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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
- or -
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from __________ to__________
Commission File Number 000-4491
FIRST TENNESSEE NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
TENNESSEE 62-0803242
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
165 Madison Avenue, Memphis, Tennessee 38103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including Area Code: 901-523-4444
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Exchange on which Registered
------------------- ------------------------------------
$0.625 Par Value Common Capital Stock New York Stock Exchange, Inc.
(including rights attached thereto)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] YES [ ] NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). [X] YES [ ] NO
At June 30, 2003, the aggregate market value of the voting and non-voting common
equity of the registrant held by non-affiliates of the registrant was
approximately $5.4 billion.
At February 27, 2004, the registrant had 124,077,101 shares of common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
1. Portions of Proxy Statement furnished to shareholders in connection
with Annual Meeting of Shareholders scheduled for 4/20/04 --
Parts I, II, III and IV.
PART I
ITEM 1
BUSINESS
General.
First Tennessee National Corporation (the "Corporation") is a Tennessee
corporation incorporated in 1968. The Corporation is registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended, and is a
financial holding company under the provisions of the Gramm-Leach-Bliley Act. At
December 31, 2003, the Corporation had total assets of $24.5 billion and ranked
2nd in terms of total assets among Tennessee-headquartered bank holding
companies and ranked 33rd nationally.
Through its principal subsidiary, First Tennessee Bank National
Association (the "Bank"), and its other banking-related subsidiaries, the
Corporation provides diversified financial services though five business
segments, First Tennessee Banking Group, First Horizon, FTN Financial,
Transaction Processing and Corporate, which are described in more detail in the
response to Item 7 of Part II hereof and Note 22 to the Consolidated Financial
Statements contained in an Appendix to the Corporation's Proxy Statement
furnished to shareholders in connection with the Annual Meeting of Shareholders
scheduled for April 20, 2004 (herein referred to, including such Appendix, as
the "2004 Proxy Statement"), which note is incorporated herein by reference.
During 2003 approximately 67% of revenues were provided by fee income and
approximately 33% of revenues were provided by net interest income. As a
financial holding company, the Corporation coordinates the financial resources
of the consolidated enterprise and maintains systems of financial, operational
and administrative control intended to coordinate selected policies and
activities, including as described in Item 9A of Part II hereto.
The Bank is a national banking association with principal offices in
Memphis, Tennessee. It received its charter in 1864. During 2003 through its
various business segments, including consolidated subsidiaries, the Bank
generated gross revenue (net interest income plus noninterest income) of
approximately $2.4 billion and contributed substantially all of consolidated net
income from continuing operations. At December 31, 2003, the Bank had $24.3
billion in total assets, $15.8 billion in total deposits, and $13.9 billion in
net loans. Among Tennessee headquartered banks at September 30, 2003, the Bank
ranked 2nd in terms of total assets and ranked 1st in Tennessee deposit market
share. Nationally, it ranked 32nd among banks in terms of total assets as of
September 30, 2003. On December 31, 2003, the Bank had 478 banking locations
(179 financial centers and 299 off-premises ATMs) in 21 Tennessee counties,
including all of the major metropolitan areas of the state, 12 banking locations
(6 financial centers and 6 off-premises ATMs) in Mississippi, one off premises
ATM in Arkansas, and one financial center in Virginia. At December 31, 2003,
First Horizon Home Loan Corporation, a subsidiary of the Bank, and its
affiliates provided mortgage banking services through 301 office, including
satellite branches, in 39 states and ranked in the top 15 nationally in retail
mortgage loan originations and mortgage loan servicing, as reported by Inside
Mortgage Finance. FTN Financial Group, at December 31, 2003, had 14 offices in
11 states, and FTN Financial Capital Markets, a division of the Bank, ranked as
one of the leading underwriters of U.S. agency debt.
The Corporation provides the following services through its
subsidiaries:
o general banking services for consumers, businesses, financial
institutions, and governments
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o mortgage banking services
o through FTN Financial-sales and underwriting of bank-eligible
securities and securities eligible for underwriting by financial
subsidiaries, mortgage loans and advisory services, and equity
research.
o transaction processing - credit card merchant processing,
nationwide check clearing services, and remittance processing
o trust, fiduciary, and agency services
o credit card products
o discount brokerage and brokerage
o venture capital
o equipment finance
o investment and financial advisory services, including investment
advisor to First Funds, a family of mutual funds
o mutual fund sales as agent
o retail and commercial insurance sales as agent
o private mortgage reinsurance
o consumer lending
An element of the Corporation's business strategy is to seek
acquisitions and consider divestitures that would enhance long-term shareholder
value. The Corporation has a department charged with this responsibility which
is constantly reviewing and developing opportunities to achieve this element of
the Corporation's strategy. Acquisitions and divestitures which closed during
the past three years are described in Note 2 to the Consolidated Financial
Statements.
All of the Corporation's subsidiaries are listed in Exhibit 21. The
Bank has filed notice with the Comptroller of the Currency ("Comptroller") as a
government securities broker/dealer. The FTN Financial Capital Markets division
of the Bank is registered with the Securities and Exchange Commission ("SEC") as
a municipal securities dealer. The Bank is supervised and regulated as described
below. Highland Capital Management Corp., Martin and Company, Inc. and First
Tennessee Advisory Services, a separately identifiable department of the Bank,
are registered with the SEC as investment advisers. First Tennessee Brokerage,
Inc. is registered as an investment adviser in all states where it conducts
advisory business for which registration is required. Hickory Venture Capital
Corporation is licensed as a Small Business Investment Company. First Tennessee
Brokerage, Inc., FTN Financial Securities Corporation and FTN Midwest Research
Securities Corporation are registered as broker-dealers with the SEC and all
states where they conduct business for which registration is required. First
Horizon Home Loan Corporation is licensed as a mortgage lender (or exempt from
licensing) in all states where it does business and is regulated by the
Comptroller. First Tennessee Insurance Services ("FTIS"), a department of the
Bank, and First Horizon Insurance Services, Inc. ("FHIS") are licensed as
insurance agencies in all states where they do business for which licensing is
required. FT Reinsurance Company is licensed by the state of South Carolina as a
monoline insurance company. FT Insurance Corporation is licensed as an insurance
agency in Alabama. Synaxis, Inc.'s subsidiaries, which include Polk & Sullivan
Group, Inc., Mann, Smith & Cummings, Inc., Synaxis Risk Services, Inc., Merritt
& McKenzie, Inc., Frost Specialty Risk, Inc., and Van Meter Insurance, Inc., are
licensed as insurance agencies in all states where they do business for which
licensing is required. FTN Financial Securities Corporation, FTN Midwest
Research Securities Corporation, FHIS and all of the subsidiaries listed in the
preceding sentence are financial subsidiaries under the Gramm-Leach-Bliley Act.
First Tennessee Brokerage, Inc. is licensed as an insurance agency in the states
where it does business for which licensing is required for the sale of annuity
products.
2
Expenditures for research and development activities were not material
in any of the last three fiscal years.
Neither the Corporation nor any of its significant subsidiaries is
dependent upon a single customer or very few customers.
At December 31, 2003, the Corporation and its subsidiaries had 11,494
full-time-equivalent employees, not including contract labor for certain
services.
For additional information on the business of the Corporation, refer to
the Management's Discussion and Analysis and Glossary sections contained in the
2004 Proxy Statement, which sections are incorporated herein by reference.
The Corporation's Internet address is www.firsttennessee.com. The
Corporation makes available free of charge on its Internet website its annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form
8-K, and amendments thereto as soon as reasonably practicable after the
Corporation files such material with, or furnishes such material to, the
Securities and Exchange Commission, as applicable.
Corporate Governance and NYSE Disclosures.
The Corporation's Board of Directors adopted Corporate Governance
Guidelines, which are available on the Corporation's website, along with the
charters of the Board's Audit Committee, Nominating and Corporate Governance
Committee, and Compensation (previously named Human Resources) Committee. To
access the information at the website address (www.firsttennessee.com), click on
"Company Information," then "Investor Relations," and then "Corporate
Governance." Written copies of any of the documents are available to
shareholders upon request to the Corporate Secretary.
The Corporation's Board of Directors has also adopted a Code of
Business Conduct and Ethics, which includes a number of policies and guidelines
that have been in place over the years. The Code is available on the
Corporation's website and written copies will be provided to shareholders upon
request to the Corporate Secretary. Any waiver of this Code for an executive
officer or director will be promptly disclosed to shareholders by posting such
information on the Corporation's website.
See Item 10 of Part III below for information on the Corporation's Code
of Ethics for Senior Financial Officers.
The Corporation's Chief Executive Officer will be required to certify
annually to the New York Stock Exchange ("NYSE") that the Chief Executive
Officer is unaware of any violation by the Corporation of NYSE corporate
governance listing standards, and this certification will be disclosed annually
(commencing in 2005) in the Corporation's proxy statement or Form 10-K or by
another method authorized by the NYSE.
Supervision and Regulation.
The following summary sets forth certain of the material elements of
the regulatory framework applicable to bank holding companies and financial
holding companies and their subsidiaries and to companies engaged in securities
and insurance activities and provides certain specific information about the
Corporation. The bank regulatory framework is intended primarily for the
protection of depositors and the Federal Deposit Insurance Funds and not for the
protection of security holders. In addition, certain
3
activities of the Corporation and its subsidiaries are subject to various
securities and insurance laws and are regulated by the Securities and Exchange
Commission and the state insurance departments of the states in which they
operate. To the extent that the following information describes statutory and
regulatory provisions, it is qualified in its entirety by express reference to
each of the particular statutory and regulatory provisions. A change in
applicable statutes, regulations or regulatory policy may have a material effect
on the business of the Corporation.
General
The Corporation is a bank holding company and financial holding company
within the meaning of the Bank Holding Company Act of 1956, as amended (the
"BHCA") and is registered with the Board of Governors of the Federal Reserve
System (the "Federal Reserve"). The Corporation is subject to the regulation and
supervision of and examination by the Federal Reserve under the BHCA. The
Corporation is required to file with the Federal Reserve annual reports and such
additional information as the Federal Reserve may require pursuant to the BHCA.
Under the BHCA, prior to March 13, 2000, bank holding companies could
not in general directly or indirectly acquire the ownership or control of more
than 5% of the voting shares or substantially all of the assets of any company,
including a bank, without the prior approval of the Federal Reserve, and a bank
holding company and its subsidiaries were generally limited to engaging in
banking and activities found by the Federal Reserve to be so closely related to
banking as to be a proper incident thereto. Since March 13, 2000, eligible bank
holding companies that elect to become financial holding companies may affiliate
with securities firms and insurance companies and engage in activities that are
"financial in nature" generally without the prior approval of the Federal
Reserve. See "Gramm-Leach-Bliley Act" below.
In addition, the BHCA permits the Federal Reserve to approve an
application by a bank holding company to acquire a bank located outside the
acquirer's principal state of operations without regard to whether the
transaction is prohibited under state law. See "Interstate Banking and Branching
Legislation." The Tennessee Bank Structure Act of 1974, among other things,
prohibits (subject to certain exceptions) a bank holding company from acquiring
a bank for which the home state is Tennessee (a "Tennessee bank") if, upon
consummation, the company would directly or indirectly control 30% or more of
the total deposits in insured depository institutions in Tennessee. As of June
30, 2003, the Corporation estimates that it held approximately 18% of such
deposits. Subject to certain exceptions, the Tennessee Bank Structure Act
prohibits a bank holding company from acquiring a bank in Tennessee which has
been in operation for less than five years. Tennessee law permits a Tennessee
bank to establish branches in any county in Tennessee. See also "-- Interstate
Banking and Branching Legislation" below.
The Bank is a national banking association subject to regulation,
examination and supervision by the Comptroller as its primary federal regulator.
In addition, the Bank is insured by, and subject to regulation by, the Federal
Deposit Insurance Corporation (the "FDIC"). The Bank is also subject to various
requirements and restrictions under federal and state law, including
requirements to maintain reserves against deposits, restrictions on the types
and amounts of loans that may be granted and the interest that may be charged
thereon and limitations on the types of investments that may be made, activities
that may be engaged in, and types of services that may be offered. Various
consumer laws and regulations also affect the operations of the Bank. In
addition to the impact of regulation, commercial banks are affected
significantly by the actions of the Federal Reserve as it attempts to control
the money supply and credit availability in order to influence the economy.
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Payment of Dividends
The Corporation is a legal entity separate and distinct from its
banking and other subsidiaries. The principal source of cash flow of the
Corporation, including cash flow to pay dividends on its stock or principal
(premium, if any) and interest on debt securities, is dividends from the Bank.
There are statutory and regulatory limitations on the payment of dividends by
the Bank to the Corporation, as well as by the Corporation to its shareholders.
As a national bank, the Bank is required by federal law to obtain the
prior approval of the Comptroller for the payment of dividends if the total of
all dividends declared by the board of directors of the Bank in any year will
exceed the total of (i) its net profits (as defined and interpreted by
regulation) for that year plus (ii) the retained net profits (as defined and
interpreted by regulation) for the preceding two years, less any required
transfers to surplus. A national bank also can pay dividends only to the extent
that retained net profits (including the portion transferred to surplus) exceed
bad debts (as defined by regulation).
If, in the opinion of the applicable federal bank regulatory authority,
a depository institution or a holding company is engaged in or is about to
engage in an unsafe or unsound practice (which, depending on the financial
condition of the depository institution or holding company, could include the
payment of dividends), such authority may require that such institution or
holding company cease and desist from such practice. The federal banking
agencies have indicated that paying dividends that deplete a depository
institution's or holding company's capital base to an inadequate level would be
such an unsafe and unsound banking practice. Moreover, the Federal Reserve, the
Comptroller and the FDIC have issued policy statements which provide that bank
holding companies and insured depository institutions generally should only pay
dividends out of current operating earnings.
In addition, under the Federal Deposit Insurance Act ("FDIA"), an
FDIC-insured depository institution may not make any capital distributions
(including the payment of dividends) or pay any management fees to its holding
company or pay any dividend if it is undercapitalized or if such payment would
cause it to become undercapitalized.
At December 31, 2003, under dividend restrictions imposed under
applicable federal laws, the Bank, without obtaining regulatory approval, could
legally declare aggregate dividends of approximately $508.4 million. Under
Tennessee law, the Corporation is not permitted to pay dividends if, after
giving effect to such payment, it would not be able to pay its debts as they
become due in the usual course of business or the Corporation's total assets
would be less than the sum of its total liabilities plus any amounts needed to
satisfy any preferential rights if the Corporation was dissolving.
The payment of dividends by the Corporation and the Bank may also be
affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines and debt covenants.
Transactions with Affiliates
There are various legal restrictions on the extent to which the
Corporation and its nonbank subsidiaries (including for purposes of this
paragraph, in certain situations, subsidiaries of the Bank) can borrow or
otherwise obtain credit from the Bank. There are also legal restrictions on the
Bank's purchases of or investments in the securities of and purchases of assets
from the Corporation and its nonbank subsidiaries, the Bank's loans or
extensions of credit to third parties collateralized by the
5
securities or obligations of the Corporation and its nonbank subsidiaries, the
issuance of guaranties, acceptances and letters of credit on behalf of the
Corporation and its nonbank subsidiaries, and certain bank transactions with the
Corporation and its nonbank subsidiaries, or with respect to which the
Corporation and its nonbank subsidiaries act as agent, participate or have a
financial interest. Subject to certain limited exceptions, the Bank (including
for purposes of this paragraph all subsidiaries of the Bank) may not extend
credit to the Corporation or to any other affiliate (other than another
subsidiary bank and certain exempted affiliates) in an amount which exceeds 10%
of the Bank's capital stock and surplus and may not extend credit in the
aggregate to all such affiliates in an amount which exceeds 20% of its capital
stock and surplus. Further, there are legal requirements as to the type, amount
and quality of collateral which must secure such extensions of credit by the
Bank to the Corporation or to such other affiliates. Also, extensions of credit
and other transactions between the Bank and the Corporation or such other
affiliates must be on terms and under circumstances, including credit standards,
that are substantially the same or at least as favorable to the Bank as those
prevailing at the time for comparable transactions with non-affiliated
companies. Also, the Corporation and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services.
Capital Adequacy
The Federal Reserve has adopted risk-based capital guidelines for bank
holding companies. The minimum guideline for the ratio of total capital ("Total
Capital") to risk-weighted assets (including certain off-balance-sheet items,
such as standby letters of credit) is 8%, and the minimum ratio of Tier 1
Capital (defined below) to risk-weighted assets is 4%. At least half of the
Total Capital must be composed of common stock, minority interests in the equity
accounts of consolidated subsidiaries, noncumulative perpetual preferred stock
and a limited amount of cumulative perpetual preferred stock, less goodwill and
certain other intangible assets ("Tier 1 Capital"). The remainder may consist of
qualifying subordinated debt, certain types of mandatory convertible securities
and perpetual debt, other preferred stock and a limited amount of loan loss
reserves. At December 31, 2003, the Corporation's consolidated Tier 1 Capital
and Total Capital ratios were 9.22 and 13.19%, respectively.
The Federal Reserve Board, the FDIC and the OCC have adopted rules to
incorporate market and interest-rate risk components into their risk-based
capital standards and that explicitly identify concentration of credit risk and
certain risks arising from non-traditional activities, and the management of
such risks, as important factors to consider in assessing an institution's
overall capital adequacy. Under the market risk requirements, capital is
allocated to support the amount of market risk related to a financial
institution's ongoing trading activities for banks with relatively large trading
activities. Institutions will be able to satisfy this additional requirement, in
part, by issuing short-term subordinated debt that qualifies as Tier 3 capital.
Based on present practices and activity levels, those trading related market
risk rules have no significant impact on the Corporation's regulatory capital
requirements.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to quarterly average assets, less goodwill and certain
other intangible assets (the "Leverage Ratio"), of 3% for bank holding companies
that meet certain specific criteria, including having the highest regulatory
rating. All other bank holding companies generally are required to maintain a
Leverage Ratio of at least 3%, plus an additional cushion of 100 to 200 basis
points. The Corporation's Leverage Ratio at December 31, 2003 was 7.19%. The
guidelines also provide that bank holding companies experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
on intangible assets. Furthermore, the Federal
6
Reserve has indicated that it will consider a "tangible Tier 1 Capital leverage
ratio" (deducting all intangibles) and other indicia of capital strength in
evaluating proposals for expansion or new activities.
The Bank is subject to risk-based and leverage capital requirements
similar to those described above adopted by the Comptroller. The Corporation
believes that the Bank was in compliance with applicable minimum capital
requirements as of December 31, 2003. Neither the Corporation nor the Bank has
been advised by any federal banking agency of any specific minimum Leverage
Ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business and in certain circumstances
to the appointment of a conservator or receiver. See "--Prompt Corrective
Action."
In June 1999, the Basel Committee on Banking Supervision launched its
efforts to develop an improved capital adequacy framework by issuing its
proposals to revise the 1988 Capital Accord. The new capital framework would
consist of minimum capital requirements, a supervisory review process and the
effective use of market discipline. In its proposal for minimum capital
requirements, the Committee set out options from which banks could choose
depending on the complexity of their business and the quality of their risk
management. A standardized approach would refine the current measurement
framework and introduce the use of external credit assessments to determine a
bank's capital charge. Banks with more advanced risk management capabilities
could make use of an internal risk-rating based approach. Under this approach,
some of the key elements of credit risk, such as the probability of default of
the borrower, would be estimated internally by a bank. The Committee also
proposes an explicit capital charge for operational risk to provide for problems
like internal systems failure.
The supervisory review aspect of the new framework would seek to ensure
that a bank's capital position is consistent with its overall risk profile and
strategy. The supervisory review process would also encourage early supervisory
intervention when a bank's capital position deteriorates. The third aspect of
the new framework, market discipline, would call for detailed disclosure of a
bank's capital adequacy in order to encourage high disclosure standards and to
enhance the role of market participants in encouraging banks to hold adequate
capital. Banks must also disclose how they evaluate their own capital adequacy.
In April 2003, the Basel Committee issued a revised proposal (referred
to as the Third Consultative Paper) resulting from most recent public comments.
In July 2003, the U.S. regulators followed by issuing an Advanced Notice of
Proposed Rulemaking outlining the proposed application for U.S. banks. This
notice proposes required implementation including the use of the advanced
measurement methods for large internationally active banks (core banks) and
allows for other banks to opt-in should they so choose. Under the proposed rules
First Tennessee would not be considered a core bank that would be required to
implement the new rules but could evaluate whether to opt-in. For those banks
that do not opt-in, the current capital rules will continue to apply. Based on
feedback from this advanced notice, it is expected that a notice of proposed
rulemaking will be issued in 2004 along with a comprehensive field test of its
proposals for banks (referred to as the fourth quantitative impact study, or
QIS4). A final rule is expected in 2005 with implementation of some form of the
new guidelines expected in 2007. The Corporation cannot predict at this time
whether the new capital adequacy framework will be adopted by U.S. regulators or
in what form, or the effect it would have on the financial condition or results
of operations of the Bank or the Corporation. The Corporation will continue to
monitor the evolution of the proposed rulemaking and its potential impacts to
the Corporation and the industry.
7
Holding Company Structure and Support of Subsidiary Banks
Because the Corporation is a holding company, its right to participate
in the assets of any subsidiary upon the latter's liquidation or reorganization
will be subject to the prior claims of the subsidiary's creditors (including
depositors in the case of the Bank) except to the extent that the Corporation
may itself be a creditor with recognized claims against the subsidiary. In
addition, depositors of a bank, and the FDIC as their subrogee, would be
entitled to priority over the creditors in the event of liquidation of a bank
subsidiary.
Under Federal Reserve policy, the Corporation is expected to act as a
source of financial strength to, and to commit resources to support, the Bank.
This support may be required at times when, absent such Federal Reserve policy,
the Corporation may not be inclined to provide it. In addition, any capital
loans by a bank holding company to any of its subsidiary banks are subordinate
in right of payment to deposits and to certain other indebtedness of such
subsidiary bank. In the event of a bank holding company's bankruptcy, any
commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a subsidiary bank will be assumed by the bankruptcy
trustee and entitled to a priority of payment.
Cross-Guarantee Liability
Under the FDIA, a depository institution insured by the FDIC can be
held liable for any loss incurred by, or reasonably expected to be incurred by,
the FDIC in connection with (i) the default of a commonly controlled
FDIC-insured depository institution or (ii) any assistance provided by the FDIC
to any commonly controlled FDIC-insured depository institution "in danger of
default." "Default" is defined generally as the appointment of a conservator or
receiver and "in danger of default" is defined generally as the existence of
certain conditions indicating that a default is likely to occur in the absence
of regulatory assistance. The FDIC's claim for damages is superior to claims of
shareholders of the insured depository institution or its holding company but is
subordinate to claims of depositors, secured creditors and holders of
subordinated debt (other than affiliates) of the commonly controlled insured
depository institution. Following the sale by the Corporation of substantially
all of the assets of the First National Bank of Springdale, the Bank is
currently the only depository institution owned by the Corporation. In the
event that the Corporation established or acquired another depository
institution, any loss suffered by the FDIC in respect of another subsidiary
bank would likely result in assertion of the cross-guarantee provisions, the
assessment of such estimated losses against the Corporation's other subsidiary
bank and a potential loss of the Corporation's investment in such subsidiary
bank.
Prompt Corrective Action
The FDIA requires, among other things, the federal banking regulators
to take "prompt corrective action" in respect of FDIC-insured depository
institutions that do not meet minimum capital requirements. Under the FDIA,
insured depository institutions are divided into five capital tiers: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." Under applicable
regulations, an institution is defined to be well capitalized if it maintains a
Leverage Ratio of at least 5%, a Tier 1 Capital ratio of at least 6% and a Total
Capital ratio of at least 10% and is not subject to a directive, order or
written agreement to meet and maintain specific capital levels. An institution
is defined to be adequately capitalized if it meets all of its minimum capital
8
requirements as described above. An institution will be considered
undercapitalized if it fails to meet any minimum required measure, significantly
undercapitalized if it has a Total Risk-Based Capital ratio of less than 6%, a
Tier 1 Risk-Based Capital ratio of less than 3% or a Leverage Ratio of less than
3% and critically undercapitalized if it fails to maintain a level of tangible
equity equal to at least 2% of total assets. An institution may be deemed to be
in a capitalization category that is lower than is indicated by its actual
capital position if it receives an unsatisfactory examination rating.
The FDIA generally prohibits an FDIC-insured depository institution
from making any capital distribution (including payment of dividends) or paying
any management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions are
subject to restrictions on borrowing from the Federal Reserve System. In
addition, undercapitalized depository institutions are subject to growth
limitations and are required to submit capital restoration plans. An insured
depository institution's holding company must guarantee the capital plan, up to
an amount equal to the lesser of 5% of the depository institution's assets at
the time it becomes undercapitalized or the amount of the capital deficiency
when the institution fails to comply with the plan, for the plan to be accepted
by the applicable federal regulatory authority. The federal banking agencies may
not accept a capital plan without determining, among other things, that the plan
is based on realistic assumptions and is likely to succeed in restoring the
depository institution's capital. If a depository institution fails to submit an
acceptable plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject
to a number of requirements and restrictions, including orders to sell
sufficient voting stock to become adequately capitalized, requirements to reduce
total assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized depository institutions are subject to appointment
of a receiver or conservator, generally within 90 days of the date on which they
become critically undercapitalized.
The Corporation believes that at December 31, 2003 the Bank had
sufficient capital to qualify as "well capitalized" under the regulatory capital
requirements discussed above.
Interstate Banking and Branching Legislation
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "IBBEA") authorizes interstate acquisitions of banks and bank holding
companies without geographic limitation. In addition, a bank may merge with a
bank in another state as long as neither of the states has opted out of
interstate branching prior to May 31, 1997. Tennessee did not opt out of
interstate branching. A bank may establish and operate a de novo branch in a
state in which the bank does not maintain a branch if that state explicitly
permits de novo branching. Tennessee permits de novo branching on a reciprocity
basis. Once a bank has established branches in a state through an interstate
merger transaction, the bank may establish and acquire additional branches at
any location in the state where any bank involved in the interstate merger
transaction could have established or acquired branches under applicable federal
or state law. A bank that has established a branch in a state through de novo
branching may establish and acquire additional branches in such state in the
same manner and to the same extent as a bank having a branch in such state as a
result of an interstate merger. If a state opts out of interstate branching
within the specified time period, no bank in any other state may establish a
branch in the opting out of state, whether through an acquisition or de novo.
Gramm-Leach-Bliley Act
The Gramm-Leach-Bliley Act repealed or modified a number of significant
provisions of current laws, including the Glass-Steagall Act and the Bank
Holding Company Act of 1956, which impose
9
restrictions on banking organizations' ability to engage in certain types of
activities. The Act generally allows bank holding companies such as the
Corporation broad authority to engage in activities that are financial in nature
or incidental to such a financial activity, including insurance underwriting and
brokerage; merchant banking; securities underwriting, dealing and market-making;
real estate development; and such additional activities as the Federal Reserve
in consultation with the Secretary of the Treasury determines to be financial in
nature or incidental thereto. A bank holding company may engage in these
activities directly or through subsidiaries by qualifying as a "financial
holding company." To qualify a bank holding company must file a declaration with
the Federal Reserve and certify that all of its subsidiary depository
institutions are well-managed and well-capitalized. The Act also permits
national banks such as the Bank to engage in certain of these activities through
financial subsidiaries. To control or hold an interest in a financial
subsidiary, a national bank must meet the following requirements: (1) the
national bank must receive approval from the Comptroller for the financial
subsidiary to engage in the activities, (2) the national bank and its depository
institution affiliates must each be well-capitalized and well-managed, (3) the
aggregate consolidated total assets of all of the national bank's financial
subsidiaries must not exceed 45% of the national bank's consolidated total
assets or, if less, $50 billion, (4) the national bank must have in place
adequate policies and procedures to identify and manage financial and
operational risks and to preserve the separate identities and limited liability
of the national bank and the financial subsidiary, and (5) if the financial
subsidiary will engage in principal transactions and the national bank is one of
the one hundred largest banks, the national bank must have outstanding at least
one issue of unsecured long-term debt that is currently rated in one of the
three highest investment grade rating categories (or if in the second fifty
largest banks, an alternative requirement is that the national bank has a
current long-term issuer credit rating within the three highest investment grade
rating categories). No new financial activity may be commenced under the Act
unless the national bank and all of its depository institution affiliates have
at least "satisfactory" CRA ratings. Certain restrictions apply if the bank
holding company or the national bank fails to continue to meet one or more of
the requirements listed above. In addition, the Act contains a number of other
provisions that may affect the Bank's operations, including functional
regulation of the Bank's securities and investment management operations by the
SEC and the Bank's insurance operations by the States and limitations on the use
and disclosure to third parties of customer information. The Act generally
became effective March 11, 2000, although certain provisions took effect later,
such as functional regulation (May 12, 2001, except for certain matters), and
compliance with privacy regulations was required by July 1, 2001. The
Corporation is a financial holding company and currently, the Bank has 9
financial subsidiaries. The Corporation cannot predict at this time the
potential effect that the Act will have on its business and operations, although
the Corporation expects that the general effect of the Act will be to increase
competition in the financial services industry generally.
FDIC Insurance Assessments; DIFA
The FDIC insurance premium charged on bank deposits insured by the Bank
Insurance Fund ("BIF") and on deposits insured by the Savings Association
Insurance Fund ("SAIF"), including savings association deposits acquired by
banks, ranges from 0 to 27 cents per $100 of deposits, depending on the
institution's risk classification, based on capital and supervisory risk
factors. The Deposit Insurance Funds Act of 1996 ("DIFA") provides for
assessments to be imposed on insured depository institutions with respect to
deposits insured by the BIF (in addition to any assessments imposed on
depository institutions with respect to SAIF-insured deposits) to pay for the
cost of Financing Corporation ("FICO") bonds. All banks are assessed to pay the
interest due on FICO bonds. The cost to the Corporation on an annual basis is
immaterial.
Under the FDIA, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe and unsound practices,
is in an unsafe or unsound condition to continue
10
operations or has violated any applicable law, regulation, rule, order or
condition imposed by a federal bank regulatory agency.
Depositor Preference
Federal law provides that deposits and certain claims for
administrative expenses and employee compensation against an insured depository
institution would be afforded a priority over other general unsecured claims
against such an institution, including federal funds and letters of credit, in
the "liquidation or other resolution" of such an institution by any receiver.
Securities Regulation
Certain of the Corporation's subsidiaries are subject to various
securities laws and regulations and capital adequacy requirements promulgated by
the regulatory and exchange authorities of the jurisdictions in which they
operate.
The Corporation's registered broker-dealer subsidiaries are subject to
the SEC's net capital rule, Rule 15c3-1. That rule requires the maintenance of
minimum net capital and limits the ability of the broker-dealer to transfer
large amounts of capital to a parent company or affiliate. Compliance with the
rule could limit operations that require intensive use of capital, such as
underwriting and trading.
Certain of the Corporation's subsidiaries and a division of the Bank
are registered investment advisers who are regulated under the Investment
Advisers Act of 1940. These subsidiaries, among other activities, provide
investment advice to investment companies regulated under the Investment Company
Act of 1940. Advisory contracts with these investment companies automatically
terminate under these laws upon an assignment of the contract by the investment
adviser unless appropriate consents are obtained. Subsidiaries of the
Corporation are subject to certain restrictions in their dealings with
investment companies advised by a subsidiary of the Corporation.
Insurance Activities
Subsidiaries of the Corporation sell various types of insurance as
agent in a number of the states. Insurance activities are subject to regulation
by the states in which such business is transacted. Although most of such
regulation focuses on insurance companies and their insurance products,
insurance agents and their activities are also subject to regulation by the
states, including, among other things, licensing and marketing and sales
practices.
Competition.
The Corporation and its subsidiaries face substantial competition in
all aspects of the businesses in which they engage from national and state banks
located in Tennessee and large out-of-state banks as well as from savings and
loan associations, credit unions, other financial institutions, consumer finance
companies, trust companies, investment counseling firms, money market mutual
funds, insurance companies, securities firms, mortgage banking companies and
others. For certain information on the competitive position of the Corporation
and the Bank, refer to the "General" subsection above of this Item 1. Also,
refer to the subsections entitled "Supervision and Regulation" and "Effect of
Governmental Policies," both of which are relevant to an analysis of the
Corporation's competitors. Due to the intense competition in the financial
industry, the Corporation makes no representation that its competitive position
has remained constant, nor can it predict whether its position will change in
the future.
11
Sources and Availability of Funds.
Specific reference is made to the Management's Discussion and Analysis
and Glossary sections, including the subsections entitled "Deposits and Other
Sources of Funds," and "Liquidity Risk Management," contained in the 2004 Proxy
Statement, which sections are incorporated herein by reference.
Effect of Governmental Policies.
The Bank is affected by the policies of regulatory authorities,
including the Federal Reserve System and the Comptroller. An important function
of the Federal Reserve System is to regulate the national money supply.
Among the instruments of monetary policy used by the Federal Reserve
are: purchases and sales of U.S. Government securities in the marketplace;
changes in the discount rate, which is the rate any depository institution must
pay to borrow from the Federal Reserve; and changes in the reserve requirements
of depository institutions. These instruments are effective in influencing
economic and monetary growth, interest rate levels and inflation.
The monetary policies of the Federal Reserve System and other
governmental policies have had a significant effect on the operating results of
commercial banks in the past and are expected to continue to do so in the
future. Because of changing conditions in the national economy and in the money
market, as well as the result of actions by monetary and fiscal authorities, it
is not possible to predict with certainty future changes in interest rates,
deposit levels, loan demand or the business and earnings of the Corporation and
the Bank or whether the changing economic conditions will have a positive or
negative effect on operations and earnings.
Various bills are from the time to time introduced in the United States
Congress and the Tennessee General Assembly and other state legislatures, and
regulations are proposed by the regulatory agencies which could affect the
business of the Corporation and its subsidiaries. It cannot be predicted whether
or in what form any of these proposals will be adopted or the extent to which
the business of the Corporation and its subsidiaries may be affected thereby.
Statistical Information Required by Guide 3.
The statistical information required to be displayed under Item I
pursuant to Guide 3, "Statistical Disclosure by Bank Holding Companies," of the
Exchange Act Industry Guides is incorporated herein by reference to the
Consolidated Financial Statements and the notes thereto and the Management's
Discussion and Analysis and Glossary sections in the 2004 Proxy Statement;
certain information not contained in the 2004 Proxy Statement, but required by
Guide 3, is contained in the tables immediately following:
12
FIRST TENNESSEE NATIONAL CORPORATION
ADDITIONAL GUIDE 3 STATISTICAL INFORMATION
ON DECEMBER 31
(Unaudited)
Investment Portfolio
(Dollars in thousands) 2003 2002 2001
- ----------------------------------------------------------------------------------------
Mortgage-backed securities &
collateralized mortgage
obligations $2,200,862 $2,396,530 $2,153,012
U.S. Treasury and other
U. S. government agencies 49,141 84,575 136,827
States and political subdivisions 14,423 28,890 45,416
Other 205,944 190,290 190,615
---------- ---------- ----------
Total $2,470,370 $2,700,285 $2,525,870
========== ========== ==========
Loan Portfolio
(Dollars in thousands) 2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------
Commercial:
Commercial, financial and
industrial $ 4,502,917 $ 4,134,158 $ 4,176,738 $ 3,964,396 $3,660,642
Real estate commercial 968,064 1,037,341 929,036 946,903 776,553
Real estate construction 690,402 551,449 492,531 415,713 353,659
Retail:
Real estate residential 6,817,122 4,721,307 3,732,767 3,573,260 2,814,249
Real estate construction 527,260 342,127 211,429 179,515 132,740
Other retail 212,362 286,069 459,510 840,228 1,018,110
Credit card receivables 272,398 272,994 281,132 319,435 607,205
----------- ----------- ----------- ----------- ----------
Total $13,990,525 $11,345,445 $10,283,143 $10,239,450 $9,363,158
=========== =========== =========== =========== ==========
Short-Term Borrowings
(Dollars in thousands) 2003 2002 2001
- ----------------------------------------------------------------------------------------
Federal funds purchased and
securities sold under
agreements to repurchase $3,079,248 $3,126,350 $2,921,543
Commercial paper 31,793 25,695 22,273
Other short-term borrowings 196,183 335,513 426,878
---------- ---------- ----------
Total $3,307,224 $3,487,558 $3,370,694
========== ========== ==========
13
Maturities of Short-Term Purchased Funds on December 31, 2003
0-3 3-6 6-12 Over 12
(Dollars in thousands) Months Months Months Months Total
- -----------------------------------------------------------------------------------------------------
Certificates of deposit
$100,000 and more $4,249,174 $36,403 $366,795 $651,704 $5,304,076
Federal funds purchased and
securities sold under
agreements to repurchase 3,079,248 -- -- -- 3,079,248
Commercial paper and
other short-term borrowings 222,092 215 459 5,210 227,976
- -----------------------------------------------------------------------------------------------------
Total $7,550,514 $36,618 $367,254 $656,914 $8,611,300
=====================================================================================================
Contractual Maturities of Commercial & Real Estate Construction Loans on
December 31, 2003
After 1 Year
(Dollars in thousands) Within 1 Year Within 5 Years After 5 Years Total
- ---------------------------------------------------------------------------------------------------------------------------
Commercial, financial and industrial $2,375,062 $1,849,213 $278,642 $4,502,917
Real estate commercial 312,414 522,166 133,484 968,064
Commercial real estate construction 521,134 167,744 1,524 690,402
Consumer real estate construction 522,464 4,428 368 527,260
- ---------------------------------------------------------------------------------------------------------------------------
Total $3,731,074 $2,543,551 $414,018 $6,688,643
===========================================================================================================================
For maturities over one year:
Interest rates - floating $1,466,354 $153,986 $1,620,340
Interest rates - fixed 1,077,197 260,032 1,337,229
- ---------------------------------------------------------------------------------------------------------------------------
Total $2,543,551 $414,018 $2,957,569
===========================================================================================================================
ITEM 2
PROPERTIES
The Corporation has no properties that it considers materially
important to its financial statements.
ITEM 3
LEGAL PROCEEDINGS
The Corporation is a party to no material pending legal proceedings the
nature of which are required to be disclosed pursuant to the Instructions
contained in the Form of this Report.
ITEM 4
SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
There were no matters submitted during the fourth quarter of 2003 to a
vote of security holders, through the solicitation of proxies or otherwise.
14
ITEM 4A
EXECUTIVE OFFICERS OF REGISTRANT
The following is a list of executive officers of the Corporation as of
March 1, 2004. The executive officers are elected at the April meeting of the
Corporation's Board of Directors following the annual meeting of shareholders
for a term of one year and until their successors are elected and qualified.
Name and Age Offices and Positions - Year First Elected to Office
- ------------ ----------------------------------------------------
Charles G. Burkett President - Retail Financial Services/Memphis
Age: 52 Financial Services of the Corporation and the Bank
(2001)
J. Kenneth Glass Chairman of the Board (1/1/04), President (2001) and
Age: 57 Chief Executive Officer (2002) of the Corporation and
the Bank
John H. Hamilton Executive Vice President, Product Management and
Age: 54 Delivery Services (2002)
Herbert H. Hilliard Executive Vice President, Risk Management (2001) and
Age: 56 Government Relations and CRA (1988) of the
Corporation and the Bank
Harry A. Johnson, III Executive Vice President (1990) and General Counsel
Age: 55 (1988) of the Corporation and the Bank
James F. Keen Executive Vice President (2003), Corporate Controller
Age: 53 of the Corporation (1988) and the Bank (2001) and
principal accounting officer
Larry B. Martin President - Business Financial Services/Tennessee
Age: 56 Financial Services of the Corporation and the Bank
(2001)
Marlin L. Mosby, III Executive Vice President (2002) and Chief Financial
Age: 40 Officer (2003)
Sarah L. Meyerrose Executive Vice President, Corporate (2002) and
Age: 48 Employee Services (1998) of the Corporation and
the Bank
John P. O'Connor, Jr. Executive Vice President of the Corporation
Age: 60 (1990) and the Bank (1987) and Chief Credit
Officer (1988)
Elbert L. Thomas, Jr. Executive Vice President (1995) and Interest Rate
Age: 55 Risk Manager (2003)
15
Each of the executive officers has been employed by the Corporation or
its subsidiaries during each of the last five years. Prior to July of 2002,
Mr. Glass was President and Chief Operating Officer of the Corporation and the
Bank, and prior to July 2001, he was President-Retail Financial Services
of the Corporation and the Bank. Prior to April of 2000, Mr. Glass was
Executive Vice President of the Corporation and prior to April of 1999, he was
President-Tennessee Banking Group of the Bank. The Personnel Division changed
its name to the Employee Services Division in April of 1999. From July 2001 to
July, 2002, Ms. Meyerrose was also Executive Vice President, Wealth Management.
Prior to July of 2001, Mr. Burkett was Executive Vice President, Manager
Affluent Market of the Bank. Prior to July of 2001, Mr. Martin was Chairman and
CEO-Knoxville of the Bank. Prior to June 2002, Mr. Hamilton was Executive Vice
President, Manager Bank Services Group and prior to April 2002, he was Executive
Vice President-Corporate Financial Services. Prior to April 1999, he was
Executive Vice President-Manager Regional Banking. Prior to November 2003, Mr.
Mosby was Executive Vice President-Strategic Planning and Investor Relations and
prior to April 2002, he was Senior Vice President, Strategic Planning. Mr. Keen
was appointed Chief Financial Officer on an interim basis, from December 1,
2002, until November 17, 2003. Mr. Thomas was appointed Executive Vice
President-Interest Rate Risk Manager in October 2003 following his return after
a disability leave which commenced December 1, 2002. Prior to December 1, 2002,
Mr. Thomas was Chief Financial Officer of the Company and the Bank.
PART II
ITEM 5
MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
(a) Market for the Corporation's Common Stock:
The Corporation's common stock, $0.625 par value, is listed and trades
on the New York Stock Exchange, Inc. under the symbol FTN. As of December 31,
2003, there were 8,579 shareholders of record of the Corporation's common stock.
Additional information called for by this Item is incorporated herein by
reference to the Summary of Quarterly Financial Information Table, the Selected
Financial and Operating Data Table, Note 18 to the Consolidated Financial
Statements, and the "Deposits and Other Sources of Funds," and "Liquidity Risk
Management" subsections of the Management's Discussion and Analysis section
contained in the 2004 Proxy Statement and to the "Payment of Dividends" and
"Transactions with Affiliates" subsections contained in Item 1 of Part I of
this Form 10-K, which is incorporated herein by reference.
(b) Sale of Unregistered Securities:
During 2003 there were no sales of shares of the Corporation's common
stock without registration under the Securities Act of 1933, as amended.
(c) Description of the Corporation's Capital Stock:
Authorized Capital Stock. The authorized capital stock of the
Corporation currently consists of 5,000,000 shares of preferred stock, without
par value ("preferred stock"), which may be issued from time to time by
resolution of the Corporation's Board of Directors (the "Board") and 400,000,000
shares of common stock, $0.625 par value (the "common stock"). As of December
31, 2003 there were 124,834,272 shares of common stock and no shares of
preferred stock outstanding. As of that date,
16
approximately 28 million shares of common stock were reserved for issuance under
various stock plans, and no shares of preferred stock were reserved for
issuance. Although shares have been reserved for issuance under the employee
stock plans, the plans generally permit the Corporation to repurchase shares on
the open market or privately for issuance under such plans. The Board has
authorized management to repurchase shares from time to time for the plans. A
total of 4.4 million shares were repurchased and 4.1 million shares were issued
for the plans in 2003. Also, the Corporation has announced that the Board
approved the repurchase of up to 9.5 million shares by December 31, 2004.
Through December 31, 2003, 3.0 million shares have been repurchased pursuant to
this authority. Pursuant to Board authority, the Corporation plans to continue
to purchase shares from time to time and will evaluate the level of capital and
take action designed to generate or use capital as appropriate for the interest
of the shareholders. Repurchases will be made in the open market or through
privately negotiated transactions and will be subject to market conditions,
accumulation of excess equity and prudent capital management. Also, the
Corporation has on file with the SEC one effective shelf registration pursuant
to which it may offer from time to time, at its discretion, senior or
subordinated debt securities, preferred stock, including depository shares, and
common stock at an aggregate initial offering price not to exceed $125 million
(net of prior issuances) and another effective shelf registration pursuant to
which up to $200 million of capital securities (guaranteed preferred beneficial
interests in the Corporation's subordinated debentures) is available for
issuance.
Preferred Stock. The Board is authorized, without further action by the
shareholders, to provide for the issuance of up to 5,000,000 shares of preferred
stock, from time to time in one or more series and, with respect to each such
series, has the authority to fix the powers (including voting power),
designations, preferences and relative, participating, optional or other special
rights and the qualifications, limitations or restrictions thereof.
Common Stock. The Board is authorized to issue a maximum of 400,000,000
shares of common stock. The holders of the common stock are entitled to receive,
ratably, such dividends as may be declared by the Board from funds legally
available therefor, provided that if any shares of preferred stock are at the
time outstanding, the payment of dividends on common stock or other
distributions (including purchases of common stock) may be subject to the
declaration and payment of full cumulative dividends, and the absence of
arrearages in any mandatory sinking fund, on outstanding shares of preferred
stock. The holders of the outstanding shares of common stock are entitled to one
vote for each such share on all matters presented to shareholders and are not
entitled to cumulate votes for the election of directors. Upon any dissolution,
liquidation or winding up of the Corporation resulting in a distribution of
assets to the shareholders, the holders of common stock are entitled to receive
such assets ratably according to their respective holdings after payment of all
liabilities and obligations and satisfaction of the liquidation preferences of
any shares of preferred stock at the time outstanding. The shares of common
stock have no preemptive, redemption, subscription or conversion rights. Under
the Corporation's Charter, the Board is authorized to issue authorized shares of
common stock without further action by the shareholders. However, the common
stock is traded on the New York Stock Exchange, Inc. which requires shareholder
approval of the issuance of additional shares of common stock in certain
situations. The Transfer Agent for the common stock is Wells Fargo Bank
Minnesota, N.A.
The Board is divided into three classes, which results in approximately
one third of the directors being elected each year. In addition, the Charter and
the Bylaws, among other things, generally give to the Board the authority to fix
the number of directors on the Board and to remove directors from and fill
vacancies on the Board, other than removal for cause and the filling of
vacancies created thereby which are reserved to shareholders exercising at least
a majority of the voting power of all outstanding voting stock of the
Corporation. To change these provisions of the Bylaws, other than by action of
the Board, and to amend these provisions of the Charter or to adopt any
provision of the Charter inconsistent with
17
such Bylaw provisions, would require approval by the holders of at least 80% of
the voting power of all outstanding voting stock. Such classification of the
Board and such other provisions of the Charter and the Bylaws may have a
significant effect on the ability of the shareholders of the Corporation to
change the composition of an incumbent Board or to benefit from certain
transactions which are opposed by the Board.
Shareholder Protection Rights Plan. On October 20, 1998, the Board
adopted a Shareholder Protection Rights Agreement (the "Rights Plan") and
declared a dividend of one right on each share of common stock outstanding on
November 2, 1998, or issued thereafter and prior to the time the rights separate
and thereafter pursuant to options and convertible securities outstanding at the
time the rights separate. The Rights Plan became operative upon the expiration
on September 18, 1999 of a substantially identical plan that was adopted in
1989.
Until the earlier of (i) the 10th business day (subject to certain
adjustments by the Board) after commencement of a tender or exchange offer
which, if consummated, would result in a person or group owning 10% or more (but
not more than 50%) of the outstanding shares of common stock (an "Acquiring
Person") and (ii) the tenth business day (the "Flip-in Date") after the first
date of public announcement by the Corporation that a person has become an
Acquiring Person, the Rights will be evidenced by the common stock certificates,
will automatically trade with the common stock, and will not be exercisable.
Thereafter, separate rights certificates will be distributed, and each right
will entitle its holder to purchase one one-hundredth of a share of
Participating Preferred Stock having economic and voting terms similar to those
of one share of common stock for $150.00, subject to adjustment (the "Exercise
Price").
The Rights will expire on the earliest of (i) the Exchange Time
(defined below), (ii) December 31, 2009, and (iii) the date on which the Rights
are redeemed as described below. The Board may amend the Rights Plan in any
respect prior to the Flip-in Date. The Board may, at its option, at any time
prior to the close of business on the Flip-in Date, redeem all the Rights at a
price of $0.001 per Right.
If a Flip-in Date occurs, each Right (other than Rights beneficially
owned by the Acquiring Person or its affiliates, associates or transferees,
which Rights will become void) will entitle its holder to purchase a number of
shares of common stock or Participating Preferred Stock having a market value of
twice the Exercise Price for an amount in cash equal to the then-current
Exercise Price. In addition, the Board may, at its option, at any time after a
Flip-in Date, elect to exchange the Rights (other than Rights beneficially owned
by the Acquiring Person or its affiliates, associates or transferees) for shares
of common stock or a Participating Preferred Stock at an exchange ratio of one
share of common stock or 1/100th of a share of Participating Preferred Stock per
Right (the "Exchange Time").
Also, if after an Acquiring Person controls the Corporation's Board of
Directors, the Corporation is involved in a merger or sells more than 50% of its
assets or earning power or is involved with an Acquiring Person in certain
self-dealing transactions (or has entered into an agreement to do any of the
foregoing) and, in the case of a merger, the Acquiring Person will receive
different treatment than all other shareholders, each Right will entitle its
holder to purchase a number of shares of common stock of the Acquiring Person
having a market value of twice the Exercise Price for an amount in cash equal to
the then-current Exercise Price.
The Rights will not prevent a takeover of the Corporation. The Rights,
however, may have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that acquires 10% or more of the
outstanding common stock unless the Rights are first redeemed by the
Corporation's Board.
18
ITEM 6
SELECTED FINANCIAL DATA
The information called for by this Item is incorporated herein by
reference to the Selected Financial and Operating Data table in the 2004 Proxy
Statement.
ITEM 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
The information called for by this Item is incorporated herein by
reference to the Management's Discussion and Analysis section, Glossary section,
and the Consolidated Historical Statements of Income and Consolidated Average
Balance Sheets and Related Yields and Rates tables in the 2004 Proxy Statement.
ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information called for by this Item is incorporated herein by
reference to the "Interest Rate Risk Management" subsection of Note 1 to the
Consolidated Financial Statements and the "Risk Management-Interest Rate Risk
Management" subsection of the Management's Discussion and Analysis section
contained in the 2004 Proxy Statement.
ITEM 8
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this Item is incorporated herein by
reference to the Consolidated Financial Statements and the notes thereto and to
the Summary of Quarterly Financial Information table in the 2004 Proxy Statement
and to the report of the predecessor independent accountant included as Exhibit
99(c) to this report.
ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
The information called for by this Item, reflecting a change in
accountants, has been previously reported by the Corporation under Item 4 of
Form 8-K, filed 5-12-02, which is incorporated herein by reference.
ITEM 9A
CONTROLS AND PROCEDURES
Evaluation of Disclosures and Procedures. The Corporation's management,
with the participation of the Corporation's Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the design and operation
of the Corporation's disclosure controls and procedures (as defined in Exchange
Act Rule 13a-15(e)) as of the end of the period covered by the annual report.
Based on that evaluation, the Chief Executive Officer and the Chief Financial
Officer have concluded that the Corporation's disclosure controls and procedures
are effective to ensure that material information relating to the Corporation
and the Corporation's consolidated subsidiaries is made known to such officers
by
19
others within these entities, particularly during the period this annual report
was prepared, in order to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting. There have not
been any changes in the Corporation's internal control over financial reporting
during the Corporation's fourth fiscal quarter that have materially affected, or
are reasonably likely to materially affect, the Corporation's internal control
over financial reporting.
PART III
ITEM 10
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information called for by this Item as it relates to directors and
nominees for director of the Corporation, audit committee financial expert, and
members of the Audit Committee of the Corporation's Board of Directors is
incorporated herein by reference to the "Corporate Governance and Board Matters"
section and the "Election of Directors" section of the Corporation's 2004 Proxy
Statement (excluding the Audit Committee Report and the statements regarding the
independence of members of the Audit Committee). The information required by
this Item as it relates to executive officers of the Corporation is incorporated
herein by reference to Item 4A in Part I of this Report. The information
required by this Item as it relates to compliance with Section 16(a) of the
Securities Exchange Act of 1934 is incorporated herein by reference to the
"Section 16(a) Beneficial Ownership Reporting Compliance" section of the 2004
Proxy Statement.
The Corporation's Board of Directors has adopted a Code of Ethics for
Senior Financial Officers that applies to the Chief Executive Officer, Chief
Financial Officer and Controller and also applies to all professionals serving
in the financial, accounting or audit areas of the Corporation and its
subsidiaries. A copy of the Code is filed as Exhibit 14 to this report and is
posted on the Corporation's Internet website (www.firsttennessee.com). [Click on
"Company Information," then "Investor Relations," and then "Corporate
Governance."] There have been no amendments to, or waivers from, provisions of
the Code that apply to the Chief Executive Officer, Chief Financial Officer or
Controller and that relate to elements of the Code identified in Item 406(b) of
SEC Regulation S-K since the Code was adopted, and the Corporation intends to
satisfy its disclosure obligations under Item 10 of Form 8-K related thereto by
posting such information on the Corporation's Internet website, the address for
which is listed above.
The Audit Committee of the Board of Directors adopted an Audit and
Non-audit Services Pre-approval Policy, which is provided in Appendix C to the
2004 Proxy Statement and incorporated herein by reference.
ITEM 11
EXECUTIVE COMPENSATION
The information called for by this Item is incorporated herein by
reference to the "Executive Compensation" section of the 2004 Proxy Statement
(excluding the Total Shareholder Return Performance Graph).
20
ITEM 12
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The information called for by this Item is incorporated herein by
reference to the "Stock Ownership Information and Table" section and the Equity
Compensation Plan Information Table contained in the 2004 Proxy Statement.
The Corporation is unaware of any arrangements which may result in a
change in control of the Corporation.
ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by this Item is incorporated herein by
reference to the "Certain Relationships and Related Transactions" section of the
2004 Proxy Statement.
ITEM 14
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table discloses the aggregate fees billed for each of the
last two fiscal years for professional services rendered by KPMG LLP, the
Corporation's independent public accountant:
Type of Service 2002 2003
--------------- ---- ----
Audit fees $ 751,500 $1,031,500
Audit-related fees $ 328,500 $ 385,000
Tax fees $1,052,770(i) $ 17,200
All other fees $ 27,000 $ 61,638
---------- ----------
Total $2,159,770 $1,495,338
========== ==========
(i) -- Included in the amount for 2002 is $1 million for tax planning
services rendered prior to KPMG LLP's engagement as the Corporation's
auditor.
The Corporation's Audit Committee adopted an Audit and Non-Audit
Services Pre-Approval Policy, which is included in Appendix C to the
Corporation's 2004 Proxy Statement and incorporated herein by reference.
The information on fees billed by KPMG LLC is incorporated herein by
reference to the "Vote Item No. 4"section of the 2004 Proxy Statement. No
services were approved by the Audit Committee pursuant to Rule 2-01(c)(7)(i)(c)
of Regulation S-X.
21
PART IV
ITEM 15
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this Report:
Financial Statements:
1. Consolidated Statements of Condition as of December 31, 2003 and
2002.
2. Consolidated Statements of Income for the years ended December 31,
2003, 2002 and 2001.
3. Consolidated Statements of Shareholders' Equity for the years ended
December 31, 2003, 2002, and 2001.
4. Consolidated Statements of Cash Flows for the years ended December
31, 2003, 2002 and 2001.
5. Notes to the Consolidated Financial Statements
6. Report of Independent Public Accountants
7. Report of Predecessor Independent Public Accountant
The consolidated financial statements of the Corporation, the notes
thereto, and the report of independent public accountants, in the 2004
Proxy Statement, as listed above, are incorporated herein by reference.
The report of the predecessor independent public accountant is attached
hereto as Exhibit 99(c) and incorporated herein by reference.
Financial Statement Schedules: Not applicable.
Exhibits:
Exhibits marked with an "*" represent a management contract or
compensatory plan or arrangement required to be identified and filed as
an exhibit.
(3)(i) Restated Charter of the Corporation, as amended, incorporated herein by
reference to Exhibit 3(i) to the Corporation's1997 Annual Report on
Form 10-K.
(3)(ii) Bylaws of the Corporation, as amended and restated.
(4)(a) Shareholder Protection Rights Agreement, dated as of October 20, 1998,
between the Corporation and First Tennessee Bank National Association,
as Rights Agent, including as Exhibit A the forms of Rights Certificate
and Election to Exercise and as Exhibit B the form of Articles of
Amendment designating Participating Preferred Stock, incorporated
herein by reference to Exhibits 1, 2, and 3 to the Corporation's
Registration Statement on Form 8-A filed 10-23-98.
(4)(b) The Corporation and certain of its consolidated subsidiaries have
outstanding certain long-term debt. See Note 10 in the Corporation's
2004 Proxy Statement. None of such debt exceeds 10% of the total assets
of the Corporation and its consolidated subsidiaries. Thus, copies of
constituent instruments defining the rights of holders of such debt are
not required
22
to be included as exhibits. The Corporation agrees to furnish copies of
such instruments to the Securities and Exchange Commission upon
request.
*(10)(a) First Tennessee National Corporation Non-qualified Deferred
Compensation Plan.
*(10)(b) 2000Employee Stock Option Plan, as amended and restated, incorporated
herein by reference to Exhibit 10(b) to the Corporation's 2000 Annual
Report on Form 10-K.
*(10)(c) 1997 Employee Stock Option Plan, as amended and restated, incorporated
herein by reference to Exhibit 10(c) to the Corporation's Quarterly
Report on Form 10-Q for the quarter ended 9/30/02.
*(10)(d) 1992 Restricted Stock Incentive Plan, as amended and restated,
incorporated herein by reference to Exhibit 10(d) to the Corporation's
Quarterly Report on Form 10-Q for the quarter ended 3-31-99.
*(10)(e) 1984 Stock Option Plan, as amended, 1-21-97 amendment and 10-22-97
amendment, incorporated herein by reference to Exhibit 10(e) to the
Corporations 1992, 1996 and 1997 Annual Reports on Form 10-K.
*(10)(f) 1990 Stock Option Plan, as amended, and 1-21-97, 10-22-97, and 10-18-00
amendments, incorporated herein by reference to Exhibit 10(f) to the
Corporation's 1992, 1996, 1997 and 2000 Annual Reports on Form 10-K.
*(10)(g) Survivor Benefits Plan, as amended and restated, incorporated herein by
reference to Exhibit 10(g) to the Corporation's Quarterly Report on
Form 10-Q for the quarter ended 9-30-03.
*(10)(h) Directors and Executives Deferred Compensation Plan, as amended and
restated, incorporated herein by reference to Exhibit 10(h) to the
Corporation's Quarterly Report on Form 10-Q for the quarter ended
6-30-03 and form of individual agreement, incorporated herein by
reference to Exhibit 10(h) to the Corporation's 1996 Annual Report on
Form 10-K.
*(10)(i) Amended and Restated Pension Restoration Plan, as amended and restated,
incorporated herein by reference to Exhibit 10(i) to the Corporation's
Quarterly Report on Form 10-Q for the quarter ended 9-30-03.
*(10)(j) Director Deferral Agreements with schedule, incorporated herein by
reference to Exhibit 10(k) to the Corporation's 1992 Annual Report on
Form 10-K and Exhibit 10(j) to the Corporation's 1995 Annual Report on
Form 10-K.
*(10)(k) Form of Severance Agreements dated 1-28-97, incorporated herein by
reference to Exhibit 10(k) to the Corporation's 1996 Annual Report on
Form 10-K.
*(10)(l) 1995 Employee Stock Option Plan, as amended and restated, incorporated
herein by reference to Exhibit 10(l) to the Corporation 2000 Annual
Report on Form 10-K.
23
*(10)(m) Non-Employee Directors' Deferred Compensation Stock Option Plan, as
amended and restated, incorporated herein by reference to Exhibit 10(m)
to the Corporation's 1997 Annual Report on Form 10-K.
*(10)(n) 2000 Non-Employee Directors' Deferred Compensation Stock Option Plan,
incorporated herein by reference to Exhibit 10(n) to the Corporation's
Quarterly Report on Form 10-Q for the quarter ended 6-30-03.
*10(o) Ralph Horn Non-compete and Early Retirement Agreement.
*10(p) Non-employee Director Benefits.
*10(q) 2002 Management Incentive Plan, incorporated herein by reference to
Exhibit 10(q) to the Corporation's 2001 Annual Report on Form 10-K.
*10(r) 2003 Equity Compensation Plan, incorporated herein by reference to
Appendix A to the Corporation Proxy Statement furnished to shareholders
in connection with the annual meeting scheduled for April 15, 2003,
filed March 18, 2003.
*10(s) 2002 Bank Director and Advisory Board Member Deferral Plan,
incorporated herein by reference to Exhibit 10(s) to the Corporation's
2002 Annual Report on Form 10-K.
*10(t) [1997] Bank Director and Advisory Board Member Deferral Plan,
incorporated herein by reference to Exhibit 10(t) to the Corporation's
2002 Annual Report on Form 10-K.
*10(u) [1991] Bank Advisory Director Deferral Plan, incorporated herein by
reference to Exhibit 10(u) to the Corporation's 2002 Annual Report on
Form 10-K.
*10(v) Long-Term Disability Program.
14 Code of Ethics for Senior Financial Officers
16 Letter regarding change in certifying accountant, incorporated herein
by reference to Exhibit 16 to the Corporation's Form 8-K, filed May 16,
2002.
(21) Subsidiaries of the Corporation.
23(a) Accountants' Consents.
23(b) Registrant's disclosure regarding Accountant's Consent.
(24) Powers of Attorney.
31(a) Rule 13a-14(a) Certifications of CEO (pursuant to Section 302 of
Sarbanes-Oxley Act of 2002)
31(b) Rule 13a-14(a) Certifications of CFO (pursuant to Section 302 of
Sarbanes-Oxley Act of 2002)
32(a) Rule 1350 Certifications of CEO (pursuant to Section 906 of
Sarbanes-Oxley Act of 2002)
32(b) Rule 1350 Certifications of CFO (pursuant to Section 906 of
Sarbanes-Oxley Act of 2002)
24
(99)(a) The Corporation's Proxy Statement furnished to shareholders in
connection with Annual Meeting of Shareholders scheduled for April 20,
2004, including Financial Information Appendix and excluding the Board
Compensation Committee Report, the Total Shareholder Return Performance
Graph, the Audit Committee Report and the statements regarding the
independence of members of the Audit Committee, filed March 10, 2004,
and incorporated herein by reference.
(99)(b) Annual Report on Form 11-K for the Corporation's Savings Plan and
Trust, for fiscal year ended 12/31/03 as authorized by SEC Rule 15d-21
(to be filed as an Amendment to Form l0-K).
(99)(c) Report of Predecessor Independent Public Accountant.
(99)(d) Form 8-K, filed by the Corporation 5-15-02, and incorporated herein by
reference.
(b) The following reports on Form 8-K, with the Date of Report indicated, were
filed during the fourth quarter 2003:
1. 10/22/03 -- Item 12 -- Earnings Release for third quarter 2003 was
furnished.
2. 10/22/03 -- Item 5 -- Announcement of the election of J. Kenneth Glass
as Chairman of the Board upon the retirement of Ralph Horn on
12/31/03, the election of Marlin L. Mosby, III as Executive Vice
President and Chief Financial Officer, effective 11/17/03, and the
election of Elbert L. Thomas, Jr. as Executive Vice President and
Interest Rate Risk Manager on 10/22/03.
25
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FIRST TENNESSEE NATIONAL CORPORATION
Date: March 10, 2003 By: /s/ Marlin L. Mosby, III
---------------------------------------------
Marlin L. Mosby, III, Executive Vice President,
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
J. Kenneth Glass* Chairman of the Board, President March 10, 2004
- -------------------------- Chief Executive Officer and a Director
J. Kenneth Glass (principal executive officer)
Marlin L. Mosby, III* Executive Vice President and Chief March 10, 2004
- -------------------------- Financial Officer (principal
Marlin L. Mosby, III financial officer)
James F. Keen* Executive Vice President, and March 10, 2004
- -------------------------- Corporate Controller (principal
James F. Keen accounting officer)
Robert C. Blattberg* Director March 10, 2004
- --------------------------
Robert C. Blattberg
George E. Cates* Director March 10, 2004
- --------------------------
George E. Cates
James A. Haslam, III* Director March 10, 2004
- --------------------------
James A. Haslam, III
R. Brad Martin* Director March 10, 2004
- --------------------------
R. Brad Martin
Vicki R. Palmer * Director March 10, 2004
- --------------------------
Vicki R. Palmer
Michael D. Rose* Director March 10, 2004
- --------------------------
Michael D. Rose
Mary F. Sammons* Director March 10, 2004
- --------------------------
Mary F. Sammons
26
William B. Sansom* Director March 10, 2004
- --------------------------
William B. Sansom
Jonathan P. Ward* Director March 10, 2004
- --------------------------
Jonathan P. Ward
Luke Yancy III* Director March 10, 2004
- --------------------------
Luke Yancy III
*By: /s/ Clyde A. Billings, Jr. March 10, 2004
------------------------------
Clyde A. Billings, Jr.
As Attorney-in-Fact
27
EXHIBIT INDEX
Item No. Description
- -------- -----------
(3)(i) Restated Charter of the Corporation, as amended, incorporated herein by
reference to Exhibit 3(i) to the Corporation's 1997 Annual Report on Form 10-K.
(3)(ii) Bylaws of the Corporation, as amended and restated.
(4)(a) Shareholder Protection Rights Agreement, dated as of October 20, 1998,
between the Corporation and First Tennessee Bank National Association, as Rights
Agent, including as Exhibit A the forms of Rights Certificate and Election to
Exercise and as Exhibit B the form of Articles of Amendment designating
Participating Preferred Stock, incorporated herein by reference to Exhibits 1,
2, and 3 to the Corporation's Registration Statement on Form 8-A filed 10-23-98.
(4)(b) The Corporation and certain of its consolidated subsidiaries have
outstanding certain long-term debt. See Note 10 in the Corporation's 2004 Proxy
Statement. None of such debt exceeds 10% of the total assets of the Corporation
and its consolidated subsidiaries. Thus, copies of constituent instruments
defining the rights of holders of such debt are not required to be included as
exhibits. The Corporation agrees to furnish copies of such instruments to the
Securities and Exchange Commission upon request.
*(10)(a) First Tennessee National Corporation Non-qualified Deferred
Compensation Plan.
*(10)(b) 2000 Employee Stock Option Plan, as amended and restated, incorporated
herein by reference to Exhibit 10(b) to the Corporation's 2000 Annual Report on
Form 10-K.
*(10)(c) 1997 Employee Stock Option Plan, as amended and restated, incorporated
herein by reference to Exhibit 10(c) to the Corporation's Quarterly Report on
Form 10-Q for the quarter ended 9/30/02.
*(10)(d) 1992 Restricted Stock Incentive Plan, as amended and restated,
incorporated herein by reference to Exhibit 10(d) to the Corporation's Quarterly
Report on Form 10-Q for the quarter ended 3-31-99.
*(10)(e) 1984 Stock Option Plan, as amended, and 1-21-97 and 10-22-97
amendments, incorporated herein by reference to Exhibit 10(e) to the
Corporation's 1992, 1996 and 1997 Annual Reports on Form 10-K.
*(10)(f) 1990 Stock Option Plan, as amended, and 1-21-97, 10-22-97 and 10-18-00
amendments, incorporated herein by reference to Exhibit 10(f) to the
Corporation's 1992, 1996, 1997 and 2000 Annual Reports on Form 10-K.
*(10)(g) Survivor Benefits Plan, as amended and restated, incorporated herein
by reference to Exhibit 10(g) to the Corporation's 2003 Quarterly Report on
Form 10-Q for the quarter ended 9-30-03.
*(10)(h) Directors and Executives Deferred Compensation Plan, as amended and
restated, incorporated herein by reference to Exhibit 10(h) to the Corporation's
Quarterly Report on Form 10-Q for the quarter ended 6-30-03 and form of
individual agreement, incorporated herein by reference to Exhibit 10(h) to the
Corporation's 1996 Annual Report on Form 10-K.
*(10)(i) Amended and Restated Pension Restoration Plan, as amended and restated,
incorporated herein by reference to Exhibit 10(i) to the Corporation's 2003
Quarterly Report on Form 10-Q for the quarter ended 9-30-03.
*(10)(j) Director Deferral Agreements with schedule, incorporated herein by
reference to Exhibit 10(k) to the Corporation's 1992 Annual Report on Form 10-K
and Exhibit 10(j) to the Corporation's 1995 Annual Report on Form 10-K.
*(10)(k) Form of Severance Agreements dated 1-28-97, incorporated herein by
reference to Exhibit 10(k) to the Corporation's 1996 Annual Report on Form 10-K.
*(10)(l) 1995 Employee Stock Option Plan, as amended and restated, incorporated
herein by reference to Exhibit 10(l) to the Corporation's 2000 Annual Report on
Form 10-K.
*(10)(m) Non-Employee Directors Deferred Compensation Stock Option Plan, as
amended and restated, incorporated herein by reference to Exhibit 10(m) to the
Corporation's 1997 Annual Report on Form 10-K.
*(10)(n) 2000 Non-Employee Directors' Deferred Compensation Stock Option Plan,
incorporated herein by reference to Exhibit 10(n) to the Corporation's Quarterly
Report on Form 10-Q for the quarter ended 6-30-03.
*10(o) Ralph Horn Non-Compete and Early Retirement Agreement.
*10(p) Non-employee Director Benefits.
*10(q) 2002 Management Incentive Plan, incorporated herein by reference to
Exhibit 10(q) to the Corporation's 2001 Annual Report on Form 10-K.
*10(r) 2003 Equity Compensation Plan, incorporated herein by reference to
Appendix A to the Corporation's Proxy Statement furnished to shareholders in
connection with the annual meeting scheduled for April 15, 2003, filed March 18,
2003.
*10(s) 2002 Bank Directors and Advisory Board Member Deferral Plan, incorporated
herein by reference to Exhibit 10(s) to the Corporation's 2002 Annual Report on
Form 10-K.
*10(t) [1997] Bank Director and Advisory Board Member Deferral Plan,
incorporated herein by reference to Exhibit 10(t) to the Corporation's 2002
Annual Report on Form 10-K.
*10(u) [1991] Bank Advisory Director Deferral Plan, incorporated herein by
reference to Exhibit 10(u) to the Corporation's 2002 Annual Report on Form 10-K.
*10(v) Long-Term Disability Program.
14 Code of Ethics for Senior Financial Officers
(16) Letter regarding change in certifying accountant, incorporated herein by
reference to Exhibit 16 to the Corporation's Form 8-K, filed May 16, 2002.
(21) Subsidiaries of the Corporation.
(23)(a) Accountants' Consents.
(23)(b) Registrant's Disclosure regarding Accountant's Consent.
(24) Powers of Attorney
31(a) Rule 13a-14(a) Certifications of CEO (pursuant to Section 302 of
Sarbanes-Oxley Act of 2002)
31(b) Rule 13a-14(a) Certifications of CFO (pursuant to Section 302 of
Sarbanes-Oxley Act of 2002)
32(a) Rule 1350 Certifications of CEO (pursuant to Section 906 of Sarbanes-Oxley
Act of 2002)
32(b) Rule 1350 Certifications of CFO (pursuant to Section 906 of Sarbanes-Oxley
Act of 2002)
(99)(a) The Corporation's Proxy Statement furnished to shareholders in
connection with Annual Meeting of Shareholders scheduled for April 20, 2004,
including Financial Information Appendix and excluding the Board Compensation
Committee Report, the Total Shareholder Return Performance Graph, the Audit
Committee Report, the Audit Committee Charter, and the statements regarding the
independence of members of the Audit Committee, filed March 10, 2004, and
incorporated herein by reference.
(99)(b) Annual Report on Form ll-K for the Corporation's Savings Plan and Trust,
for fiscal year ended 12/31/03, as authorized by SEC Rule 15d-21 (to be filed as
an amendment to Form 10-K).
(99)(c) Report of Predecessor Independent Public Accountant.
(99)(d) Form 8-K, filed by the Corporation 5-15-02, and incorporated herein by
reference.
* Exhibits marked with an "*" represent a management contract or
compensatory plan or arrangement required to be identified and filed as an
exhibit.