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
( ) 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: 0-19376
Aspen Bancshares, Inc.
---------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1068527
--------------- -------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
534 East Hyman Avenue, P. O. Box 3677, Aspen, Colorado 81612
---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(970) 925-6700
----------------
(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.
(X) Yes ( ) No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
( ) Yes ( ) No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of April 10, 1997:
3,720,780
-----------
ASPEN BANCSHARES, INC.
PART I
------
FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
The accompanying unaudited interim financial statements have been prepared in
accordance with the instructions for Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. All adjustments which are, in the opinion
of management, of a normal recurring nature necessary to a fair statement of
the results for the interim periods presented have been made. The results of
operations for such interim periods are not necessarily indicative of results
of operations for a full year. The statements should be read in conjunction
with the summary of accounting policies and the notes to the consolidated
financial statements included in Aspen Bancshares' Annual Report on Form 10-K
for the year ended December 31, 1996 and Form 8-K dated March 7, 1997, which
are incorporated herein by this reference.
2
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands)
March 31,
1997 1996 December 31, 1996
ASSETS ----- ----- ---------------
Cash and Due From Banks $10,240 $9,088 $15,114
Interest Bearing Deposits in Banks 667 1,177 400
Securities:
Available for Sale 81,742 43,182 78,170
Federal Funds Sold and Securities
Purchased Under Resale Agreements 22,760 27,225 17,540
Loans Held for Resale 513 4,561 684
Loans 313,646 269,149 321,934
Loan Loss Reserve (3,251) (2,204) (3,217)
------- ------- --------
Loans, Net 310,395 266,945 318,717
Property, Equipment, and Leasehold
Improvements 9,330 7,678 9,477
Accrued Interest Receivable 3,390 2,155 3,052
Other Assets 7,430 3,652 7,452
-------- -------- --------
Total Assets $446,467 $365,663 $450,606
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand Noninterest Bearing $48,094 $33,601 $47,061
Demand Interest Bearing 157,190 113,065 150,269
Savings and Time Deposits Less
Than $100,000 141,518 111,966 141,141
Time Deposits $100,000 and Over 54,484 54,991 60,403
------- ------- -------
Total Deposits 401,286 313,623 398,874
------- ------- -------
Federal Funds Purchased - 2,270 -
Other Borrowings 9,875 17,235 15,975
Other Liabilities 3,221 4,414 4,656
------- ------- -------
Total Liabilities 414,382 337,542 419,505
------- ------- -------
Shareholders' Equity:
Preferred Stock - 6,150 -
Common Stock 38 30 37
Additional Paid in Capital 11,656 4,883 11,632
Retained Earnings 21,464 18,008 20,260
Net Unrealized Loss on Securities
Available for Sale (1,073) (950) (828)
-------- -------- --------
Total Shareholders' Equity 32,085 28,121 31,101
-------- -------- --------
Total Liabilities and
Shareholders' Equity $446,467 $365,663 $450,606
======== ======== ========
3
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
Three Months Ended
March 31,
1997 1996
------ ------
Interest Income:
Loans Receivable $7,500 $6,421
Investment Securities 1,245 579
Deposits in Banks 9 14
Federal Funds Sold 269 307
------ ------
Total Interest Income 9,023 7,321
------ ------
Interest Expense:
Deposits 3,907 3,135
Other 251 247
------ ------
Total Interest Expense 4,158 3,382
------ ------
Net Interest Income Before Provision for Loan Losses 4,865 3,939
Provision for Loan Losses 19 9
------ ------
Net Interest Income After Provision for Loan Losses 4,846 3,930
------ ------
Non-interest Income:
Service Charges 289 188
Other Fees and Charges 308 217
Gain on Sale of Investments 47 5
Gain on Sale of Loans 93 315
------ ------
Total Other Income 737 725
------ ------
Non-interest Expense:
Salaries and Benefits 1,754 1,326
Occupancy 416 397
Other Expense 1,287 953
Loss on Sale of Investments - -
Loss on Sale of Loans - 4
------ ------
Total Other Expense 3,457 2,680
------ ------
Income from Operations 2,126 1,975
------ ------
Provision for Income Tax 739 705
------ ------
Net Income $1,387 $1,270
====== ======
Net Income Available to Common Stock $1,387 $1,162
====== ======
Net Income per Share $0.36 $0.37
Net Income per Share-Fully Diluted $0.36 $0.34
Book Value per Share $8.49 $7.11
Average Number of Shares Outstanding-Primary 3,862 3,134
Average Number of Shares Outstanding-Fully
Diluted 3,862 3,780
4
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY
(unaudited)
(in thousands, except number of shares)
Net Unreal-
ized Loss on
Additional Securities
Common Stock Paid-In Retained Available
Shares Amount Capital Earnings for Sale Total
--------- ------ ------ -------- ------------ -------
Balance at December
31, 1996 3,717,714 $37 $11,632 $20,260 ($828) $31,101
Net Income - - - 1,387 - 1,387
Dividends - - - (183) - (183)
Exercise of Options 3,066 1 24 - - 25
Net Gain (Loss) - - - - (245) (245)
--------- ---- ------- -------- -------- -------
Balance at March
31, 1997 3,720,780 $38 $11,656 $21,464 ($1,073) $32,085
========= ==== ======= ======== ======== =======
5
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Three Months
Ended March 31,
1997 1996
------- -------
Operating Activities:
Net Income $1,387 $1,270
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision for Loan Losses 19 9
Depreciation and Amortization 190 193
Net Gain on Sale of Investments and Loans (84) (320)
Sales of Loans Originated for Resale 3,326 9,753
Loans Originated for Resale (3,119) (4,449)
(Increase) Decrease in Other Assets 127 (847)
(Increase) Decrease in Interest Receivable (338) (10)
Increase (Decrease) in Other Liabilities (3,347) (2,476)
Increase (Decrease) in Accrued Income Taxes 1,329 677
Increase (Decrease) in Interest Payable 583 690
------- -------
Net Cash Provided (Used) by Operating Activities 73 4,490
------- -------
Investing Activities:
Federal Funds Sold, Net (Increase) Decrease (5,220) (6,485)
Net (Increase) Decrease in Interest
Bearing Deposits in Other Banks (45) (62)
Proceeds From the Sales of
Available for Sale Investments 99 264
Proceeds From Maturities of
Available for Sale Investments 5,664 6,151
Purchases of Available for Sale
Securities (9,745) (7,685)
Increase in Net Unrealized Loss on Securities
Available for Sale 457 271
Purchases of Trading Securities - (467)
Proceeds From the Sale of Trading Securities - 472
Net Increase in Loans 8,304 (14,159)
Increase in Other Real Estate Owned (105) -
Purchase of Property, Equipment,
and Leasehold Improvements (140) (110)
Sale of Property, Equipment,
and Leasehold Improvements 97 -
------- -------
Net Cash Used by Investing Activities (634) (21,810)
------- -------
Financing Activities:
Net Changes in Deposit Accounts 2,412 13,606
Change in Net Unrealized Loss on
Securities Available for Sale (245) (195)
Exercise of Common Stock Options 25 4
Dividends Paid (183) (256)
Federal Funds Purchased - 2,270
Other Borrowed Funds (6,100) 950
------- -------
Net Cash Provided by Financing Activities (4,091) 16,379
------- -------
Net Increase(Decrease)in Cash and Cash Equivalents (4,652) (941)
Cash and Cash Equivalents-Beginning of Year 14,892 10,029
------- -------
Cash and Cash Equivalents-End of Year $10,240 $9,088
Cash Paid During the Year ======= =======
Interest $840 $2,692
Income Taxes - -
------- -------
Total $840 $2,692
======= =======
6
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations.
---------------------
The Company is a bank holding company whose principal assets are the common
stock of Pitkin County Bank and Trust Company (Pitkin), a commercial bank
organized in 1979, the common stock of Centennial Savings Bank, F.S.B.
(Centennial), a thrift originally created in 1905 which has its headquarters
in Durango, Colorado, and the common stock of Val Cor Bancorporation, Inc.
(Val Cor), a bank holding company formed in December, 1982, which the Company
acquired in June, 1996. Val Cor owns 99.1% of the common stock of Valley
National Bank of Cortez, Colorado (Valley), a national banking association
organized in 1979.
The Company acquired all of the stock of Centennial on October 6, 1993.
Centennial has five branches in Colorado, located in Grand Junction, Montrose,
Cortez, Pagosa Springs, and Dolores, and one branch in Farmington, New Mexico.
Centennial continues operating under its present name and charter as a
separate subsidiary of the Company. The acquisition was accounted for using
the purchase method of accounting.
Pitkin County Bank is headquartered in Aspen, Colorado, with a branch office
in Telluride, Colorado and a full service branch in El Jebel, Colorado.
On June 18, 1996, the Company acquired all of the stock of Val Cor. Valley
has three branches in Colorado; two located in Cortez and one located in
Dolores. Valley continues to operate under its present name and charter as a
separate subsidiary of Val Cor. The total purchase price was approximately
$10.3 million including acquisition expenses. Pursuant to the Third Amended
Acquisition Agreement and Plan of Merger dated January 12, 1996, Val Cor's
stockholders received from the Company $32.653 in cash for each share of Val
Cor common stock owned by them. The Company funded the acquisition through a
combination of bank debt of $6.5 million and cash on hand.
As a result of the acquisition, Val Cor's assets and liabilities were adjusted
on June 18, 1996 to reflect their fair values in conformity with the
procedures specified by Accounting Principles Board Opinion No. 16, Business
Combinations, for transactions reported on the basis of the purchase method.
This resulted in a net increase in stockholders' equity as of June 18, 1996 of
approximately $4.2 million.
On September 17, 1996, Centennial voluntarily entered into a Supervisory
Agreement with the Office of Thrift Supervision (OTS), which is defined as a
"written agreement" within the meaning of Section 8 of the Federal Deposit
Insurance Act, 12 U.S.C., Section 1818. In addition, the Community
Reinvestment Act evaluation of Centennial rated it Substantial Noncompliance.
The Supervisory Agreement requires Centennial to take actions to achieve
compliance with applicable consumer and public-interest related laws and
regulations and safe and sound business practices related thereto, to review
its records to determine if disclosures of finance charges and/or annual
percentage rates to its customers were accurate, to establish and maintain
accurate and complete records demonstrating its regulatory compliance with the
various consumer laws and regulations and to implement a compliance program
relative to consumer and public-interest related laws and regulations, which,
among other things, provides for written policies and procedures, increased
staff training, independent compliance testing and other actions necessary to
enhance Centennial's compliance with consumer and public-interest related laws
and regulations.
On November 19, 1996, the Company signed an Agreement of Merger and an
Agreement and Plan of Reorganization, as amended on March 11, 1997,
(collectively, the Agreement) with Zions Bancorporation(Zions). The Agreement
provides for the merger of the Company into Zions, whereby Zions will be the
surviving corporation. Upon consummation of the Agreement, each outstanding
share of the Company's common stock will be converted into a right to receive
a certain number of shares, determined by formula, of Zions' common stock.
The purchase price is $73,000,000 plus certain accretions and less certain
fees payable. The Agreement is subject to certain contingencies, including
shareholder approval. The shareholders will vote upon the Agreement on Mary
16, 1997. All regulatory approvals have been obtained.
The Company granted an option to Zions to purchase up to 19.9% of the
Company's common stock as an inducement of Zions to enter into the Agreement.
Under this option, Zions has the right to purchase up to 739,825 shares of the
Company's Common Stock for $18.875 per share. Zions may exercise the option
only upon the occurrence of a triggering event which has been defined to
include actions by the Company's board of directors that authorize or support
the execution of a merger agreement or offer with another party or recommend
the Company's shareholders not approve the Agreement, a willful material
breach by the Company, or certain actions by a third party relative to their
acquisition of the Company.
On April 7, 1997, Centennial's Board of Directors agreed to voluntarily enter
into a Supervisory Agreement with the OTS. The Supervisory Agreement requires
Centennial to take all necessary and appropriate actions to achieve compliance
with various banking laws, regulations and safe and sound business practices,
and submit to the OTS a management plan relative to the executive management
of Centennial. The Supervisory Agreement further requires that Centennial take
certain corrective actions relative to transactions with affiliates, make
certain amendments to its bylaws, correct its December 31, 1996 Thrift
Financial Report and correct internal control weaknesses. This action will not
result in an increase in Centennial's deposit insurance premiums. Management
and the Board of Directors of Centennial are taking the necessary and
appropriate actions and corrective measures to comply with the Supervisory
Agreement.
7
The following table provides a summary of the major elements of income and
expense for the first quarter of 1997 compared with the first quarter of 1996
(unaudited, in thousands, except per share data).
Three Months Percentage
Ended Change
March 31, Increase
1997 1996 Change (Decrease)
------ ------ ------ ----------
Interest Income $9,023 $7,321 $1,702 23.2%
Interest Expense 4,158 3,382 776 22.9%
------ ------ ------ ------
Net Interest Income 4,865 3,939 926 23.5%
Provision for Loan Losses 19 9 10 111.1%
------ ------ ------ ------
Net Interest Income after
Provision for Loan Losses 4,846 3,930 916 23.3%
------ ------ ------ ------
Non-interest Income 737 725 12 1.7%
Non-interest Expense 3,457 2,680 777 29.0%
------ ------ ------ ------
Income from Operations 2,126 1,975 151 7.6%
Provision for Income Tax 739 705 34 4.8%
------ ------ ------ ------
Net Income $1,387 $1,270 $117 9.2%
====== ====== ====== ======
Net Income Available to Common Stock $1,387 $1,162 ($83) 19.4%
====== ====== ====== ======
Earnings per Common Share $0.36 $0.37 ($0.01) (2.7%)
Earnings per Share-Fully Diluted $0.36 $0.34 $ 0.02 5.9%
Net Interest Income
The major portion of the Company's income results from net interest income,
which is the excess of interest generated by interest-earning assets,
including loan fees, over the interest paid for the funds required to support
these assets. Net interest income expressed as a percentage of average total
earning assets is referred to as the net interest margin.
Net interest income is influenced primarily by changes in a) the volume and
mix of earning assets and sources of funding, b) market rates of interest, and
c) income tax rates. The effect of some of these factors can be influenced by
management policies and actions. External factors, such as customer loan
demand, Federal Reserve Board monetary policy and changes in tax laws, can
have a significant effect on net interest income from one period to another.
For the three months ended March 31, 1997, net interest income rose by
$926,000 or 23.5% over 1996. The increase was accounted for by a 25.1% rise in
average earning assets for the first three months of 1997 over 1996. For the
quarter ended March 31, 1997, average loans increased 18.2% or $49.0 million.
Average investment securities increased 95.0% or $39.5 million for the quarter
ended March 31, 1997 as excess funds were invested to obtain a higher yield
over the Federal Funds rate. The increase in average earning assets is
primarily attributable to the acquisition of Val Cor.
For the three months ended March 31, 1997, the net interest margin decreased 3
basis points, from 4.69% as of March 31, 1996 to 4.63% as of March 31, 1997.
Average interest bearing deposits increased $77.2 million or 28.1%, primarily
due to the acquisition of Val Cor. The net interest spread, which is the
difference between the rate earned on earning assets less the rate paid on
interest-bearing liabilities, decreased from 4.07% for the three months ended
March 31, 1996 to 4.04% for the three months ended March 31, 1997.
The table on page 9 presents average balances, interest income and interest
expense, as well as average rates earned and paid on the Company's major asset
and liability items for the three months ended March 31,1997 and 1996.
8
Three Months Ended
March 31, 1997 March 31, 1996
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate(1) Balance Expense Rate(1)
ASSETS -------- ------- ------- -------- -------- -------
Interest-Earning Assets:
Interest-Bearing Deposits
in Financial Institutions $630 $8 5.08% $1,141 $15 5.26%
U.S. Treasury and Agency
Securities 41,939 670 6.39% 15,009 179 4.77%
Tax Exempt Securities 5,227 52 3.98% 2,642 39 5.90%
Other Securities 33,877 525 6.20% 23,905 360 6.02%
Federal Funds Sold 21,058 268 5.09% 24,638 307 4.98%
Loans (2) 317,761 7,500 9.44% 268,785 6,421 9.56%
-------- ------ -------- ------
Total Earning Assets $420,492 $9,023 8.58% $336,120 $7,321 8.71%
-------- ------ -------- ------
Cash and Due from Banks 11,297 9,616
Premises and Equipment 9,436 7,723
Accrued Interest Receivable 3,127 2,111
Allowance for Loan Losses (3,235) (2,201)
Net Unrealized Gain (Loss)on
Securities Available for Sale (1,177) (1,023)
Other Assets 7,291 4,506
--------- --------
Total Assets $447,231 $356,852
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Demand Deposits $154,178 $1,294 3.36% $112,628 $879 3.12%
Savings Deposits 26,599 193 2.90% 18,681 138 2.95%
Time Deposits Over $100,000 55,064 792 5.75% 51,472 756 5.88%
Other Time Deposits 115,801 1,628 5.62% 91,627 1,363 5.95%
Other Borrowings 14,467 251 6.94% 17,286 246 5.69%
-------- ------ -------- ------
Total Interest-Bearing
Liabilities $366,109 $4,158 4.54% $291,694 $3,382 4.64%
-------- ------ -------- ------
Noninterest-Bearing Deposits 46,079 32,938
Other Liabilities 3,457 4,074
Shareholders' Equity 31,586 28,146
Total Liabilities and -------- --------
Shareholder's Equity $447,231 $356,852
======== ========
Net Interest Income $4,865 $3,939
======= =======
Net Interest Spread 4.04% 4.07%
Net Interest Margin 4.63% 4.69%
(1)Annualized
(2)Includes Loans Held for Sale
9
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF VOLUME AND RATE CHANGES ON NET INTEREST INCOME AND EXPENSE
(unaudited)
(in thousands)
For the Three Months Ended
March 31, 1997 over
March 31, 1996
Yield/
Volume(1) Rate(2) Total
---------- ------- ------
Increase (Decrease) in Interest Income:
Interest-Bearing Deposits
in Financial Institutions ($6) ($1) ($7)
U.S. Treasury and
Agency Securities 430 61 491
Tax Exempt Securities 26 (13) 13
Other Securities 155 10 165
Federal Funds Sold (46) 7 (39)
Loans (3) 1,156 (77) 1,079
------ ------ ------
Total Earning Assets $1,714 ($12) $1,702
====== ====== ======
Increase (Decrease) in Interest Expense:
Demand Deposits $349 $66 $415
Savings Deposits 57 (2) 55
Time Deposits Over $100,000 52 (16) 36
Other Time Deposits 340 (75) 265
Federal Funds Purchased and 0 0
Other Borrowed Money (49) 54 5
------ ----- ------
Total Interest-Bearing Liabilities $749 $27 $776
====== ===== ======
Increase (Decrease)in Net Interest Income $966 ($40) $926
====== ===== ======
(1) Represents the difference between the average balances of the two
periods applied to the current year average rate, adjusted from an
annualized rate to three month activity.
(2) Represents the difference between the average rates of the two periods
applied to the prior year average balance, adjusted from an annualized
rate to three month activity.
(3) Loans held for sale are included.
10
Non-interest Income
-------------------
Overall, non-interest income increased 1.7%, or $12,000, for the first three
months of 1997 versus the same period in 1996. Gains on sales of loans
decreased $222,000 or 70.5% in the first three months of 1997 compared to the
first three months of 1996. Other fees and charges increased 41.9% or
$91,000 for the three months ended March 31, 1997 over March 31, 1996.
Service charges increased $101,000 or 53.7% for the three months ended March
31, 1997 over March 31, 1996. The increase in service charges and other fees
and charges is primarily due to the acquisition of Val Cor.
Non-interest expense
--------------------
Non-interest expenses increased $777,000 or 29.0% from the three months ended
March 31, 1996 to the similar period in 1997. The addition of Val Cor
accounted for $731,000 of this increase. Other expenses include items such as
data processing, insurance, and legal fees. Salaries and benefits increased
$428,000 or 32.3% in the first three months of 1997 versus the same period in
1996. Staff increased from 165 to 214 employees from March 31, 1996 to March
31, 1997, primarily due to the acquisition of Val Cor. At March 31, 1997,
Pitkin had 60 employees, Centennial had 99 employees and Valley had 55
employees.
Provision for Income Taxes
--------------------------
The effective tax rate for the three months ended March 31, 1997 is 34.8%
compared to 35.7% for the three months ended March 31, 1996. These rates are
less than the statutory tax rate of 39.5%, primarily due to earnings on
investments which are tax-exempt for state purposes.
Allowance for Loan Loss
-----------------------
The Company maintains its allowance for loan losses at a level considered by
management to be adequate to cover the risk of loss in the loan portfolio at a
particular point in time. In determining whether an additional amount should
be added to the reserve in excess of the amount of loan losses, management
takes into consideration a number of factors, including loss experience in
relation to outstanding loans and the existing level of the reserve for
losses, a continuing review of problem loans and overall portfolio quality,
regular examinations of the loan portfolio conducted by the Company's staff
and by State and Federal supervisory authorities and economic conditions.
During the period from March 31, 1996 to March 31, 1997, loans increased
16.7%, or $45.0 million. The increase is attributable to continued strong
loan demand and approximately $42 million to the acquisition of Val Cor. The
loan loss reserve increased 47.5% or $1.047 million from $2.204 million at
March 31, 1996 to $3.251 million at March 31, 1997, primarily attributable to
the acquisition of Val Cor. Management of the Company established this level
of reserve after extensive analysis and continuing reviews.
Beginning with fiscal 1995, the Company adopted Financial Accounting Standards
No. 114, "Accounting by Creditors for Impairment of a Loan" (SFAS No. 114),
and Financial Accounting Standards No. 118, "Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures" (SFAS No. 118).
A loan is impaired when, based on current information and events, it is
probable that the Company will be unable to collect all amounts due according
to the contractual terms of the loan agreement. Loans are not classified as
impaired because of minimal payment delays or insignificant shortfalls in
amounts if management expects to collect all amounts due including interest.
Management determines loan impairments on a loan by loan basis for the entire
portfolio.
Accrual of interest can be discontinued on impaired loans and loans designated
as nonaccrual loans. Accrual of interest on loans is generally discontinued
either when reasonable doubt exists as to the full, timely collection of
interest or principal, or when a loan becomes contractually past due 90 days
or more with respect to interest or principal. When a loan is placed on
impaired or nonaccrual status, all interest previously accrued but not
collected is charged against income. Income on such loans is then recognized
only to the extent that cash is received and where the future collection of
principal is probable. Interest accruals are resumed on such loans only when
they are brought fully current with respect to such interest and principal and
when, in the judgment of management, the loans are estimated to be fully
collectible as to both principal and interest.
For impaired loans based on SFAS No. 114, the entire change in present value
of expected cash flows is reported as bad debt expense in the same manner in
which impairment initially was recognized or as a reduction in the amount of
bad debt expense that otherwise would be reported. The Company had no loans
considered impaired at March 31, 1997.
11
The following table presents an analysis of the Loan Loss Reserve and
Nonperforming Assets.
LOAN LOSS RESERVE ANALYSIS
(unaudited)
(in thousands)
March 31,
1997 1996
------ ------
Balance, Beginning of Period $3,217 $2,178
Provision Charged to Operations 19 27
Loans Charged Off (23) (17)
Recoveries of Loans Previously Charged Off 38 3
-------- --------
Balance, End of Period $3,251 $2,191
======== ========
Ending Loan Portfolio (1) $314,159 $265,898
======== ========
Allowance For Loan Losses as a Percentage
of Ending Loan Portfolio 1.03% 0.82%
===== =====
NONPERFORMING ASSETS
(unaudited)
(in thousands)
March 31,
1997 1996
------ ------
Non-accrual Loans $827 $10
Loans 90 days Past Due and Still Accruing 911 337
Interest
------- -------
Total Nonperforming Loans $1,738 $347
------- -------
Other Real Estate Owned 105 0
------- -------
Total Nonperforming Loans and Assets $1,843 $347
======= =======
Nonperforming Loans to Total Ending Loans 0.55% 0.13%
======= =======
Nonperforming Assets to Total Ending Loans
and Other Assets Acquired 0.59% 0.13%
======= =======
(1) Includes Loans Held for Sale
Real Estate Owned
-----------------
Other Real Estate Owned consists of a condominium in Purgatory, Colorado owned
by Centennial.
Other Banks Owned
-----------------
The Company had no other banks owned at March 31, 1997.
At March 31, 1997, Pitkin owned 70.8% of the total capital stock of Thatcher
Financial Group, Inc. ("TFG"). Pitkin acquired the stock at sale of the
collateral on a loan made by Pitkin. TFG's primary asset was 100% of the
common stock of Thatcher Bank, F.S.B. Pitkin also had a loan collateralized
by the stock of Thatcher Bank and an art collection. During 1993, Pitkin sold
the stock of Thatcher Bank and the art collection. Proceeds from the sales
were used to satisfy outstanding loan principal, interest and expenses related
to the loans made by Pitkin. Directors of TFG, who are parties related to
Pitkin, are in the process of determining outstanding liabilities, including
possible federal and state income taxes payable. The determination of some of
these liabilities is dependent upon the final outcome of pending litigation.
After determination and payment of outstanding liabilities of TFG, TFG
directors plan to distribute the remaining funds, if any, to the shareholders
of TFG. There is no determination as to when this can be accomplished.
Pitkin has not recorded any receivable with respect to its ownership of TFG
stock. At March 31, 1997, TFG had assets, primarily cash and investments, of
approximately $1 million (unaudited).
12
PART II
-------
OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
-----------------
See discussion on page 9, Item 3 in the Company's Annual Report on Form
10-K for the year ended December 31, 1996, which is incorporated herein by
this reference.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits
Exhibit
Number Description of Exhibit
-------- --------------------------------------------------------
3.1 Articles of Incorporation of Aspen Bancshares, Inc. (1)
3.2 Bylaws of Aspen Bancshares, Inc. (1)
10.1 Pitkin County Bank and Trust Co. Building Lease (1)
10.2 Form of Loan Participation Agreement (1)
10.3 Incentive Stock Option Plan (1)
10.4 Non-qualified Stock Option Plan (2)
10.5 Third Amended Acquisition Agreement and Plan of Merger
between Aspen Bancshares, Inc. and Val Cor
Bancorporation, Inc. dated January 12, 1996 (3)
10.6 Loan Agreement between Aspen Bancshares, Inc. and The
Laredo National Bank dated June 18, 1996 (4)
10.7 Agreement and Plan of Reorganization dated as of
November 19, 1996 between Zions Bancorporation and
Aspen Bancshares, Inc. (5)
10.8 First Amendment to Agreement and Plan of Reorganization
dated March 11, 1997 between Zions Bancorporation and
Aspen Bancshares, Inc. (6)
10.9 Supervisory Agreement between Centennial Savings Bank
and the Office of Thrift Supervision
11.0 Statement Regarding Computation of Per Share Earnings:
Weighted Average
Shares
Outstanding:
(in thousands)
(unaudited)
Three Months
Ended
March 31,
1997 1996
------ ------
Common Stock 3,721 2,981
Incentive Stock Options 93 75
Warrants - 53
Nonqualified Stock Options 48 28
------ ------
Primary Shares Outstanding 3,862 3,137
Convertible Preferred and Warrants - 643
------ ------
Fully Diluted Shares Outstanding 3,862 3,780
====== ======
Net Income
------------
Net Income $1,387 $1,270
Less: Preferred Dividends Paid - 108
------ ------
Net Income Available to Common Stock $1,387 $1,162
====== ======
27.0 Financial Data Schedule
13
(1) Incorporated by reference from the Company's Form S-1 Registration
Statement, File No. 33-37098
(2) Incorporated by reference from the Company's Form S-8 Registration
Statement, File No. 33-93908
(3) Incorporated by reference from the Company's Form S-3 Registration
Statements, File No. 33-97700
(4) Incorporated by reference from the Company's Form 10-Q for the period
ended June 30, 1996, File No. 0-19376
(5) Incorporated by reference from the Schedule 13D filed by Zions
Bancorporation on November 19, 1996
(6) Incorporated by reference from Amendment No. 2 to the Schedule 13D filed
by Zions Bancorporation in March, 1997
b. Reports on Form 8-K
A report on Form 8-K was filed March 7, 1997, containing the
Company's audited financial statements for the year ended December
31, 1996.
14
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.
ASPEN BANCSHARES, INC.
Date:April 14, 1997 By: /s/ Charles B. Israel
Charles B. Israel, President and CEO
Date:April 14, 1997 By: /s/ Amy G. Beidleman
Amy G. Beidleman, Vice President, CFO and
Secretary
15