Tennessee 62-0803242
- ---------------------------------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
165 Madison Avenue, Memphis, Tennessee 38103
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(901) 523-4027
--------------------------------------------------
(Registrant's telephone number, including area code)
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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
Common Stock, $1.25 par value 63,977,731
- ----------------------------- -----------------------------
Class Outstanding at April 30, 1997
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INDEX
Part I. Financial Information
Part II. Other Information
Signatures
Exhibit Index
Exhibit 3(i)
Exhibit 3(ii)
Exhibit 11
Exhibit 27
|
This financial information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the interim periods presented.
CONSOLIDATED STATEMENTS OF CONDITION First Tennessee National Corporation
- -------------------------------------------------------------------------------------------------------
March 31 December 31
-------------------------- ------------
(Dollars in thousands)(Unaudited) 1997 1996 1996
- ---------------------------------------------------------------------------------------- ------------
ASSETS:
Cash and due from banks $ 525,059 $ 658,101 $ 959,604
Federal funds sold and securities
purchased under agreements to resell 234,045 52,063 138,365
- ---------------------------------------------------------------------------------------- ------------
Total cash and cash equivalents 759,104 710,164 1,097,969
- ---------------------------------------------------------------------------------------- ------------
Investment in bank time deposits 1,963 1,628 1,922
Capital markets securities inventory 286,371 358,212 150,402
Mortgage loans held for sale 698,800 1,138,871 787,362
Securities available for sale 2,137,711 2,163,053 2,173,620
Securities held to maturity (market value of $63,454
at March 31, 1997; $73,688 at March 31, 1996;
and $66,677 at December 31, 1996) 63,068 72,296 65,914
Loans, net of unearned income 7,764,724 7,325,244 7,728,203
Less: Allowance for loan losses 121,688 114,631 117,748
- ---------------------------------------------------------------------------------------- ------------
Total net loans 7,643,036 7,210,613 7,610,455
- ---------------------------------------------------------------------------------------- ------------
Premises and equipment, net 191,029 178,970 185,624
Real estate acquired by foreclosure 14,631 13,215 7,823
Intangible assets, net 115,682 126,355 119,465
Mortgage servicing rights, net 305,620 180,808 266,027
Capital markets receivables and other assets 758,498 664,247 592,319
- ---------------------------------------------------------------------------------------- ------------
TOTAL ASSETS $12,975,513 $12,818,432 $13,058,902
======================================================================================== ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Demand $ 1,882,416 $ 1,824,027 $ 2,122,997
Checking/Interest 166,413 158,344 154,812
Savings 673,908 673,140 627,984
Money market account 2,792,704 2,535,464 2,685,931
Certificates of deposit under $100,000 and other time 2,837,555 2,843,388 2,868,322
Certificates of deposit $100,000 and more 838,222 718,224 573,016
- ---------------------------------------------------------------------------------------- ------------
Total deposits 9,191,218 8,752,587 9,033,062
- ---------------------------------------------------------------------------------------- ------------
Federal funds purchased and securities
sold under agreements to repurchase 1,517,706 1,552,661 1,881,187
Commercial paper and other short-term borrowings 394,640 567,106 377,369
Capital markets payables and other liabilities 721,818 804,464 578,113
Term borrowings 208,269 258,633 234,645
- ---------------------------------------------------------------------------------------- ------------
Total liabilities 12,033,651 11,935,451 12,104,376
- ---------------------------------------------------------------------------------------- ------------
Guaranteed preferred beneficial interests in
First Tennessee's subordinated debentures 100,000 - -
- ---------------------------------------------------------------------------------------- ------------
SHAREHOLDERS' EQUITY:
Preferred stock - no par value (5,000,000 shares authorized,
but unissued) - - -
Common stock - $1.25 par value (shares authorized -
200,000,000; shares issued - 63,939,022 at
March 31, 1997; 67,394,920 at March 31, 1996; and
66,857,519 at December 31, 1996) 79,924 84,244 83,572
Capital surplus 44,574 67,573 48,657
Undivided profits 729,141 736,443 823,175
Unrealized market adjustment (8,564) (916) 2,697
Deferred compensation on restricted stock incentive plans (3,213) (4,363) (3,575)
- ---------------------------------------------------------------------------------------- ------------
Total shareholders' equity 841,862 882,981 954,526
- ---------------------------------------------------------------------------------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $12,975,513 $12,818,432 $13,058,902
======================================================================================== ============
|
CONSOLIDATED STATEMENTS OF INCOME First Tennessee National Corporation
- ------------------------------------------------------------------------------------
Three Months Ended
March 31
--------------------------
(Dollars in thousands except per share data)(Unaudited) 1997 1996
- -------------------------------------------------------------------------------------
INTEREST INCOME:
Interest and fees on loans $166,958 $160,167
Interest on investment securities:
Taxable 34,588 32,096
Tax-exempt 1,206 1,343
Interest on mortgage loans held for sale 14,875 18,881
Interest on capital markets inventory 2,579 4,258
Interest on other earning assets 2,120 907
- -------------------------------------------------------------------------------------
Total interest income 222,326 217,652
- -------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits:
Checking/Interest 533 649
Savings 2,096 2,503
Money market account 21,719 24,587
Certificates of deposit under $100,000 and other time 40,491 41,431
Certificates of deposit $100,000 and more 10,585 9,966
Interest on short-term borrowings 26,956 27,831
Interest on term borrowings 4,437 5,307
- -------------------------------------------------------------------------------------
Total interest expense 106,817 112,274
- -------------------------------------------------------------------------------------
NET INTEREST INCOME 115,509 105,378
Provision for loan losses 12,526 8,033
- -------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 102,983 97,345
- -------------------------------------------------------------------------------------
NONINTEREST INCOME:
Mortgage banking 64,187 58,119
Capital markets 20,465 28,121
Deposit transactions and cash management 19,224 17,435
Cardholder and merchant processing 11,273 9,760
Trust services and investment management 9,270 8,296
Equity securities gains 23 475
Debt securities gains/(losses) 6 (217)
All other income and commission 14,628 14,588
- -------------------------------------------------------------------------------------
Total noninterest income 139,076 136,577
- -------------------------------------------------------------------------------------
ADJUSTED GROSS INCOME AFTER PROVISION FOR LOAN LOSSES 242,059 233,922
- -------------------------------------------------------------------------------------
NONINTEREST EXPENSE:
Employee compensation, incentives, and benefits 93,896 98,942
Operations services 10,961 10,656
Occupancy 10,663 9,329
Equipment rentals, depreciation, and maintenance 9,158 8,121
Communications and courier 8,686 8,241
Amortization of mortgage servicing rights 8,835 7,699
Advertising and public relations 4,932 4,939
Legal and professional fees 3,244 2,500
Amortization of intangible assets 2,407 2,354
Deposit insurance premium 365 419
All other 27,179 22,386
- -------------------------------------------------------------------------------------
Total noninterest expense 180,326 175,586
- -------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 61,733 58,336
Applicable income taxes 23,170 20,895
- -------------------------------------------------------------------------------------
NET INCOME $ 38,563 $ 37,441
=====================================================================================
NET INCOME PER COMMON SHARE $ .60 $ .56
- -------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING 64,582,657 67,301,454
- -------------------------------------------------------------------------------------
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CONSOLIDATED STATEMENTS OF CASH FLOWS First Tennessee National Corporation
- -----------------------------------------------------------------------------------
Three Months Ended March 31
----------------------------
(Dollars in thousands)(Unaudited) 1997 1996
- -----------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $ 38,563 $ 37,441
Adjustments to reconcile net income to net cash
provided/(used)by operating activities:
Provision for loan losses 12,526 8,033
Provision for deferred income tax 7,811 20,895
Depreciation and amortization of premises
and equipment 7,803 6,916
Amortization of mortgage servicing rights 8,835 7,699
Amortization of intangible assets 2,407 2,354
Net other amortization and accretion 1,171 5,317
Market value adjustment on foreclosed property - 1,137
Equity securities gains (23) (475)
Debt securities (gains)/losses (6) 217
Net loss on disposal of fixed assets 19 49
Net (increase)/decrease in:
Capital markets securities inventory (135,969) (175,557)
Mortgage loans held for sale 88,562 (349,688)
Capital markets receivables (168,582) (129,686)
Interest receivable (3,863) 1,809
Other assets (42,760) (70,776)
Net increase/(decrease) in:
Capital markets payables 166,278 121,458
Interest payable 9,706 6,977
Other liabilities (31,233) 82,679
- -----------------------------------------------------------------------------------
Total adjustments (77,318) (460,642)
- -----------------------------------------------------------------------------------
Net cash used by operating activities (38,755) (423,201)
- -----------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Held to maturity securities:
Maturities 2,830 2,427
Available for sale securities:
Sales 22,706 79,285
Maturities 104,012 98,774
Purchases (108,684) (322,280)
Premises and equipment:
Sales 111 30
Purchases (12,862) (8,160)
Net (increase)/decrease in loans (51,463) 259
(Increase)/decrease in investment in bank time deposits (41) 491
- -----------------------------------------------------------------------------------
Net cash used by investing activities (43,391) (149,174)
- -----------------------------------------------------------------------------------
FINANCING ACTIVITES:
Common stock:
Exercise of stock options 6,183 1,502
Cash dividends (20,131) (17,869)
Repurchase shares (128,298) (505)
Payments of term borrowings (26,419) (1,427)
Issuance of guaranteed preferred beneficial interests
in First Tennessee's subordinated debentures 100,000 -
Net increase/(decrease) in:
Deposits 158,156 165,968
Short-term borrowings (346,210) 359,022
- -----------------------------------------------------------------------------------
Net cash provided/(used) by financing activities (256,719) 506,691
- -----------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (338,865) (65,684)
- -----------------------------------------------------------------------------------
Cash and cash equivalents at beginning of period 1,097,969 775,848
- -----------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 759,104 $710,164
===================================================================================
Total interest paid $ 97,025 $100,785
Total income taxes paid 15,359 462
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The unaudited interim consolidated financial statements have been prepared in
accordance with generally accepted accounting principles. In the opinion of
management, all necessary adjustments have been made for a fair presentation of
financial position and results of operations for the periods presented. The
operating results for the three month period ended March 31, 1997, are not
necessarily indicative of the results that may be expected going forward. For
further information, refer to the audited consolidated financial statements and
footnotes included in the 1996 Annual Report to shareholders.
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share," specifies the computation, presentation, and disclosure requirements
for earnings per share (EPS). The objective of SFAS No. 128 is to simplify the
computation and to make the U.S. standard more compatible with EPS
standards of other countries and with that of the International Accounting
Standards Committee. When adopted in the first quarter of 1998, the standard
is not expected to have a material impact on the EPS computation of First
Tennessee.
(Dollars in thousands) 1997 1996
- ---------------------------------------------------------------------------------------
Commercial $3,558,389 $3,316,086
Consumer 2,710,766 2,563,818
Permanent mortgage 636,384 673,104
Credit card receivables 529,197 514,277
Real estate construction 287,266 244,975
Nonaccrual 42,722 12,984
- ---------------------------------------------------------------------------------------
Loans, net of unearned income 7,764,724 7,325,244
Allowance for loan losses 121,688 114,631
- ---------------------------------------------------------------------------------------
Total net loans $7,643,036 $7,210,613
=======================================================================================
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The following table presents information concerning nonperforming loans at March 31:
(Dollars in thousands) 1997 1996
- ---------------------------------------------------------------------------------------
Impaired loans $12,424 $ 7,377
Other nonaccrual loans 30,298 5,607
- ---------------------------------------------------------------------------------------
Total nonperforming loans $42,722 $12,984
=======================================================================================
Restructured impaired loans at March 31, 1997 and 1996, were $196,000 and
$279,000, respectively.
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Nonperforming loans consist of impaired loans, other nonaccrual loans and
certain restructured loans. An impaired loan is a loan that management
believes the contractual amount due probably will not be collected. Impaired
loans are generally carried on a nonaccrual status. Nonaccrual loans are loans
on which interest accruals have been discontinued due to the borrower's
financial difficulties. Management may elect to continue the accrual of
interest when the estimated net realizable value of collateral is sufficient to
recover the principal balance and accrued interest.
Generally, interest payments received on impaired loans are applied to
principal. Once all principal has been received, additional payments are
recognized as interest income on a cash basis. The following table presents
information concerning impaired loans:
Three Months Ended
March 31
--------------------
(Dollars in thousands) 1997 1996
- -----------------------------------------------------------
Total interest on impaired loans $ 151 $ 141
Average balance on impaired loans 11,849 8,649
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An allowance for loan losses is maintained for all impaired loans. Activity in the allowance for loan losses related to non-impaired loans, impaired loans, and for the total allowance for the three months ended March 31, 1997 and 1996, is summarized as follows:
(Dollars in thousands) Non-impaired Impaired Total
- ---------------------------------------------------------------------------------------
Balance at December 31, 1995 $109,051 $ 3,516 $112,567
Provision for loan losses 9,304 (1,271) 8,033
Charge-offs 8,719 131 8,850
Less loan recoveries 2,694 187 2,881
- ---------------------------------------------------------------------------------------
Net charge-offs/(recoveries) 6,025 (56) 5,969
- ---------------------------------------------------------------------------------------
Balance at March 31, 1996 $112,330 $ 2,301 $114,631
=======================================================================================
Balance at December 31, 1996 $114,217 $ 3,531 $117,748
Provision for loan losses 10,908 1,618 12,526
Charge-offs 10,227 426 10,653
Less loan recoveries 2,057 10 2,067
- ---------------------------------------------------------------------------------------
Net charge-offs 8,170 416 8,586
- ---------------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1997 $116,955 $ 4,733 $121,688
=======================================================================================
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First Tennessee National Corporation (First Tennessee) is headquartered in Memphis, Tennessee, and is a nationwide, diversified financial services institution which provides banking and other financial services to its customers through various national and regional business lines. The Regional Banking Group includes the retail/commercial bank, the credit card division and the trust division. The National Lines of Business include mortgage banking, First Tennessee Capital Markets (also referred to as capital markets) and transaction processing. Expenses are allocated to the various business lines based on management's best estimates and equity is assigned to reflect the inherent risk in each business line. These allocations are periodically reviewed and may be revised from time to time, in which case the prior history is restated to ensure comparability.
The following is a discussion and analysis of the financial condition and results of operations of First Tennessee for the three month period ended March 31, 1997, compared to the three month period ended March 31, 1996. To assist the reader in obtaining a better understanding of First Tennessee and its performance, this discussion should be read in conjunction with First Tennessee's unaudited consolidated financial statements and accompanying notes appearing in this report. Additional information including the 1996 financial statements, notes and management's discussion is provided in the 1996 annual report.
OVERVIEW
First Tennessee reported first quarter earnings of $.60 per share, up 7 percent over last year's first quarter earnings per share of $.56. Net income for the first quarter of 1997 was $38.6 million, an increase of 3 percent from the $37.4 million earned in the first quarter of 1996. For the first quarter of 1997, return on average assets was 1.23 percent and return on average common equity was 18.09 percent, compared with 1.22 percent and 17.27 percent, respectively, for the first quarter of 1996. Total assets were $13.0 billion and shareholders' equity was $841.9 million at March 31, 1997, compared with total assets of $12.8 billion and shareholders' equity of $883.0 million at March 31, 1996. Share repurchase programs implemented during the year caused the reduction in shareholders' equity.
During the first quarter of 1997, the bond division announced a new name -- First Tennessee Capital Markets, which reflects its national presence as a securities distributor, underwriter and financial provider.
INCOME STATEMENT REVIEW
NONINTEREST INCOME
Fee income (noninterest income excluding securities gains and losses) contributed 55 percent to total revenue, but grew only 2 percent (from $136.3 million to $139.0 million) primarily due to a 27 percent decline (from $28.1 million to $20.5 million) in noninterest income from capital markets' record first quarter 1996. Excluding capital markets' impact on fee income, the growth in fee income was 10 percent. The record level in 1996 experienced by capital markets was due to a more favorable market environment and increased bank customer demand. The resurgence in bank customer demand for securities
Noninterest income in mortgage banking grew 10 percent from the first quarter of 1996 (from $58.1 million to $64.2 million) due primarily to the increase in mortgage servicing fee income. Mortgage servicing fee income increased 63 percent from the first quarter of 1996 (from $14.5 million to $23.7 million) as the servicing portfolio grew 25 percent from $18.7 billion at March 31, 1996, to $23.4 billion at March 31, 1997. Revenues from the sale of mortgage servicing rights increased 82 percent (from $.9 million to $1.6 million).
Income derived from the loan origination function decreased 16 percent (from $21.1 million to $17.7 million) as mortgage loan originations declined 31 percent from $2.8 billion in the first quarter of 1996 to $1.9 billion in the first quarter of 1997. The decrease in origination volume related primarily to a slowdown in refinance activity due to a different interest rate environment. During the first quarter of 1996, refinance activity accounted for 47 percent of originations compared with 28 percent in the first quarter of 1997. With less origination volume than the first quarter of 1996, income derived from the creation of originated mortgage servicing rights decreased $8.6 million, and as a consequence of a less volatile interest rate environment there were $8.2 million less secondary marketing losses incurred in the first quarter of 1997 than for the same period in 1996.
During the first quarter of 1997, mortgage banking adopted an accounting change converting late fees from a cash basis to an accrual basis. This added approximately $2 million to mortgage servicing income.
Noninterest income from trust and investment management services (personal trust, corporate trust, employee benefits and Highland Capital Management Corp.) rose 12 percent (from $8.3 million to $9.3 million) over the first quarter of 1996 primarily due to the investment management performance of Highland Capital and income from sales of asset management products.
Credit card operations (cardholder and merchant processing) increased 16 percent (from $9.8 million to $11.3 million) resulting from increased volume and changes in the fee structure. Pricing and sales initiatives as well as the addition of a large new customer led to the 10 percent increase (from $17.4 million to $19.2 million) in deposit transactions and cash management.
NET INTEREST INCOME
For purposes of this discussion, net interest income has been adjusted to a fully taxable equivalent (FTE) basis for certain tax-exempt loans and investments included in earning assets. Earning assets, including loans, have been expressed as averages, net of unearned income.
For the first quarter of 1997, net interest income increased 9 percent (from $106.8 million to $116.6 million) from first quarter 1996.
This increase was due to a 30 basis point improvement in the net interest margin and growth in earning assets of 2 percent (see Balance Sheet Review section for discussion).
NET INTEREST MARGIN
The net interest margin (margin) improved from 3.94 percent for the first quarter of 1996 to 4.24 percent for the first quarter of 1997. As shown in the Net Interest Margin Computation Table, the net interest spread (the
NET INTEREST MARGIN COMPUTATION TABLE
First Quarter
-------------
1997 1996
----- -----
Yield on earning assets 8.06% 7.99%
Rate paid on interest-bearing liabilities 4.51 4.87
----- -----
Net interest spread 3.55 3.12
Effect of interest-free sources .63 .75
Loan fees .09 .11
FRB* interest and penalties (.03) (.04)
----- -----
Net interest margin 4.24% 3.94%
===== =====
- ---------------------------------------------------------------
*Federal Reserve Bank
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The net interest margin is affected by the activity levels and related funding for First Tennessee's nonbank business lines as these lines typically produce different margins than traditional banking segments. Consequently, First Tennessee's consolidated margin cannot be readily compared to that of other bank holding companies. The Net Interest Margin Composition Table provides a breakdown by business line of the impact on the consolidated margin.
NET INTEREST MARGIN COMPOSITION TABLE
First Quarter
---------------
1997 1996
------ ------
Regional banking group 4.61 % 4.31 %
Mortgage banking (.28) (.29)
Capital markets (.09) (.09)
Transaction processing - .01
------ ------
Total net interest margin 4.24 % 3.94 %
====== ======
- ----------------------------------------------------------------
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The regional bank group's margin improved from 4.31 percent to 4.61 percent because of loan and deposit growth, improvement in the investment portfolio yield and the expiration of the basis swap amortization expense.
The negative impact on the net interest margin from mortgage banking occurs because the spread between the rates on mortgage loans temporarily in the warehouse and the related short-term funding rates are significantly less than the comparable spread earned in the regional banking group. Capital markets also tends to negatively impact the net interest margin because of its strategy to hedge inventory in the cash markets which effectively eliminates net interest income on these positions while reducing market risk.
Total noninterest expense (operating expense) for the first quarter of 1997 increased 3 percent (from $175.6 million to $180.3 million) over the same period in 1996. Employee compensation, incentives, and benefits (personnel expense), the largest category, decreased 5 percent (from $98.9 million to $93.9 million). Personnel expense includes commissions paid in several lines of business such as capital markets and mortgage banking. As sales and/or originations increase or decrease or the product mix changes in these business lines, the commissions change accordingly. As a result of reduced volumes, personnel expense decreased 30 percent in capital markets and 9 percent in mortgage banking. The benefit of the recently completed consolidation of mortgage operations also reduced the growth in expenses this quarter.
Amortization of mortgage servicing rights increased 15 percent (from $7.7 million to $8.8 million) as a result of a larger servicing portfolio.
Excluding expenses in capital markets and mortgage banking, expense growth between the first quarters of 1996 and 1997 was 10 percent. Most of this growth relates to personnel expense ($3.3 million), expense related to a proposed student loan law suit settlement ($2.8 million), expense associated with the qualifying capital securities issued during the quarter ($2.0 million)(see Capital section for more information) and equipment rental, depreciation and occupancy ($1.4 million).
PROVISION FOR LOAN LOSSES/ASSET QUALITY
The provision for loan losses increased $4.5 million to $12.5 million at March 31, 1997, and reflects a higher level of mortgage loans repurchased during the quarter. However, the allowance for loan losses to loans remained stable at 1.57 percent on March 31, 1997, compared with 1.56 percent on March 31, 1996.
Net charge-offs to average net loans for the first quarter was .44 percent in 1997, an increase from the .33 percent in the first quarter of 1996, and a decline from the .59 percent in the fourth quarter of 1996. The increase in net charge-offs was primarily related to consumer and credit card lending. Despite First Tennessee's increase in credit card net charge-offs from the previous year, this ratio still remained favorable to industry averages, and delinquency ratios for consumer loans also were favorable to industry averages.
The $2.9 million increase in 90 days past due loans reflects the overall trends in consumer loan and credit card delinquencies which are consistent with current market trends in the industry.
At March 31, 1997, First Tennessee had no concentration of 10 percent or more of total loans in any single industry.
Nonperforming assets grew 112 percent (from $27.2 million to $57.5 million) from the first quarter of 1996 to the first quarter of 1997. The mortgage banking operation added $32.3 million to nonperforming assets primarily from a larger number of mortgage loans repurchased by mortgage banking during the first quarter of 1997 to correct loan file documentation in order to certify loan pools. This backlog in the documentation and pool certification process occurred principally from the consolidation of five mortgage banking operations concurrent with an unanticipated higher level of loan originations last year. Excluding the impact of the mortgage banking operation on nonperforming assets, the ratio of nonperforming loans to total loans was .15 percent and the ratio of nonperforming assets to total loans plus foreclosed real estate and other assets was .23 percent.
March 31
---------------------
1997 1996
--------- ---------
Nonperforming loans $ 42,722 $ 12,984
Foreclosed real estate 14,631 13,215
Other assets 194 966
--------- ---------
Total nonperforming assets $ 57,547 $ 27,165
========= =========
Loans 90 days past due $ 36,038 $ 33,264
Potential problem assets* $ 80,719 $ 69,498
Allowance for credit losses:
Beginning balance at December 31 $117,748 $112,567
Provision for loan losses 12,526 8,033
Charge-offs (10,653) (8,850)
Loan recoveries 2,067 2,881
---------- ----------
Ending balance at March 31 $121,688 $114,631
========== ==========
Allowance to total loans 1.57% 1.56%
Nonperforming loans to total loans .55% .18%
Nonperforming assets to total loans, foreclosed
real estate and other assets .74% .37%
Allowance to nonperforming assets 211.46% 421.98%
- ------------------------------------------------------------------------
*Includes loans 90 days past due
|
NET CHARGE-OFFS AS A PERCENTAGE OF AVERAGE LOANS TABLE
March 31
-----------------
1997 1996
----- ------
Commercial and commercial real estate -% (.08)%
Consumer .35 .37
Credit card receivables 4.59 3.32
Permanent mortgage (.02) .05
Total .44 .33
- --------------------------------------------------------------
|
BALANCE SHEET REVIEW
For purposes of this discussion, loans are expressed net of unearned income, unless otherwise noted. Period end total assets grew 1 percent, from $12.8 billion to $13.0 billion, from March 31, 1996, to March 31, 1997. Period end loans increased 6 percent (from $7.3 billion to $7.8 billion) from March 31, 1996, to March 31, 1997; mortgage loans held for sale (mortgage warehouse) decreased 39 percent (from $1.1 billion to $.7 billion); and investment securities decreased 2 percent, or $34.6 million. The growth in the period end balance sheet was funded by a 4 percent increase (from $6.2 billion to $6.5 billion) in interest-bearing core deposits.
Comparing average balances from first quarter 1996, total assets grew 4 percent (from $12.3 billion to $12.8 billion); loans grew 6 percent (from $7.3 billion to $7.7 billion); and interest-bearing core deposits increased 5
As a result of lower origination volume, the average mortgage warehouse decreased 28 percent (from $1.1 billion to $.8 billion) from the first quarter of 1996.
CAPITAL
Average shareholders' equity for the first quarter of 1997 was $864.5 million. During the first quarter of 1997, First Tennessee issued $100 million of 8.07 percent qualifying capital securities (shown as "Guaranteed preferred beneficial interests in First Tennessee's subordinated debentures" on the Statement of Condition) through First Tennessee Capital I, a Delaware business trust wholly owned by First Tennessee. These capital securities qualify as Tier I capital and are fully and unconditionally guaranteed by First Tennessee. Return on capital (net income/total shareholders' equity plus qualifying capital securities) was 16.31 percent for the first quarter of 1997 and return on common equity was 18.09 percent. Part of the proceeds from the issuance of the qualifying capital securities was used to purchase 1.9 million shares of common stock under an accelerated share repurchase program during the first quarter. The accelerated share repurchase program is scheduled to settle in July of 1997. The average common equity to assets ratio for the first quarter of 1997 was 6.78 percent. The total average equity to assets ratio (including the qualifying capital securities) for the first quarter of 1997 was 7.52 percent, with the qualifying capital securities contributing approximately 74 basis points to this ratio. This compares with a total average equity to assets ratio of 7.08 percent in the first quarter of 1996. Excluding the effects of unrealized market valuations had an immaterial effect on these ratios.
At March 31, 1997, the corporation's Tier 1 capital ratio was 8.84
percent, the total capital ratio was 11.62 percent and the leverage ratio was
6.79 percent. On March 31, 1997, First Tennessee's bank subsidiaries had
sufficient capital to qualify as well-capitalized institutions under the
regulatory capital standards.
OFF-BALANCE SHEET ACTIVITY
In the normal course of business, First Tennessee is a party to financial instruments that are not required to be reflected on a balance sheet. First Tennessee enters into transactions involving these instruments to meet the financial needs of its customers and manage its own exposure to fluctuations in interest rates. These instruments are categorized into "Lending," "Mortgage banking," "Interest rate risk management" and "Capital markets" as noted in the Off-Balance Sheet Financial Instruments table.
Notional value
--------------
LENDING
Commitments to extend credit:
Consumer credit card lines $1,746.3
Consumer home equity 344.3
Commercial real estate and construction
and land development 366.7
Mortgage banking 834.3
Other 1,613.3
Other Commitments:
Commercial and standby letters of credit 588.1
Foreign exchange contracts 3.8
MORTGAGE BANKING
Mortgage pipeline and warehouse hedging:
Interest rate forward contracts - commitments to sell 1,338.6
Interest rate option contracts - put option purchased 20.0
INTEREST RATE RISK MANAGEMENT
Receive fixed/pay floating - amortizing 30.8
CAPITAL MARKETS
Forward contracts:
Commitments to buy 989.4
Commitments to sell 931.2
Securities underwriting commitments 2.0
- ------------------------------------------------------------------------
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Items 1, 2, 3, 4 and 5.
As of the end of the first quarter, 1997, the answers to Items 1, 2, 3, 4 and 5 were either inapplicable or negative, and therefore, these items are omitted.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits furnished in accordance with the provisions of the Exhibit Table of Item 601 of Regulation S-K are included as described in the Exhibit Index which is a part of this report. Exhibits not listed in the Exhibit Index are omitted because they are inapplicable.
(b) A report on Form 8-K was filed on January 9, 1997 (with a Date of Report of January 6, 1997), disclosing under Item 5, Other Events, the issuance by First Tennessee Capital I, a Delaware statutory business trust (the "Trust"), the Common Securities of which are owned by the Corporation, of 100,000 of the Trust's 8.07% Capital Securities, Series A (the "Capital Securities"), in a registered public offering. The Trust's sole asset is $103,093,000 aggregate principal amount of the Corporation's 8.07% Junior Subordinated Deferrable Interest Debentures, Series A, also issued January 6, 1997. Also, the Corporation guaranteed the Trust's obligations under the Capital Securities to the extent set forth in the Corporation's Guarantee Agreement. Various documents related to the offering were filed as exhibits to the Form 8-K under Item 7."
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.
DATE: 5/12/97 By: Elbert L. Thomas Jr.
--------------------- ---------------------------------
Elbert L. Thomas Jr.
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
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Exhibit No. Exhibit Description Page No.
- ----------- ------------------- --------
3(i) Restated Charter of the Corporation. Filed Herewith
3(ii) Bylaws of the Corporation, as amended and Filed Herewith
restated.
11 Statement re Computation of Per Share Earnings. Filed Herewith
27 Financial Data Schedule (for SEC use only) Filed Herewith
|
Pursuant to the provisions of Section 48-20-107 of the Tennessee Business Corporation Act, the undersigned Corporation adopts the following Restated Charter:
1. NAME.
The name of the Corporation shall be: FIRST TENNESSEE NATIONAL
CORPORATION.
2. DURATION.
The duration of the Corporation is perpetual.
3. ADDRESS.
The address of the principal office of the Corporation in the State of Tennessee shall be: 165 Madison Avenue, Memphis, Tennessee 38103.
4. PROFIT.
The Corporation is for profit.
5. PURPOSES.
The purpose or purposes for which the Corporation is organized are, to the extent permitted by law:
(a) To subscribe for, purchase, lease or otherwise acquire and to receive, own, hold, sell, exchange, lease, mortgage, pledge, assign or otherwise dispose of, and otherwise deal in and with "securities" (as such term is herein defined) issued or created by, or other property (real or personal) of any person, corporation, association, firm, trust, organization or other entity whatsoever, including but not limited to this corporation and any national banking association, state-chartered bank, savings bank and trust company, wherever located or organized and whether public, private or municipal, of this state, or any district, territory, subdivision, municipality or department thereof, or any other state or any district, territory, subdivision, municipality or department thereof, or any country, nation or government, or any district, territory, subdivision, municipality or department thereof; to possess and exercise any and all rights, powers and privileges of ownership of such securities or other property, including without limitation the right to vote on such securities; and to issue or deliver in payment or exchange, in whole or in part, for any such securities or other property, its own stock, bonds, notes or other obligations, or to make payment for any such securities or other property by any other lawful
(b) To promote, finance and assist, financially or otherwise, whether by loan, guaranty, subsidy or otherwise, any person, corporation, partnership, association, firm, trust, organization or other entity in which the Corporation shall have any interest; to guarantee the payment of dividends on any stock or the payment of the obligations issued or incurred by any such person, corporation, partnership, association, firm, trust, organization or other entity, to issue its own stock, bonds or other obligations in payment or exchange for any securities or other property acquired (pursuant to a merger, consolidation or otherwise) by any such person, corporation, partnership, association, firm, trust, organization or other entity; and to do any and all other acts and things for the enhancement, protection or preservation of any securities which are in any manner, directly or indirectly, owned, held or guaranteed by the Corporation.
(c) To render assistance, service, counsel and advice to, and to act as representative in any capacity (whether managing, operating, financial, purchasing, selling, advertising or otherwise) of any person, corporation, partnership, association, firm, trust, organization or other entity, including without limitation those in which the Corporation shall have any interest.
(d) To acquire by purchase, lease, exchange or otherwise, to own, hold, use, manage, develop, improve and to sell, lease, mortgage, exchange and otherwise deal in, real estate and any interest or right therein and personal property of every class and description, either for is own account or for the account of others, to erect, construct, rebuild, repair, manage and control, lease, buy and sell, any and all kinds of and interest in real estate and personal property; and to engage generally in the business of operating and leasing real estate and personal property of every character and description.
(e) To buy, sell, produce, manufacture and dispose of all kinds of goods, documents, instruments, general intangibles, chattel paper, accounts, contract rights, wares, foods, potables, merchandise, manufactures, commodities, furniture, machinery, tools, supplies and products of any kind, character or description whatsoever, and generally to engage in any mercantile, manufacturing or commercial business of any kind or character whatsoever throughout the world, and to do all things incidental to any such business or businesses.
(f) To enter into any lawful arrangements for sharing profits, union of interest, reciprocal concession or cooperation, with any corporation, association, partnership, syndicate, entity, person or governmental, municipal or public authority, domestic or foreign in the carrying on of any business
(g) To issue bonds, debentures, convertible debentures, notes, commercial paper, or other obligations of this Corporation, from time to time for any of the objects or purposes of the Corporation and to secure the same by mortgage, pledge, deed of trust or otherwise.
(h) To guarantee obligations of any other entity and to secure such guaranties by mortgage, pledge or otherwise by vote of a majority of the entire Board of Directors.
(i) To indemnify the officers and directors during their term of office or thereafter for actions arising during their term of office, either directly or through the purchase of insurance, for expenditures as parties to suits by or in the right of the Corporation or other than by or in the right of the Corporation to the extent permitted by the statutes of Tennessee.
(j) Without in any way limiting any of the objects or purposes or powers, whether primary or secondary of the Corporation, it is hereby expressly declared and provided that the Corporation shall have power to do all acts or things necessary, incidental or convenient to do, or calculated, directly or indirectly, to promote the interest of the Corporation, or enhance the value or render profitable any of its property or rights; and in carrying on its business or businesses, or for the purpose of obtaining or furthering any of its objects, to do any and all things and exercise any and all powers, rights and privileges which a corporation for profit may now or hereafter be permitted to do or to exercise under the laws of the State of Tennessee; and to do any and all of the acts and things herein set forth to the same extent as natural persons could do, and in any part of the world, as principal, factor, agent, contractor, trustee or otherwise, either alone or in syndicates, or otherwise in conjunction with any person, entity, syndicate, partnership, association or corporation, governmental or public bodies or authorities of any kind, domestic or foreign; to establish and maintain offices and agencies and to exercise all or any of its corporate powers and rights throughout the world.
(k) To engage, in addition to the foregoing, in any lawful act or activity for which corporations may be organized under the Tennessee General Corporation Act.
(l) It is the intention that the objects, purposes and powers specified in the fifth paragraph hereof shall, except where otherwise specified in said paragraph, be no-wise limited or restricted by reference to or inference from the terms of any other clause or paragraph in this Charter, but that the objects, purposes and powers specified in the fifth paragraph and in each of the clauses or paragraphs of this Charter shall be regarded as independent objects, purposes and powers.
The foregoing clauses shall be construed both as purposes and powers, and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of this Corporation.
The maximum number of shares which the Corporation shall have authority to issue is as follows:
(a) Two Hundred Million (200,000,000) shares of common stock of a par value of $1.25 each; and
(b) Five Million (5,000,000) shares of preferred stock, having no par value.
7. COMMENCEMENT OF BUSINESS.
The Corporation will not commence business until consideration of One Thousand Dollars ($1,000.00) has been received for the issuance of shares.
8. PREEMPTIVE RIGHTS.
No shareholder of the Corporation shall because of his ownership of stock have a preemptive or other right to purchase, subscribe for or take any part of any stock or any part of the notes, debentures, bonds or other securities convertible into or carrying options or warrants to purchase stock of the Corporation issued, optioned or sold by it after its incorporation. Any part of the capital stock and any part of the notes, debentures, bonds or other securities convertible into or carrying options or warrants to purchase stock of the Corporation authorized by this Restated Charter or by any amendment duly filed, may at any time be issued, optioned for sale and sold or disposed of by the Corporation pursuant to a resolution of its Board of Directors to such persons and upon such terms as may to such Board seem proper without first offering such stock or securities or any part thereof to existing shareholders.
9. COMMON STOCK.
The entire voting power of the Corporation shall be vested in the common stock; provided, however, that the Board of Directors is authorized by this Charter to issue, from time to time, serial preferred stock of the Corporation in one or more series each of which constitutes a separate class, and prior to issuance to fix and determine the distinguishing characteristics and rights, privileges and immunities of each such series. Such characteristics and rights, privileges and immunities may include, but are not limited to, the voting rights of such serial preferred stock, and such voting rights of such serial preferred stock may, if so determined by the Board of Directors prior to the issuance of such serial preferred stock, give to the holders of such serial preferred stock voting rights equal to, greater than or less than those of the holders of the common stock.
10. SERIAL PREFERRED STOCK.
The shares of any preferred class may be divided into and issued in series. If the shares of any
The Board of Directors is authorized to issue the preferred stock, without par value, in one or more series, from time to time with such voting powers, full or limited, or without voting powers, and with such designations, preferences and relative participating, optional or other special rights and qualifications, limitations and restrictions thereof, as may be provided in a resolution or resolutions adopted by the Board of Directors. The authority of the Board of Directors shall include, but not be limited to, the determination or fixing of the following with respect to shares of such class or any series thereof: (1) the number of shares and designation; (2) the dividend rate and whether dividends are to be cumulative; (3) whether shares are to be redeemable and, if so, the terms and amount of any sinking fund for the purchase or redemption of such shares; (4) whether shares shall be convertible and, if so, the terms and provisions applying; (5) what voting rights are to apply, if any; and (6) what restrictions are to apply, if any, on the issue or re-issue of any additional preferred stock.
11. ADDITIONAL POWERS.
(a) The Corporation shall have the right to purchase, take, receive or otherwise acquire, hold, own, pledge, transfer or otherwise dispose of its own shares; but purchases of its own shares, whether direct or indirect, shall be made only to the extent of unreserved and unrestricted earned or capital surplus available therefor.
(b) Other provisions: Management. The Corporation shall be managed by the Board of Directors, which shall exercise all powers conferred under the laws of the State of Tennessee including without limitation the power:
(1) To hold meetings, to have one or more offices, and to keep the books of the corporation, except as otherwise expressly provided by law, at such places, whether within or without the State of Tennessee, as may from time to time be designated by the Board.
(2) To make, alter and repeal bylaws of the corporation, subject to the reserved power of the shareholders to make, alter and repeal bylaws.
(3) To approve the issuance or sale of any of its authorized but unissued shares of any class, bonds or other securities and rights or options entitling the holders thereof to purchase from the corporation shares of any class or classes, to approve the purchase or other acquisition of or the reissuance, sale or other disposition of treasury shares; to fix the consideration to be received
(4) To use or apply any funds of the corporation lawfully available therefor for the purchase or acquisition of shares of the capital stock or bonds or other securities of the corporation, in the market or otherwise, at such price as may be fixed by the Board, and to such extent and in such manner and for such purposes and upon such terms as the Board may deem expedient and as may be permitted by law, and to sell, exchange, transfer, reissue or cancel such shares of the capital stock of the corporation upon such terms and for such consideration as it may deem proper.
(5) To determine whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the corporation, or any of them, shall be open to the inspection of the shareholders, and no shareholder shall have any right to inspect any account, record, book or document of the corporation, except as conferred by the laws of the State of Tennessee or as authorized by the Board.
(6) To remove any director for cause as defined by the laws of the State of Tennessee by a vote of a majority of the entire Board of Directors.
(7) To fill any newly created directorships resulting from an increase in the number of directors and any vacancies occurring in the Board for any reason, (including removal of directors without cause by the shareholders or for cause by the Board of Directors or the shareholders.)
(8) To designate an Executive Committee consisting of two or more directors and such other committees consisting of two or more persons, who may or may not be directors, and to delegate to such Executive Committee and other committees all such authority of the Board that it deems desirable within the limits prescribed by the statutes of the State of Tennessee.
(9) To designate the officer or officers of the corporation who shall vote the shares of capital stock held by the corporation in other corporations and to authorize the execution of any proxy that may be necessary in connection therewith.
(10) To take any action required or permitted of the Board without a meeting on written consent, setting forth the action so taken, sighed by all directors entitled to vote thereon.
12. NUMBER, ELECTION AND TERMS OF DIRECTORS.
(a) The number of directors of the Corporation which shall constitute the entire Board of Directors shall be fixed from time to time in the Bylaws of the Corporation. Any such determination shall continue in effect unless and until changed, but no such changes shall affect the term of any director then in office. Upon the adoption of this Article 12, the directors shall be divided into three classes (I, II and III), as nearly equal in number as possible. The initial term of office for members of Class I shall expire at the annual meeting of shareholder in 1988; the initial term of office
(b) Newly created directorships resulting from any increase in the authorized number of directors or any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification or any other cause (except removal from office) shall be filled only by the Board of Directors, provided that a quorum is then in office and present, or only by a majority of the directors then in office, if less than a quorum is then in office, or by the sole remaining director. Any vacancies on the Board of Directors resulting from removal from office may be filled by the affirmative vote of the holders of at least a majority of the voting power of all outstanding voting stock or, if the shareholders do not so fill such a vacancy, by a majority of the directors then in office. Directors elected to fill a newly created directorship or other vacancy shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor has been duly elected and qualified. The directors of any class of directors of the Corporation may be removed by the shareholders only for cause by the affirmative vote of the holders of at least a majority of the voting power of all outstanding voting stock.
(c) The Bylaws or any Bylaw of the Corporation may be adopted, amended or repealed only by the affirmative vote of not less than a majority of the directors then in office at any regular or special meeting of directors, or by the affirmative vote of the holders of at least eighty percent (80%) of the voting power of all outstanding voting stock at any annual meeting or any special meeting called for that purpose. Any provision of the Charter which is inconsistent with any provision of the Bylaws of the Corporation may be adopted only by the affirmative vote of the holders of at least eighty percent (80%) of the voting power of all outstanding voting stock at any annual meeting or any special meeting called for that purpose.
(d) Notwithstanding any other provisions of this Charter or the Bylaws of the Corporation (and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law, this Charter, the Bylaws of the Corporation or otherwise), the affirmative vote of the holders of at least eighty percent (80%) of the voting power of all outstanding voting stock shall be required to adopt any provisions inconsistent with, or to amend or repeal, this Article 12.
(e) Notwithstanding the foregoing, whenever the holders of any one or more classes or series of preferred stock issued by the Corporation shall have the right, voting separately by class or by series, to elect directors at an annual or special meeting of shareholders, the election, term of
13. DIRECTOR LIABILITY.
No director shall be personally liable to the Corporation or its
shareholders for monetary damages for breach of fiduciary duty as director,
except for liability (i) for any breach of the director's duty of loyalty to
the Corporation or its shareholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, or
(iii) under Section 48-18-304, or any successor provision thereto, of the
Tennessee Business Corporation Act.
DATED: April 15, 1997
By:/s/ Lenore S. Creson --------------------------------- Lenore S. Creson, Secretary |
The undersigned, duly authorized officer of First Tennessee National Corporation (the "Corporation"), acting pursuant to TBCA Section 48-20-107(d), hereby certifies the following:
The Restated Charter does not contain any amendment to the Charter requiring shareholder approval. The Restated Charter was duly adopted by the Board of Directors of the Corporation at a meeting on April 15, 1997.
Date: April 29, 1997 By:/s/ Lenore S. Creson
-----------------------------------
Lenore S. Creson, Secretary
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1.1 PRINCIPAL OFFICE. The principal office of First Tennessee National Corporation (the "Corporation") shall be 165 Madison Avenue, Memphis, Tennessee.
1.2 OTHER OFFICES. The Corporation may have offices at such other places, either within or without the State of Tennessee, as the Board of Directors may from time to time designate or as the business of the Corporation may from time to time require.
1.3 REGISTERED OFFICE. The registered office of the Corporation required to be maintained in the State of Tennessee shall be the same as its principal office and may be changed from time to time as provided by law.
2.1 PLACE OF MEETINGS. Meetings of the shareholders of the Corporation may be held either in the State of Tennessee or elsewhere; but in the absence of notice to the contrary, shareholders' meetings shall be held at the principal office of the Corporation in Memphis, Tennessee.
2.2 QUORUM AND ADJOURNMENTS. The holders of a majority of the shares issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite, and shall constitute a quorum at all meetings of the shareholders, for the transaction of business, except as otherwise provided by law, the Restated Charter of the Corporation, as amended from time to time (the "Charter), or these Bylaws. In the event a quorum is not obtained at the meeting, the holders of a majority of the shares entitled to vote thereat, present in person or by proxy, shall have power to adjourn the meeting from time to time and, whether or not a quorum is obtained at the meeting, the Chairman of the meeting shall have the power to adjourn the meeting from time to time, in either case without notice, except as otherwise provided by law, other than announcement at the meeting. At such adjourned meeting at which the requisite amount of voting shares shall be represented, any business may be transacted which might have been transacted at the meeting as originally notified.
2.3 NOTICE OF MEETINGS. Unless otherwise required by applicable law, written notice of the annual and each special meeting stating the date, time and place of the meeting shall be mailed, postage prepaid, or otherwise delivered to each shareholder entitled to vote thereat at such address as appears on the records of shareholders of the Corporation, at least ten (10) days, but not more than two (2) months, prior to the meeting date. In addition, notice of any special meeting shall state the purpose or purposes for which the meeting is called and the person or persons calling the meeting. In the event of an adjournment of a meeting to a date more than four months after the date fixed for the original meeting or the Board of Directors fixes a new record date for the adjourned meeting, a new notice of the adjourned meeting must be given to shareholders as of the new record date. Any previously scheduled meeting may be postponed, and any special meeting may be canceled, by resolution of the Board of Directors upon public notice given prior to the date scheduled for such meeting.
2.4 ANNUAL MEETINGS. The annual meeting of shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held each year on the third Tuesday in April, or if that day is a legal holiday, on the next succeeding business day not a legal holiday, at 10:00 a.m. Memphis time or on such other date and/or at such other time as the Board of Directors may fix by resolution by vote of a majority of the entire Board of Directors. At the meeting, the shareholders shall elect by ballot, by plurality vote, directors to succeed directors in the class of directors whose term expires at the meeting and directors elected by the Board of Directors to fill vacancies in other classes of directors and may transact such other business as may properly come before the meeting.
2.5 SPECIAL MEETINGS. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by statute, may be called by Chairman of the Board and shall be called by the Chairman of the Board or the Secretary at the request
2.6 WAIVER OF NOTICE. Any shareholder may waive in writing notice of any meeting either before, at or after the meeting. Attendance by a shareholder in person or by proxy at a meeting shall constitute a waiver of objection to lack of notice or defective notice and a waiver of objection to consideration of a matter that was not described in the meeting notice unless the shareholder objects in the manner required by law.
2.7 VOTING. Unless otherwise required by the Charter, at each meeting of shareholders, each shareholder shall have one vote for each share of stock having voting power registered in the shareholder's name on the records of the Corporation on the record date for that meeting, and every shareholder having the right to vote shall be entitled to vote in person or by proxy appointed by instrument in writing or any other method permitted by law.
2.8 PROCEDURES FOR BRINGING BUSINESS BEFORE SHAREHOLDER MEETING. At an annual or special meeting of shareholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been properly brought before an annual or special meeting of shareholders. To be properly brought before an annual or special meeting of shareholders, business must be (I) in the case of a special meeting called by the Chairman of the Board or at the request of the Board of Directors, specified in the notice of the special meeting (or any supplement thereto), or (ii) in the case of an annual meeting properly brought before the meeting by or at the direction of the Board of Directors or (iii) otherwise properly brought before the annual or special meeting by a shareholder. For business to be properly brought before such a meeting of shareholders by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 30 days nor more than 60 days prior to the date of the meeting; provided, however, that if fewer than 40 days' notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholders to be timely must be so delivered or received not later than the close of business on the 10th day following the earlier of (I) the day on which such notice of the date of such meeting was mailed or (ii) the day on which such public disclosure was made. A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before a meeting of shareholders (I) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name and address, as they appear on the Corporation's books, of the shareholder proposing such business and any other shareholders known by such shareholder to be supporting such proposal, (iii) the class and number of shares of the Corporation which are beneficially owned by such shareholder on the date of such shareholder's notice and by any other shareholders known by such shareholder to be supporting such proposal on the date of such shareholder's notice, and (iv) any material interest of the shareholder in such proposal. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at a meeting of shareholders except in accordance with the procedures set forth in this Section 2.8. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that the business was not properly brought before the meeting in accordance with the procedures prescribed by these Bylaws, and if the Chairman should so determine, the Chairman shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
2.9 SEC PROXY RULES. In addition to complying with the provisions
of Section 2.8, a shareholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934 and the rules and
regulations thereunder with respect to the matters set forth in Section 2.8.
Nothing in Section 2.8 shall be deemed to affect any rights of shareholders to
request inclusion of proposals in the Corporation's proxy statement pursuant to
rules of the Securities and Exchange Commission. For such proposals to be
acted upon at a meeting, however, compliance with the notice provisions of
Section 2.8 is also required.
3.1 POWERS OF DIRECTORS. The business and affairs of the Corporation shall be managed under the direction of and all corporate powers shall be exercised by or under the authority of the Board of Directors.
3.2 NUMBER AND QUALIFICATIONS. The Board of Directors shall consist of 11 members. The Board of Directors has the power to change from time to time the number of directors specified in the preceding sentence. Any such change in the number of directors constituting the Corporation's Board Directors must be made exclusively by means of an amendment to these Bylaws adopted by a majority of the entire Board of Directors then in office. Directors need not be shareholders of the Corporation nor residents of the State of Tennessee.
3.4 COMPENSATION. The directors shall be paid for their services on the Board of Directors and on any Committee thereof such compensation (which may include cash, shares of stock of the Corporation and options thereon) and benefits together with reasonable expenses, if any, at such times as may, from time to time, be determined by resolution adopted by a majority of the entire Board of Directors; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and being compensated therefor.
3.5 COMMITTEES. The directors, by resolution adopted by a majority of the entire Board of Directors, may designate an executive committee and other committees, consisting of two or more directors, and may delegate to such committee or committees all such authority of the Board of Directors that it deems desirable, including, without limitation, authority to appoint corporate officers, fix their salaries, and, to the extent such is not provided by law, the Charter or these Bylaws, to establish their authority and responsibility, except that no such committee or committees shall have and exercise the authority of the Board of Directors to:
(a) authorize distributions (which include dividend declarations), except according to a formula or method prescribed by the Board of Directors,
(b) fill vacancies on the Board of Directors or on any of its committees,
(c) adopt, amend or repeal bylaws,
(d) authorize or approve the reacquisition of shares, except according to a formula or method prescribed by the Board of Directors, or
(e) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the Board of Directors may authorize a committee to do so within limits specifically prescribed by the Board of Directors.
3.6 PROCEDURES FOR DIRECTOR NOMINATIONS. Except as provided in
Section 3.7 with respect to vacancies on the Board of Directors, only persons
nominated in accordance with the procedures set forth in this Section 3.6 shall
be eligible for election as directors. Nominations of persons for election to
the Board of Directors may be made at a meeting of shareholders (I) by or at
the direction of the Board of Directors, or (ii) by any shareholder of the
Corporation entitled to vote for the election of directors at such meeting who
complies with the notice procedures set forth in this Section 3.6. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a shareholder's notice must be delivered to
or mailed and received at the principal executive offices of the Corporation
not less than 30 days nor more than 60 days prior to the date of a meeting;
provided, however, that if fewer than 40 days' notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be so delivered or received not later than
the close of business on the 10th day following the earlier of (I) the day on
which such notice of the date of such meeting was mailed or (ii) the day on
which such public disclosure was made. A shareholder's notice to the Secretary
shall set forth (I) as to each person whom the shareholder proposes to nominate
for election or reelection as a director (a) the name, age, business address
and residence address of such person, (b) the principal occupation or
employment of such person, (c) the class and number of shares of the
Corporation which are beneficially owned by such person on the date of such
shareholder's notice and (d) any other information relating to such person that
is required to be disclosed in solicitations of proxies for election of
directors or, is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including, without
limitation, such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); and (ii) as to the
shareholder giving the notice (a) the name and address, as they appear on the
Corporation's books, of such shareholder and any other shareholders known by
such shareholder to be supporting such nominees and (b) the class and number of
shares of the Corporation which are beneficially owned by such shareholder on
the date of such shareholder's notice and by any other shareholders known by
such shareholder to be supporting such nominees on the date of such
shareholder's notice. No person shall be eligible for election as a director
of the Corporation unless nominated in accordance with the procedures set forth
in this Section 3.6. The Chairman of the meeting shall, if the facts warrant,
determine and declare to
3.7 VACANCIES; REMOVAL FROM OFFICE. Except as otherwise provided by law or by the Charter, newly created directorships resulting from any increase in the authorized number of directors or any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification or any other cause (except removal from office) shall be filled only by the Board of Directors, provided that a quorum is then in office and present, or only by a majority of the directors then in office, if less than a quorum is then in office or by the sole remaining director. Any vacancies on the Board of Directors resulting from removal from office may be filled by the affirmative vote of the holders of at least a majority of the voting power of all outstanding voting stock or, if the shareholders do not so fill such a vacancy, by a majority of the directors then in office. Directors elected to fill a newly created directorship or other vacancy shall hold office for a term expiring at the next shareholders' meeting at which directors are elected and until such director's successor has been duly elected and qualified. The directors of any class of directors of the Corporation may be removed by the shareholders only for cause by the affirmative vote of the holders of at least a majority of the voting power of all outstanding voting stock.
3.8 PLACE OF MEETINGS. The directors may hold meetings of the Board of Directors or of a committee thereof at the principal office of the Corporation in Memphis, Tennessee, or at such other place or places, either in the State of Tennessee or elsewhere, as the Board of Directors or the members of the committee, as applicable, may from time to time determine by resolution or by written consent or as may be specified in the notice of the meeting.
3.9 QUORUM. A majority of the directors shall constitute a quorum for the transaction of business, but a smaller number may adjourn from time to time, without further notice, if the time and place to which the meeting is adjourned are fixed at the meeting at which the adjournment is taken and if the period of adjournment does not exceed thirty (30) days in any one (1) adjournment. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the vote of a greater number is required by law, the Charter, or these Bylaws.
3.10 REGULAR MEETINGS. Following each annual meeting of shareholders, the newly elected directors, together with the incumbent directors whose terms do not expire at such meeting, shall meet for the purpose of organization, the appointment of officers and the transaction of other business, and, if a majority of the directors be present at such place, day and hour, no prior notice of such meeting shall be required to be given to the directors. The place, day and hour of such meeting may also be fixed by resolution or by written consent of the directors. In addition, the Board of Directors may approve an annual schedule for additional regular meetings of the Board of Directors and of committees thereof.
3.11 SPECIAL MEETINGS. Special meetings of the directors may be called by the Chairman of the Board, the Chief Executive Officer, or the President (or as to any committee of the Board of Directors, by the person or persons specified in the resolution of the Board of Directors establishing the committee) on two days' notice by mail or on one day's notice by telegram or cablegram, or on two hours' notice given personally or by telephone or facsimile transmission to each director (or member of the committee, as appropriate), and shall be called by the Chairman of the Board or Secretary in like manner on the written request of a majority of directors then in office. The notice shall state the day and hour of the meeting and the place where the meeting is to be held. Special meetings of the directors may be held at any time on written waiver of notice or by consent of all the directors, either of which may be given either before, at or after the meeting.
3.12 ACTION WITHOUT A MEETING. The directors may (whether acting in lieu of a meeting of the Board of Directors or of a committee thereof) take action which they are required or permitted to take, without a meeting, on written consent setting forth the action so taken, signed by all of the directors entitled to vote thereon. If all the directors entitled to vote consent to taking such action without a meeting, the affirmative vote of the number of directors necessary to authorize or take such action at a meeting is the act of the Board of Directors or committee, as appropriate.
3.13 TELEPHONE MEETINGS. Directors may participate in a meeting of the Board of Directors or of a committee thereof by, or conduct a meeting through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director so participating is deemed to be present in person at such meeting.
4.1 DESIGNATED OFFICERS. The officers of the Corporation shall consist of a Chairman of the Board, a Chief Executive Officer, a President, such number of Vice Chairmen as the Board may from time to time determine and appoint, an Auditor, a Chief Credit Officer, a Chief Financial Officer, a Controller, a General Counsel, a Manager of Risk Management, a Personnel Division Manager, a Secretary, and a Treasurer, and such number of Executive Vice Presidents, Senior Vice Presidents and Vice Presidents and such other Officers and assistant Officers as may be from time to time determined and appointed in accordance with the provisions of this Article Four. The title of any officer may include any additional descriptive designation determined to be appropriate. Any person may hold two or more offices, except that the President shall not also be the Secretary or an Assistant Secretary. The officers, other than the Chairman of the Board, need not be directors, and officers need not be shareholders.
4.2 APPOINTMENT OF OFFICERS. Except as otherwise provided in this
Section 4.2, the officers of the Corporation shall be appointed by the Board of
Directors at the annual organizational meeting of the Board of Directors
following the annual meeting of shareholders. The Board of Directors may
delegate to a committee of the Board of Directors the power to create corporate
offices, define the authority and responsibility of such offices, except to the
extent such authority or responsibility would not be consistent with the law or
the Charter, and to appoint persons to any office of the Corporation except
the offices of the Chairman of the Board, Chief Executive Officer, and
President. In addition, the Board of Directors may delegate to the officers
appointed to the Corporation's personnel committee, acting as a committee, the
authority to appoint persons to any offices of the Corporation of the level of
Vice President and below annually at the personnel committee meeting
immediately following the annual meeting of shareholders and to appoint persons
to any office of the Corporation of the level of Senior Vice President and
below during the period of time between the annual appointment of officers by
the Board of Directors or pursuant to this section 4.2 of the Bylaws.
Notwithstanding the delegation of authority pursuant to this section 4.2 of the
Bylaws, the Board of Directors retains the authority to appoint such other
officers and agents as it shall deem necessary, who shall exercise such powers
and perform such duties as shall be determined from time to time by the Board
of Directors.
4.3 TERM. The officers of the Corporation shall be appointed for a term of one (1) year and until their successors are appointed and qualified, subject to the right of removal specified in Section 4.4 of these Bylaws. The designation of a specified term does not grant to any officer any contract rights.
4.4 VACANCIES, RESIGNATIONS AND REMOVAL. If the office of any officer or officers becomes vacant for any reason, the vacancy may be filled by the Board of Directors or, if such officer was appointed by a committee, by the committee appointing such officer. Any officer may resign at any time by delivering a written notice to the Chairman of the Board, Chief Executive Officer, President, Secretary, or Personnel Division Manager of the Corporation, or the designee of any of them, which shall be effective upon delivery unless it specifies a later date acceptable to the Corporation. Any officer shall be subject to removal at any time with or without cause by the affirmative vote of a majority of the Board of Directors, and in the event the officer was appointed by a committee, then by the affirmative vote of a majority of either such committee or the Board of Directors.
4.5 COMPENSATION. The Board of Directors, or a committee thereof, shall fix the compensation of Executive Officers (as defined herein) of the Corporation. "Executive officers" shall be those officers of the Corporation identified as such from time to time in a resolution or resolutions of the Board of Directors. The compensation of officers who are not Executive Officers shall be fixed by the Board of Directors, by a committee thereof, or by management under such policies and procedures as shall be established by the Board of Directors or a committee thereof.
4.6 DELEGATION OF OFFICER DUTIES. In case of the absence of any
officer of the Corporation, or for any reason that the Board of Directors (or,
in addition, in the case of any officer appointed by a committee, such
committee or any other committee which could appoint such officer pursuant to
Section 4.2 of these Bylaws) may deem sufficient, the Board of Directors (or
committee, as applicable) may delegate, for the time being, the powers or
duties, or any of them, of such officer to any other officer, or to any
director.
4.7 CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors and shall have such powers and perform such duties as may be provided for herein and as are normally incident to the office and as may be assigned by the Board of Directors. If and at such times as the Board of Directors so determines, the Chairman of the Board may also serve as the Chief Executive Officer of the Corporation.
4.9 PRESIDENT. The President, in the absence of the Chairman of the Board and the Chief Executive Officer, shall preside at all meetings of the shareholders and of the Board of Directors. The President shall be the Chief Executive Officer of the Corporation unless the Board of Directors has appointed another person to such office, in which case the President shall be the Chief Operating Officer of the Corporation and shall have such powers and perform such duties as may be provided for herein and as are normally incident to the office and as may be prescribed by the Board of Directors, the Chairman of the Board, or the Chief Executive Officer.
4.10 VICE CHAIRMEN. Vice Chairmen shall perform such duties and exercise such powers as may be prescribed by the Board of Directors, the Chairman of the Board, or the Chief Executive Officer.
4.11 CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall be the principal financial officer of the Corporation. The Chief Financial Officer is authorized to sign any document filed with the Securities and Exchange Commission or any state securities commission on behalf of the Corporation and shall perform such duties and exercise such powers as are normally incident to the office and as may be prescribed by the Board of Directors, the Chairman of the Board, or the Chief Executive Officer.
4.12 CHIEF CREDIT OFFICER. The Chief Credit Officer shall perform such duties and exercise such powers as are normally incident to the office and as may be prescribed by the Board of Directors, the Chairman of the Board, or the Chief Executive Officer.
4.13 GENERAL COUNSEL. The General Counsel shall perform such duties and exercise such powers as are normally incident to the office and as may be prescribed by the Board of Directors, the Chairman of the Board, or the Chief Executive Officer.
4.14 PERSONNEL DIVISION MANAGER. The Personnel Division Manager shall perform such duties and exercise such powers as are normally incident to the office and as may be prescribed by the Board of Directors, the Chairman of the Board, or the Chief Executive Officer.
4.15 MANAGER OF RISK MANAGEMENT. The Manager of Risk Management shall perform such duties and exercise such powers as are normally incident to the office and as may be prescribed by the Board of Directors, the Chairman of the Board, or the Chief Executive Officer.
4.16 EXECUTIVE VICE PRESIDENTS, SENIOR VICE PRESIDENTS AND VICE PRESIDENTS. Executive Vice Presidents, Senior Vice Presidents and Vice Presidents shall perform such duties and exercise such powers as may be prescribed by the Board of Directors, a committee thereof, the personnel committee, the Chairman of the Board, or the Chief Executive Officer.
4.17 SECRETARY. The Secretary shall attend all sessions of the Board of Directors and of the shareholders and record all votes and the minutes of all proceedings in books to be kept for that purpose. The Secretary shall give or cause to be given notice of all meetings of the shareholders and of the Board of Directors, shall authenticate records of the Corporation, and shall perform such other duties as are incident to the office or as may be prescribed by the Board of Directors, the Chairman of the Board or the Chief Executive Officer. In the absence or disability of the Secretary, the Assistant Secretary or such other officer or officers as may be authorized by the Board of Directors or Executive Committee thereof shall perform all the duties and exercise all of the powers of the Secretary and shall perform such other duties as the Board of Directors, Chairman of the Board or the Chief Executive Officer shall prescribe.
4.18 TREASURER. The Treasurer shall have the custody of the funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, the Chairman of the Board,
4.19 AUDITOR. The Auditor shall perform such duties and exercise such powers as are normally incident to the office and as may be prescribed by the Board of Directors or the Chairman of the Audit Committee.
4.20 CONTROLLER. The Controller shall be the principal accounting officer of the Corporation. The Controller is authorized to sign any document filed with the Securities and Exchange Commission or any state securities commission on behalf of the Corporation and shall assist the management of the Corporation in setting the financial goals and policies of the Corporation, shall provide financial and statistical information to the shareholders and to the management of the Corporation and shall perform such other duties and exercise such other powers as may be prescribed by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President. In the absence or disability of the Controller, the Assistant Controller shall perform all the duties and exercise all powers of the Controller and shall perform such duties as the Board of Directors or the Chairman of the Board or the Chief Executive Officer shall prescribe.
4.21 OTHER OFFICERS. Officers holding such other offices as may be created pursuant to Sections 4.1 and 4.2 of these Bylaws shall have such authority and perform such duties and exercise such powers as may be prescribed by the Board of Directors, a committee thereof, the personnel committee, the Chairman of the Board or the Chief Executive Officer.
4.22 OFFICER COMMITTEES. The directors, by resolution adopted by a majority of the entire Board of Directors, may designate one or more committees, consisting of two or more officers, and may delegate to such committee or committees all such authority that the Board of Directors deems desirable that is permitted by law. Members of such committees may take action without a meeting and may participate in meetings to the same extent and in the same manner that directors may take action and may participate pursuant to Sections 3.12 and 3.13 of these Bylaws.
5.1 CERTIFICATES. The certificates representing shares of stock of the Corporation shall be numbered, shall be entered in the books or records of the Corporation as they are issued, and shall be signed by the Chairman of the Board or the Chief Executive Officer and any one of the following: the President, the Treasurer, or the Secretary. Either or both of the signatures upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar other than an officer or employee of the Corporation. Each certificate shall include the following upon the face thereof:
(a) A statement that the Corporation is organized under the laws of the State of Tennessee;
(b) The name of the Corporation;
(c) The name of the person to whom issued;
(d) The number and class of shares, and the designation of the series, if any, which such certificate represents;
(e) The par value of each share represented by such certificate; or a statement that the shares are without par value; and
5.2 SHARES NOT REPRESENTED BY CERTIFICATES. Notwithstanding the provisions of Section 5.1 of these Bylaws, the Board of Directors may authorize the issuance of some or all of the shares of any class without certificates. The Corporation shall send to each shareholder to whom such shares have been issued or transferred at the appropriate time any written statement providing information about such shares, which is required by law.
5.3 STOCK TRANSFERS AND RECORD DATES. Transfers of shares of stock shall be made upon the books of the Corporation by the record owner or by an attorney, lawfully constituted in writing, and upon surrender of any certificate therefor. The Board of Directors may appoint suitable agents in Memphis, Tennessee, and elsewhere to facilitate transfers by shareholders under such regulations as the Board of Directors may from time to time prescribe. The transfer books may be closed by the Board of Directors for such period, not to exceed 40 days, as may be deemed advisable for dividend or other purposes, or in lieu of closing the books, the Board of Directors may fix in advance a date as the record date for determining shareholders entitled notice of and to vote at a meeting of shareholders, or entitled to payment of any dividend or other distribution. The record date for voting or taking other action as shareholders shall not be less than 10 days nor more than 70 days prior to the meeting date or action requiring such determination of shareholders. The record date for dividends and other distributions shall not be less than 10 days prior to the payment date of the dividend or other distribution. All certificates surrendered to the Corporation for transfer shall be canceled, and no new certificate shall be issued until the former certificate for like number of shares shall have been surrendered and canceled, except that in case of a lost or destroyed certificate a new one may be issued on the terms prescribed by Section 5.5 of these Bylaws.
5.4 RECORD OWNERS. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof; and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, except as required by applicable law.
5.5 LOST, DESTROYED, STOLEN OR MUTILATED CERTIFICATES. The agent for transfer of the Corporation's stock may issue new share certificates in place of certificates represented to have been lost, destroyed, stolen or mutilated upon receiving an indemnity satisfactory to the agent and the Secretary or Treasurer of the Corporation, without further action of the Board of Directors.
6.1 INDEMNIFICATION OF OFFICERS WHEN WHOLLY SUCCESSFUL. If any current or former officer of the Corporation [including for purposes of this Article an individual who, while an officer, is or was serving another corporation or other enterprise (including an employee benefit plan and a political action committee, which serves the interests of the employees of the Corporation or any of its subsidiaries) in any capacity at the request of the Corporation and unless the context requires otherwise the estate or personal representative of such officer] is wholly successful, on the merits or otherwise, in the defense of any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal ("Proceeding"), to which the officer was a party because he or she is or was an officer of the Corporation, the officer shall be indemnified by the Corporation against all reasonable expenses, including attorney fees, incurred in connection with such Proceeding, or any appeal therein.
6.2 INDEMNIFICATION OF OFFICERS WHEN NOT WHOLLY SUCCESSFUL. If any current or former officer of the Corporation has not been wholly successful on the merits or otherwise, in the defense of a Proceeding, to which the officer was or was threatened to be made a party because he or she was or is an officer, the officer shall be indemnified by the Corporation against any judgment, settlement, penalty, fine (including any excise tax assessed with respect to an employee benefit plan), or other liability and any reasonable expenses, including attorney fees, incurred as a result of such Proceeding, or any appeal therein, if authorized in the specific case after a determination has been made that indemnification is permissible because the following standard of conduct has been met:
(a) The officer conducted himself or herself in good faith, and
(b) The officer reasonably believed: (I) in the case of conduct in the officer's official capacity as an officer of the Corporation that the officer's conduct was in the Corporation's best interest; and (ii) in all other cases that the officer's conduct was at least not opposed to its best interests; and
provided, however, the Corporation may not indemnify an officer in connection with a Proceeding by or in the right of the Corporation in which the officer was adjudged liable to the Corporation or in connection with any other proceeding charging improper benefit to the officer, whether or not involving action in his or her official capacity, in which the officer was adjudged liable on the basis that personal benefit was improperly received by the officer.
6.3 PROCEDURES FOR INDEMNIFICATION DETERMINATIONS. The determination required by Section 6.2 herein shall be made as follows:
(a) By the Board of Directors by a majority vote of a quorum consisting of directors not at the time parties to the Proceeding;
(b) If a quorum cannot be obtained, by majority vote of a committee duly designated by the Board of Directors (in which designation directors who are parties may participate) consisting solely of two or more directors not at the time parties to the Proceeding;
(c) By independent special legal counsel: (I) selected by the
Board of Directors or its committee in the manner prescribed
in subsection (a) or (b); or (ii) if a quorum of the Board of
Directors cannot be obtained under subsection (a) and a
committee cannot be designated under subsection (b), selected
by majority vote of the full Board of Directors (in which
selection directors who are parties may participate); or, if a
determination pursuant to subsections (a), (b), or (c) of this
Section 6.3 cannot be obtained, then
(d) By the shareholders, but shares owned by or voted under the control of directors who are at the time parties to the Proceeding may not be voted on the determination.
6.4 SERVING AT THE REQUEST OF THE CORPORATION. An officer of the Corporation shall be deemed to be serving another corporation or other enterprise or employee benefit plan or political action committee at the request of the Corporation only if such request is reflected in the records of the Board of Directors or a committee appointed by the Board of Directors for the purpose of making such requests. Approval by the Board of Directors, or a committee thereof, may occur before or after commencement of such service by the officer.
6.5 ADVANCEMENT OF EXPENSES. The Corporation shall pay for or reimburse reasonable expenses, including attorney fees, incurred by an officer who is a party to a Proceeding in advance of the final disposition of the Proceeding if:
(a) The officer furnishes to the Corporation a written affirmation of the officer's good faith belief that the officer has met the standard of conduct described in Section 6.2 herein;
(b) The officer furnishes to the Corporation a written undertaking, executed personally or on behalf of the officer, to repay the advance if it is ultimately determined that the officer is not entitled to indemnification; and
(c) A determination is made that the facts then known to those making the determination would not preclude indemnification under this bylaw.
6.6 UNDERTAKING REQUIRED FOR EXPENSES. The undertaking required by Section 6.5 herein must be an unlimited general obligation of the officer but need not be secured and may be accepted without reference to financial ability to make repayment.
6.7 PROCEDURES FOR EXPENSE DETERMINATIONS. Determinations and authorizations of payments under Section 6.5 herein shall be made in the same manner as is specified in Section 6.3 herein.
6.8 INDEMNIFICATION OF EMPLOYEES AND FORMER DIRECTORS. Every employee and every former director of the Corporation shall be indemnified by the Corporation to the same extent as officers of the Corporation.
6.10 MANDATORY INDEMNIFICATION OF DIRECTORS AND DESIGNATED OFFICERS. The Corporation shall indemnify each of its directors and such of the non-director officers of the Corporation or any of its subsidiaries as the Board of Directors may designate, and shall advance expenses, including attorney's fees, to each director and such designated officers, to the maximum extent permitted (or not prohibited) by law, and in accordance with the foregoing, the Board of Directors is expressly authorized to enter into individual indemnity agreements on behalf of the Corporation with each director and such designated officers which provide for such indemnification and expense advancement and to adopt resolutions which provide for such indemnification and expense advancement.
6.11 INSURANCE. Notwithstanding anything in this Article Six to the contrary, the Corporation shall have the additional power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Corporation, or who, while a director, officer, employee or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, political action committee, or other enterprise, against liability asserted against or incurred by the person in that capacity or arising from the person's status as a director, officer, employee, or agent, whether or not the Corporation would have the power to indemnify the person against the same liability.
7.1 NON-EMPLOYEE DIRECTORS. Directors who are not also officers of the Corporation or its affiliates shall be retired from the Board of Directors as follows:
(a) Any director who shall attain the age of sixty-five (65) on or before the last day of the term for which he or she was elected shall not be nominated for re-election and shall be retired from the Board of Directors at the expiration of such term.
(b) For the purpose of maintaining boards of active business and professional persons, directors leaving the occupation or the position held at their last election (by retirement or otherwise) will be expected to tender their resignation from the Board of Directors upon such occasion. A resignation will ordinarily be accepted unless (I) the director assumes another management position deemed appropriate by the Board of Directors for continuation, or (ii) the director is so engaged in some specific project for the Board of Directors as to make his or her resignation detrimental to the Corporation. Under this circumstance, the Board of Directors may elect to set a subsequent date for his or her retirement to coincide with the completion of the project.
Directors who are also officers of the Corporation or any of its affiliates will be retired from the Board of Directors on the date of the annual meeting coincident with or next following the date of the director's retirement from or other discontinuation of active service with the Corporation and its affiliates.
7.2 OFFICERS AND EMPLOYEES. Except as provided in the following
sentence, the Corporation has no compulsory retirement age for its officers or
employees. Each officer or employee who has attained 65 years of age and who,
for the two-year period immediately before attaining such age, has been
employed in a "bona fide executive" or a "high policy-making" position as those
terms are used and defined in the Age Discrimination in Employment Act, Section
12(c), and the regulations relating to that section prescribed by the Equal
Employment Opportunity Commission, all as amended from time to time
(collectively, the "ADEA"), shall automatically be terminated by way of
compulsory retirement and his or her salary discontinued on the first day of
the month coincident with or immediately following the 65th birthday, provided
such employee is entitled to an immediate nonforfeitable annual retirement
benefit, as specified in the ADEA, in the aggregate amount of at least $44,000.
Notwithstanding the prior sentence, the Board of Directors, in its discretion,
may continue any such officer or employee in service and designate the capacity
in which he or she shall serve, and shall fix the remuneration he or she shall
receive. The Board of Directors may also re-employ any former officer who had
theretofore been retired.
8.1 DEFINITION OF "DOCUMENT." For purposes of this Article Eight of the Bylaws, the term "document" shall mean a document of any type, including, but not limited to, an agreement, contract, instrument, power of attorney, endorsement, assignment, transfer, stock or bond power, deed, mortgage, deed of trust, lease, indenture, conveyance, proxy, waiver, consent, certificate, declaration, receipt, discharge, release, satisfaction, settlement, schedule, account, affidavit, security, bill, acceptance, bond, undertaking, check, note or other evidence of indebtedness, draft, guaranty, letter of credit, and order.
8.2 EXECUTION OF DOCUMENTS. Except as expressly provided in
Section 5.1 of these Bylaws (with respect to signatures on certificates
representing shares of stock of the Corporation), the Chairman of the Board,
the Chief Executive Officer, the President, any Vice Chairman, any Executive
Vice President, any Senior Vice President, any Vice President, the Chief
Financial Officer, the Chief Credit Officer, the General Counsel, the Personnel
Division Manager, the Manager of Risk Management, the Controller, the
Treasurer, the Secretary, and any other officer, or any of them acting
individually, may (I) execute and deliver in the name and on behalf of the
Corporation or in the name and on behalf of any division or department of the
Corporation any document pertaining to the business, affairs, or property of
the Corporation or any division or department of the Corporation, and (ii)
delegate to any other officer, employee or agent of the Corporation the power
to execute and deliver any such document. In addition, the President -
Tennessee Banking, the President - Memphis Banking, and the Group Manager -
Money Management of First Tennessee Bank National Association (the "Bank"), the
principal subsidiary of the Corporation, or any of them acting individually,
may, as agent of the Corporation, execute and deliver in the name and on behalf
of the Corporation any such document.
8.3 METHOD OF EXECUTION BY SECRETARY. Unless otherwise required by law, the signature of the Secretary on any document may be a facsimile.
9.1 DEFINITION OF EMERGENCY. The provisions of this Article Nine shall be effective only during an "emergency." An "emergency" shall be deemed to exist whenever any two of the officers identified in Section 9.2 of these Bylaws in good faith determine that a quorum of the directors cannot readily be assembled because of a catastrophic event.
9.2 NOTICE OF MEETING. A meeting of the Board of Directors may be called by any one director or by any one of the following officers: Chairman of the Board, Chief Executive Officer, President, any Vice Chairman, any Executive Vice President, Chief Credit Officer, Chief Financial Officer, Controller, General Counsel, Manager of Risk Management, Personnel Division Manager, or Secretary. Notice of such meeting need be given only to those directors whom it is practical to reach by any means the person calling the meeting deems feasible, including, but not limited to, by publication and radio. Such notice shall be given at least two hours prior to commencement of the meeting.
9.3 QUORUM AND SUBSTITUTE DIRECTORS.. If a quorum has not been obtained, then one or more officers of the Corporation or the Bank present at the emergency meeting of the Board of Directors, as are necessary to achieve a quorum, shall be considered to be substitute directors for purposes of the meeting, and shall serve in order of rank, and within the same rank in order of seniority determined by hire date by the Corporation, the Bank or any of their subsidiaries. In the event that less than a quorum of the directors (including any officers who serve as substitute directors for the meeting) are present, those directors present (including such officers serving as substitute directors) shall constitute a quorum.
9.4 ACTION AT MEETING. The Board as constituted pursuant to
Section 9.3 and after notice has been provided pursuant to Section 9.2 may take
any of the following actions: (I) prescribe emergency powers of the
Corporation, (ii) delegate to any officer or director any of the powers of the
Board of Directors, (iii) designate lines of succession of officers and agents
in the event that any of them are unable to discharge their duties, (iv)
relocate the principal office or designate alternative or multiple principal
offices, and (v) take any other action that is convenient, helpful, or
necessary to carry on the business of the Corporation.
9.5 EFFECTIVENESS OF NON-EMERGENCY BYLAWS. All provisions of these Bylaws not contained in this Article Nine, which are consistent with the emergency bylaws contained in Article Nine, shall remain effective during the emergency.
9.7 ACTION TAKEN IN GOOD FAITH. Any corporate action taken in good faith in accordance with the provisions of this Article Nine binds the Corporation and may not be used to impose liability on any director, substitute director, officer, employee or agent of the Corporation.
10.1 FISCAL YEAR. The Board of Directors of the Corporation shall have authority from time to time to determine whether the Corporation shall operate upon a calendar year basis or upon a fiscal year basis, and if the latter, said Board of Directors shall have power to determine when the said fiscal year shall begin and end.
10.2 DIVIDENDS. Dividends on the capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting pursuant to law. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends or for repairing or maintaining any property of the Corporation, or for such other purposes as the directors shall think conducive to the interest of the Corporation.
10.3 SEAL. This Corporation shall have a Corporate Seal which shall consist of an imprint of the name of the Corporation, the state of its incorporation, the year of incorporation and the words "Corporate Seal." The Corporate Seal shall not be required to establish the validity or authenticity of any document executed in the name and on behalf of the Corporation.
10.4 NOTICES. Whenever notice is required to be given to any director, officer or shareholder under any of the provisions of the law, the Charter, or these Bylaws (except for notice required by Sections 2.8 and 3.6 of these Bylaws), it shall not be construed to require personal notice, but such notice may be given in writing by depositing the same in the United States mail, postage prepaid, or by telegram, teletype, facsimile transmission or other form of wire, wireless, or other electronic communication or by private carrier addressed to such shareholder at such address as appears on the Corporation's current record of shareholders, and addressed to such director or officer at such address as appears on the records of the Corporation. If mailed as provided above, notice to a shareholder shall be deemed to be effective at the time when it is deposited in the mail.
10.5 BYLAW AMENDMENTS. The Board of Directors shall have power to make, amend and repeal the Bylaws or any Bylaw of the Corporation by vote of not less than a majority of the directors then in office, at any regular or special meeting of the Board of Directors. The shareholders may make, amend and repeal the Bylaws or any Bylaw of this Corporation at any annual meeting or at a special meeting called for that purpose only by the affirmative vote of the holders of at least eighty percent (80%) of the voting power of all outstanding voting stock, and all Bylaws made by the directors may be amended or repealed by the shareholders only by the vote of the holders of at least eighty percent (80%) of the voting power of all outstanding voting stock. Without further authorization, at any time the Bylaws are amended, the Secretary is authorized to restate the Bylaws to reflect such amendment, and the Bylaws, as so restated, shall be the Bylaws of the Corporation.
Three Months Ended
March 31
-----------------------------
Computation for Statements of Income: 1997 1996
- ------------------------------------- ----------- -----------
Per statements of income (Thousands):
Net income $38,563 $37,441
=========== ===========
Per statements of income:
Weighted average shares outstanding 64,582,657 67,301,454
=========== ===========
Primary earnings per share (a):
Net income $ .60 $ .56
=========== ===========
Additional Primary computation
- ------------------------------
Adjustment to weighted average shares
outstanding:
Weighted average shares outstanding
per primary computation above 64,582,657 67,301,454
Add dilutive effect of outstanding
options (as determined by the
application of the treasury stock
method) 1,644,027 889,119
Weighted average shares outstanding, ----------- -----------
as adjusted 66,226,684 68,190,573
=========== ===========
Primary earnings per share, as adjusted (b):
Net income $ .58 $ .55
=========== ===========
Additional Fully Diluted Computation
- ------------------------------------
Adjustment to weighted average share
outstanding:
Weighted average shares outstanding
per primary computation above 66,226,684 68,190,573
Additional dilutive effect of outstanding
options (as determined by the application
of the treasury stock method) 41,572 74,565
Weighted average shares outstanding, ----------- -----------
as adjusted 66,268,256 68,265,138
=========== ===========
Fully diluted earnings per share, as adjusted (b):
Net income $ .58 $ .55
=========== ===========
|
ARTICLE 9
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FIRST
TENNESSEE NATIONAL CORPORATION'S MARCH 31, 1997, FINANCIAL STATEMENTS FILED IN
ITS 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCES TO SUCH FINANCIAL
STATEMENTS.
MULTIPLIER: 1,000
PERIOD TYPE
3 MOS
FISCAL YEAR END
DEC 31 1997
PERIOD START
JAN 01 1997
PERIOD END
MAR 31 1997
CASH
525,059
INT BEARING DEPOSITS
1,963
FED FUNDS SOLD
234,045
TRADING ASSETS
286,371
INVESTMENTS HELD FOR SALE
2,137,711
INVESTMENTS CARRYING
63,068
INVESTMENTS MARKET
63,454
LOANS
8,463,524
ALLOWANCE
121,688
TOTAL ASSETS
12,975,513
DEPOSITS
9,191,218
SHORT TERM
1,912,346
LIABILITIES OTHER
721,818
LONG TERM
208,269
PREFERRED MANDATORY
100,000
PREFERRED
0
COMMON
79,924
OTHER SE
761,938
TOTAL LIABILITIES AND EQUITY
12,975,513
INTEREST LOAN
181,833
INTEREST INVEST
35,794
INTEREST OTHER
4,699
INTEREST TOTAL
222,326
INTEREST DEPOSIT
75,424
INTEREST EXPENSE
106,817
INTEREST INCOME NET
115,509
LOAN LOSSES
12,526
SECURITIES GAINS
29
EXPENSE OTHER
180,326
INCOME PRETAX
61,733
INCOME PRE EXTRAORDINARY
61,733
EXTRAORDINARY
0
CHANGES
0
NET INCOME
38,563
EPS PRIMARY
0.60
EPS DILUTED
0.58
YIELD ACTUAL
4.24
LOANS NON
42,526
LOANS PAST
38,310
LOANS TROUBLED
196
LOANS PROBLEM
42,409
ALLOWANCE OPEN
117,748
CHARGE OFFS
10,653
RECOVERIES
2,067
ALLOWANCE CLOSE
121,688
ALLOWANCE DOMESTIC
121,688
ALLOWANCE FOREIGN
0
ALLOWANCE UNALLOCATED
0