1
=================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of
1934
Date of Report (Date of earliest event reported) April 16, 1999
NORTH BANCSHARES, INC.
(Exact name of Registrant as specified in its Charter)
Delaware 0-22800 36-3915073
(State or other (commission file number) (IRS Employer
jurisdiction of Identification
incorporation) number)
100 West North Avenue, Chicago, Illinois 60610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 664-4320
N/A
Former name or former address, if changed since last report)
=================================================================
2
Item 5. Other Events
On April 16, 1999, the Registrant issued the attached press
release.
Item 7. Financial Statements and Exhibits
(a) Exhibits
1. Press Release, Dated April 16, 1999, regarding first quarter 1999
earnings and a regular quarterly dividend.
3
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 hereunto duly authorized.
NORTH BANCSHARES, INC.
(Registrant)
Date: April 16, 1999 /S/ Joseph A. Graber
----------------------
Joseph A. Graber
President and Chief Executive Officer
4
EXHIBIT
5
NORTH BANCSHARES, INC NEWS RELEASE
RELEASE: IMMEDIATELY
Joseph A. Graber or Victor E. Caputo
(312) 664-4320
NORTH BANCSHARES ANNOUNCES
FIRST QUARTER EARNINGS PER SHARE INCREASES 17%
FIRST QUARTER NET INCOME INCREASES 14%
QUARTERLY DIVIDEND DECLARED
CHICAGO, IL, APRIL 16, 1999, - North Bancshares, Inc., the holding
company of North Federal Savings Bank today announced diluted earnings per
share of $.14 for the quarter ended March 31, 1999, an improvement of $.02
per share or 17%, from $.12 per share for the quarter ended March 31, 1998.
Net income for the quarter ended March 31, 1999 amounted to $176,000, an
increase of $21,000 or 14%, from $155,000 for the quarter ended March 31,
1998. The improvement in earnings per share is primarily related to a
$91,000 reduction in non-interest expenses, partially offset by a $44,000
decrease in net interest income and an increase of $37,000 in income tax
expense. In addition, there was a decrease in the average number of
outstanding shares.
Concurrent with this earnings release the Board of Directors of the
Company has declared a quarterly dividend of $.11 per share to be paid on May
14, 1999 to stockholders of record as of April 30, 1999.
Net interest income was $865,000 for the quarter ended March 31, 1999,
compared with $909,000 for the quarter ended March 31, 1998. The decrease is
primarily attributable to a decrease in the net interest margin to 2.82% for
the quarter ended March 31, 1999, compared with 3.07% for the quarter ended
March 31, 1998. The decline in net interest margin was due primarily to
prepayments of higher yielding mortgage loans during 1998 and the first
quarter of 1999, resulting in a lower yield on average interest-earning assets
,partially offset by lower certificate of deposit interest rates and lower
borrowing costs.
Non-interest income amounted to $114,000 for the quarter ended March 31,
1999, compared with $103,000 for the quarter ended March 31, 1998. Fees and
service charges increased by $18,000 to $77,000 for the quarter ended March
31, 1999 from $59,000 for the quarter ended March 31, 1998. The improvement
in fees and service charges was primarily due to an increase in the total
number of transaction accounts that produce fee income and an increase in the
fee structure for money market and checking accounts.
Non-interest expense decreased by $91,000, or 11.4%, to $708,000 for the
quarter ended March 31, 1999, compared with $798,000 for the quarter ended
March 31, 1998. The improvement was primarily attributable to a $52,000
decrease in compensation and benefits expense and a $32,000 reduction in
professional fees.
Income tax expense amounted to $95,000 for the quarter ended March 31,
1999, compared with $58,000 for the quarter ended March 31, 1998. The
effective tax rate amounted to 35.1% for the quarter ended March 31, 1999,
compared with 27.2%% for the quarter ended March 31, 1998. The increase is
primarily due to increased income before taxes in 1999 and the offset of
capital loss carryforwards against capital gains recorded in 1998.
Net loans receivable totaled $82.8 at March 31, 1999 compared with $82.1
million at December 31, 1998. The $700,000 increase was due primarily to the
purchase of a $1.0 million participation loan on a combination multi-family
and commercial property. At March 31, 1999, the Bank had $6.1 million in
loan applications pending approval or closing and $603,000 in outstanding
equity lines of credit.
<PAGE 6>
Mortgage-backed securities available for sale amounted to $14.4 million
at March 31, 1999, compared with $10.9 million at December 31, 1998. The
increase was due primarily to the reclassification of $4.5 million mortgage-
backed securities that were previously classifed held to maturity, due to the
adoption of SFAS 133.
Total deposits amounted to $74.7 at March 31, 1999 compared with $76.2
million at December 31, 1998. The $1.5 million decrease was primarily
attributable to a $3.1 decrease in certificates of deposit. The majority of
the certificates withdrawn were accounts that had been paid a bonus rate of
interest and would have renewed at lower rates. These withdrawals were
partially offset by a $1.5 increase in checking and money market accounts.
Borrowed funds increased $3.0 million to $37.1 million at March 31, 1999
from $34.1 million at December 31, 1998. The additional funds were used to
offset the withdrawal of certificates of deposit described above.
Stockholders' equity was $13.0 million at March 31, 1999, compared with
$13.3 million at December 31, 1998. The decrease was primarily attributable
to a $231,000 increase in accumulated other comprehensive loss. Retained
earnings increased to $11.2 million at March 31, 1999, compared with $11.1
million at December 31, 1998, due to net income of $176,000, which was
partially offset by $139,000 in dividend payments for the quarter.
Joseph A. Graber, President and Chief Executive Officer, commented:
"We are very pleased with our first quarter results. The restructuring of
our loan portfolio to incorporate more higher yielding investor property loans
during the past year, accompanied by a reduction in our cost of funds, has
helped to partially offset the effects of an extremely high level of loan
prepayments we experinced during 1998 and during this first quarter of 1999."
He added, "We have been able to reduce our non-interest expenses by 11.4%,
while increasing our non-interest income by 10.7%, when comapred with the
first quarter of 1998. We anticipate quarter to quarter improvement in
earnings per share throughout the year. Our 1999 annualized return on equity
is 5.34%, a 44% improvement over our 1998 return on equity of 3.70%."
North Bancshares, Inc. is the holding company for North Federal Savings
Bank. Its common stock is traded on the Nasdaq Stock Market under the symbol
"NBSI." North Federal has served the north side of Chicago from its home
office in Old Town since 1886. It also operates a branch office in Wilmette,
IL. For 42 consecutive quarters, the bank has received a five-star superior
rating for safety from Bauer Financial Reports, Inc., and is rated one of the
best in the nation by Sheshunoff Information Services, Inc. North Federal is
proud to support local service and non-profit organizations. Its executives
serve on the boards of Lincoln Park Chamber of Commerce, Old Town Chamber of
Commerce and the Human Capital Council. Further information is available on
our website at www.northfederal.com including prior press releases, SEC
filings, company history, and current products, services and interest rates.
When used in this press release the words or phrases "will likely result"
, "are expected to", "will continue", "is anticipated", "estimate", "project"
or similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
The Company wishes to caution readers not to place undue reliance on any such
forward-looking statements which speak only as of the date made. The Company
wishes to advise readers that the factors listed above could affect the
Company's financial performance.
The Company does not undertake -- and specifically disclaims any
obligation -- to publicly release the results of any revisions which may be
made to any forward-looking statements to reflect events or circumstances
after the date of such statements or to reflect the occurrence of anticipated
or unanticipated events.
(FINANCIAL STATEMENTS ATTACHED)
<PAGE 7>
NORTH BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
ASSETS MARCH 31, 1999 DEC 31, 1998
- --------------------------------------------------------------------------
Cash and due from banks $ 971 $ 810
Interest-bearing deposits 2,047 2,413
Federal funds sold 4,344 5,722
Investment in dollar denominated mutual funds 2,286 801
- -------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS 9,648 9,746
Investment securities available for sale 16,393 14,880
Mortgage-backed securities held to maturity --- 4,478
Mortgage-backed securities available for sale 14,436 10,884
Stock in Federal Home Loan Bank of Chicago 1,855 1,705
Loans receivable, net of allowance for loan
losses of $214 at March 31, 1999 and at
December 31, 1998 82,771 82,123
Accrued interest receivable 801 849
Premises and equipment, net 1,013 1,021
Other assets 164 146
- -------------------------------------------------------------------------
TOTAL ASSETS $127,081 $125,832
=========================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------
Deposit accounts $ 74,681 $76,222
Borrowed funds 37,100 34,100
Advance payments by borrowers for
taxes and insurance 666 1,036
Accrued interest payable and other liabilities 1,619 1,152
- ------------------------------------------------------------------------
TOTAL LIABILITIES 114,066 112,510
- ------------------------------------------------------------------------
Preferred stock, $.01 par value. Authorized
500,000 shares; none outstanding - -
Common stock, $.01 Par value. Authorized
3,500,000 shares; issued 1,914,105 shares 19 19
Additional paid-in capital 13,394 13,437
Retained earnings, substantially restricted 11,165 11,127
Treasury stock at cost (661,990 shares at
March 31, 1999 and 651,182 shares at
December 31, 1998) (10,762) (10,664)
Accumulated other comprehensive loss (384) (153)
Common stock acquired by Employee Stock
Ownership Plan (417) (444)
- ------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 13,015 13,322
- ------------------------------------------------------------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $127,081 $125,832
========================================================================
<PAGE 8>
NORTH BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
THREE MONTHS ENDED
MARCH 31,
1998 1997
- ------------------------------------------------------------------------------
INTEREST INCOME:
Loans receivable $1,528 $1,494
Interest-bearing deposits and federal funds sold 80 116
Investment securities available for sale 252 383
Mortgage-backed securities held to maturity - 96
Mortgage-backed securities available for sale 230 -
Investment in mutual funds 13 31
Dividends on FHLB stock 29 29
- ------------------------------------------------------------------------------
TOTAL INTEREST INCOME 2,132 2,149
- ------------------------------------------------------------------------------
INTEREST EXPENSE:
Deposit accounts 797 819
Borrowed funds 470 421
- ------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 1,267 1,240
- --------------------------------------------------------------------------------
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 865 909
PROVISION FOR LOAN LOSSES - -
- --------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 865 909
- --------------------------------------------------------------------------------
NON-INTEREST INCOME:
Gain on sale of investment securities
available for sale 33 40
Fees and service charges 77 59
Other 4 4
- --------------------------------------------------------------------------------
TOTAL NON-INTEREST INCOME 114 103
- --------------------------------------------------------------------------------
NON-INTEREST EXPENSE:
Compensation and benefits 400 452
Occupancy expense 112 125
Professional fees 43 75
Data processing 51 47
Advertising and promotion 23 25
Federal deposit insurance premium 9 12
Other 70 63
- -------------------------------------------------------------------------------
TOTAL NON-INTEREST EXPENSE 708 799
- --------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 271 213
INCOME TAX EXPENSE 95 58
- --------------------------------------------------------------------------------
NET INCOME $ 176 $ 155
================================================================================
EARNINGS PER SHARE:
Basic .15 .12
Diluted .14 .12
================================================================================
AVERAGE SHARES OUTSTANDING:
Basic 1,204,652 1,272,779
Diluted 1,252,295 1,341,510
================================================================================
<PAGE 9>
SELECTED FINANCIAL RATIOS AND OTHER DATA (UNAUDITED):
THREE MONTHS ENDED
MARCH 31,
1999 1998
------------------
PERFORMANCE RATIOS:
- --------------------------------------------------------------------------
Return on assets (ratio of net income
to average total assets) (1) 0.56% 0.51%
Interest Rate Spread Information:
Average during period (1) 2.29 2.41
End of period (1) 2.38 2.55
Net interest margin (1) 2.82 3.07
Ratio of operating expenses to average assets (1) 2.25 2.63
Ratio of average interest-earning assets
to average interest-bearing liabilities 112.72 115.81
- ------------------------------------------------------------------------------
MARCH 31, 1999 DECEMBER 31, 1998
ASSET QUALITY RATIOS:
- ---------------------------------------------------------------------------------------
Non-performing assets to total assets 0.02 0.00
Allowance for loan losses to non-performing loans 891.67 891.67
Allowance for loan losses to loans receivable 0.26 0.26
CAPITAL RATIOS:
- ---------------------------------------------------------------------------------------
Stockholders' equity to total assets 10.24 10.46
Average Stockholders' equity to average assets 10.44 11.18
Return on Stockholders' equity (ratio of net
income to average equity) (1) 5.35 3.70
Shares outstanding-actual 1,252,085 1,262,893
Book value per share 10.39 10.42
- ----------------------------------------------------------------------------------------
Number of full service offices 2 2
(1) Annualized for the three month periods presented.