1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-6198
FIRST AMERICAN CORPORATION
(Exact name of Registrant as specified in its charter)
TENNESSEE 62-0799975
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
FIRST AMERICAN CENTER, NASHVILLE, TENNESSEE 37237
(address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 615/748-2000
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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common shares outstanding: 26,103,247 as of July 27, 1994.
2
PART I. FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
FOR QUARTER ENDED JUNE 30, 1994
3
FIRST AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
QUARTER ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
------------------- --------------------
1994 1993 1994 1993
------------------- --------------------
(IN THOUSANDS)
INTEREST INCOME
Interest and fees on loans $ 84,664 $ 71,556 $162,975 $140,463
Interest and dividends on securities 29,514 35,827 60,287 70,975
Interest on Federal funds sold and securities
purchased under agreements to resell 650 729 1,843 1,501
Interest on time deposits with other banks and other interest 246 353 541 1,212
- - ----------------------------------------------------------------------------------------------------------------------
Total interest income 115,074 108,465 225,646 214,151
- - ----------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits:
NOW accounts 4,048 3,644 7,822 7,126
Money market accounts 14,002 11,281 26,503 22,123
Regular savings 2,484 2,496 4,938 4,934
Certificates of deposit under $100,000 10,316 11,412 20,358 23,206
Certificates of deposit $100,000 and over 3,580 3,580 6,341 6,990
Other time and foreign 3,654 4,437 7,461 9,136
- - ----------------------------------------------------------------------------------------------------------------------
Total interest on deposits 38,084 36,850 73,423 73,515
- - ----------------------------------------------------------------------------------------------------------------------
Interest on short-term borrowings 6,592 3,963 11,736 7,856
Interest on long-term debt 959 987 1,898 1,302
- - ----------------------------------------------------------------------------------------------------------------------
Total interest expense 45,635 41,800 87,057 82,673
- - ----------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 69,439 66,665 138,589 131,478
PROVISION FOR LOAN LOSSES (NOTE 4) - (10,000) - (8,000)
- - ----------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 69,439 76,665 138,589 139,478
- - ----------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Service charges on deposit accounts 10,440 9,676 19,861 18,648
Commissions and fees on fiduciary activities 4,295 3,695 8,529 7,499
Investment services income 2,065 2,603 4,175 3,549
Merchant discount fees 1,729 1,568 3,236 2,851
Trading account revenue 461 673 1,003 1,362
Net gain (loss) on sale of securities available for sale 117 (772) (286) (2,344)
Other income 6,146 5,181 13,253 10,488
- - ----------------------------------------------------------------------------------------------------------------------
Total non-interest income 25,253 22,624 49,771 42,053
- - ----------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 32,304 29,412 63,972 58,354
Net occupancy expense 5,078 6,017 10,491 11,161
Equipment expense 3,593 3,860 7,180 7,063
Systems and processing expense 2,399 3,833 5,818 7,195
FDIC insurance expense 3,126 3,414 6,225 6,832
Communication expense 2,057 1,788 4,043 3,589
Supplies expense 1,308 1,256 2,634 2,396
Foreclosed properties expense (income), net (222) (595) (998) (2,131)
Other expenses 9,472 9,005 17,578 18,132
- - ----------------------------------------------------------------------------------------------------------------------
Total non-interest expense 59,115 57,990 116,943 112,591
- - ----------------------------------------------------------------------------------------------------------------------
Income before income tax expense and cumulative effect of changes
in accounting principles 35,577 41,299 71,417 68,940
Income tax expense (note 7) 13,517 15,269 27,417 25,490
- - ----------------------------------------------------------------------------------------------------------------------
Income before cumulative effect of changes in accounting principles 22,060 26,030 44,000 43,450
Cumulative effect of changes in accounting principles, net of tax
(notes 6 and 7) - - - 1,216
- - ----------------------------------------------------------------------------------------------------------------------
NET INCOME $ 22,060 $ 26,030 $ 44,000 $ 44,666
======================================================================================================================
PER COMMON SHARE:
Income before cumulative effect of changes in accounting principles $ .85 $ 1.01 $ 1.69 $ 1.68
Cumulative effect of changes in accounting principles, net of tax - - - .05
- - ----------------------------------------------------------------------------------------------------------------------
Net income $ .85 $ 1.01 $ 1.69 $ 1.73
======================================================================================================================
Cash dividends $ .21 $ .15 $ .42 $ .25
======================================================================================================================
Weighted average common shares outstanding 26,073 25,903 26,057 25,864
======================================================================================================================
See notes to consolidated financial statements.
4
FIRST AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30 DECEMBER 31
--------------------------- --------------
1994 1993 1993
----------- ----------- --------------
(IN THOUSANDS)
ASSETS
Cash and due from banks $ 368,630 $ 388,657 $ 500,119
Time deposits with other banks 2,784 27,754 2,195
Securities (note 2):
Held to maturity (market value $1,505,608, $1,318,205 and
$670,764, respectively) 1,543,636 1,281,022 657,835
Available for sale (amortized cost $420,096, market value
$930,219, and amortized cost $1,356,896, respectively) 399,693 898,770 1,392,984
- - -----------------------------------------------------------------------------------------------------------------------
Total securities 1,943,329 2,179,792 2,050,819
- - -----------------------------------------------------------------------------------------------------------------------
Federal funds sold and securities purchased under
agreements to resell 190,570 187,286 144,785
Trading account securities 8,969 6,268 12,263
Loans:
Commercial 2,012,696 1,734,855 1,953,983
Consumer--amortizing mortgages 1,088,193 729,213 1,015,852
Consumer--other 1,013,252 932,774 969,929
Real estate--construction 96,282 101,012 106,624
Real estate--commercial mortgages and other 314,352 300,756 302,772
- - -----------------------------------------------------------------------------------------------------------------------
Total loans 4,524,775 3,798,610 4,349,160
Unearned discount and net deferred loan fees 7,070 12,202 9,072
- - -----------------------------------------------------------------------------------------------------------------------
Loans, net of unearned discount and net deferred
loan fees 4,517,705 3,786,408 4,340,088
Allowance for possible loan losses (note 4) 136,745 167,600 134,124
- - -----------------------------------------------------------------------------------------------------------------------
Total net loans 4,380,960 3,618,808 4,205,964
- - -----------------------------------------------------------------------------------------------------------------------
Premises and equipment, net 104,945 110,828 102,596
Foreclosed properties 15,953 33,014 18,881
Other assets 211,543 168,770 150,700
- - -----------------------------------------------------------------------------------------------------------------------
Total assets $7,227,683 $6,721,177 $7,188,322
=======================================================================================================================
LIABILITIES
Deposits:
Demand (non-interest-bearing) $1,132,747 $1,140,749 $1,232,951
NOW accounts 798,448 700,206 797,343
Money market accounts 1,471,116 1,361,367 1,442,316
Regular savings 428,164 399,415 424,492
Certificates of deposit under $100,000 1,113,602 1,130,377 1,137,965
Certificates of deposit $100,000 and over 374,875 353,136 296,285
Other time 315,378 339,707 327,231
Foreign 67,112 21,098 31,975
- - -----------------------------------------------------------------------------------------------------------------------
Total deposits 5,701,442 5,446,055 5,690,558
- - -----------------------------------------------------------------------------------------------------------------------
Short-term borrowings 807,958 618,699 756,763
Long-term debt 52,382 66,265 65,945
Other liabilities 84,843 81,250 93,347
- - -----------------------------------------------------------------------------------------------------------------------
Total liabilities 6,646,625 6,212,269 6,606,613
- - -----------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common stock, $5 par value; authorized 50,000,000
shares; issued: 26,094,370 shares at June 30, 1994;
25,918,872 shares at June 30, 1993 and 25,988,201
shares at December 31, 1993 130,472 129,594 129,941
Capital surplus 118,890 116,162 117,015
Retained earnings 346,698 264,305 313,644
Deferred compensation on restricted stock (1,963) (1,153) (940)
- - -----------------------------------------------------------------------------------------------------------------------
Realized shareholders' equity 594,097 508,908 559,660
Net unrealized gains (losses) on securities available
for sale, net of tax (note 2) (13,039) - 22,049
- - -----------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 581,058 508,908 581,709
- - -----------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $7,227,683 $6,721,177 $7,188,322
=======================================================================================================================
See notes to consolidated financial statements.
5
FIRST AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
NET
UNREALIZED
DEFERRED GAINS
COMPENSATION (LOSSES)
ON ON SECURITIES
SIX MONTHS ENDED JUNE 30, 1993, AND COMMON CAPITAL RETAINED RESTRICTED AVAILABLE
JUNE 30, 1994 STOCK SURPLUS EARNINGS STOCK FOR SALE TOTAL
--------- --------- -------- ----------- --------- ----------
(IN THOUSANDS)
Balance, January 1, 1993 $128,931 $114,350 $226,113 $ (1,073) $ - $468,321
Issuance of 122,067 common shares in
connection with Employee Benefit Plan, net
of discount on Dividend Reinvestment Plan 610 1,571 - - - 2,181
Issuance of 10,600 shares of restricted common
stock 53 241 - (294) - -
Amortization of deferred compensation on
restricted stock - - - 214 - 214
Net income - - 44,666 - - 44,666
Cash dividends declared ($.25 per common
share) - - (6,474) - - (6,474)
- - -----------------------------------------------------------------------------------------------------------------------------------
Balance June 30, 1993 $129,594 $116,162 $264,305 $(1,153) $ - $508,908
===================================================================================================================================
Balance, January 1, 1994 $129,941 $117,015 $313,644 $ (940) $ 22,049 $581,709
Issuance of 60,969 common shares in
connection with Employee Benefit Plan, net
of discount on Dividend Reinvestment Plan 305 728 - - - 1,033
Issuance of 45,200 shares of restricted common
stock 226 1,147 - (1,373) - -
Amortization of deferred compensation on
restricted stock - - - 350 - 350
Net income - - 44,000 - - 44,000
Cash dividends declared ($.42 per common
share) - - (10,946) - - (10,946)
Change in net unrealized gains and losses on
securities available for sale, net of taxes - - - - (35,088) (35,088)
- - -----------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1994 $130,472 $118,890 $346,698 $ (1,963) $ (13,039) $581,058
===================================================================================================================================
See notes to consolidated financial statements.
6
FIRST AMERICAN CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
JUNE 30
--------------------------
1994 1993
---------- ----------
(IN THOUSANDS)
OPERATING ACTIVITIES
Net income $ 44,000 $ 44,666
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses - (8,000)
Depreciation of premises and equipment 6,786 6,747
Cumulative effect of changes in accounting principles, net of tax - (1,216)
Amortization of intangible assets 1,659 1,168
Other amortization (accretion), net (107) 3,145
Deferred income tax expense (benefit) (1,329) 3,151
Net loss on sale of securities available for sale 286 2,344
Net gain on sale of premises and equipment (172) -
Change in assets and liabilities, net of effects from purchase of
bank subsidiary:
Decrease in accrued interest receivable 2,819 1,037
Decrease in accrued interest payable (5,736) (1,927)
Decrease in trading account securities 3,294 1,613
(Increase) decrease in other assets (35,197) 27,172
Decrease in other liabilities (3,037) (35,008)
- - -------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 13,266 44,892
- - -------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net (increase) decrease in time deposits with other banks (589) 89,431
Proceeds from sale of securities available for sale 1,304,215 657,795
Proceeds from maturities of securities available for sale 118,526 6,743
Purchases of securities available for sale (681,178) (975,564)
Proceeds from maturities of securities held to maturity 91,112 544,016
Purchases of securities held to maturity (774,363) (430,106)
Net increase in Federal funds sold and
securities purchased under agreements to resell (45,785) (91,836)
Net increase in loans (140,332) (92,615)
Purchase of bank subsidiary, net of cash acquired (1,784) -
Proceeds from sale of premises and equipment 784 81
Purchases of premises and equipment (8,755) (16,332)
- - -------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (138,149) (308,387)
- - -------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net decrease in deposits (34,129) (75,784)
Net increase in short-term borrowings 51,195 10,120
Proceeds from issuance of long-term debt - 49,680
Redemption of 7 5/8% debentures at 101.22% (13,759) -
Net repayment of remaining long-term debt - (318)
Net proceeds from issuance of common stock 1,033 2,181
Cash dividends paid (10,946) (6,474)
- - -------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (6,606) (20,595)
- - -------------------------------------------------------------------------------------------------------------------
Decrease in cash and due from banks (131,489) (284,090)
Cash and due from banks, January 1 500,119 672,747
- - -------------------------------------------------------------------------------------------------------------------
Cash and due from banks, June 30 $ 368,630 $388,657
===================================================================================================================
Cash paid during the period for:
Interest expense $ 81,157 $ 81,585
Income taxes 31,453 27,447
Noncash investing activities:
Foreclosures 1,053 14,996
Securities transferred to held to maturity
from available for sale 203,764 -
- - -------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
7
FIRST AMERICAN CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles and general practices within the
banking industry.
The interim consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
presented in the Corporation's 1993 Annual Report to Shareholders. The
quarterly consolidated financial statements reflect all adjustments which are,
in the opinion of management, necessary for a fair presentation of the results
for interim periods. Certain prior year amounts have been reclassified to
conform with current year presentation. The results for interim periods are
not necessarily indicative of results to be expected for the complete fiscal
year.
(2) SECURITIES
Securities carried in the consolidated balance sheets at approximately
$1.38 billion, $1.11 billion, and $1.31 billion at June 30, 1994 and 1993 and
December 31, 1993, respectively, were pledged to secure public and trust
deposits and for other purposes as required or permitted by law.
At June 30, 1994, gross unrealized gains and losses on securities held
to maturity were $1.2 million and $39.2 million, respectively, and gross
unrealized gains and losses on securities available for sale were $.2 million
and $20.6 million, respectively.
Effective December 31, 1993, the Corporation adopted Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115 requires investments
in equity securities that have a readily determinable fair value and
investments in debt securities to be classified into three categories, as
follows: held to maturity debt securities, which are reported at amortized
cost; trading securities, which are reported at fair value with unrealized
gains and losses included in earnings; and securities available for sale, which
are reported at fair value, with unrealized gains and losses excluded from
earnings and reported, net of tax, as a separate component of shareholders'
equity. There was no impact on the Corporation's 1993 consolidated net income
as a result of adoption of SFAS No. 115.
(3) NONPERFORMING ASSETS
Nonperforming assets were as follows:
JUNE 30 December 31
- - -----------------------------------------------------------------------------------------
(in thousands) 1994 1993 1993
- - -----------------------------------------------------------------------------------------
Non-accrual loans $ 15,185 $ 38,708 $ 21,666
Foreclosed properties 15,953 33,014 18,881
- - -----------------------------------------------------------------------------------------
Total nonperforming assets $ 31,138 $ 71,722 $ 40,547
=========================================================================================
90 days or more past due
on accrual $ 2,658 $ 4,586 $ 4,764
=========================================================================================
Nonperforming assets as a percent of
loans and foreclosed properties .69% 1.88% .93%
=========================================================================================
8
(4) ALLOWANCE FOR POSSIBLE LOAN LOSSES
Transactions in the allowance for possible loan losses were as follows:
SIX MONTHS ENDED
JUNE 30
- - -----------------------------------------------------------------------------------------------------------------
(in thousands) 1994 1993
- - -----------------------------------------------------------------------------------------------------------------
Balance, January 1 $134,124 $181,108
Provision (credited) charged to operating expenses - (8,000)
Allowance of subsidiary purchased (note 9) 323 -
- - -----------------------------------------------------------------------------------------------------------------
134,447 173,108
- - -----------------------------------------------------------------------------------------------------------------
Loans charged off 7,105 14,270
Recoveries of loans previously charged off (9,403) (8,762)
- - -----------------------------------------------------------------------------------------------------------------
Net charge-offs (recoveries) (2,298) 5,508
- - -----------------------------------------------------------------------------------------------------------------
Balance, June 30 $136,745 $167,600
=================================================================================================================
Allowance ratios were as follows:
SIX MONTHS ENDED
JUNE 30
- - -----------------------------------------------------------------------------------------------------------------
1994 1993
- - -----------------------------------------------------------------------------------------------------------------
Allowance end of period to net loans outstanding 3.03% 4.43%
Net charge-offs (recoveries) to average loans (annualized) (.11) .30
=================================================================================================================
Net charge-offs (recoveries) by major categories were as follows:
SIX MONTHS ENDED
JUNE 30
- - -----------------------------------------------------------------------------------------------------------------
(in thousands) 1994 1993
- - -----------------------------------------------------------------------------------------------------------------
Commercial $ (2,204) $ 2,054
Consumer--amortizing mortgages (273) 53
Consumer--other 527 2,485
Real estate--construction (13) 483
Real estate--commercial mortgages and other (335) 433
- - -----------------------------------------------------------------------------------------------------------------
Total net charge-offs (recoveries) $ (2,298) $ 5,508
=================================================================================================================
(5) LONG-TERM DEBT
On January 31, 1994, the Corporation redeemed the remaining balance of
approximately $13.6 million of its 7 5/8% debentures due in 2002, at a price of
101.22%.
(6) EMPLOYEE BENEFITS
Effective January 1, 1993, the Corporation adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," which
requires the cost of postretirement benefits other than pensions to be
recognized on an accrual basis as employees perform services to earn such
benefits. The Corporation recognized this item during the first quarter of 1993
as a cumulative effect of a change in accounting principle, resulting in a
one-time non-cash charge of $17.5 million before taxes ($11.6 million after
taxes). This charge represents the discounted present value of expected future
retiree medical and death benefits attributable to employees' service rendered
prior to 1993.
Effective December 31, 1993, the Corporation adopted SFAS No. 112,
"Employers' Accounting for Postemployment Benefits," which requires employers to
recognize a liability for postemployment benefits under certain circumstances.
The Corporation's short-term and long-term disability benefits, survivor income
benefits, and certain other benefits are governed by this statement. The
Corporation recognized this item during fourth quarter 1993 as a cumulative
effect of a change in accounting principle, resulting in a one-time non-cash
charge of $2.0 million before taxes ($1.3 million after taxes).
9
(7) INCOME TAXES
Income tax expense (benefit) attributable to income from continuing
operations consisted of the following:
SIX MONTHS ENDED
JUNE 30
- - ----------------------------------------------------------------------------------------------------------
(in thousands) 1994 1993
- - ----------------------------------------------------------------------------------------------------------
Current - Federal $24,363 $18,762
State 4,383 3,577
Deferred - Federal (581) 3,460
State (748) (309)
- - ----------------------------------------------------------------------------------------------------------
Total $27,417 $25,490
==========================================================================================================
Effective January 1, 1993, the Corporation adopted SFAS No. 109,
"Accounting for Income Taxes," which requires a change from the deferred method
of accounting for income taxes applying Accounting Principles Bulletin No. 11 to
the asset and liability method of accounting for income taxes. Under the asset
and liability method of SFAS No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
Under SFAS No. 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. The cumulative effect of this change in accounting for income
taxes, net of a $3.9 million valuation allowance, was a $12.8 million benefit
and is included in the cumulative effect of changes in accounting principles in
the 1993 consolidated income statement.
The valuation allowance for deferred tax assets as of December 31, 1993,
was $1.3 million. The net change in the total valuation allowance for the six
months ended June 30, 1994, was a net decrease of $.6 million as a result of
continuing operations.
At June 30, 1994, deferred tax assets, net of a valuation allowance of
$.7 million, totalled $81.3 million and deferred tax liabilities totalled $19.6
million, resulting in net deferred tax assets of $61.7 million. Management
believes that more likely than not, the deferred tax assets, net of a valuation
allowance, will be realized. The tax effects of temporary differences that give
rise to the significant portion of deferred tax assets at June 30, 1994, include
the allowance for loan losses ($51.0 million), valuation of securities available
for sale ($8.3 million), and postretirement benefit obligation ($7.7). The tax
effects of temporary differences that give rise to deferred tax liabilities
include plant and equipment ($5.6 million), direct lease financing ($7.0
million), and purchase accounting adjustments ($2.5 million).
(8) LEGAL MATTERS
The Corporation and seven other financial institutions are defendants
in a class action lawsuit brought in the Circuit Court of Shelby County,
Tennessee. The lawsuit alleges anti-trust, unconscionability, usury, and
contract claims arising out of the defendants' returned check charges. The
asserted plaintiff class consists of depositors who have been charged returned
check or overdraft fees. The plaintiffs are requesting compensatory and
punitive damages of $25 million against each defendant. The anti-trust,
unconscionability, and usury claims were previously dismissed, and in December
1993 the Circuit Court granted the defendants' motion for summary judgment and
dismissed the remaining claim. The plaintiffs have appealed. In addition, an
antitrust lawsuit alleging a price fixing conspiracy has been filed against the
Corporation and eight other financial institutions by the plaintiffs in the
U.S. District Court for the Western District of Tennessee. The defendant
banks' motion for summary judgment in the Federal action was also granted and
the plaintiffs have appealed. Management believes these suits are without
merit and, based upon information currently known and on advice of counsel,
that they will not have a material adverse effect on the Corporation's
consolidated financial statements.
Also, there are from time to time other legal proceedings pending
against the Corporation and its subsidiaries. In the opinion of management and
counsel, liabilities, if any, arising from such proceedings presently pending
would not have a material adverse effect on the consolidated financial
statements of the Corporation.
10
(9) ACQUISITION
On April 1, 1994, the Corporation consummated its purchase of all of
the outstanding shares of Fidelity Crossville Corp. (FCC), the parent company
of First Fidelity Savings Bank, F.S.B. (First Fidelity) located in Crossville,
Tennessee, for $6.5 million. First Fidelity was a Federal stock savings bank
with offices in Crossville and Fairfield Glade with total assets of $48.7
million at that date. In conjunction with the acquisition, First Fidelity was
merged into First American National Bank and First Fidelity's two offices
became branches of First American National Bank. The transaction was accounted
for as a purchase.
(10) ACCOUNTING MATTERS
During May 1993, the Financial Accounting Standards Board issued SFAS
No. 114, "Accounting by Creditors for Impairment of a Loan," which is effective
for fiscal years beginning after December 15, 1994. SFAS No. 114 requires that
impaired loans be measured at the present value of expected future cash flows
discounted at the loan's effective interest rate, at the loan's observable
market price, or the fair value of the collateral if the loan is collateral
dependent. At this time, the Corporation is evaluating when and how it will
adopt SFAS No. 114. Adoption of SFAS No. 114 is not expected to have a
material effect on the Corporation's consolidated financial statements.
(11) EARNINGS PER COMMON SHARE
Earnings per common share amounts are computed by dividing net income
by the weighted average number of common shares outstanding during each
respective period.
11
PART I. FINANCIAL INFORMATION
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR QUARTER ENDED JUNE 30, 1994
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
The following discussion should be read in conjunction with the
consolidated financial statements and supplementary data appearing within this
report. Reference should also be made to the Corporation's 1993 Annual Report
for a complete discussion of factors that impact results of operations,
liquidity, and capital.
HIGHLIGHTS
Net income for the second quarter of 1994 was $22.1 million or $.85 per
share compared with $26.0 million or $1.01 per share for the second quarter of
1993. For the six months ended June 30, 1994, net income was $44.0 million or
$1.69 per share compared with $44.7 million or $1.73 per share for the six
months ended June 30, 1993. Net income for the first six months of 1993
included $1.2 million or $.05 per share for the cumulative effect of changes in
accounting principles. Effective January 1, 1993, the Corporation adopted the
provisions of Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions" and
SFAS No. 109, "Accounting for Income Taxes." Income before the cumulative
effect of changes in accounting principles for the six months ended June 30,
1993, was $43.5 million or $1.68 per share.
The $4.0 million decline in second quarter 1994 earnings compared to
the same time last year was primarily due to the zero provision for loan losses
in the current quarter compared to the negative $10.0 million provision in the
second quarter of 1993. In addition, second quarter 1994 earnings include a
$1.1 million increase in non-interest expense, a $2.8 million increase in net
interest income and a $2.6 million increase in non-interest income. Exclusive
of the $10.0 million negative provision for loan losses, net of tax, taken
during the second quarter of 1993, net income was $19.7 million compared to
$22.1 million in the second quarter of 1994.
The $.7 million decrease in net income for the six months ended June
30, 1994, compared to the same period last year was primarily due to the zero
provision for loan losses for the current period compared to the $8.0 million
negative provision for the six months ended June 30, 1993. In addition, net
income for the six months ended June 30, 1994, included a $4.4 million increase
in non-interest expense, a $7.1 million improvement in net interest income and
a $7.7 million increase in non-interest income. Exclusive of the cumulative
effect of changes in accounting principles and the $8.0 million negative
provision for loan losses, net of tax, recorded during the first six months of
1993, net income was $38.4 million compared to $44.0 million in the first six
months of 1994.
On April 1, 1994, the Corporation consummated its purchase of all of
the outstanding shares of Fidelity Crossville Corp. (FCC), the parent company
of First Fidelity Savings Bank, F.S.B.(First Fidelity) located in Crossville,
Tennessee, for $6.5 million. First Fidelity was a Federal stock savings bank
with offices in Crossville and Fairfield Glade with total assets of $48.7
million at that date. In conjunction with the acquisition, First Fidelity was
merged into First American National Bank and First Fidelity's two offices
became branches of First American National Bank. The transaction was accounted
for as a purchase.
BALANCE SHEET
Total assets of the Corporation rose $506.5 million or 8% to $7.23
billion at June 30, 1994, compared to $6.72 billion one year earlier. The
growth in total assets is primarily due to a $731.3 million (19%) increase in
loans, net of unearned discount and net deferred loan fees, to $4.52 billion at
June 30, 1994, from $3.79 billion at June 30, 1993. Total consumer loans at
June 30, 1994, reflects an increase of $439.5 million or 26% as compared to
June 30, 1993, primarily as a result of additional residential mortgage
lending. Contributing to the increase in loans were the acquisitions First
American National Bank of Kentucky (FANBKY) on October 1, 1993, and First
Fidelity on April 1, 1994, which were accounted for as purchases and which had
loans of $164.1 million and $35.0 million, respectively, on the acquisition
dates. Excluding these acquisitions, loans increased $532.2 million or 14%.
Partially offsetting the increase in loans was a decrease in securities of
$236.5 million (11%). At June 30, 1994, securities available for sale
reflected net unrealized losses of $20.4 million related to SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," which the
Corporation adopted effective December 31, 1993.
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Total deposits were $5.70 billion at June 30, 1994, an increase of
$255.4 million or 5% from $5.45 billion a year earlier. The increase in
deposits is primarily due to the acquisitions of FANBKY and First Fidelity,
which had deposits of $185.5 million and $45.0 million, respectively, on the
acquisition dates. Excluding these acquisitions, deposits increased $24.9
million or just under 1%. Core deposits, which are defined as total deposits
excluding certificates of deposit $100,000 and over and foreign deposits,
totalled $5.26 billion at June 30, 1994, an increase of $187.6 million or 4%
from a year earlier. Short-term borrowings, primarily Federal funds purchased
and securities sold under agreements to repurchase, increased $189.3 million or
31%.
Total shareholders' equity was $581.1 million or 8.04% of total assets
at June 30, 1994, as compared with $508.9 million or 7.57% of total assets at
June 30, 1993. Book value per share was $22.27, $19.63, and $22.38 for June
30, 1994 and 1993 and December 31, 1993, respectively. The slight decline in
book value per share from December 31, 1993, to June 30, 1994, reflects a
decrease of $35.1 million in net unrealized gains and losses on securities
available for sale, net of tax, recorded in accordance with SFAS No. 115.
NET INTEREST INCOME
The Corporation's primary source of earnings is net interest income,
which is the difference between interest earned on earning assets and interest
expense incurred on interest-bearing liabilities. Net interest income is
affected by the volume and mix of earning assets and interest-bearing
liabilities and the respective yields earned and rates paid. The Corporation's
1993 Annual Report includes additional discussion of factors which impact net
interest income.
Net interest income on a taxable equivalent basis amounted to $70.3
million for the second quarter of 1994, compared to $67.6 million for the
second quarter of 1993, an increase of $2.7 million or 4%. The increase was
primarily due to an increase in the volume of earning assets partially offset
by a lower net interest spread, which is the difference between the yield on
earning assets and the rate paid on interest-bearing liabilities. Average
earning assets increased 8% to $6.58 billion in the second quarter of 1994 from
$6.11 billion in the second quarter of 1993. Average loans increased $728.0
million (19%) while average securities decreased $220.1 million (10%). For the
second quarter of 1994, the Corporation's net interest spread declined 20 basis
points to 3.66% from 3.86% for the second quarter of 1993. This decrease
resulted from a combination of an 11 basis point decline in the rates earned on
earning assets (primarily securities and consumer loans) and a nine basis point
increase in the rates paid on interest-bearing liabilities (other than
deposits). As the net interest spread declined, the net interest margin, which
is net interest income expressed as a percentage of average earning assets,
decreased to 4.29% for the second quarter of 1994 as compared with 4.44% for
the same quarter a year earlier.
Net interest income on a taxable equivalent basis amounted to $140.3
million for the six months ended June 30, 1994, compared to $133.4 million from
the six months ended June 30, 1993, an increase of $6.9 million or 5%. The
increase was primarily due to an increase in the volume of earning assets
partially offset by a lower net interest spread. Average earning assets
increased 8% to $6.53 billion in the first six months of 1994 from $6.05
billion in the first six months of 1993. Average loans increased $660.4
million (18%) while average securities decreased $156.2 million (7%). For the
first six months of 1994, the Corporation's net interest spread declined 16
basis points to 3.72% from 3.88% for the first six months of 1993. This
decrease resulted from the rates earned on earning assets (primarily securities
and consumer loans) declining more than the rates paid on interest-bearing
liabilities (primarily deposits). The net interest margin decreased to 4.33%
for the first six months of 1994 as compared with 4.44% for the same period a
year earlier.
PROVISION FOR LOAN LOSSES AND ALLOWANCE
The provision for loan losses represents a charge (credit) to earnings
necessary, after loan charge-offs and recoveries, to maintain the allowance for
possible loan losses at an appropriate level to absorb estimated losses
inherent in the loan portfolio. During the second quarter of 1994 there was a
zero provision made for loan losses, compared to a $10.0 million negative
provision recorded in the second quarter of 1993. Nonperforming loans totalled
$15.2 million at June 30, 1994, a 61% decrease from the $38.7 million balance a
year earlier. Net charge-offs were $.7 million in the second quarter of 1994
as compared to $3.1 million in the second quarter of 1993.
During the first six months of 1994 there was a zero provision made for
loan losses, compared to an $8.0 million negative provision recorded in the
first six months of 1993. In the first six months of
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1994 and 1993, charge-offs were $7.1 million and $14.3 million, respectively,
while recoveries amounted to $9.4 million and $8.8 million, respectively. Net
recoveries were $2.3 million in the first six months of 1994 as compared to
$5.5 million of net charge-offs in the first six months of 1993.
The allowance for possible loan losses was $136.7 million at June 30,
1994, compared with $167.6 million at June 30, 1993. The allowance for
possible loan losses represented 3.03% and 4.43% of net loans at June 30, 1994
and 1993, respectively.
Determining the appropriate level of the allowance and the amount of
the provision for loan losses involves uncertainties and matters of judgment
and therefore cannot be determined with precision. The Corporation's 1993
Annual Report includes additional discussion of factors which impact the
allowance for possible loan losses.
NON-INTEREST INCOME
Total non-interest income was $25.3 million for the second quarter of
1994 compared with $22.6 million for the second quarter of 1993, an increase of
$2.7 million or 12%. Excluding gains and losses on sales of securities
available for sale, non-interest income rose $1.7 million or 7%. This increase
from the second quarter of 1993 is primarily attributable to growth in service
charges on deposit accounts ($.8 million, an 8% increase), commissions and fees
on fiduciary activities ($.6 million, a 16% increase), and "other income" ($1.0
million, a 19% increase). "Other income" includes $.7 million of income from
vendor incentives and insurance commissions in excess of amounts in the second
quarter of 1993. The above increases in non-interest income were partially
offset by a decline in investment services income ($.5 million, a 21% decrease)
related to the sale of annuities, mutual funds, and other investment products.
Total non-interest income was $49.8 million for the first six months of
1994 compared with $42.1 million for the first six months of 1993, an increase
of $7.7 million or 18%. Excluding gains and losses on sales of securities
available for sale, non-interest income increased $5.7 million or 13%. This
increase from the first six months of 1993 is primarily attributable to growth
in service charges on deposit accounts ($1.2 million, a 7% increase);
commissions and fees on fiduciary activities ($1.0 million, a 14% increase);
investment services income ($.6 million, an 18% increase); and "other income"
($2.8 million, a 26% increase). The increase in "other income" consists
primarily of $1.7 million of income in excess of prior year amounts from a gain
from a leveraged lease buy-out, vendor incentives and insurance commissions.
NON-INTEREST EXPENSE
Total non-interest expense was $59.1 million for the second quarter of
1994 compared with $58.0 million for the same period in 1993, a 2% increase.
Salaries and employee benefits increased $2.9 million or 10% from the same
period in 1993 due to merit increases, incentive compensation, higher employee
benefit costs, and additional employees resulting from the transfer of certain
computer programming functions to the Corporation and acquisitions of FANBKY
and First Fidelity. Non-personnel related expense decreased $1.8 million or 6%
from the second quarter of 1993 principally as a result of a $.9 million
decrease in net occupancy expense and a $1.4 million decline in systems and
processing expense. Net occupancy expense for the second quarter of 1993
included $.9 million of nonrecurring expense related to a branch automation
project. Excluding second quarter 1994 non-interest expenses of $1.4 million
for FANBKY and First Fidelity, total non-interest expense decreased $.3 million
or 1% compared to the second quarter of 1993.
In March 1994 the Corporation's agreement with an outside vendor to
provide data processing and telecommunication services was amended to transfer
certain software programming functions to the Corporation. The Corporation
expects to have increased control over programming functions. The agreement
amendment results in a cost savings in systems and processing expense and
increases in other non-interest expense categories, such as salaries and
benefits.
The Corporation's operating efficiency ratio (non-interest expense as a
percentage of the sum of net interest income, on a fully taxable basis, and
non-interest income) improved to 61.85% in the second quarter of 1994 from
64.25% in the second quarter of 1993.
Total non-interest expense was $116.9 million for the first six months
of 1994 compared with $112.6 million for the same period in 1993, a 4%
increase. Salaries and employee benefits increased $5.6 million or 10% from
the same period in 1993, which is reflective of merit increases, incentive
compensation, higher employee benefit costs, and additional employees from the
transfer of certain computer programming functions to the Corporation and
acquisitions of FANBKY and First Fidelity.
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Non-personnel related expense decreased $1.3 million or 2% from the first six
months of 1993 principally as a result of a $.7 million decrease in net
occupancy expense, a $1.4 million decrease in systems and processing expense,
and a $.6 million decrease in FDIC insurance. Non-interest expense also
includes an increase over the first half of 1993 of $1.1 million in foreclosed
property expense, net of income. Excluding non-interest expenses for the first
six months of 1994 of $2.6 million for FANBKY and First Fidelity, total
non-interest expense increased $1.8 million or 2% compared to the first six
months of 1993.
The Corporation's operating efficiency ratio improved to 61.52% in the
first six months of 1994 from 64.16% in the first six months of 1993.
INCOME TAXES
During the second quarters of 1994 and 1993, the Corporation's income
tax expense was $13.5 million and $15.3 million, respectively. The major
factor for the decrease was the decline in income before income taxes.
During the first six months of 1994 and 1993, income tax expense
totalled $27.4 million which compares to $25.5 million in the same period in
1993. The primary factor in the increase in the first six months of 1994 was
the increase in the Corporation's income before income taxes and cumulative
effect of changes in accounting principles.
ASSET QUALITY
Nonperforming assets of the Corporation were $31.1 million at June 30,
1994, compared with $71.7 million at June 30, 1993, a decrease of 57%.
Nonperforming assets at June 30, 1994, represented .69% of total loans and
foreclosed properties, compared to 1.88% at June 30, 1993. At June 30, 1994,
nonperforming assets were comprised of $15.2 million of non-accrual loans and
$15.9 million of foreclosed properties.
Other potential problem loans consist of loans that are not considered
nonperforming currently but where information about possible credit problems
has caused the Corporation to have doubts as to the ability of the borrowers to
comply fully with present repayment terms. At June 30, 1994, loans totalling
approximately $80 million, while not considered nonperforming loans, were
classified in the Corporation's internal loan grading system as substandard or
worse, compared with approximately $110 million of such loans at June 30, 1993.
Depending on the economy and other future events, these loans and others which
may not be presently identified could become future nonperforming assets.
CAPITAL ADEQUACY AND LIQUIDITY
In the second quarter of 1994, the Corporation declared cash dividends
on its common stock of $.21 per share compared to $.15 per share in the second
quarter of 1993, a 40% increase. Cash dividends for the first six months of
1994 were $.42 versus $.25 in the first six months of 1993, a 68% increase.
The Federal Reserve Board and Office of the Comptroller of the Currency
(OCC) regulations require that, in order to be considered adequately
capitalized, bank holding companies and national banks maintain a minimum total
risk-based capital ratio (total capital to risk-adjusted assets) of 8.0%, a
Tier I risk-based capital ratio (Tier I capital to risk-adjusted assets) of
4.0%, and a Tier I leverage capital ratio (Tier I capital to total assets less
excluded intangibles) of 4.0%. In order to be considered well capitalized the
total risk- based capital ratio must be a minimum of 10%, the Tier I risk-based
capital ratio must equal or exceed 6%, and the Tier I leverage capital ratio
must be 5% or greater. At June 30, 1994, the Corporation had a total
risk-based capital ratio of 12.65%, a Tier I risk-based capital ratio of
10.46%, and a Tier I leverage capital ratio of 7.79%. At June 30, 1994, these
ratios for First American National Bank, the Corporation's principal
subsidiary, were 11.26%, 9.99%, and 7.49%, respectively.
Liquidity management consists of maintaining sufficient cash levels to
fund operations and to meet the requirements of borrowers, depositors, and
creditors. Liquid assets, which include cash and cash equivalents, money
market instruments, and securities that will mature within one year, amounted
to $.81 billion and $1.21 billion at June 30, 1994 and 1993, respectively. The
estimated average maturity of securities was 4.3 years and 3.2 years at June
30, 1994 and 1993, respectively. The overall liquidity position of the
Corporation is further enhanced by a high proportion of core deposits, which
provide a stable funding base. Core deposits comprised 92% of total deposits
at June 30, 1994 versus 93% at June 30, 1993.
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On December 31, 1993, the Corporation adopted SFAS No. 115. Included
within total securities classified as available for sale at that time were
$203.8 million of securities classified as such due to regulatory restrictions
even though the Corporation had the intent and ability to hold such securities
to maturity. Upon a regulatory revision in the second quarter of 1994 which
allowed those securities to be classified as held to maturity, the Corporation
transferred such securities from available for sale to held to maturity. At
the time of transfer, the securities had an unrealized loss of $1.0 million
($.6 net of taxes). In accordance with SFAS No. 115, such unrealized loss was
retained as a component of shareholders' equity and will be amortized over the
remaining lives of the securities.
On January 31, 1994, the Corporation redeemed the remaining balance of
approximately $13.6 million of its 7 5/8% debentures due in 2002, at a price of
101.22%. During the first quarter of 1993, the Corporation filed a shelf
registration statement with the Securities and Exchange Commission to issue
$100 million of subordinated debt securities. During the second quarter of
1993, the Corporation issued $50 million of subordinated notes under the shelf
registration statement and used a portion of the proceeds for the acquisition
of FANBKY.
The Corporation entered into a three-year revolving credit agreement
effective March 31, 1994, which provides for loans of up to $35 million. On
May 31, 1994, the revolving credit agreement was amended to increase the loans
available to $50 million from $35 million. The Corporation had no revolving
credit borrowings outstanding at June 30, 1994, or during the six months then
ended.
ASSET/LIABILITY MANAGEMENT
The Corporation utilizes off-balance-sheet ("derivative") products in
managing its interest rate risk exposure. Derivatives reduce the Corporation's
vulnerability to changes in the interest rate environment. Balance-sheet
hedging vehicles are linked and bear a correlation to assets or liabilities on
the balance sheet. By using derivative products such as interest rate swaps
and futures contracts, the derivative products offset fluctuations in net
interest income from the otherwise unhedged position. In other words, if net
interest income from the otherwise unhedged position changes (increases or
decreases) by a given amount, the derivative product should result in close to
the opposite result, making the combined amount (otherwise unhedged position
impact plus the derivative product position impact) essentially unchanged.
Derivative products enable the Corporation to improve its balance between
interest sensitive assets and interest sensitive liabilities by managing
interest rate exposure, while continuing to meet lending and deposit needs of
its customers.
Credit risk exposure due to off-balance-sheet hedging is closely
monitored, and counterparts to these contracts are selected on the basis of
their credit worthiness, as well as their market-making ability.
The Corporation enters into interest rate caps, floors, options, and
forward and futures contracts for its asset/liability management program.
Realized and unrealized gains and losses on such instruments which are
designated as effective hedges of interest rate exposure are deferred and
recognized as interest income or interest expense over the covered periods or
lives of the hedged assets or liabilities.
The Corporation also enters into interest rate swap and basis swap
transactions in connection with its asset/liability management program in
managing interest rate exposure. The impact of interest rate swaps and basis
swaps is accrued based on expected settlement payments and is recorded as an
adjustment to interest income and expense over the life of the related
agreements.
In conjunction with managing interest rate sensitivity, at June 30,
1994, the Corporation had interest rate swaps and basis swaps with notional
values totaling $1.3 billion and futures with notional values aggregating $.4
billion. As of June 30, 1994, swap transactions were entered into with
counterparts with credit ratings of A2 or higher. At June 30, 1994, these
derivative products had unrealized net pre-tax gains of $9.0 million. At June
30, 1993, the Corporation had interest rate swaps and basis swaps with notional
values totaling $.9 billion which had unrealized net pre-tax losses of $4.3
million. Net interest income for the six months ended June 30, 1994 and 1993,
included derivative products net expense of $4.9 million and $3.0 million,
respectively.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Corporation and seven other financial institutions are
defendants in a class action lawsuit brought in the Circuit Court of
Shelby County, Tennessee. The lawsuit alleges anti-trust,
unconscionability, usury, and contract claims arising out of the
defendants' returned check charges. The asserted plaintiff class
consists of depositors who have been charged returned check or
overdraft fees. The plaintiffs are requesting compensatory and
punitive damages of $25 million against each defendant. The
anti-trust, unconscionability, and usury claims were previously
dismissed, and in December 1993 the Circuit Court granted the
defendants' motion for summary judgment and dismissed the remaining
claim. The plaintiffs have appealed. In addition, an antitrust
lawsuit alleging a price fixing conspiracy has been filed against the
Corporation and eight other financial institutions by the plaintiffs
in the U.S. District Court for the Western District of Tennessee. The
defendant banks' motion for summary judgment in the Federal action was
also granted and the plaintiffs have appealed. Management believes
these suits are without merit and, based upon information currently
known and on advice of counsel, that they will not have a material
adverse effect on the Corporation's consolidated financial statements.
Also, there are from time to time other legal proceedings pending
against the Corporation and its subsidiaries. In the opinion of
management and counsel, liabilities, if any, arising from such
proceedings presently pending would not have a material adverse effect
on the consolidated financial statements of the Corporation.
Item 4. Submission of Matters to a Vote of Security Holders
(a) An annual meeting of shareholders was held on April 21, 1994.
(b) At the annual meeting, the shareholders voted on the election of
directors. The name of each director elected, including a tabulation
of votes, is as follows:
For Against Abstain
--- ------- -------
Dennis C. Bottorff 21,119,574 81,242 552,659
James A. Haslam II 21,113,598 87,018 552,859
Walter G. Knestrick 21,118,532 82,584 552,359
Robert A. McCabe, Jr. 21,114,076 86,537 552,862
William O. McCoy 21,106,124 94,992 552,359
David K. Wilson 21,112,187 88,698 552,590
Toby S. Wilt 21,116,104 84,512 552,859
The name of each other director whose term of office as a director
continued after the annual meeting is as follows: Reginald D. Dickson,
T. Scott Fillebrown, Jr., Gene C. Koonce, Dale W. Polley, James F.
Smith, Jr., Cal Turner, Jr., Samuel E. Beall, III, Earnest W.
Deavenport, Jr., Martha R. Ingram, James R. Martin, Roscoe R.
Robinson, and William S. Wire II.
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(c) Additionally, at the annual meeting, the shareholders voted on a
proposal to amend the First American Corporation 1991 Employee Stock
Incentive Plan by increasing the number of shares of common stock
reserved thereunder by one million two hundred fifty thousand
(1,250,000) shares. There were 17,789,377 affirmative votes;
3,169,934 negative votes; and 794,164 abstentions and broker non-votes
with respect to this matter. Abstentions and broker non-votes were
neither counted for nor against this matter.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description
------ ---------------------------------------------------------
11 Statement regarding computation of per share earnings is
included in Note 11 to the Consolidated Financial
Statements for the Quarter Ended June 30, 1994. See Part
1, Item 1.
15 Letter regarding unaudited interim financial information
from KPMG Peat Marwick, dated July 21, 1994.
99 Pursuant to Section 11 (a) of the Securities Act of 1933
and Rule 158 promulgated thereunder, the registrant files
herewith its earnings statement for the twelve months
ended June 30, 1994, a period which covers the twelve
months after the effective date of the registrant's
registration statement on Form S-3, Registration No.
33-59844, relating to its issuance of $50 million of
6 7/8% subordinated notes due 2003.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30,
1994.
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SIGNATURES
Pursuant to the requirements 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 AMERICAN CORPORATION
---------------------------
(Registrant)
/s/ Dale W. Polley
---------------------------
Dale W. Polley
Vice Chairman and Chief Administrative
Officer and Director (and principal
financial officer)
Date: August 9, 1994
---------------------------
20
FIRST AMERICAN CORPORATION
QUARTERLY STATEMENT ON FORM
10-Q
FOR QUARTER ENDED JUNE 30, 1994
EXHIBIT INDEX
-------------
Exhibit
Number Description
- - ------ ---------------------------------------------------------
15 Letter regarding unaudited interim financial information
from KPMG Peat Marwick, dated July 21, 1994.
99 Earnings statement for the twelve months ended June 30,
1994, a period which covers the twelve months after the
effective date of the registrant's registration statement
on Form S-3, Registration No. 33-59844, relating to its
issuance of $50 million of 6 7/8% subordinated notes due
2003.