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
--------------------
(X) Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the period ended March 31, 1996
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 60432
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 outstanding as of March 31, 1996.
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONTENTS
Part I. Financial Information
Item 1. Financial Statements
a. Condensed Consolidated Balance Sheets
b. Condensed Consolidated Statements of Income
c. Condensed Consolidated Statements of Cash Flow
d. Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 6b. Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter
ended March 31, 1996.
Signatures
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in Thousands)
March 31, December 31,
1996 1995
--------- ------------
ASSETS
Cash and due from banks ......................................... $ 40,639 $ 42,979
Securities
Available for sale ......................................... 15,139 17,337
Held to maturity ........................................... 182,142 185,374
-------- --------
Total Securities ....................................... 197,281 202,711
-------- --------
Federal funds sold ............................................ 53,208 41,537
Loans:
Commercial ................................................. 79,274 79,967
Agricultural ............................................... 6,663 8,815
Real estate ................................................ 213,788 210,631
Consumer ................................................... 132,428 133,346
Other ...................................................... 927 998
-------- --------
433,080 433,757
Less Unearned Discount ..................................... (1,481) (1,909)
-------- --------
431,599 431,848
Less Allowance for loan losses ............................. (4,185) (3,931)
-------- --------
Loans, net ............................................. 427,414 427,917
-------- --------
Premises and equipment, net ..................................... 17,347 15,579
Accrued interest and other assets ............................... 7,492 7,687
Intangibles, net ................................................ 11,313 11,580
-------- --------
TOTAL ASSETS .................................................... $754,694 $749,990
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand, non-interest bearing ............................... $110,409 $114,035
NOW accounts ............................................... 61,803 58,027
Money Market accounts ...................................... 43,854 41,646
Savings .................................................... 158,821 152,128
Time deposits of $100,000 and over ......................... 42,346 34,781
Other time deposits ........................................ 208,639 204,520
-------- --------
Total Deposits ......................................... 625,872 605,137
-------- --------
Short-term borrowings ...................................... 48,165 64,771
Long-term debt ............................................. 7,451 7,701
Other liabilities .......................................... 6,270 5,956
-------- --------
Total Liabilities ...................................... 687,758 683,565
-------- --------
STOCKHOLDERS' EQUITY
Common Stock ............................................... 12,159 12,159
Additional paid in capital ................................. 8,846 8,846
Retained earnings .......................................... 45,977 45,519
Unrealized gain (loss) on securities available for sale, net (46) (99)
-------- --------
Total Stockholders' Equity ............................ 66,936 66,425
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...................... $754,694 $749,990
======== ========
See Notes to Condensed Consolidated Financial Statements.
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in Thousands)
Three Months Ended
March 31,
------------------
1996 1995
-------- --------
INTEREST INCOME:
Interest and Fees on Loans ........................... $ 9,384 $ 9,472
Interest on Securities:
Taxable ............................................ 2,489 2,260
Tax-exempt ......................................... 508 604
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Total Interest on Securities .............. 2,997 2,864
------- -------
Interest on Federal Funds Sold ....................... 656 388
Interest on Deposits in other Financial Institutions . 0 3
------- -------
Total Interest Income .................................. 13,037 12,727
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INTEREST EXPENSE:
Interest on Deposits ................................. 4,945 3,962
Interest on Borrowings ............................... 879 1,132
------- -------
Total Interest Expense ................................. 5,824 5,094
------- -------
Net Interest Income ................................ 7,213 7,633
Provision for Loan Losses ............................ 307 279
------- -------
Net Interest Income After
Provision for Loan Loss .......................... 6,906 7,354
------- -------
OTHER INCOME:
Trust Department Fees ................................ 326 232
Service Fees ......................................... 886 720
Net Securities Gains ................................. 127 0
Other ................................................ 101 122
------- -------
Total Other Income ..................................... 1,440 1,074
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OTHER EXPENSES:
Salaries and Employee Benefits ....................... 2,703 2,401
Occupancy Expense .................................... 683 662
Data Processing Expense .............................. 208 176
Other Expenses ....................................... 1,327 1,464
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Total Other Expense .................................... 4,921 4,703
------- -------
Income Before Income Taxes ......................... 3,425 3,725
Applicable Income Taxes ............................... 1,144 1,220
------- -------
NET INCOME ............................................. 2,281 2,505
======= =======
Earnings per Common Share .............................. 1.88 2.06
======= =======
See Notes to Condensed Consolidated Financial Statements.
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in Thousands)
Three Months Ended
March 31,
-------------------
1996 1995
--------- ---------
CASH FLOWS FROM OPERATIONS ACTIVITIES
Net Income ..................................................... $ 2,281 $ 2,505
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ................................................ 317 280
Provision for loan losses ................................... 307 279
Provision for deferred income taxes ......................... (48) 165
Amortization of bond premiums, net of (accretion) ........... 69 55
Net securities (gains) ...................................... (127) 0
Amortization of intangibles ................................. 268 260
Decrease in accrued interest and other assets ............... 195 1,561
Increase (decrease) in accrued interest and other liabilities 342 (774)
------- -------
Net Cash Provided By Operating Activities ................ 3,604 4,331
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest bearing deposits in other financial institutions, net . 0 4,099
Proceeds from maturities of securities ........................ 25,677 10,218
Proceeds from sale of securities .............................. 1,656 997
Purchase of securities ........................................ (21,772) (4,230)
Federal funds sold, net ....................................... (11,671) (35,900)
Loans made to customers, net of principal collections .......... 196 (1,976)
Purchase of premises and equipment ............................. (2,085) (612)
------- -------
Net Cash (Used In) Investing Activities ................... (7,999) (27,404)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in time deposits .................................. 11,684 (1,086)
Net increase in all other deposit accounts ..................... 9,051 (540)
Net increase (decrease) in securities sold under agreements
to repurchase ............................................ (16,418) 19,633
Other short-term borrowings, net ............................... (188) (6,014)
Principal paid on long-term debt ............................... (250) (125)
Dividends paid ................................................. (1,824) (1,519)
------- -------
Net Cash Provided By Financing Activities .................... 2,055 10,349
------- -------
Net (Decrease) In Cash And Due From Banks .................... (2,340) (12,724)
CASH AND DUE FROM BANKS
Beginning ...................................................... 42,979 42,832
------- -------
Ending ......................................................... $40,639 $30,108
======= =======
SUPPLEMENTAL DISCLOSURES
Cash payments for:
Interest paid to depositors .................................. $ 4,749 $ 3,636
Interest paid on borrowings .................................. 940 907
Income taxes ................................................. 0 60
Change in unrealized gain (loss) on securities
available for sale ...................................... 73 0
Related deferred income taxes ........................ (20) 0
See Notes to Condensed Consolidated Financial Statements.
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
MARCH 31, 1996
(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 ending March 31,1996, are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1996.
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 - ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1996 the Company adopted FASB Statement No. 121,
Accounting for the Impairment of Long-Lived Assets to Be Disposed Of and
Statement No. 122, Accounting for Mortgage Servicing Rights. The adoption of
these new accounting pronouncements did not have any effect on the March 31,
1996 condensed consolidated financial statements.
NOTE 3 - PURCHASE OF BRANCH FACILITY
On March 8, 1996, First National Bank of Joliet purchased a branch
facility located in Romeoville, Illinois from another financial institution. The
total cost including planned improvements is estimated to be $1,750,000. The
branch is scheduled to open in May, 1996.
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 March 31, 1996, as compared to the position of the Company at December 31,
1995, as well as the results of operations for the three months ended March 31,
1996 and 1995. This discussion is intended to be read in conjunction with the
financial statements and notes.
HIGHLIGHTS
First National Bancorp's net income for the three months ended March
31, 1996 was $2,281,000 as compared to $2,505,000 for the same period in 1995.
Earings per share for the three months ended March 31, 1996 was $1.88 versus
$2.06 for the same period in 1995.
As of March 31, 1996, Total Assets were $754,694,000 versus
$749,990,000 on December 31, 1995.
Total Stockholder's Equity at March 31, 1996 was 8.87% of assets as
compared to 8.86% at December 31, 1995.
BALANCE SHEET
Total assets increased by $4,704,000, or .6%, from the totals reported
at December 31, 1995. An increase of $20,735,000 in Total Deposits and a
decrease of $16,606,000 in Short- Term Borrowings were offset primarily by an
increase in Fed Funds Sold of $11,671,000, a Securities decrease of $5,430,000
and a net Loans decrease of $503,000.
Net Loans were $427,414,000 at March 31, 1996, which represented 56.6%
of total assets and 68.3% of total deposits compared to the December 31, 1995
total of $427,917,000 or 57.1% of total assets and 70.7% of total deposits.
Securities ended the period at $197,281,000 as compared to $202,711,000
on December 31, 1995, which represents a decrease of 2.7%. The security
portfolio was 81.3% invested in U.S. Government obligations and 18.6% in
obligations of State and Political Subdivisions and .1% in Other Securities at
March 31, 1996.
The Allowance for loan losses increased $254,000 for the three month
period ended March 31, 1996 to $4,185,000 which represented .9% of loans, net of
unearned income. At December 31, 1995, the allowance for loan losses represented
.9% of such loan balances. A portion of this increase relates to the expansion
of the subsidiary Banks into the credit card lending program. 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 March 31, 1996, consisted of $110,409,000 of
non-interest bearing deposits (17.6% of total deposits) and $515,463,000 of
interest bearing deposits ( 82.4% of total deposits). This compares to December
31, 1995 totals of $114,035,000 non- interest bearing deposits (18.8% of total
deposits ) and $491,102,000 of interest-bearing deposits (81.2% of total
deposits).
Tier 1 Capital at March 31, 1996 was 12.2% compared to 12.1% at
December 31, 1995. 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
Net interest income for the first three months was 5.5% lower than in
the same period in 1995. This decrease is due to a lower yield environment and
loan origination fee income in 1996 as compared to the first quarter of 1995.
Other income for the first three months increased $366,000 or 34.1%
over the same period in 1995. This is due primarily to increased service charges
on deposit accounts of $120,000 , gains on loans sold of $19,000, and increased
securities gains of $127,000.
For the three months ending March 31, 1996, Other Expenses were
$218,000 or 4.6% higher than the same period in 1995. Accounting for most of the
change were higher salary and benefit costs, and an increase in intangible
amortization and data processing expenses.
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: MAY 10, 1996
/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