UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-11132
FIRST BANKING CENTER, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1391327
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Milwaukee Ave., Burlington, WI 53105
(Address of principal executive offices) (Zip Code)
(414) 763-3581
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. Common Stock,
$1.00 par value, 1,476,365 shares outstanding.
PART I. FINANCIAL INFORMATION
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED BALANCE SHEET
March 31, 1997
vs
December 31, 1996
(Amounts in Thousands)
ASSETS 3/31/97 12/31/96
Cash and due from banks $9,341 $21,412
Federal funds sold 7,670 7,905
Total Cash and Cash Equivalents 17,011 29,317
Interest bearing deposits in banks 1,425 4,869
Investment securities - Held to Maturity 0 0
Investment securities - Available for Sale 67,661 65,362
Loans 199,684 194,387
Less:
Allowance for loan losses (2,965) (2,897)
Total Net Loans 196,719 191,490
Property and Equipment 6,557 6,595
Other Assets 7,597 7,087
TOTAL ASSETS $296,970 $304,720
LIABILITIES
Deposits
Non-interest bearing demand $34,587 $37,109
Interest bearing demand 22,189 25,216
Money market demand 46,053 42,355
Savings 33,892 33,091
Time 104,515 97,088
Total Deposits 241,236 234,859
Fed Funds Purchased and Securities sold
under agreements to repurchase 16,530 30,925
U S Treasury note account 540 540
Long-term borrowings 9,339 9,489
Accrued interest and other liabilities 2,698 2,667
TOTAL LIABILITIES $270,343 $278,480
STOCKHOLDERS' EQUITY
Common Stock, $1.00 par value 3,000,000
shares authorized 1,476,365 shares issued $1,476 $1,476
Surplus 4,094 4,091
Retained Earnings 21,349 20,703
Net unrealized loss on available
for sale securities (292) (30)
Subtotal 26,627 26,240
Treasury Stock 0 0
TOTAL STOCKHOLDERS' EQUITY $26,627 $26,240
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $296,970 $304,720
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED STATEMENT OF INCOME
as of March 31, 1997 and 1996
(Amounts in Thousands)
Quarter-to-Date Year-to-Date
3/31/97 3/31/96 3/31/97 3/31/96
INTEREST INCOME
Interest and fees on loans $4,336 $3,982 $4,336 $3,982
Interest on deposits in banks 71 49 71 49
Interest on federal funds sold
and repurchase agreements 94 67 94 67
Interest on securities:
U.S. Government and other 695 727 695 727
Tax Exempt Securities 259 154 259 154
TOTAL INTEREST INCOME 5,455 4,979 5,455 4,979
INTEREST EXPENSE
Interest on deposits 2,297 2,033 2,297 2,033
Int on fed funds purch. and securities
sold under agreements to repurchase 265 283 265 283
Int on U S Treasury Note Account 5 6 5 6
Int on long-term borrowings 158 130 158 130
TOTAL INTEREST EXPENSE 2,725 2,452 2,725 2,452
Net interest Income 2,730 2,527 2,730 2,527
Provision for loan losses 83 99 83 99
NET INT. INC. AFTER PROVISION
FOR LOAN LOSSES 2,647 2,428 2,647 2,428
OTHER OPERATING INCOME
Trust department income 96 81 96 81
Service charges on deposits 246 181 246 181
Invest. security gains/(losses) 0 0 0 0
Other income 160 98 160 98
TOTAL OTHER OPERATING INCOME 502 360 502 360
OTHER OPERATING EXPENSE
Employee expense 1,211 918 1,211 918
Occupancy expense 184 175 184 175
Equipment expense 232 170 232 170
Computer services 113 89 113 89
Other expense 521 388 521 388
TOTAL OTHER OPERATING EXPENSE 2,261 1,740 2,261 1,740
Income before income taxes 888 1,048 888 1,048
Income taxes 242 336 242 336
NET INCOME $646 $712 $646 $712
Earnings per share $0.44 $0.49 $0.44 $0.49
Average shares outstanding 1,476 1,468 1,476 1,468
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
BURLINGTON, WISCONSIN
Y-T-D ending March 31, 1997 and 1996
Increase (decrease) in Cash and Cash Equivalents
(Amounts in Thousands)
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $646 $712
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 201 133
Provision for loan losses 83 99
Provision for deferred taxes 0 0
Amortization and accretion of bond
premiums and discounts - net 27 40
Amortization of excess cost over equity in
underlying net assets of subsidiary 26 1
Investment securities (gains) losses 0 0
(Increase) decrease in assets:
Interest receivable (341) 68
Other assets (60) (928)
Increase (decrease) in liabilities:
Taxes payable 196 290
Interest payable (102) 32
Other liabilities (64) (99)
TOTAL ADJUSTMENTS (34) (364)
NET CASH PROVIDED FROM OPERATING ACTIVITIES $612 $348
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing deposits $3,444 $1,138
Proceeds from sales of available for sale securities 0 0
Proceeds from maturities of available for sale securities 23,112 17,387
Purchase of available for sale securities (25,835) (16,092)
Proceeds from maturity of held to maturity securities 0 2,290
Purchase of held to maturity securities 0 (2,901)
Net (increase) decrease in loans (5,312) (83)
Purchase of office buildings and equipment (162) (502)
NET CASH USED IN INVESTING ACTIVITIES ($4,753) $1,237
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
BURLINGTON, WISCONSIN
Y-T-D ending March 31, 1997 and 1996
Increase (decrease) in Cash and Cash Equivalents
(Amounts in Thousands)
1997 1996
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits $6,377 ($7,704)
Dividends paid 0 0
Net increase (decrease) in Long-term Borrowings (150) (339)
Net increase (decrease) in U S Treasury Note Account 0 542
Net increase (decrease) in fed funds purchased and
securities sold under repurchase agreements (14,395) 142
Proceeds from stock options exercised 3 1
NET CASH PROVIDED BY FINANCING ACTIVITIES ($8,165) ($7,358)
Net increase (decrease) in cash and cash equivalents (12,306) (5,773)
Cash and cash equivalents at beginning of year 29,317 22,188
Cash and cash equivalents at end of quarter $17,011 $16,415
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) during the year for:
Interest $2,827 $2,420
Income taxes (received) $47 $47
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED STATEMENT OF CHANGES
IN COMPONENTS OF STOCKHOLDERS' EQUITY
As of March 31, 1997
(Amounts in Thousands)
COMMON RETAINED AVAILABLE TREASURY
STOCK SURPLUS EARNINGS FOR SALE STOCK
SECURITIES
Balances
December 31, 1995 $1,468 $3,995 $18,570 ($148) ($1)
Net income-YTD 1996 712
Cash dividend paid
$0.00 per share 0
Exercise of
Stock options 1
Change in unrealized
loss on available
for sale securities (125)
Balances
March 31, 1996 1,468 3,995 19,282 (273) 0
Balances
December 31, 1996 $1,476 $4,091 $20,703 ($30) $0
Net income-YTD 1997 646
Cash dividend paid
$0.00 per share 0
Exercise of
Stock options 3
Change in unrealized
loss on available
for sale securities (262)
Balances
March 31, 1997 $1,476 $4,094 $21,349 ($292) $0
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 1997
Note 1. Basis of Presentation
In the opinion of Management, the accompanying unaudited consolidated financial
statements reflect all adjustments which are necessary to present a fair
statement of the results for the interim periods.
The accounting policies followed by the registrant are set forth in Note A to
the registrant's financial statements in the 1996 First Banking Center, Inc.
(the "Company") annual report which is incorporated by reference herein (see
exhibit A).
Item 2
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As of March 31, 1997
The following is a discussion of the financial condition and results of
operations of the Company for the year-to-date ended March 31, 1997.
Financial condition
Loans
As of March 31, 1997, loans outstanding were $199.6 million an increase
of $5.3 million or 2.72% from December 31, 1996. During this three month
period, Construction and Land Development loans decreased by $2.3 million
and Commercial loans increased $3.9 million or 9.2% and 12.5%
respectively. At March 31, 1997, Construction and Land Development loans
were at $23 million or 11.4% of total loans, Residential Real Estate
loans were at $80.7 million or 40.4% of total loans, and Commercial
loans were at $34.6 million or 17.3% of total loans.
Allowance for Loan Losses
The allowance for possible loan losses was $3 million or 1.48% of gross
loans on March 31, 1997, compared with $2.9 million or 1.49% of gross loans
on December 31, 1996. Net charge offs for the three month period ended
March 31, 1997, were -$15 thousand, or -.01% of gross loans, compared to
- -$20 thousand or .01% of gross loans for the same period in 1996. As of
March 31, 1997, loans on non-accrual status totaled 448 thousand or .22%
of gross loans compared to $217 thousand or .13% of gross loans on March
31, 1996, and $260 thousand or .13% of gross loans on December 31, 1996.
The non-accrual loans consisted primarily of real estate loans of which
$204 thousand or 46% were single family dwellings. On March 31, 1997,
the ratio of non-accrual loans to the allowance for loan losses was
15.1% compared to 9% on December 31, 1996.
The Banks evaluate the adequacy of the allowance for loan losses based
on an analysis of specific problem loans, as well as on an aggregate basis.
Management reviews a calculation of the allowance for loan losses on a
quarterly basis and feels that the allowance for loan losses is adequate.
The allowance for loan losses is maintained at a level considered adequate to
provide for potential future losses. The level of the allowance is based on
management's periodic and comprehensive evaluation of the loan portfolio,
including past loan loss experience; current and projected economic trends;
the volume, growth and composition of the loan portfolio; and other relevant
factors. Reports of examinations furnished by State and Federal banking
authorities are also considered by management in this regard.
During this three month period ended March 31, 1997, $83 thousand was
charged to current earnings and added to the allowance for loan losses.
Investment securities - Available for Sale
The securities available-for-sale portfolio increased $2.3 million
from December 31, 1996, to March 31, 1997.
Deposits and Borrowed Funds
As of March 31, 1997, total deposits were $241 million, which is an in-
crease of $6.4 million or 2.7% from December 31, 1996. Interest Bearing Demand
Deposits decreased $3.4 million or 12%. Demand deposits decreased $2.5
million or 6.8% since December 31, 1996. Time deposits decreased $7.4
million or 7.6% since December 31, 1996. Securities sold under agreements
to repurchase decreased $14.3 million or 46.5% and Federal Home Loan
Borrowings decreased $150 thousand or 1.6% since December 31, 1996.
Asset/Liability Management
The principal function of asset/liability management is to
manage the balance sheet mix, maturities, repricing characteristics
and pricing components to provide an adequate and stable net
interest margin with an acceptable level of risk over time and
through interest rate cycles.
Interest-sensitive assets and liabilities are those that are
subject to repricing within a specific relevant time horizon. The
Company measures interest-sensitive assets and liabilities, and
their relationship with each other at terms of immediate, quarterly
intervals up to 1 year, and over 1 year.
Changes in net interest income, other than volume-related,
arise when interest rates on assets reprice in a time frame or
interest rate environment that is different from the repricing
period for liabilities. Changes in net interest income also arise
from changes in the mix of interest-earning assets and interest-
bearing liabilities.
The Company's strategy with respect to asset/liability
management is to maximize net interest income while limiting our
exposure to a potential downward movement. Strategy is implemented
by the Bank's management, which takes action based upon its
analysis of the Bank's present positioning, its desired future
positioning, economic forecasts and its goals.
Liquidity
The liquidity position of the Company is managed to insure
that sufficient funds are available to meet customers' needs for
loans and deposit withdrawals. Liquidity to meet demand is
provided by maintaining marketable investment securities and money
market assets such as Interest Bearing Deposits in Banks and
Federal Funds Sold. The banks are members of the Federal Home
Loan Bank system which provides the company with an additional source
of liquidity.
Securities Sold Under Agreements to Repurchase (Repos) declined by
$14.4 million. This decline was funded by a decrease in Cash and
by a shift in funds from Repos to Deposits. Total Loans increased
$5.2 million and Investment Securities increased by $2.2 million.
These increases were funded by the $6.4 million increase in Deposit
balances.
Management is unaware of any recommendations by regulatory
authorities, known trends, events or uncertainties that will have
or that are reasonably likely to have a material effect on the
Company's liquidity.
Results of Operations Overview
For the three month period ended March 31, 1997 the Company reported
earnings of $646 thousand a decrease of $66 thousand or 9.3% over the
same period in 1996.
Net Interest Income
Net interest income for the three months ended March 31, 1997, was
$2.7 million compared to $2.5 million for the same period in 1996. The
increase in net interest income is the result of a $476 thousand increase
in interest income and only a $273 thousand increase in interest expense.
The increase in interest income is a result of a 15.1% increase in average
loan balances. The increase in interest expense is due to increased rates
paid and increased average balances of 18.8%.
Provision for Loan Losses
The Banks have established the allowance for loan losses to reduce
the gross level of loans outstanding by an estimate of uncollectible
loans. As loans are deemed uncollectible, they are charged against
the allowance. A provision for loan losses is expensed against current
income on a monthly basis. This provision acts to replenish the
allowance for loan losses to accommodate charge-offs and growth in the
loan portfolio, thereby maintaining the allowance at an adequate level.
During the first three months of 1997, provisions charged against
1996 income were $83,000 which was a decrease of 16.2% as compared to
the same period in 1996.
Non-interest income and expense
Non-interest income for the first three months of 1997 increased $142 thousand
or 39.4% from the same period in 1996. This increase is due primarily to
increased income from service charges on deposit, which increased $65
thousand or 35.9%.
Non-interest expense for the first three months of 1997 as compared to the
same period during 1996 increased $521 thousand or 29.9%. Occupancy
expense increased $9 thousand or 5.1%, and equipment expense increased
$62 thousand or 36.5%. Employee expense showed the second largest
increase of $639 thousand or 25.5%. These increases are a result of an increase
in personnel and new locations.
PART II - OTHER INFORMATION
Item I. Legal Proceedings
none
Item II. Changes in Securities
none
Item III. Defaults Upon Senior Securities
none
Item IV. Submission of Matters to a Vote of Security Holders
none
Item V. Other Information
none
Item VI. Exhibits and Reports on Form 8-K
none
EXHIBIT A:
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1996, 1994
Note A: Summary of Significant Accounting Policies
Consolidation:
The consolidated financial statements of First Banking Center,
Inc. include the accounts of its wholly owned subsidiaries, First
Banking Center - Burlington and First Banking Center - Albany.
First Banking Center - Burlington includes the accounts of its
wholly owned subsidiary, First Banking Center Burlington
Investment Corporation. The consolidated financial statements
have been prepared in conformity with generally accepted
accounting principles and conform to general practices within the
banking industry. All significant intercompany accounts and
transactions have been eliminated in the consolidated financial
statements.
Nature of banking activities:
The consolidated income of First Banking Center, Inc. is
principally from income of the two bank subsidiaries. The
subsidiary Banks grant agribusiness, commercial, residential and
consumer loans, accepts deposits and provides trust services to
customers primarily in southeastern and south central Wisconsin.
The subsidiary Banks are subject to competition from other
financial institutions and nonfinancial institutions providing
financial products. Additionally the Company and the subsidiary
Banks are subject to the regulations of certain regulatory
agencies and undergo periodic examination by those regulatory
agencies.
Basis of financial statement presentation:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
Cash and cash equivalents:
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, federal funds sold
and investments with an original maturity of three months or
less. Generally, federal funds are sold for one-day periods.
The subsidiary Banks maintain amounts due from banks which, at
times, may exceed federally insured limits. The subsidiary Banks
have not experienced any losses in such accounts.
Held to maturity securities:
Securities classified as held to maturity are those debt
securities the subsidiary Banks have both the intent and ability
to hold to maturity regardless of changes in market conditions,
liquidity needs or changes in general economic conditions. These
securities are carried at cost, adjusted for amortization of
premium and accretion of discount, computed by the interest
method over their contractual lives. The sale of a security
within three months of its maturity date or after collection of
at least 85 percent of the principal outstanding at the time the
security was acquired is considered a maturity for purposes of
classification and disclosure.
Available for sale securities:
Securities classified as available for sale are those debt
securities that the subsidiary Banks intend to hold for an
indefinite period of time, but not necessarily to maturity. Any
decision to sell a security classified as available for sale
would be based on various factors, including significant
movements in interest rates, changes in the maturity mix of the
subsidiary Banks' assets and liabilities, liquidity needs,
regulatory capital consideration, and other similar factors.
Securities available for sale are carried at fair value.
Unrealized gains or losses are reported as increases or decreases
in stockholders' equity, net of the related deferred tax effect.
Realized gains or losses, determined on the basis of the cost of
specific securities sold, are included in earnings.
Trading securities:
Trading securities, which are generally held for the short term,
usually under 90 days, in anticipation of market gains, are
carried at fair value. Realized and unrealized gains and losses
on trading account assets are included in interest income on
trading account securities.
Loans:
Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or payoff are reported at
the amount of unpaid principal, reduced by the allowance for loan
losses. Interest on loans is calculated by using the simple
interest method on daily balances of the principal amount
outstanding. The accrual of interest income on impaired loans is
discontinued when, in the opinion of management, there is
reasonable doubt as to the borrower's ability to meet payment of
interest or principal when they become due. When interest
accrual is discontinued, all unpaid accrued interest is reversed.
Cash collections on impaired loans are credited to the loan
receivable balance, and no interest income is recognized on those
loans until the principal balance is current. Accrual of
interest is generally resumed when the customer is current on all
principal and interest payments and has been paying on a timely
basis for a period of time.
Allowance for loan losses:
The allowance for loan losses is established through a provision
for loan losses charged to expense. Loans are charged against the
allowance for loan losses when management believes that the
collectibility of the principal is unlikely. The allowance is an
amount that management believes will be adequate to absorb
possible losses on existing loans that may become uncollectible,
based on evaluation of the collectibility of loans and prior loan
loss experience. The evaluations take into consideration such
factors as changes in the nature and volume of the loan
portfolio, overall portfolio quality, review of specific problem
loans, and current economic conditions that may affect the
borrower's ability to pay. While management uses the best
information available to make its evaluation, future adjustments
to the allowance may be necessary if there are significant
changes in economic conditions. Impaired loans are measured
based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, as a
practical expedient, at the loan's observable market price or the
fair value of the collateral if the loan is collateral dependent.
A loan is impaired when it is probable the creditor will be
unable to collect all contractual principal and interest payments
due in accordance with the terms of the loan agreement.
In addition, various regulatory agencies periodically review the
allowance for loan losses. These agencies may require the banks
to make additions to the allowance for loan losses based on their
judgments of collectibility based on information available to
them at the time of their examination.
Office buildings and equipment:
Depreciable assets are stated at cost less accumulated
depreciation. Provisions for depreciation are computed on
straight-line and accelerated methods over the estimated useful
lives of the assets, which range from 15 to 50 years for
buildings and 3 to 15 years for equipment.
Profit-sharing plan:
The Company has established a trusteed contributory 401(k) profit-
sharing plan for qualified employees. The Company's policy is to
fund contributions as accrued.
Other real estate owned:
Other real estate owned, acquired through partial or total
satisfaction of loans is carried at the lower of cost or fair
value less cost to sell. At the date of acquisition losses are
charged to the allowance for loan losses. Revenue and expenses
from operations and changes in the valuation allowance are
included in loss on foreclosed real estate.
Income taxes:
The Company files a consolidated federal income tax return and
individual subsidiary state income tax returns. Accordingly,
amounts equal to tax benefits of those companies having taxable
federal losses or credits are reimbursed by the other companies
that incur federal tax liabilities.
Amounts provided for income tax expense are based on income
reported for financial statement purposes and do not necessarily
represent amounts currently payable under tax laws. Deferred
income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of
assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected
to affect taxable income. As changes in tax laws or rates are
enacted, deferred tax assets and liabilities are adjusted through
the provision for income taxes. The differences relate
principally to the reserve for loan losses, nonaccrual loan
income, deferred compensation and pension, fixed assets and
unrealized gains and losses on available for sale securities.
Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.
Off-balance-sheet financial instruments:
In the ordinary course of business the subsidiary Banks have
entered into off-balance-sheet financial instruments consisting
of commitments to extend credit, commitments under credit card
arrangements, commercial letters of credit and standby letters of
credit. Such financial instruments are recorded in the financial
statements when they are funded or related fees are incurred or
received.
Trust assets and fees:
Property held for customers in fiduciary or agency capacities is
not included in the accompanying balance sheet, since such items
are not assets of the Company. In accordance with established
industry practice, income from trust fees is reported on the cash
basis. Reporting of trust fees on an accrual basis would have no
material effect on reported income.
Earnings per share:
Earnings per share are computed based upon the weighted average
number of common and common equivalent shares outstanding during
each year. In the computation of weighted average shares
outstanding all dilutive stock options are assumed to be
exercised at the beginning of each year and the proceeds are used
to purchase shares of the Company's common stock at the average
market price during the year. Fully diluted earnings per share
are computed in a similar manner except, to reflect maximum
potential dilution, the market price at the close of the reported
period is used if higher than the average market price during the
year.
Fair value of financial instruments:
Financial Accounting Standards Board Statement No. 107,
Disclosures About Fair Value of Financial Instruments, requires
disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is
practicable to estimate that value. In cases where quoted market
prices are not available, fair values are based on estimates
using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows.
In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many
cases, could not be realized in immediate settlement of the
instrument. Statement No. 107 excludes certain financial
instruments from its disclosure requirements. Accordingly, the
aggregate fair value amounts presented do not represent the
underlying value of the Company.
The following methods and assumptions were used by the Company in
estimating the fair value of its financial instruments:
Carrying amounts approximate fair values for the following
instruments:
Cash and cash equivalents
Federal funds sold
Short-term borrowing
Accrued interest receivable
Accrued interest payable
Variable rate loans that reprice frequently where no
significant change in credit risk has occurred
Demand deposits
Variable rate money market accounts
Variable rate certificate of deposit
Trading account securities
Available for sale securities
Quoted market prices:
Where available, or if not available, based on quoted
market prices of comparable instruments for the
following instrument:
Held to maturity securities
Discounted cash flows:
Using interest rates currently being offered on
instruments with similar terms and with similar
credit quality:
All loans except variable rate loans described above
Fixed rate certificates of deposit
Notes payable and other borrowing
Quoted fees currently being charged for similar
instruments:
Taking into account the remaining terms of the
agreements and the counterparties' credit standing:
Off-balance-sheet instruments:
Guarantees
Letters of credit
Lending commitments
Since the majority of the Company's off-balance-sheet instruments
consists of nonfee-producing, variable rate commitments, the
Company had determined it does not have a distinguishable fair
value.
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1943, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
First Banking Center, Inc.
May 14, 1997 ROMAN BORKOVEC
Date Roman Borkovec, President & Chief
Executive Officer
May 14, 1997 JAMES SCHUSTER
Date James Schuster, Chief Accounting Officer