QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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(X) Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended September 30, 1995
or
( ) Transition Report Pursuant to Section 13 of 15(d) of
the Securities Exchange Act of 1934
For the transition period from ----- to -----
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Commission file number 0-15123
I.R.S. Employer Identification Number 31-1182986
FIRST NATIONAL BANCORP, INC.
(an Illinois Corporation)
78 N. Chicago St.
Joliet, Illinois 60431
Telephone: (815) 726-4371
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 issuers classes of
common stock, as of the latest practicable date: 1,215,902 shares of the
Company's Common Stock ($10.00 par value) were
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in Thousands)
September 30, December 31,
ASSETS 1995 1994
------------- ------------
Cash and due from banks .............................. $ 41,064 $ 42,832
Interest-bearing deposits in other ................... 0 4,198
financial institutions
Securities
Taxable ......................................... $ 164,618 $ 148,502
Tax-exempt ...................................... 38,658 41,372
--------- ---------
Total Securities ............................ $ 203,276 $ 189,874
--------- ---------
Federal funds sold ................................. $ 53,018 $ 0
Loans:
Commercial ...................................... $ 82,232 $ 91,120
Agricultural .................................... 8,895 8,485
Real estate ..................................... 210,901 184,795
Individuals ..................................... 132,141 140,671
Other ........................................... 1,107 940
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$ 435,276 $ 426,011
Less Unearned Discount .......................... (2,374) (4,011)
--------- ---------
$ 432,902 $ 422,000
Less Allowance for loan losses .................. (3,771) (3,082)
--------- ---------
Loans, net .................................. $ 429,131 $ 418,918
--------- ---------
Premises and equipment, net .......................... $ 15,488 $ 14,660
Accrued interest and other assets .................... 8,421 9,510
Intangibles, net ..................................... 11,866 12,650
--------- ---------
TOTAL ASSETS ......................................... $ 762,264 $ 692,642
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand, non-interest bearing .................... $ 107,832 $ 108,177
NOW accounts .................................... 58,122 51,944
Money Market accounts ........................... 44,381 43,796
Savings ......................................... 152,958 151,263
Time deposits of $100,000 and over .............. 36,502 25,552
Other time deposits ............................. 201,344 175,430
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Total Deposits .............................. $ 601,139 $ 556,162
--------- ---------
Short-term borrowings ........................... 82,022 59,614
Long-term debt .................................. 7,826 8,326
Other liabilities ............................... 5,852 6,883
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Total Liabilities ........................... $ 696,839 $ 630,985
--------- ---------
STOCKHOLDERS' EQUITY
Common Stock .................................... $ 12,159 $ 12,159
Additional paid in capital ...................... 8,846 8,846
Retained earnings ............................... 44,420 40,652
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Total Stockholders' Equity ................. $ 65,425 $ 61,657
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ........... $ 762,264 $ 692,642
========= =========
See Notes to Condensed Consolidated Financial Statements.
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in Thousands)
Nine Months Ended
September 30,
1995 1994 1995 1994
------- ------- ------- -------
INTEREST INCOME:
Interest and Fees on Loans ........................................... $ 9,647 $ 7,804 $28,436 $21,993
Interest on Securities:
Taxable ............................................................ $ 2,386 $ 1,959 $ 6,957 $ 6,004
Tax-exempt ......................................................... 609 639 1,770 1,922
------- ------- ------- -------
Total Interest on Securities .............................. 2,995 2,598 8,727 7,926
------- ------- ------- -------
Interest on Federal Funds Sold ....................................... 820 154 1,989 478
Interest on Deposits in other Financial Institutions ................. 0 46 3 173
------- ------- ------- -------
Total Interest Income .................................................. $13,462 $10,602 $39,155 $30,570
------- ------- ------- -------
INTEREST EXPENSE:
Interest on Deposits ................................................. $ 4,794 $ 3,413 $13,271 $ 9,388
Interest on Borrowings ............................................... 1,278 699 3,714 1,845
------- ------- ------- -------
Total Interest Expense ................................................. $ 6,072 $ 4,112 $16,985 $11,233
------- ------- ------- -------
Net Interest Income ................................................ $ 7,390 $ 6,490 $22,170 $19,337
Provision for Loan Losses ............................................ 279 262 837 561
------- ------- ------- -------
Net Interest Income After
Provision for Loan Loss .......................................... $ 7,111 $ 6,228 $21,333 $18,776
------- ------- ------- -------
OTHER INCOME:
Trust Department Fees ................................................ $ 181 $ 182 $ 610 $ 615
Service Fees ......................................................... 983 536 2,509 1,776
Net Securities Gains ................................................. 179 4 187 4
Other ................................................................ 87 201 492 395
------- ------- ------- -------
Total Other Income ..................................................... $ 1,430 $ 923 $ 3,798 $ 2,790
------- ------- ------- -------
OTHER EXPENSES:
Salaries and Employee Benefits ....................................... $ 2,465 $ 2,174 $ 7,283 $ 6,321
Occupancy Expense .................................................... 507 610 1,871 1,704
Data Processing Expense .............................................. 250 206 664 555
Other Expenses ....................................................... 1,649 1,289 4,867 3,668
------- ------- ------- -------
Total Other Expense .................................................... $ 4,871 $ 4,279 $14,685 $12,248
------- ------- ------- -------
Income Before Income Taxes ......................................... $ 3,670 $ 2,872 $10,446 $ 9,318
Applicable Income Taxes .............................................. 1,188 829 3,336 2,852
------- ------- ------- -------
NET INCOME ............................................................. $ 2,482 $ 2,043 $ 7,110 $ 6,466
======= ======= ======= =======
Earnings per Common Share .............................................. $ 2.04 $ 1.68 $ 5.85 $ 5.32
======= ======= ======= =======
See Notes to Condensed Consolidated Financial Statements.
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts In Thousands)
Nine Months
Ended Year Ended
September 30, December 31,
CASH FLOWS FROM OPERATIONS ACTIVITIES 1995 1994
------------- ------------
Net Income .......................................................... $ 7,110 $ 7,507
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation ..................................................... 855 984
Provision for loan losses ........................................ 837 830
Provision for deferred income taxes .............................. 120 (214)
Amortization of bond premiums, net of (accretion) ................ 147 327
Net securities (gains) losses .................................... (187) 0
Amortization of intangibles ...................................... 784 619
(Increase) decrease in accrued interest and other assets ......... 1,767 (2,099)
Increase (decrease) in accrued interest and other liabilities .... (1,151) 675
-------- --------
Net Cash Provided By Operating Activities ..................... $ 10,282 $ 8,629
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest bearing deposits in other financial institutions, net .... $ 4,198 $ 4,455
Proceeds from maturities of securities ........................... 38,886 66,469
Proceeds from sale of securities ................................. 1,496 0
Purchase of securities ........................................... (53,744) (48,971)
Federal funds sold, net ........................................... (53,018) 39,114
Loans made to customers, net of principal collections ............. (11,728) (52,331)
Purchase of Plano Bancshares, Inc. net of cash
acquired and debentures issued .................................. 0 (4,644)
Proceeds from sale of equipment ................................... 0 15
Purchase of premises and equipment ................................ (1,683) (1,822)
-------- --------
Net Cash Provided By (Used In)Investing Activities ............ ($75,593) $ 2,285
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in time deposits .......................... $ 36,864 $ 26,056
Net increase (decrease) in all other deposit accounts ............. 8,113 (10,663)
Net increase (decrease) in securities sold under agreements
to repurchase ................................................... 25,843 (20,364)
Other short-term borrowings, net .................................. (3,435) 1,941
Proceeds from long-term debt ...................................... 0 3,800
Principal paid on long-term debt .................................. (500) (250)
Cash paid in lieu of fractional shares ............................ 0 (34)
Dividends paid .................................................... (3,342) (3,258)
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Net Cash Provided By (Used In) Financing Activities ............. $ 63,543 ($ 2,772)
-------- --------
Net Increase (Decrease) In Cash And Due From Banks .............. ($ 1,768) $ 8,142
CASH AND DUE FROM BANKS
Beginning ......................................................... 42,832 34,690
-------- --------
Ending ............................................................ $ 41,064 $ 42,832
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest paid to depositors ..................................... $ 13,034 $ 13,220
Interest paid on borrowings ..................................... 3,263 2,671
Income taxes .................................................... 2,972 3,503
Other real estate acquired in settlement of loans ................... $ 678 $ 444
See Notes to Condensed Consolidated Financial Statements
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying Condensed Consolidated Financial Statements have been
prepared in accordance with Generally Accepted Accounting Principles for interim
financial information and with the instructions for Form 10 - Q and Rule 10 - 01
of Regulation S - X. Accordingly, they do not include all the information and
footnotes required by Generally Accepted Accounting Principles for complete
Financial Statements. These statements include, however, all adjustments
(consisting of normal recurring accruals), which in the opinion of management
are considered necessary for the fair presentation of the results for the period
shown. Operating results for the three months and nine months periods ending
September 30, 1995, are not necessarily indicative of the results that may be
expected for the year ended December 31, 1995. These Consolidated Financial
Statements include the accounts of the Company and its wholly-owned
subsidiaries, First National Bank of Joliet, Southwest Suburban Bank, Bank of
Lockport and Plano Bancshares, Inc. All material intercompany accounts and
transactions have been eliminated in consolidation.
NOTE 2 - RECLASSIFICATIONS
Certain amounts included in the condensed consolidated balance sheet at
December 31, 1994 and the condensed consolidated statement of cash flows for the
year ended December 31, 1994 have been retroactively reclassified to conform to
the presentations adopted at September 30, 1995.
NOTE 3 - ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1995 the Company adopted FASB Statement No. 114,
Accounting by Creditors for Impairment of a Loan, FASB Statement No. 118 which
amended certain provisions of FASB No. 114 with respect to income recognition
and disclosures, and FASB Statement No. 119, Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments. The adoption of
these new accounting pronouncements did not have any effect on the September 30,
1995 condensed consolidated financial statements. The Financial Accounting
Standards Board also has approved effective for years beginning after December
15, 1995, Statement No. 121, Accounting for the Impairment of Long-Lived Assets
to Be Disposed Of and Statement No. 122, Accounting for Mortgage Servicing
Rights. FASB Statements No. 121 and No. 122 are not expected to have a material
effect on the consolidated financial statements when adopted.
NOTE 4 - ACQUISITION OF PLANOBANCSHARES, INC.
The supplemental schedule of noncash investing and financing activities
relative to the purchase of Plano Bancshares, Inc. during the year ended
December 31, 1994 is as follows: Acquisition of Plano Bancshares, Inc.
Assets acquired:
Cash and due from banks ............................... $ 2,317
Securities ................................................ 16,827
Federal funds sold ...................................... 814
Loans, net ............................................... 34,174
Premises and equipment .................................. 1,609
Accrued interest and other assets ..................... 753
Intangibles ............................................... 6,127
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$62,621
-------
Liabilities assumed:
Demand, NOW and Money Market .......................... $ 6,106
deposits
Savings and time deposits .............................. 43,649
Deferred taxes ........................................... 1,526
Other liabilities ........................................ 603
-------
$51,884
-------
Total purchase price ........................................ $10,737
Debentures issued ............................................ 3,776
=======
Cash paid .................................................... $ 6,961
=======
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management's discussion and analysis focuses on the
consolidated financial position of First National Bancorp, Inc. ("The Company")
as of September 30, 1995, as compared to the position of the Company at December
31, 1994, as well as the results of operations for the three months and nine
months ended September 30, 1995 and 1994. This discussion is intended to be read
in conjunction with the financial statements and notes.
HIGHLIGHTS
First National Bancorp's net income for the nine months ended September 30,
1995 was $7,110,000 as compared to $6,466,000 for the same period in 1994.
Earnings per share for the nine months ended September 30, 1995 was $5.85 versus
$5.32 for the same period in 1994. As of September 30, 1995, Total Assets were
$762,264,000 versus $692,642,000 on December 31, 1994. Total Stockholder's
Equity at September 30, 1995 was 8.6% of assets as compared to 8.9% at December
31, 1994.
BALANCE SHEET
Total assets increased by $69,622,000, or 10.1%, from the totals reported
at December 31, 1994. An increase of $44,977,000 in Total Deposits and an
increase of $22,408,000 in Short- Term Borrowings were offset primarily by
increases in Fed Funds Sold of $53,018,000, Securities and Investment CD's
increased by $9,204,000 and net Loans increased by $10,213,000. Net Loans were
$429,131,000 at September 30, 1995, which represented 56.3% of total assets and
71.4% of total deposits compared to the December 31, 1994 total of $418,918,000
or 60.5% of total assets and 75.3% of total deposits.
Securities ended the period at $203,276,000 as compared to $189,874,000 on
December 31, 1994, which represents an increase of 7.1%. The security portfolio
was 80.1% invested in U.S. Government obligations and 19.6% in obligations of
State and Political Subdivisions and .3% in Other Securities at September 30,
1995. The allowance for loan losses increased $689,000 for the nine month period
ended September 30, 1995 to $3,771,000 which represented .9% of loans, net of
unearned income. At December 31, 1994, the allowance for loan losses represented
.7% of such loan balances. A portion of this increase relates to the expansion
of the subsidiary Banks into credit card lending programs. Historical loss
experience in credit card lending is greater than the Banks' overall loss
experience requiring an increase in the allowance for loan losses. Management
continues to monitor the current loan portfolio and assess potential future
charge-offs in order to determine the level of the allowance for loan losses.
Management believes that the allowance for loan losses is adequate to absorb
estimated future losses on the loan portfolio. The deposit mix at September 30,
1995, consisted of $107,832,000 of non-interest bearing deposits (17.9% of total
deposits) and $493,307,000 of interest bearing deposits ( 82.1% of total
deposits). This compares to December 31, 1994 totals of $108,177,000 non-
interest bearing deposits (19.5% of total deposits ) and $447,985,000 of
interest-bearing deposits (80.5% of total deposits). Tier 1 Capital at September
30, 1995 was 11.8% compared to 11.5% at December 31, 1994. Banking regulations
require bank holding companies to maintain a Tier 1 Capital ratio of at least
6.0% to be considered "well capitalized".
INCOME STATEMENT
Plano Bancshares, Inc. was purchased on November 1, 1994, therefore
operating results of that subsidiary are included in consolidated results for
the Company only from that date. Net interest income for the first nine months
was 14.7% higher than in the same period in 1994. This increase is due to an
increase in loan and security volumes, and higher yields in the current year.
The same factors contributed to an increase of 13.9% for the three months ended
September 30, 1995 compared to the same period in 1994.
Other income for the first nine months increased $1,008,000 or 36.1% over
the same period in 1994. This is due primarily to increased service charges on
deposit accounts of $228,000 , gains on loans sold of $141,000 and increased
securities gains of $183,000. For the three month period ending September 30,
1995, other income was $507,000 or 54.9% higher than the same period in 1994.
For the nine months ending September 30, 1995, Other Expenses were
$2,437,000 or 19.9% higher than the same period in 1994. Higher salary and
benefit costs, increased intangible amortization, and other real estate
expenses, offset by a one-time FDIC insurance refund of $339,000, accounted for
most of the change. The three month period ending September 30, 1995 reflects an
increase of $592,000 or 13.8% over the same period in 1994.
SIGNATURES
Pursuant to the Requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST NATIONAL BANCORP, INC. (REGISTRANT)
DATE: NOVEMBER 9, 1995
/s/ Kevin T. Reardon /s/ Albert G. D'Ottavio
- ------------------------------ --------------------------------------
Kevin T. Reardon Albert G. D'Ottavio
Chairman of the Board President
Chief Executive Officer Principal Accounting Officer & Chief
Financial Officer