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 September 30, 1996
or
( ) Transition Report Pursuant to Section 13 of 15(d) of
the Securities Exchange Act of 1934
For the transition period from ----- to -----
____________________
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 issuer's 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 November
11, 1996.
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
--------------------------------------------------
CONTENTS
Part I. Financial Information
Item 1. Financial Statements Page
a. Condensed Consolidated Balance Sheets 1
b. Condensed Consolidated Statements of Income 2
c. Condensed Consolidated Statements of Cash Flow 3
d. Notes to Condensed Consolidated Financial
Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Part II. Other Information
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 11
Signature Page 12
Page 1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
--------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)
September 30, December 31,
1996 1995
---- ----
ASSETS
Cash and due from banks $31,543 $42,979
Securities
Available for sale $12,848 $17,337
Held to maturity (Fair value of $206,557 and $187,269 at 207,820 185,374
September 30,1996 and December 31,1995)
--------- ---------
Total Securities $220,668 $202,711
--------- ---------
Federal funds sold $63,550 $41,537
Loans:
Commercial $80,008 $79,967
Agricultural 8,649 8,815
Real estate 229,403 210,631
Consumer 139,695 133,346
Other 3,743 998
--------- ---------
$461,498 $433,757
Less Unearned Discount (877) (1,909)
--------- ---------
$460,621 $431,848
Less Allowance for loan losses (4,434) (3,931)
--------- ---------
Loans, net $456,187 $427,917
--------- ---------
Premises and equipment, net $17,758 $15,579
Other real estate owned 500 -
Intangibles,net 10,778 11,580
Accrued interest and other assets 8,802 7,687
--------- ---------
TOTAL ASSETS $809,786 $749,990
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand, non-interest bearing $113,115 $114,035
NOW accounts 80,744 58,027
Money Market accounts 36,462 41,646
Savings 159,487 152,128
Time deposits of $100,000 and over 58,844 34,781
Other time deposits 227,471 204,520
--------- ---------
Total Deposits $676,123 $605,137
--------- ---------
Short-term borrowings 51,015 64,771
Long-term debt 7,076 7,701
Accrued interest and other liabilities 6,004 5,956
--------- ---------
Total Liabilities $740,218 $683,565
--------- ---------
STOCKHOLDERS' EQUITY
Preferred stock, no par value, authorized 1,000,000 shares;
none issued $ - $ -
Common stock, par value $10; authorized 2,750,000 shares;
issued 1,215,902 shares 12,159 12,159
Additional paid in capital 8,846 8,846
Retained earnings 48,607 45,519
Unrealized gain (loss) on securities available for sale, net (44) (99)
--------- ---------
Total Stockholders' Equity $69,568 $66,425
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $809,786 $749,990
--------- ---------
--------- ---------
See Notes to Condensed Consolidated Financial Statements.
Page 2
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
---------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands, Except Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
INTEREST INCOME:
Interest and Fees on Loans $9,931 $9,647 $28,821 $28,436
Interest on Securities:
Taxable $2,924 $2,386 $8,071 $6,957
Tax-exempt 501 609 1,516 1,770
---------------------------------------------------
Total Interest on Securities 3,425 2,995 9,587 8,727
---------------------------------------------------
Interest on Federal Funds Sold 530 820 1,665 1,989
Interest on Deposits in other Financial Institutions - - - 3
---------------------------------------------------
Total Interest Income $13,886 $13,462 $40,073 $39,155
---------------------------------------------------
INTEREST EXPENSE:
Interest on Deposits $5,330 $4,794 $15,171 $13,271
Interest on Borrowings 777 1,278 2,383 3,714
---------------------------------------------------
Total Interest Expense $6,107 $6,072 $17,554 $16,985
---------------------------------------------------
Net Interest Income $7,779 $7,390 $22,519 $22,170
Provision for Loan Losses 209 279 816 837
---------------------------------------------------
Net Interest Income After
Provision for Loan Loss $7,570 $7,111 $21,703 $21,333
---------------------------------------------------
OTHER INCOME:
Trust Department Fees $218 $181 $780 $610
Service Fees 988 983 2,793 2,509
Net Securities Gains 2 179 152 187
Other 131 87 334 492
---------------------------------------------------
Total Other Income $1,339 $1,430 $4,059 $3,798
---------------------------------------------------
OTHER EXPENSES:
Salaries and Employee Benefits $3,048 $2,465 $8,309 $7,283
Occupancy Expense 800 507 2,194 1,871
Data Processing Expense 276 250 754 664
Other Expenses 1,448 1,649 4,484 4,867
---------------------------------------------------
Total Other Expenses $5,572 $4,871 $15,741 $14,685
---------------------------------------------------
Income Before Income Taxes $3,337 $3,670 $10,021 $10,446
Applicable Income Taxes 1,073 1,188 3,286 3,336
---------------------------------------------------
NET INCOME $2,264 $2,482 $6,735 $7,110
---------------------------------------------------
---------------------------------------------------
Earnings per Common Share $1.86 $2.04 $5.54 $5.85
---------------------------------------------------
---------------------------------------------------
Weighted average number of shares outstanding 1,215,902 1,215,902 1,215,902 1,215,902
---------------------------------------------------
---------------------------------------------------
See Notes to Condensed Consolidated Financial Statements.
Page 3
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
--------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
Nine Months Ended
September 30,
1996 1995
---- ----
CASH FLOWS FROM OPERATIONS ACTIVITIES
Net Income $6,735 $7,110
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 971 855
Provision for loan losses 816 837
Provision for deferred income taxes (148) 120
Amortization of bond premiums, net of (accretion) 122 147
Net securities (gains) losses (152) (187)
Net (gains) losses on sale of other real estate (8) 0
Amortization of intangibles 802 784
(Increase) decrease in accrued interest and other assets (1,115) 1,767
Increase (decrease) in accrued interest and other liabilities 174 (1,151)
------------------------
Net Cash Provided By Operating Activities $8,197 $10,282
------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest bearing deposits in other financial institutions, net $0 $4,198
Proceeds from maturities of securities 68,937 38,886
Proceeds from sale of securities 1,656 1,496
Purchase of securities (88,442) (53,744)
Proceeds from sale of other real estate 50 0
Federal funds sold, net (22,013) (53,018)
Loans made to customers, net of principal collections (29,628) (11,728)
Purchase of premises and equipment (3,150) (1,683)
------------------------
Net Cash Provided By (Used In) Investing Activities ($72,590) ($75,593)
------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in time deposits $47,014 $36,864
Net increase (decrease) in all other deposit accounts 23,972 8,113
Net increase (decrease) in securities sold under agreements
to repurchase (14,938) 25,843
Other short-term borrowings, net 1,182 (3,435)
Principal paid on long-term debt (625) (500)
Dividends paid (3,648) (3,342)
------------------------
Net Cash Provided By (Used In) Financing Activities $52,957 $63,543
------------------------
Net Increase (Decrease) In Cash And Due From Banks ($11,436) ($1,768)
CASH AND DUE FROM BANKS
Beginning 42,979 42,832
------------------------
Ending $31,543 $41,064
------------------------
------------------------
SUPPLEMENTAL DISCLOSURES
Cash payments for:
Interest paid to depositors $14,933 $13,034
Interest paid on borrowings 2,405 3,263
Income taxes 3,201 2,972
Noncash activities:
Other real estate acquired in settlement of loans $542 $678
Transfer of securities held to maturity to securities
available for sale 0 0
Change in unrealized gain (loss) on securities
available for sale 78 0
Related deferred income taxes (23) 0
See Notes to Condensed Consolidated Financial Statements.
Page 4
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
--------------------------------------------------
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 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 month
and nine month periods ending September 30,1996, 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 September 30, 1996
condensed consolidated financial statements.
Page 5
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
--------------------------------------------------
ITEM 2. 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.
("Company") as of September 30, 1996, as compared to the position of
the Company at December 31, 1995, as well as the results of
operations for the three months and nine months ended September 30,
1996 and 1995. This discussion is intended to be read in
conjunction with the financial statements and notes.
HIGHLIGHTS
The Company's net income for the nine months ended September
30, 1996 was $6,735,000 as compared to $7,110,000 for the same
period in 1995. Earnings per share for the nine months ended
September 30, 1996 was $5.54 versus $5.85 for the same period in
1995.
As of September 30, 1996, Total Assets were $809,786,000 versus
$749,990,000 on December 31, 1995.
Total Stockholders' Equity at September 30, 1996 was 8.59% of
assets as compared to 8.86% at December 31, 1995.
BALANCE SHEET
Total assets increased by $59,796,000, or 8.0%, from the totals
reported at December 31, 1995. An increase of $70,986,000 in Total
Deposits and a decrease of $13,756,000 in Short-Term Borrowings were
offset primarily by an increase in Fed Funds Sold of $22,013,000,
a Securities increase of $17,957,000 and a net Loans increase of
$28,270,000.
Net Loans were $456,187,000 at September 30, 1996, which
represented 56.3% of total assets and 67.5% 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 $220,668,000 as compared to
$202,711,000 on December 31, 1995, which represents an increase of
8.9%. The securities portfolio was 83.3% invested in U.S. Government
obligations and 16.6% in obligations of State and Political
Subdivisions and .1% in Other Securities at September 30, 1996.
Page 6
The Allowance for Loan Losses increased $503,000 for the nine
month period ended September 30, 1996 to $4,434,000, which
represented 1.0% 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 in the loan portfolio.
The deposit mix at September 30, 1996, consisted of $113,115,000
of non-interest bearing deposits (16.7% of total deposits) and
$563,008,000 of interest bearing deposits ( 83.3% 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).
The Tier 1 Risk Based Capital Ratio at September 30, 1996 was
12.0% compared to 12.1% at December 31, 1995. Banking regulations
require bank holding companies to maintain a Tier 1 Risk Based
Capital Ratio of at least 6.0% to be considered "well capitalized".
INCOME STATEMENT
Net interest income for the first nine months was 1.6% higher
than in the same period in 1995. This increase was due to a
stable yield environment, while the volumes of both Securities and
Loans increased in 1996 as compared to the first nine months of
1995. For the three months ended September 30, 1996, net interest
income increased 5.3% over the same period in 1995.
Other income for the first nine months increased $261,000 or
6.9% over the same period in 1995. This is due primarily to
increased service charges on deposit accounts of $281,000 . For the
three month period ending September 30, 1996, other income was
$91,000 or 6.4% lower than the same period in 1995.
For the nine months ending September 30, 1996, Other Expenses
were $1,056,000 or 7.2% 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, depreciaton, and
data processing expenses. The three month period ending September 30,
1996 reflected an increase of $701,000 or 14.4% over the same
period in 1995.
Page 7
RECENT REGULATORY DEVELOPMENTS
On September 30, 1996, President Clinton signed into law the "Economic
Growth and Regulatory Paperwork Reduction Act of 1996" (the "Regulatory
Reduction Act"). Subtitle G of the Regulatory Reduction Act consists of the
"Deposit Insurance Funds Act of 1996" (the "DIFA"). The DIFA provides for a
one-time special assessment on each depository institution holding deposits
subject to assessment by the FDIC for the Savings Association Insurance Fund
(the "SAIF") in an amount which, in the aggregate, will increase the designated
reserve ratio of the SAIF (I.E., the ratio of the insurance reserves of the SAIF
to total SAIF-insured deposits) to 1.25% on October 1, 1996. Subject to certain
exceptions, the special assessment is payable in full on November 27, 1996. None
of the Company's bank subsidiaries holds any SAIF-assessable deposits and,
therefore, none of the Company's bank subsidiaries is subject to the special
assessment.
Prior to the enactment of the DIFA, a substantial amount of the SAIF
assessment revenue was used to pay the interest due on bonds issued by the FICO,
the entity created in 1987 to finance the recapitalization of the Federal
Savings and Loan Insurance Corporation, the SAIF's predecessor insurance fund.
Pursuant to the DIFA, the interest due on outstanding FICO bonds will be covered
by assessments against both SAIF and BIF member institutions beginning January
1, 1997. Between January 1, 1997 and December 31, 1999, FICO assessments
against BIF-member institutions, such as the Company's bank subsidiaries, cannot
exceed 20% of the FICO assessments charged SAIF-member institutions. From
January 1, 2000 until the FICO bonds mature in 2019, FICO assessments will be
shared by all FDIC-insured institutions on a PRO RATA basis. The FDIC estimates
that the FICO assessments for the period January 1, 1997 through December 31,
1999 will be approximately 0.013% of deposits for BIF members versus
approximately 0.064% of deposits for SAIF members, and will be less than 0.025%
of deposits thereafter.
The DIFA also provides for a merger of the BIF and the SAIF on January 1,
1999, provided there are no state or federally chartered, FDIC-insured savings
associations existing on that date. To facilitate the merger of the BIF and the
SAIF, the DIFA directs the Treasury Department to conduct a study on the
development of a common charter and to submit a report, along with appropriate
legislative recommendations, to the Congress by March 31, 1997.
In addition to the DIFA, the Regulatory Reduction Act includes a number of
statutory changes designed to eliminate duplicative, redundant or unnecessary
regulatory requirements. Among other things, the Regulatory Reduction Act
establishes streamlined notice procedures for the commencement of new nonbanking
activities by bank holding companies, eliminates the need for national banks to
obtain OCC approval to establish an off-site ATM, excludes ATM closures and
certain branch office relocations from the prior notice requirements applicable
to branch closings, significantly expands the authority of well-capitalized and
well-managed national banks to invest in office premises without prior
regulatory approval, establishes time frames within which the FDIC must act on
applications by state banks to engage in activities which, although permitted
for the state bank under applicable state law, are not permissible activities
for national banks, and excludes ATM closures and certain branch office
relocations from the prior notice requirements applicable to branch closings.
The Regulatory Reduction Act also clarifies the liability of a financial
institution, when acting as a lender or in a fiduciary capacity, under the
federal environmental clean-up laws. Although the full impact of the Regulatory
Reduction Act on the operations of the Company and its bank subsidiaries cannot
be determined at this time, management believes that the legislation will reduce
compliance costs to some extent and allow the Company and its bank subsidiaries
somewhat greater operating flexibility.
Page 8
PART II
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company
or its subsidiaries are a party other than ordinary routine litigation
incidental to their respective businesses.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
On November 14, 1996, the Board of Directors of First National
Bancorp, Inc. (the "Company") declared a dividend of one preferred
share purchase right (a "Right") for each outstanding share of common
stock, par value $10.00 per share, of the Company (the "Common
Stock"). The dividend of the Rights is payable on November 18, 1996,
to the shareholders of record as of November 12, 1996 (the "Record
Date"). Each Right entitles the registered holder thereof, under
certain limited circumstances, to purchase from the Company one
one-thousandth of a share of Series A Junior Participating Preferred
Stock, no par value, of the Company (the "Preferred Stock") at a price
of $300.00 per one one-thousandth of a share of Preferred Stock (the
"Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement dated as of November
14, 1996, as the same may be amended from time to time (the "Rights
Agreement"), between the Company and Harris Trust and Savings Bank, as
Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated
persons (with certain exceptions, an "Acquiring Person") has acquired
beneficial ownership of 10% or more of the outstanding shares of
Common Stock or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as
any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer the consummation of which would
result in the beneficial ownership by a person or group of 10% or more
of the outstanding shares of Common Stock (the earlier of such dates
being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of
the Record Date, by such Common Stock certificate together with a copy
of the
Page 9
Summary of Rights to Purchase Series A Junior Participating Preferred
Stock (the "Summary of Rights").
The Rights Agreement provides that, until the Distribution Date
(or earlier expiration of the Rights), the Rights will be transferred
with and only with the Common Stock. Until the Distribution Date (or
earlier expiration of the Rights), new Common Stock certificates
issued after the Record Date upon transfer or new issuances of Common
Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier expiration of the
Rights), the surrender for transfer of any certificates for shares of
Common Stock outstanding as of the Record Date, even without such
notation or a copy of the Summary of Rights, will also constitute the
transfer of the Rights associated with the shares of Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and such separate
Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on November 14, 2006 (the "Final Expiration Date"),
unless the Final Expiration Date is advanced or extended or unless the
Rights are earlier redeemed or exchanged by the Company, in each case
as described below.
The Purchase Price payable and the number of shares of Preferred
Stock or other securities or property issuable, if the Rights become
exercisable and they are properly exercised, is subject to adjustment
from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock
of certain rights or warrants to subscribe for or purchase Preferred
Stock at a price, or securities convertible into Preferred Stock with
a conversion price, less than the then-current market price of the
Preferred Stock or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding
regular periodic cash dividends or dividends payable in Preferred
Stock) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights is subject to adjustment in the
event of a stock dividend on the Common Stock payable in shares of
Common Stock or subdivisions, consolidations or combinations of the
Common Stock occurring, in any such case, prior to the Distribution
Date.
Shares of Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. Each one one-thousandth of a share of
Preferred Stock will be entitled, when, as and if declared, to a
minimum preferential quarterly dividend payment of $0.75 per one
one-thousandth of a share but will be entitled to an aggregate
dividend equal to the dividend declared per share of Common Stock.
In the event of liquidation, dissolution or winding up of the
Company, the holders of the Preferred Stock will be entitled to a
minimum preferential payment of $300.00 per one one-thousandth of a
share (plus any accrued but unpaid dividends) but will be entitled
to an aggregate payment equal to the payment made per share
Page 10
of Common Stock. Each one one-thousandth of a share of Preferred
Stock will have one vote, voting together with the Common Stock.
Finally, in the event of any merger, consolidation or other
transaction in which outstanding shares of Common Stock are converted
or exchanged, each share of Preferred Stock will be entitled to
receive an amount equal to the amount received per share of Common
Stock. These rights are protected by customary antidilution
provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-thousandth
interest in a share of Preferred Stock purchasable upon exercise of
each Right (if and when it becomes exercisable and is properly
exercised) should approximate the value of one share of Common Stock.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other
than Rights beneficially owned by the Acquiring Person (which will
thereupon become void), will thereafter have the right to receive upon
exercise of a Right that number of shares of Common Stock having a
market value of two times the exercise price of the Right.
In the event that, after a person or group has become an
Acquiring Person, the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated
assets or earning power are sold, proper provisions will be made so
that each holder of a Right (other than Rights beneficially owned by
an Acquiring Person which will have become void) will thereafter have
the right to receive upon the exercise of a Right that number of
shares of common stock of the person with whom the Company has engaged
in the foregoing transaction (or its parent) that at the time of such
transaction have a market value of two times the exercise price of the
Right.
At any time after any person or group becomes an Acquiring Person
and prior to the earlier of one of the events described in the
previous paragraph or the acquisition by such Acquiring Person of 50%
or more of the outstanding shares of Common Stock, the Board of
Directors of the Company may exchange the Rights (other than Rights
owned by such Acquiring Person which will have become void), in whole
or in part, for shares of Common Stock or Preferred Stock (or a series
of the Company's preferred stock having equivalent rights, preferences
and privileges), at an exchange ratio of one share of Common Stock, or
a fractional share of Preferred Stock (or other preferred stock)
equivalent in value thereto, per Right.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at
least 1% in such Purchase Price. No fractional shares of Preferred
Stock or Common Stock will be issued (other than fractions of
Preferred Stock which are integral multiples of one one-thousandth of
a share of Preferred Stock, which may, at the election of the Company,
be evidenced by depositary receipts), and in lieu thereof an
adjustment in cash will be made based on the current market price of
the Preferred Stock or the Common Stock.
At any time prior to the time an Acquiring Person becomes such,
the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a
Page 11
price of $.01 per Right (the "Redemption Price"). The redemption of
the Rights may be made effective at such time, on such basis and with
such conditions as the Board of Directors in its sole discretion
may establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.
For so long as the Rights are then redeemable, the Company may,
except with respect to the redemption price, amend the Rights
Agreement in any manner. After the Rights are no longer redeemable,
the Company may, except with respect to the redemption price, amend
the Rights Agreement in any manner that does not adversely affect the
interests of holders of the Rights.
Until a Right becomes exercisable and is exercised or exchanged,
the holder thereof, as the holder of a right, will have no rights
as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The form of Rights Agreement between the Corporation and the
Rights Agent specifying the terms of the Rights, together the
Exhibit A thereto, the form of Certificate of Designations specifying
the terms of the Series A Junior Participating Preferred Stock;
Exhibit B thereto, the form of Right Certificate; and Exhibit C
thereto, the form of Summary of Rights to Purchase Series A Junior
Participating Preferred Stock, are attached hereto as exhibits and
incorporated herein by reference. The foregoing description of the
Rights is qualified by reference to those exhibits.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits.
4.1 Rights Agreement dated as of November 14, 1996, between First
National Bancorp, Inc. and Harris Trust and Savings Bank, as
Rights Agent. The Rights Agreement includes as Exhibit A, the
form of Certificate of Designations of Series A Junior
Participating Preferred Stock; as Exhibit B, the form of Right
Certificate; and as Exhibit C, the form of Summary of Rights to
Purchase Series A Junior Participating Preferred Stock.
27. Financial Data Schedule
Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
September 30, 1996. On October 7, 1996, a Form 8-K was filed
pursuant to Item 4. Changes in Registrant's Certifying
Accountant. On October 10, 1996, a Form 8-K (A) was filed
amending the Form 8-K filed on October 7, 1996.
Page 12
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 14, 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