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 June 30, 1997
or
( ) 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 0-15123
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: 2,431,804 shares of the
Company's Common Stock ($10.00 par value) were outstanding as of August 5,
1997.
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 Flows 3
d. Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Part II. Other Information
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature Page 15
Page 1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
June 30, December 31,
1997 1996
----------- ------------
(Unaudited)
ASSETS
Cash and due from banks $ 33,240 $ 35,785
Federal funds sold 13,159 73,241
Securities available-for-sale 12,294 11,404
Securities held-to-maturity (Fair value
of $234,991 and $203,500 at June 30, 1997
and December 31, 1996) 234,972 203,424
Loans:
Commercial 86,508 81,981
Agricultural 8,953 8,692
Real estate 252,340 234,604
Consumer 153,392 141,768
Other 3,869 2,394
-------- --------
Total loans 505,062 469,439
Unearned discount (317) (653)
Allowance for loan losses (4,412) (4,414)
-------- --------
Loans, net 500,333 464,372
Premises and equipment, net 18,610 17,880
Accrued interest and other assets 9,271 7,954
Intangibles, net 9,991 10,510
-------- --------
TOTAL ASSETS $831,870 $824,570
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand, non-interest bearing $119,351 $116,147
NOW accounts 83,842 74,749
Money Market accounts 35,429 37,130
Savings 166,730 160,653
Time deposits, $100,000 and over 64,799 63,189
Other time deposits 228,753 238,645
-------- --------
Total Deposits 698,904 690,513
-------- --------
Short-term borrowings 46,355 49,236
Long-term debt 6,576 6,951
Accrued interest and other liabilities 5,985 6,479
-------- --------
Total Liabilities 757,820 753,179
-------- --------
STOCKHOLDERS' EQUITY
Preferred stock - -
Common stock 24,318 24,318
Retained earnings 49,735 47,081
Unrealized loss on securities available
for sale, net (3) (8)
-------- --------
Total Stockholders' Equity 74,050 71,391
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $831,870 $824,570
-------- --------
-------- --------
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 per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
--------- --------- --------- ---------
INTEREST INCOME:
Loans $ 10,662 $ 9,506 $ 20,796 $ 18,890
Securities:
Taxable 3,434 2,658 6,434 5,147
Tax-exempt 484 507 968 1,015
Federal funds sold 111 479 749 1,135
--------- --------- --------- ---------
Total interest income 14,691 13,150 28,947 26,187
--------- --------- --------- ---------
INTEREST EXPENSE:
Deposits 5,787 4,896 11,508 9,841
Short-term borrowings 477 582 1,065 1,309
Long-term debt 196 145 332 297
--------- --------- --------- ---------
Total interest expense 6,460 5,623 12,905 11,447
--------- --------- --------- ---------
Net interest income 8,231 7,527 16,042 14,740
Provision for loan losses 228 300 430 607
--------- --------- --------- ---------
Net interest income after provision
for loan losses 8,003 7,227 15,612 14,133
--------- --------- --------- ---------
NONINTEREST INCOME:
Trust department income and farm
management income 235 236 534 562
Service fees 1,097 919 2,109 1,805
Securities gains, net - 23 1 150
Other income 111 102 213 203
--------- --------- --------- ---------
Total noninterest income 1,443 1,280 2,857 2,720
--------- --------- --------- ---------
NONINTEREST EXPENSES:
Salaries and employee benefits 3,018 2,558 6,021 5,261
Occupancy expense 752 711 1,488 1,394
Data processing expense 255 270 442 478
Other expenses 1,557 1,709 3,003 3,036
--------- --------- --------- ---------
Total noninterest expenses 5,582 5,248 10,954 10,169
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 3,864 3,259 7,515 6,684
Income tax expense 1,229 1,069 2,429 2,213
--------- --------- --------- ---------
NET INCOME $2,635 $2,190 $5,086 $4,471
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings per common share $1.08 $0.90 $2.09 $1.84
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average number of
shares outstanding 2,431,804 2,431,804 2,431,804 2,431,804
--------- --------- --------- ---------
--------- --------- --------- ---------
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)
Six Months Ended
June 30,
1997 1996
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 5,086 $ 4,471
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 715 635
Provision for loan losses 430 607
Amortization of securities premiums, net of accretion 31 88
Net securities gains (1) (150)
Net losses on sale of other real estate 6 -
Amortization of intangibles 519 535
Increase in accrued interest and other assets (1,330) (109)
Increase in accrued interest and other liabilities (498) (386)
-------- --------
Net cash provided by operating activities 4,958 5,691
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of securities 34,148 38,892
Proceeds from sale of securities - 1,656
Purchase of securities (66,607) (56,983)
Proceeds from sale of other real estate 7 -
Change in federal funds sold, net 60,082 9,117
Loans made to customers, net of principal collections (36,391) (8,256)
Purchase of premises and equipment (1,445) (2,728)
-------- --------
Net cash used in investing activities (10,206) (18,302)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 8,391 30,670
Net decrease in short-term borrowings (2,881) (17,992)
Principal paid on long-term debt (375) (375)
Dividends paid (2,432) (1,824)
-------- --------
Net cash provided by financing activities 2,703 10,479
-------- --------
Net decrease in cash and due from banks (2,545) (2,132)
CASH AND DUE FROM BANKS
Beginning 35,785 42,979
-------- --------
Ending $ 33,240 $ 40,847
-------- --------
-------- --------
SUPPLEMENTAL DISCLOSURES
Cash payments for:
Interest paid $ 13,658 $ 11,688
Income taxes 2,151 2,001
See Notes to Condensed Consolidated Financial Statements.
Page 4
FIRST NATIONAL BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
(Table amounts in thousands of dollars, except per share data)
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of
First National Bancorp, Inc. (the "Company") and its subsidiaries, First
National Bank of Joliet, Southwest Suburban Bank, Bank of Lockport and Plano
Bancshares, Inc. All material intercompany items and transactions have been
eliminated in consolidation.
The accompanying unaudited interim condensed consolidated financial
statements have been prepared pursuant to the rules and regulations for
reporting on Form 10-Q. Accordingly, certain disclosures required by
generally accepted accounting principles are not included herein. These
interim statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's 1996 Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
The December 31, 1996 balance sheet has been derived from the audited
financial statements included in the Company's 1996 Annual Report on Form
10-K filed with the Securities and Exchange Commission, but does not include
all disclosures required by generally accepted accounting principles.
Interim statements are subject to possible adjustment in connection with
the annual audit of the Company for the year ending December 31, 1997. In the
opinion of management of the Company, the accompanying unaudited interim
condensed consolidated financial statements reflect all adjustments
(consisting of normal recurring adjustments) necessary for a fair
presentation of the consolidated financial position and consolidated results
of operations for the periods presented.
The results of operations for the three months ended June 30, 1997 and
1996 and six months ended June 30, 1997 and 1996, are not necessarily
indicative of the results to be expected for the full year.
Earnings per share of common stock is based on weighted average number of
shares outstanding during the period. Earnings per share have been presented
to reflect the two-for-one stock split approved March 13, 1997.
Page 5
NOTE 2 - SECURITIES
The amortized cost and fair value of securities available-for-sale at
June 30, 1997 and December 31, 1996 are as follows:
Amortized Fair
Cost Value
--------- ------
June 30, 1997
-------------
U. S. Treasury $10,498 $10,497
U. S. government agencies 1,500 1,497
Other 300 300
------- -------
$12,298 $12,294
------- -------
------- -------
Amortized Fair
Cost Value
--------- ------
December 31, 1996
-----------------
U. S. Treasury $ 9,317 $ 9,308
U. S. government agencies 1,800 1,796
Other 300 300
------- -------
$11,417 $11,404
------- -------
------- -------
The amortized cost and fair value of securities held-to-maturity at
June 30, 1997 and December 31, 1996 are as follows:
Amortized Fair
Cost Value
--------- ------
June 30, 1997
-------------
U. S. Treasury $ 31,395 $ 31,356
U. S. government agencies 168,840 167,928
States and political subdivisions 34,737 35,707
-------- --------
$234,972 $234,991
-------- --------
-------- --------
Amortized Fair
Cost Value
--------- ------
December 31, 1996
-----------------
U. S. Treasury $ 40,194 $ 40,132
U. S. government agencies 127,472 126,637
States and political subdivisions 35,758 36,731
-------- --------
$203,424 $203,500
-------- --------
-------- --------
Securities with a carrying value of $159,000,000 and $133,000,000 at
June 30, 1997 and December 31, 1996, respectively, were pledged to secure
public deposits, securities sold under agreements to repurchase, and for
other purposes required or permitted by law.
Page 6
NOTE 3 - LOANS
The subsidiary banks make loans to both individuals and commercial
entities in a wide variety of industries. Loan terms vary as to interest
rate, repayment period, and collateral requirements based on the type of loan
requested and the credit worthiness of the prospective borrower. Credit risk
tends to be geographically concentrated in that the majority of the loan
customers are located in the markets served by the subsidiary banks.
The components of real estate loans at June 30, 1997 and December 31, 1996
were as follows:
June 30, December 31,
1997 1996
-------- ------------
Commercial $ 89,845 $ 76,354
Residential 142,500 138,443
Construction 19,995 19,807
-------- --------
$252,340 $234,604
-------- --------
-------- --------
Impaired loans amounted to $360,000 at June 30, 1997 and $580,000 at
December 31, 1996.
Changes in the allowance for loan losses were as follows:
1997 1996
------ ------
Balance, beginning of year $4,414 $3,931
Provision charged to operations 430 607
Loans charged-off (509) (270)
Recoveries 77 94
------ ------
Balance, June 30, 1997 and 1996 $4,412 $4,362
------ ------
------ ------
The Banks are parties to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of their
customers. These financial instruments include commitments to extend credit
and standby letters of credit, which to varying degrees, involve elements of
credit risk in excess of the amount recognized in the balance sheet.
The Banks' exposure to credit loss in the event of nonperformance by the
customer on commitments to extend credit and standby letters of credit is
represented by the contractual amount of those instruments. The Banks use the
same credit policies in making commitments and conditional obligations as for
on-balance-sheet instruments.
Page 7
A summary of the contract amounts of the Banks' exposure to
off-balance-sheet risk is as follows:
June 30, December 31,
1997 1996
-------- ------------
Loan commitments $63,148 $96,059
Standby letters of credit 18,384 19,417
NOTE 4 - STOCKHOLDERS' EQUITY
At the Company's March 13, 1997, annual shareholders' meeting,
shareholders approved an increase in the number of authorized shares from
2,750,000 to 5,500,000 and the Board declared a two-for-one stock split
effected in the form of a 100% stock dividend. Stockholders' equity has been
retroactively restated to account for the two-for-one stock split.
Common stock consisted of the following at June 30, 1997 and December 31,
1996:
1997 1996
--------- ---------
Par value per share $10 $10
Shares authorized 5,500,000 2,750,000
Shares issued and outstanding 2,431,804 1,215,902
Changes in stockholders' equity for the six months ended June 30, 1997 and
1996 are summarized as follows:
1997 1996
------- -------
Balance at beginning of period $71,391 $66,426
Net income for the period 5,086 4,471
Cash dividends declared (2,432) (1,824)
Net change in unrealized loss on securities
available-for-sale, net of deferred tax 5 38
------- -------
$74,050 $69,111
------- -------
------- -------
NOTE 5 - PENDING ACCOUNTING CHANGES
Financial Accounting Standard No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities," was issued
by the Financial Accounting Standards Board ("FASB") in 1996. It revises the
accounting for transfers of financial assets, such as loans and securities,
and for distinguishing between sales and secured borrowings. It is effective
for some transactions in 1997 and others in 1998. The effect on the financial
statements is not material.
On March 3, 1997, the FASB issued Statement No. 128, Earnings Per Share,
which is effective for financial statements beginning with year end 1997.
Basic earnings per share for 1997 and later will be calculated solely on
average common shares outstanding. Diluted earnings per share will reflect
the potential dilution of stock options and other common stock equivalents.
All prior calculations will be restated to be comparable to the new methods.
As the Company does not currently have outstanding stock options, the new
calculation methods will not significantly affect the future basic earnings
per share.
Page 8
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. (the
"Company") as of June 30, 1997, as compared to the position of the Company at
December 31, 1996, as well as the results of operations for the three months
ended June 30, 1997 and 1996, and the six months ended June 30, 1997 and
1996. This discussion is intended to be read in conjunction with the interim
condensed consolidated financial statements and notes thereto.
HIGHLIGHTS
For the three months ended June 30, 1997, the Company earned $2,635,000 or
$1.08 per share as compared to $2,190,000 or $.90 per share for the same
period in 1996. Earnings per share data for each period reflects the
two-for-one stock split approved at the March 13, 1997 Annual Shareholders'
Meeting. On a percentage basis, net income for the first quarter of 1997
increased by 20.32% over that of the first quarter of 1996. The Company's
annualized return on average assets for the three months ended June 30, 1997
was 1.29% versus 1.19% for the same period in 1996. Annualized return on
average equity was 14.61% for the second quarter of 1997 compared to 13.06%
for the second quarter of 1996.
For the six months ended June 30, 1997, net income was $5,086,000 or $2.09
per share as compared to $4,471,000 or $1.84 per share for the same period in
1996 as adjusted for the two-for-one stock split approved March 13, 1997.
Year-to-date net income increased by 13.75% over that of 1996. Annualized
return on average assets for the six months ended June 30, 1997 was 1.26%
versus 1.21% for the same period in 1996. Annualized return on average equity
was 14.28% for the first six months of 1997 compared to 13.45% for the first
six months of 1996.
Total assets increased $7,300,000 or .88% to $831,870,000 as of June 30,
1997, compared to December 31, 1996. During the first six months of 1997, net
loans grew $35,961,000, up 7.74% from December 31, 1996. Deposits increased
$8,391,000 during the first six months of 1997, up 1.22% from December 31,
1996. Stockholders' Equity increased $2,659,000, up 3.72% from December 31,
1996.
Page 9
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income, the difference between total interest earned on
earning assets and total interest expense on interest bearing liabilities, is
the Company's principal source of income. Net interest income is influenced
by changes in the volume and yield on earning assets as well as changes in
the volume and rates paid on interest bearing liabilities. The Company
attempts to favorably impact net interest income through investment decisions
on interest earning assets and monitoring interest rates its banking
subsidiaries offer, particularly rates for time deposits and short-term
borrowings.
On a tax equivalent basis (35% income tax rate), the Company's net
interest income expressed as a percentage of average interest earning assets
was 4.57% for the three months ended June 30, 1997, as compared to 4.66% for
the same period in 1996. The decrease in 1997 was due primarily to an
increase in the cost of interest bearing liabilities to 4.22% in 1997 from
4.02% in 1996 as the yield on earning assets remained relatively stable.
For the six months ended June 30, 1997, the Company's net interest income
expressed as a percentage of average interest earning assets on a tax
equivalent basis was 4.47%, as compared to 4.58% for the same period in 1996.
NONINTEREST INCOME
Noninterest income consists primarily of service charges on customer
deposit accounts and fees earned on trust department services. Total
noninterest income was $1,443,000 for the three months ended June 30, 1997,
an increase of $163,000, or 12.7%, from the same period in 1996. The ratio of
noninterest income to income before taxes was 37.3% and 39.3% for the three
months ended June 30, 1997 and 1996, respectively.
The noninterest income increase of $163,000 was primarily attributable to
an increase of $178,000 in service charges on customer deposit accounts as a
result of increases in the number of demand deposit accounts, and an increase
in ATM surcharge fees of $41,000. This increase was partially offset by a
$23,000 decrease in net securities gains.
Page 10
For the six months ended June 30, 1997, total noninterest income was
$2,857,000, an increase of $137,000 or 5.0% from the same period in 1996. The
year-to-date ratio of noninterest income to income before income taxes was
38.0% and 40.7% for 1997 and 1996, respectively.
NONINTEREST EXPENSE
Noninterest expense increased $334,000, or 6.4%, to $5,582,000 for the
three months ended June 30, 1997 as compared to $5,248,000 in the same period
in 1996.
Salaries and employee benefits represented the largest category of
noninterest expense, accounting for 54.1% of the three months ended total
June 30, 1997 total versus 48.7% in the same period in 1996. Salaries and
employee benefits increased $460,000, or 18.0%, for the three months ended
June 30, 1997 over the same period in 1996. The 1997 increase was primarily
due to a 7.0% increase in the full-time equivalent number of employees at the
Company. General pay increases also contributed to the increased payroll
expense for 1997.
Noninterest expenses other than salaries and benefits decreased $126,000,
or 4.7%, for the three months ended June 30, 1997 over the comparable period
in 1996.
Year-to-date June 30, 1997 noninterest expenses increased $785,000 or 7.7%
to $10,954,000 as compared to $10,169,000 in the same period in 1996.
Salaries and employee benefits increased $760,000 or 14.4% for the first six
months of 1997 over the same period in 1996. Salaries and employee benefits
represented 55.0% of the total noninterest expense for the six months ended
June 30, 1997, versus 51.7% for the same period in 1996. Noninterest expenses
other than salaries and benefits increased $25,000 for the six months ended
June 30, 1997 over the comparable period in 1996.
FINANCIAL CONDITION
EARNING ASSETS
At June 30, 1997, earning assets were $765,170,000, an increase of
$8,315,000 or 1.1% from $756,855,000 at December 31, 1996. Average earning
assets for the three months ended June 30, 1997 were $755,140,000, an
increase of $74,871,000, or 11.0% from the same period in 1996, primarily due
to an increase of $55,000,000 in the average loan portfolio.
Page 11
INTEREST-BEARING LIABILITIES
At June 30, 1997, interest-bearing liabilities were $632,484,000, an
increase of $1,931,000 or .3%, from $630,553,000 at December 31, 1996. The
increase was primarily due to an increase of 12.2% in NOW accounts as a
result of fluctuations in the balances of seasonal public funds and a 3.8%
increase in savings. The increase was partially offset by a 2.7% decrease in
time deposits and a 5.9% decrease in short-term borrowings.
Average interest-bearing liabilities for the three months ended 1997 were
$620,680,000, an increase of $54,143,000, or 9.6% from the same period in
1996. The increase was primarily due to a 12.1% increase in interest-bearing
deposits.
NONPERFORMING LOANS
Nonperforming loans are comprised of those loans on which interest income
is not being accrued and other loans which are contractually in arrears as to
principal or interest for ninety days or more.
As of June 30, 1997, the Company's nonperforming loans were $2,616,000
compared to $1,857,000 at December 31, 1996. The increase is attributable to
an increase of $400,000 in nonperforming real estate loans and an increase of
$270,000 in nonperforming commercial loans. The Company's ratio of
nonperforming loans to total loans was .52% at June 30, 1997, compared to
.40% at December 31, 1996. Impaired loans amounted to $360,000 at June
30,1997 and $580,000 at December 31, 1996.
ALLOWANCE FOR LOAN LOSSES
The allowance is an amount that management believes will be adequate to
absorb possible losses on existing loans that may become uncollectible, based
on evaluations of the collectibility of loans and prior loan loss experience.
This evaluation also takes into consideration such factors as changes in the
nature and volume of the loan portfolio quality, review of specific problem
loans and current economic conditions that may affect the borrower's ability
to pay.
The allowance for loan losses decreased $2,000 for the six month period
ended June 30, 1997 to $4,412,000, which represented .87% of total loans, net
of unearned income. At December 31, 1996, the allowance for loan losses
represented .94% of such loan balances.
CAPITAL RESOURCES
Stockholders' equity was $74,050,000 at June 30, 1997, an increase of
$2,659,000, or 3.7% over December 31, 1996. At June 30, 1997, stockholders'
equity represented 8.90% of total assets compared to 8.66% at December 31,
1996.
Page 12
Under rules adopted by federal bank regulatory agencies, bank holding
companies and financial institutions are subject to "risk based" capital
measurements. These regulations establish minimum levels for risk-based Tier
I Capital and Total Capital ratios and the leverage ratio. The parent company
(on a consolidated basis) and its subsidiary banks currently are considered
"well capitalized" and exceed the capital requirements established by federal
bank regulatory agencies.
The Company's consolidated actual capital ratios at June 30, 1997 and
December 31, 1996 are summarized below:
June 30, December 31,
1997 1996
-------- ------------
Total Capital to risk-weighted assets 12.84% 13.07%
Tier I Capital to risk-weighted assets 12.02% 12.20%
Tier I Capital to average assets 8.01% 7.66%
RECENT REGULATORY DEVELOPMENTS
The Committee on Banking and Financial Services of the U. S. House of
Representatives has approved legislation that would allow bank holding
companies to engage in a wider range of nonbanking activities, including
greater authority to engage in securities and insurance activities. The
expanded powers generally would be available to a bank holding company only
if the bank holding company and its bank subsidiaries remain well-capitalized
and well-managed, and if each of the depository institution subsidiaries of
the bank holding company had received at least a "satisfactory" rating under
the Community Reinvestment Act. The proposed legislation would also impose
various restrictions on transactions between the depository institution
subsidiaries of bank holding companies and their nonbank affiliates. These
restrictions are intended to protect the depository institutions from the
risks of the new nonbanking activities permitted to such affiliates. At this
time, the Company is unable to predict the impact such legislation may have
on the operations of the Company and its subsidiaries.
Additionally, legislation has been enacted in Illinois that would allow
Illinois banks, effective October 1, 1997, to engage in insurance activities,
subject to various conditions, including requirements for the manner in which
insurance products are marketed to bank customers and requirements that banks
selling insurance provide certain disclosures to customers. Legislation has
also been enacted in Illinois that would prohibit out-of-state banks from
acquiring an Illinois bank unless the Illinois bank has been in existence and
continuously operated for a period of at least five years.
Page 13
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
This report contains certain forward looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies and expectations of the
Company, are generally identifiable by use of the words "believe," "expect,"
"intend," "anticipate," "estimate," "project" or similar expressions. The
Company's ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material
adverse affect on the operations and future prospects of the Company and the
subsidiaries include, but are not limited to, changes in: interest rates,
general economic conditions, legislative/regulatory changes, monetary and
fiscal policies of the U.S. Government, including policies of the U.S.
Treasury and the Federal Reserve Board, the quality or composition of the
loan or investment portfolios, demand for loan products, deposit flows,
competition, demand for financial services in the Company's market area and
accounting principles, policies and guidelines. These risks and uncertainties
should be considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements. Further information
concerning the Company and its business, including additional factors that
could materially affect the Company's financial results, is included in the
Company's filings with the Securities and Exchange Commission.
Page 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
Page 15
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: AUGUST 7, 1997
/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