executive offices and zip code)
Registrant's telephone number, including area code: (504) 561-1371
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
Title of each class:
Common Stock, $5.00 par value
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by
nonaffiliates of the Registrant as of February 16, 1996.
Approximately $1,100,232,326*
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date.
Common Stock: $5.00 par value; 38,633,922 shares outstanding as of
February 16, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K
Documents Incorporated into which Incorporated
Annual Report to Stockholders for Parts II and IV
the year ended December 31, 1995
Definitive Proxy Statement Part III
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* For the purposes of this computation, shares beneficially owned by directors
and executive officers have been excluded.
FIRST COMMERCE CORPORATION
1995 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I.
PAGE
Item 1. Description of Business 3
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 7
PART II.
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters 7
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 8. Financial Statements and Supplementary Data 8
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 8
PART III.
Item 10. Directors and Executive Officers of the Registrant 8
Item 11. Executive Compensation 9
Item 12. Security Ownership of Certain Beneficial Owners and Management 9
Item 13. Certain Relationships and Related Transactions 9
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 9
PART I
Item 1
Description of Business
General
First Commerce Corporation (FCC) is a multi-bank holding company with
six wholly-owned bank subsidiaries in Louisiana: First National Bank of Commerce
in New Orleans (FNBC), City National Bank of Baton Rouge (CNB), Central Bank of
Monroe (Central), The First National Bank of Lafayette (FNBL), Rapides Bank &
Trust Company in Alexandria (RB&T) and The First National Bank of Lake Charles
(FNBLC).
During 1995 FCC acquired five Louisiana financial institutions adding
$1.5 billion of assets . FCC's acquisitions of First Bancshares, Inc. (First),
Lakeside Bancshares, Inc. (Lakeside), Peoples Bancshares, Inc. (Peoples) and
Central Corporation (Central) were accounted for as poolings-of-interests. The
acquisition of City Bancorp, Inc. (City) was accounted for as a purchase. The
acquisition of Central marked FCC's entry into the north Louisiana market; the
remaining acquisitions expanded FCC's presence in its current markets. For
additional information regarding these acquisitions, see Note 2 of FCC's 1995
Annual Report, which is incorporated by reference into Item 8 of this Annual
Report on Form 10-K.
The six banks accounted for substantially all of the assets of FCC at
December 31, 1995, and substantially all of the net income for 1995. The banks
offer customary services of banks of similar size and similar markets, including
numerous types of interest-bearing and noninterest-bearing deposit accounts,
commercial and consumer loans, trust services, correspondent banking services
and safe deposit facilities. For further discussion of FCC's operations, see the
Financial Review section of FCC's 1995 Annual Report, which is incorporated by
reference into Item 7 of this Annual Report on Form 10-K.
FCC has a number of non-bank subsidiaries, none of which, individually
or in the aggregate with other non-bank subsidiaries, account for a significant
amount of assets, revenues or earnings.
Regulation
Like other bank holding companies in Louisiana, FCC is subject to
regulation by the Louisiana Commissioner of Financial Institutions and the
Federal Reserve Board. Under the terms of the Bank Holding Company Act of 1956
(Act), as amended, FCC is restricted to only banking or bank-related activities
specifically allowed by the Act or the Federal Reserve Board. The Act requires
FCC to file required reports with the Federal Reserve Board. Each of FCC's
subsidiary banks is a member of the Federal Reserve System and is subject to
regulation by the Federal Reserve Board and the FDIC. The four national bank
subsidiaries are also subject to regulation and supervision by the United States
Comptroller of the Currency, while the two state-chartered bank subsidiaries are
subject to regulation and supervision by the Louisiana Commissioner of Financial
Institutions.
Payment of Dividends
The primary source of funds for debt service obligations and the
dividends paid by FCC to its stockholders is the dividends it receives from the
bank subsidiaries. The payment of dividends by FCC's national banks is regulated
by the United States Comptroller of the Currency. The payment of dividends by
FCC's state banks is regulated by the Louisiana Commissioner of Financial
Institutions and the Federal Reserve Board. Prior approval must be obtained from
the appropriate regulatory authorities before dividends can be paid if the
amount of defined capital, surplus and retained earnings is below regulatory
limits. Additionally, the national bank subsidiaries may not pay dividends in
excess of their retained net profits (net income less dividends for the current
and prior two years) without prior regulatory approval. The state bank
subsidiaries may not pay dividends in excess of their retained net profits (the
lesser of net income less dividends for the current year and one prior year or
net income less dividends for the current year and two prior years) without
prior regulatory approval. Under certain circumstances, regulatory authorities
may prohibit the payment of dividends by a bank or its parent holding company.
See Note 14 of Notes to Consolidated Financial Statements, which is incorporated
by reference into Item 8 of this Annual Report on Form 10-K.
Borrowings by the Company
Federal law prohibits FCC or its non-bank subsidiaries from borrowing
from its bank subsidiaries, unless the borrowings are secured by specified
amounts and types of collateral. Additionally, such secured loans are generally
limited to 10% of each subsidiary bank's capital and surplus and, in the
aggregate with respect to FCC and all of its subsidiaries, to 20% of each
subsidiary bank's capital and surplus. Further, 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 sale of property or furnishing
of services.
Company Support of Bank Subsidiaries
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
(FIRREA) contains a "cross-guarantee" provision which could result in any
insured depository institution owned by FCC (i.e., any bank subsidiary) being
assessed for losses incurred by the FDIC in connection with assistance provided
to, or the failure of, any other depository institution owned by FCC. In
addition, under Federal Reserve Board policy, FCC is expected to act as a source
of financial strength to each of its bank subsidiaries and to commit resources
to support each such bank in circumstances in which the bank might need outside
support.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (1991
Act) provides, among other things, that undercapitalized institutions, as
defined by regulatory authorities, must submit recapitalization plans, and a
parent company of such an institution must either (i) guarantee the
institution's compliance with the capital plan, up to an amount equal to the
lesser of five percent of the institution's assets at the time it becomes
undercapitalized or the amount of the capital deficiency when the institution
fails to comply with the plan, or (ii) suffer certain adverse consequences such
as a prohibition of dividends by the parent company to its shareholders.
Prompt Corrective Action
The 1991 Act and implementing regulations classify banks into five
categories generally relating to their regulatory capital ratios and institutes
a system of supervisory actions indexed to particular classification. Generally,
banks that are classified as "well capitalized" or "adequately capitalized" are
not subject to the supervisory actions specified in the 1991 Act for prompt
corrective action, but may be restricted from taking certain actions that would
lower their classification. Banks classified as "undercapitalized",
"significantly undercapitalized" or "critically undercapitalized" are subject to
restrictions and supervisory actions of increasing stringency based on the level
of classification.
Under the present regulation, all six of FCC's banks are
"well-capitalized". While such a classification would exclude the banks from the
restrictions and actions envisioned by the prompt corrective action provisions
of the 1991 Act, the regulatory agencies have broad powers under other
provisions of federal law that would permit them to place restrictions on the
banks or take other supervisory action regardless of such classification.
Other Provisions of the 1991 Act
In general, the 1991 Act subjected banks and bank holding companies to
significantly increased regulation and supervision. Other significant provisions
of the 1991 Act require the federal regulators to draft non-capital regulatory
measures to assure bank safety, including underwriting standards and minimum
earnings levels. The legislation further requires regulators to perform annual
on-site bank examinations, places limits on real estate lending and tightens
audit requirements. The 1991 Act and implementing regulations also impose
disclosure requirements relating to fees charged and interest paid on checking
and deposit accounts.
Interstate Banking and Branching Efficiency Act
In 1994, the Interstate Banking and Branching Efficiency Act of 1994
(Interstate Act) was enacted. Among other things, the Interstate Act (i) allows
bank holding companies after September 1995 to acquire a bank located in any
state, subject to certain limitations that may be imposed by the state, (ii)
allows banks after June 1, 1997, (or earlier if permitted by state law) to merge
across state lines unless the home state has enacted prior to June 1, 1997, a
law opting out of interstate bank mergers, and (iii) permits banks to establish
branches outside their state of domicile if expressly permitted by the law of
the state in which the branch is to be located. In 1995, the Louisiana
Legislature enacted legislation permitting an out-of-state bank holding company
to convert its Louisiana banks, as defined, into branches of the holding
company's out-of-state banks, effective June 1, 1997. Prior thereto an
out-of-state holding company is permitted only with certain limitations to
acquire Louisiana banks as separate entities. Registrant is unable to predict at
this time the effect of the Interstate Act and the Louisiana legislation on
competition.
Annual Insurance Assessment
FCC's bank subsidiaries are subject to deposit insurance assessment by
the FDIC. Effective January 1, 1996, the rate paid by the banks for deposit
insurance to the Bank Insurance Fund (BIF) was reduced to zero. Legislation is
pending regarding a special one-time assessment of approximately $.87 per $100
of deposits insured by the Savings Association Fund (SAIF). Approximately 85% of
FCC's deposits are insured by the BIF, while approximately $1.0 billion are
SAIF-insured deposits.
Miscellaneous
Federal and Louisiana laws provide for the enforcement of any pro rata
assessment of stockholders of a bank to cover impairment of capital stock by
sale, to the extent necessary, of the stock of any assessed stockholder failing
to pay the assessment. FCC, as the stockholder of its bank subsidiaries, is
subject to these provisions.
Item 2
Properties
FCC's executive offices are located in leased facilities in the Central
Business District of New Orleans. Through its subsidiaries, FCC also owns or
leases its principal banking facilities and offices in New Orleans, Baton Rouge,
Monroe, Lafayette, Alexandria and Lake Charles. Of the 142 banking offices open
at the end of 1995, 97 are owned and 45 are leased.
Data processing services for FCC and each of its subsidiaries are
performed in a facility in the Metropolitan New Orleans area, which is owned by
a subsidiary of FCC.
Management considers all properties owned or leased to be suitable and
adequate for their intended purposes and considers the leases to be fair and
reasonable. For additional information concerning premises and information
concerning FCC's obligations under long-term leases, see Note 9 of Notes to
Consolidated Financial Statements, which is incorporated by reference into Item
8 of this Annual Report on Form 10-K.
Item 3
Legal Proceedings
In the quarter ended March 31, 1989, suit was filed against
Registrant's wholly owned subsidiary, FNBC, in the matter entitled Guidry v.
Bank of LaPlace and others, Civil District Court for the Parish of Orleans.
Plaintiff sought to recover losses on certain investments, claiming that the
defendants breached duties owed to him. On April 22, 1994, a jury found that
FNBC had breached a state law duty to the plaintiff, and found it partially
responsible for plaintiff's loss, which it determined to be $4.5 million, plus
interest from April 17, 1989. On May 3, 1994, the court entered judgment against
FNBC for 15% of the $4.5 million (approximately $681,000) plus interest from
April 17, 1989. On September 15, 1995, the Louisiana Court of Appeals, Fourth
Circuit, reversed the lower court and held that FNBC was not liable for any
amount to the plaintiff. All parties applied for a review of the decision by the
Louisiana Supreme Court and on January 5, 1996, the Court denied the
application, thus finally concluding the litigation.
In the quarter ended December 31, 1995, suit was filed against the
Registrant's wholly-owned subsidiary, FNBC, among other defendants, in the
matter entitled City of New Orleans and Rivergate Development Corporation v.
Harrah's Entertainment, Inc. and others, Civil District Court for the Parish of
Orleans. The plaintiffs sued FNBC in its capacity as Trustee under the $435
million Trust Indenture created to finance construction of a land-based casino
in New Orleans, claiming that FNBC breached an "implied duty of good faith" to
the City as an additional beneficiary under the Notes Completion Guarantee, a
security instrument executed in connection with the Trust Indenture. Plaintiffs
seek the joint and several liability of all named defendants to complete
construction of the land-based casino, at an estimated cost of $190 million. On
January 23, 1996, Harrah's Entertainment, Inc. and its related defendants, with
the consent of FNBC, removed the suit from state to the federal bankruptcy
court in New Orleans. Plaintiffs subsequently filed a motion to return the
suit to state court and FNBC also filed a motion for dismissal from the
lawsuit, based on the assertion that the plaintiff has not stated a valid
cause of action against FNBC. Both plaintiffs' and FNBC's motions are pending.
In the opinion of management, after consulting with counsel, the ultimate
outcome of the litigation will not result in a material adverse effect upon FCC.
FCC and its subsidiaries have been named as defendants in various other
legal actions arising from normal business activities in which damages of
various amounts are claimed. The amount, if any, of ultimate liability with
respect to such matters cannot be determined. However, after consulting with
legal counsel, management believes any such liability will not have a material
effect on FCC's consolidated financial condition or results of operations.
Item 4
Submission of Matters to a Vote of Security Holders
Not Applicable
PART II
Information required for Items 5 through 8 is included in First
Commerce Corporation's 1995 Annual Report to stockholders filed as Exhibit 13
herewith and incorporated herein on the pages indicated below.
Item 5
Market for the Registrant's Common Stock and Related Stockholder Matters, Pages
34-36
Item 6
Selected Financial Data, Pages 34-36
Item 7
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Pages 15-33
Item 8
Financial Statements and Supplementary Data, Pages 37-58
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Not Applicable
PART III
Item 10
Directors and Executive Officers of the Registrant
IAN ARNOF, 56 -- President, Chief Executive Officer and Director of FCC since
1983.
JAMES A. ALTICK, 56 -- Chairman of the Board of Directors of Central Bank of
Monroe, La. (acquired by Registrant in 1995) since 1982; President and Chief
Executive Officer of Central Bank from 1976 to 1996.
R. JEFFREY BROOKS, 47 -- Executive Vice President since 1993; Director of
Strategic Support of FCC from 1993 to 1994; President and Chief Operating
Officer of FNBLC from 1992 to 1993; Senior Vice President and Bankcard Group
Manager of FNBC from 1986 to 1992.
THOMAS L. CALLICUTT, JR., 48 -- Senior Vice President, Controller and Principal
Accounting Officer of FCC since 1987.
MICHAEL A. FLICK, 47 -- Executive Vice President of FCC since 1985; Chief
Administrative Officer of FCC since 1994; Chief Credit Policy Officer of FCC
from 1985 to 1994; Chief Financial Officer from 1988 to 1992; Secretary of FCC
since 1987.
HOWARD C. GAINES, 55 -- Chairman of the Board of Directors of FNBC since 1988;
Chief Executive Officer of FNBC from 1988 to 1994.
THOMAS C. JAEGER, 45 -- Executive Vice President and Chief Financial Officer of
FCC since 1994; Senior Vice President and Chief Internal Auditor of FCC from
1989 to 1994.
KIMBERLY Y. LEE, 35 -- Executive Vice President and Chief Internal Auditor of
FCC since 1994; Senior Vice President and Manager of Audit and Credit Review
from 1992 to 1994. Ms. Lee served as a national bank examiner for the Office of
the Comptroller of the Currency from 1982 to 1992.
ASHTON J. RYAN, JR., 48 -- Senior Executive Vice President of FCC since 1993;
President of FNBC since 1991; Chief Executive Officer of FNBC since 1994; Chief
Operating Officer of FNBC from 1991 to 1994.
E. GRAHAM THOMPSON, 59 -- Executive Vice President and Chief Credit Policy
Officer of FCC since 1994; Chief Executive Officer of FNBL from 1992 to 1994;
Chairman of FNBL from 1993 to 1994; President of FNBL from 1992 to 1993; Chief
Executive Officer of RBT from 1992 to 1994; President and Chief Executive
Officer of CNB from 1987 to 1992.
JOSEPH V. WILSON III, 46 -- Senior Executive Vice President of FCC since 1993;
Executive Vice President of FCC from 1989 to 1992.
The remaining information required under Item 10, and the information
required by Items 11 through 13 is incorporated by reference to the Registrant's
definitive Proxy Statement for the 1996 Annual Meeting of Stockholders filed
with the Securities and Exchange Commission.
PART IV
Item 14
Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements - See Item 8.
2. Financial Statement Schedules - All schedules are omitted,
since they are either not applicable or the required
information is shown in the financial statements or notes
thereto.
3. Exhibit 3.1 Composite Articles of
Incorporation of First Commerce Corporation.
3.2 Amended and Restated By-laws of First
Commerce Corporation.
4.1 Indenture between First Commerce Corporation
and Republic Bank, Dallas, N.A., Trustee,
(trusteeship since transferred to The Bank
of New York) including the form of 12 3/4%
Convertible Debentures due 2000, Series A
included as Exhibit 4.1 to First Commerce
Corporation's Annual Report on Form 10-K for
the year ended December 31, 1985 and
incorporated herein by reference.
4.2 Indenture between First Commerce Corporation
and Republic Bank Dallas, N.A., Trustee,
(trusteeship since transferred to The Bank
of New York) including the form of 12 3/4%
Convertible Debentures due 2000, Series B
included as Exhibit 4.2 to First Commerce
Corporation's Annual Report on Form 10-K for
the year ended December 31, 1985 and
incorporated herein by reference.
4.3 Rights Agreement between First Commerce
Corporation and First Chicago Trust Company
of New York as Rights Agent.
10.1 Form of Employment Agreement between First
Commerce Corporation and Messrs. Arnof,
Brooks, Flick, Gaines, Ryan, Thompson,
Wilson and Ms. Lee.
10.2 Amended and Restated First Commerce
Corporation Supplemental Tax-Deferred
Savings Plan included as Exhibit 10.1 to
First Commerce Corporation's Annual Report
on Form 10-K for the year ended December 31,
1994, and incorporated herein by reference.
10.3 First Commerce Corporation Retirement
Benefit Restoration Plan included as Exhibit
10.2 to First Commerce Corporation's Annual
Report on Form 10-K for the year ended
December 31, 1994, and incorporated herein
by reference.
10.4 First Commerce Corporation Amended and
Restated 1992 Stock Incentive Plan, Form of
Nonqualified Stock Option Agreement and Form
of Restricted Stock Agreement included as
Exhibit 10.4 to First Commerce Corporation's
Annual Report on Form 10-K for the year
ended December 31, 1994, and incorporated
herein by reference.
11 Statement Re: Computation of Earnings Per
Share
13 First Commerce Corporation's 1995 Annual
Report to Stockholders
21 Subsidiaries of First Commerce Corporation
23 Consent of Arthur Andersen LLP
24 Power of Attorney
27 Financial Data Schedule
(b) Reports on Form 8-K
A report on Form 8-K dated November 3, 1995 was filed by the
registrant reporting Item 2 - Acquisition or Disposition of
Assets and Item 7 - Financial Statements and Exhibits. The
report contained information regarding the consummation of
FCC's acquisition of Central Corporation.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
First Commerce Corporation
(Registrant)
By /s/ THOMAS L. CALLICUTT, JR.
-----------------------------
Thomas L. Callicutt, Jr.
Senior Vice President, Controller and
Principal Accounting Officer
Date March 21, 1996
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 on the dates indicated.
Signatures Title
Ian Arnof President and Chief Executive Officer
Hermann Moyse, Jr. Chairman of the Board
Thomas C. Jaeger Executive Vice President and Chief Financial Officer
James J. Bailey III Director
John W. Barton Director
Sydney J. Besthoff III Director
Robert C. Cudd III Director
Frances B. Davis Director
Laurance Eustis, Jr. Director
William P. Fuller Director
Arthur Hollins III Director
F. Ben James, Jr. Director By /s/ THOMAS L. CALLICUTT, JR.
Erik F. Johnsen Director -----------------------------
J. Merrick Jones, Jr. Director Thomas L. Callicutt, Jr.
Edwin Lupberger Director Attorney-in-Fact
Mary Chavanne Martin Director
Hugh G. McDonald, Jr. Director Date: March 21, 1996
Saul A. Mintz Director
O. Miles Pollard, Jr. Director
G. Frank Purvis, Jr. Director
T.H. Scott Director
Edward M. Simmons Director
H. Leighton Steward Director
Robert A. Weigle Director