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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2001
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 000-30707
First Northern Community Bancorp
(Exact name of Registrant as specified in its charter)
California 68-0450397
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
195 N. First St., Dixon, CA 95620
(Address of principal executive offices) (Zip Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, no par value
(Title of Class)
707-678-3041
(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 periods as 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 [_]
The aggregate market value of Common Stock held by non-affiliates (based upon
the last reported trade on the OTC Bulletin Board on July 31, 2001) was
approximately $66,905,475. As of July 31, 2001, there were 3,185,975 shares of
Common Stock, no par value, outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
ASSETS
June 30, 2001 December 31, 2000
------------- -----------------
Cash and due from banks $ 26,034 $ 24,660
Federal funds sold 12,750 10,000
Investment securities - available for sale 100,407 126,638
Loans, net of allowance for loan losses of
$6,902 at June 30, 2001 and
$7,228 at December 31, 2000 236,104 210,542
Loans held for sale 18,750 6,585
Premises and equipment, net 6,402 6,148
Accrued Interest receivable and other assets 5,927 7,055
------------------ ----------------
TOTAL ASSETS $ 406,374 $ 391,628
================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand $ 93,015 $ 99,134
Interest-bearing transaction deposits 40,406 43,905
Savings & MMDA's 108,803 99,675
Time, under $100,000 68,985 65,618
Time, $100,000 and over 50,912 41,447
------------------ ----------------
Total deposits 362,121 349,779
Accrued interest payable and other liabilities 5,125 5,312
------------------ ----------------
TOTAL LIABILITIES 367,246 355,091
------------------ ----------------
Stockholders' equity
Common stock, no par value; 4,000,000 shares authorized;
3,200,913 shares issued and outstanding in 2001
and 3,070,949 shares issued and outstanding in 2000 25,176 22,784
Additional paid in capital 977 977
Retained earnings 11,281 12,036
Accumulated other comprehensive income 1,694 740
------------------ ----------------
TOTAL STOCKHOLDERS' EQUITY 39,128 36,537
------------------ ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 406,374 $ 391,628
================== ================
See notes to unaudited condensed consolidated financial statements.
2
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(in thousands, except per share amounts)
Three months Three months Six months Six months
ended ended ended ended
June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000
------------- ------------- ------------- -------------
Interest Income
Loans $ 5,505 $ 4,476 $ 10,922 $ 8,398
Federal funds sold 102 330 160 851
Investment securities
Taxable 1,487 1,887 3,217 3,737
Non-taxable 284 303 564 591
------------- ------------- --------------- --------------
Total interest income 7,378 6,996 14,863 13,577
Interest Expense
Deposits 2,237 2,145 4,530 4,231
Other borrowings 67 10 97 25
------------- ------------- --------------- --------------
Total interest expense 2,304 2,155 4,627 4,256
------------- ------------- --------------- ------------
Net interest income 5,074 4,841 10,236 9,398
Recovery of loan losses - - (308) -
------------- ------------- --------------- --------------
Net interest income after
recovery of loan losses 5,074 4,860 10,544 9,321
------------- ------------- --------------- --------------
Other operating income
Service charges on deposit accounts 426 392 796 686
Gains (losses) on available for sale securities 75 4 (277) 14
Gains on other real estate owned - 3 - 87
Gains on sales of loans 157 117 253 140
Alternative investment income 78 129 143 181
ATM fees 57 53 111 110
Mortgage brokerage income 46 60 86 92
Loan servicing Income 47 32 87 63
Origination Cost/Fees 93 19 152 77
Other income 102 71 187 145
------------- ------------- --------------- --------------
Total other operating income 1,081 880 1,538 1,595
------------- ------------- --------------- --------------
Other operating expenses
Salaries and employee benefits 2,573 2,349 4,977 4,488
Occupancy and equipment 562 545 1,141 1,045
Data processing 121 105 309 206
Stationery and supplies 126 109 244 254
Advertising 72 98 123 168
Other 639 685 1,271 1,379
------------- ------------- --------------- --------------
Total other operating expense 4,093 3,891 8,065 7,540
------------- ------------- --------------- --------------
Income before income tax expense 2,062 1,830 4,017 3,376
Provision for income tax expense 721 661 1,402 1,084
------------- ------------- --------------- --------------
Net income $ 1,341 $ 1,169 $ 2,615 $ 2,292
Other Comprehensive Income:
Unrealized (loss) gain on available for sale
sale securities, net of tax effect (404) 33 954 (217)
------------- ------------- --------------- --------------
Total Comprehensive Income $ 937 $ 1,202 $ 3,569 $ 2,075
============= ============= =============== ==============
Basic Income per share $ 0.42 $ 0.34 $ 0.81 $ 0.67
============= ============= =============== ==============
Diluted Income per share $ 0.41 $ 0.34 0.79 $ 0.66
============= ============= =============== ==============
See notes to unaudited condensed consolidated financial statements.
3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six months Six Months
ended ended
June 30, 2001 June 30, 2000
------------- -------------
Operating Activities
Net Income $ 2,615 $ 2,292
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 449 415
Recovery of loan losses (308) -
Loss on available for sale securities 277 -
Gain on sale of loans (253) (143)
Decrease in accrued interest receivable and other assets 1,128 461
Decrease in accrued interest payable and other liabilities (187) (144)
------------- -------------
Net cash provided by operating activities 3,196 2,881
Investing Activities
Net decrease in investment securities 26,908 2,967
Net increase in loans (25,254) (29,703)
Net (increase) decrease in loans held for sale (11,912) 5,319
Purchases of premises and equipment, net (703) (544)
------------- -------------
Net cash used in investing activities (10,961) (21,961)
Financing Activities
Net increase in deposits 12,342 10,027
Cash dividends paid (7) (6)
Stock Options Exercised 59 -
Repurchase of stock (1,030) (2,330)
------------- -------------
Net cash provided by financing activities 11,364 7,691
------------- -------------
Net change in cash and cash equivalents 4,124 (11,389)
Cash and cash equivalents at beginning of period 34,660 57,106
------------- -------------
Cash and cash equivalents at end of period $ 38,784 $ 45,860
============= =============
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Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 4,683 $ 4,282
Income Taxes $ 1,432 $ 497
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Supplemental disclosures of noncash investing and financing activities:
Stock dividend distributed $ 3,126 $ 2,514
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See notes to unaudited condensed consolidated financial statements.
4
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001 and December 31, 2000
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and notes required
by accounting principles generally accepted in the United States of America
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. The results of operations for
any interim period are not necessarily indicative of results expected for
the full year. These condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto contained in the First Northern Community Bancorp's Annual Report
to shareholders and Form 10-K for the year ended December 31, 2000. The
unaudited condensed consolidated financial statements include the accounts
of the Company and its subsidiary as if the Company had been in existence
during all periods presented. All material intercompany accounts have been
eliminated in consolidation.
2. RECLASSIFICATIONS
Certain reclassifications have been made to the 2000 financial statements
to conform with the 2001 presentation.
3. OUTSTANDING SHARES AND EARNINGS PER SHARE
On January 18, 2001, the Board of Directors of the First Northern Community
Bancorp declared a 6% stock dividend payable as of March 31, 2001. All
income per share amounts have been adjusted to give retroactive effect to
the stock dividend.
Earnings Per Share (EPS)
Basic and diluted earnings per share for the three-month and six-month
periods ending June 30, 2001 and June 30, 2000 were computed as follows (in
thousands, except share amounts and earnings per share):
Three months Six months
ended June 30, ended June 30,
2001 2000 2001 2000
- ----------------------------------------------------------------------------------------------------------------------------
Basic earnings per share:
Net income $ 1,341 $ 1,169 $ 2,615 $ 2,292
- ----------------------------------------------------------------------------------------------------------------------------
Denominator:
Weighted average common shares
outstanding 3,213,934 3,401,852 3,235,058 3,425,655
- ----------------------------------------------------------------------------------------------------------------------------
Basic EPS $ 0.42 $ 0.34 $ 0.81 $ 0.67
============================================================================================================================
Diluted earnings per share:
Net income $ 1,341 $ 1,169 $ 2,615 $ 2,292
- ----------------------------------------------------------------------------------------------------------------------------
Denominator:
Weighted average common shares
outstanding 3,213,934 3,401,852 3,235,058 3,425,655
Incremental shares due to dilutive
stock options 75,229 25,151 76,597 23,615
- ----------------------------------------------------------------------------------------------------------------------------
3,289,163 3,247,003 3,311,655 3,449,270
- ----------------------------------------------------------------------------------------------------------------------------
Diluted EPS $ 0.41 $ 0.34 $ 0.79 $ 0.66
============================================================================================================================
5
4. ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is maintained at levels considered adequate
by management to provide for possible loan losses. The allowance is based
on management's assessment of various factors affecting the loan portfolio,
including problem loans, business conditions and loss experience, and an
overall evaluation of the quality of the underlying collateral. Changes in
the allowance for loan losses during the six-months ended June 30, 2001 and
2000 and for the year ended December 31, 2000 were as follows (in
thousands):
Six months ended Year ended
June 30, December 31,
2001 2000 2000
------- --------- ------------
Balance, beginning of period $ 7,228 $ 7,825 $ 7,825
Recovery of loan losses (308) -- --
Loan charge-offs (50) (334) (852)
Loan recoveries 32 66 255
------- --------- ------------
Balance, end of period $ 6,902 $ 7,557 $ 7,228
======= ========= ============
5. GAIN OR LOSS ON SALE OF LOANS AND SERVICING RIGHTS
Effective April 1, 2001, the Bank adopted FASB Statement No. 140,
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, a replacement of FASB Statement No. 125,
which supersedes and replaces the guidance in FASB Statement No. 125,
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. Statement No. 140 revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but it carries over most of
the provisions of Statement No. 125 without reconsideration. Statement No.
140 is effective for transfers of financial assets occurring after March
31, 2001; it is applied prospectively. The Company does not expect adoption
of Statement No. 140 to have a material impact on the financial condition
or operating results of the Company.
6. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In July 2001, the FASB issued Statement No. 141, Business Combinations, and
Statement No. 142, Goodwill and Other Intangible Assets. Statement 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 as well as all purchase method
business combinations completed after June 30, 2001. Statement 141 also
specifies criteria intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill,
noting that any purchase price allocable to an assembled workforce may not
be accounted for separately. Statement 142 will require that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead tested for impairment at least annually in accordance with the
provisions of Statement 142. Statement 142 will also require that
intangible assets with definite useful lives be amortized over their
respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of.
The Company is required to adopt the provisions of Statement 141
immediately and Statement 142 effective January 1, 2002. Furthermore, any
goodwill and any intangible asset determined to have an indefinite useful
life that are acquired in a purchase business combination completed after
June 30, 2001 will not be amortized, but will continue to be evaluated for
impairment in accordance with the appropriate pre-Statement 142 accounting
literature. Goodwill and intangible assets acquired in business
combinations completed before July 1, 2001 will continue to be amortized
prior to the adoption of Statement 142. The Company does not have any
goodwill and intangible assets acquired in business combinations completed
before July 1, 2001. The Company does not expect adoption of Statements No.
141 and 142 to have a material impact on the financial condition or
operating results of the Company.
6
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RELULTS OF OPERATIONS
The following is a discussion and analysis of the significant changes in the
Unaudited Condensed Consolidated Balance Sheets and of the significant changes
in income and expenses reported in the Unaudited Condensed Consolidated
Statements of Income and Comprehensive Income as of and for the three-month and
six-month periods ended June 30, 2001 and 2000.
SUMMARY
The Company recorded net income of $2,615,000 for the six-month period ended
June 30, 2001, representing an increase of $323,000 or 14.1% over $2,292,000 for
the same period in 2000 and had net income of $1,341,000 for the three-month
period ended June 30, 2001, representing an increase of $172,000 or 14.7% over
$1,169,000 for the same period in 2000.
The increase in net income over the six-month period ended June 30, 2001 as
compared to the same period a year ago, resulted primarily from an increase in
net interest income and other operating income combined with decreases in the
provision for loan losses which was partially offset by increases in other
operating expense and provision for income tax expense.
The increase in net income over the three-month period ended June 30, 2001 as
compared to the same period a year ago, resulted primarily from an increase in
net interest income and other operating income which was partially offset by
increases in other operating expense and provision for income tax expense.
On January 18, 2001, the Board of Directors of the First Northern Community
Bancorp declared a 6% stock dividend payable as of March 31, 2001. All income
per share amounts have been adjusted to give retroactive effect to the stock
dividend.
CHANGES IN FINANCIAL CONDITION
The asset side of the Unaudited Condensed Consolidated Balance Sheet showed an
$1,374,000 increase in cash and due from banks, a $2,750,000 increase in fed
funds sold, a $26,231,000 decrease in investment securities, a $25,562,000
increase in loans, a $12,165,000 increase in loans held for sale, and a
$1,128,000 decrease in accrued interest receivable and other assets from
December 31, 2000 to June 30, 2001. The reason for the increase in cash and
due from banks was due to an increase in items in process of collection, which
was partially offset by decreases in the Federal Reserve Bank and Pacific Coast
Bankers Bank due from accounts. The increase in fed funds sold was due to
increased deposits. The decrease in investment securities was due to a write-
down of a corporate bond and proceeds from sales, maturities and calls. The
proceeds were used to fund new loans. The increase in loans was in commercial
and real estate loans. The increase in loans held for sale was in real estate
loans. The decrease in accrued interest receivable and other assets was due to
decreased income taxes receivable, and decreased loan and securities interest
receivables.
The liability side of the Unaudited Condensed Consolidated Balance Sheet showed
an increase in total deposits of $12,342,000 compared to year-end 2000 deposit
totals. The increase in deposits was due to higher savings, money market and
time deposit totals combined with lower demand and interest-bearing transaction
deposit totals. Other liabilities decreased $187,000 from December 31, 2000 to
June 30, 2001. The decrease in other liabilities was due to decreased notes
payable and accrued expenses, which was partially offset by purchased funds.
CHANGES IN RESULTS OF OPERATIONS
Interest Income
- ---------------
Interest income on loans for the six-month period ended June 30, 2001 is up
30.1% over the same period for 2000, from $8,398,000 to $10,922,000 and is up
23.0% for the three-month period ending June 30, 2001 over the same period for
2000, from $4,476,000 to $5,505,000. The increase over the six-month period
ended June 30, 2001 as compared to the same period a year ago, was due to an
increase in average loans which was partially offset by a 37 basis point
decrease in loan yields. The increase over the three-month period ended June
30, 2001 as compared to the same period a year ago, was due to an increase in
average loans which was partially offset by an 82 basis point decrease in loan
yields.
7
Interest income on securities for the six-month period ended June 30, 2001 is
down 12.6% over the same period for 2000, from $4,328,000 to $3,781,000 and is
down 19.1% for the three-month period ended June 30, 2001 as compared to the
same period in 2000, from $2,190,000 to $1,771,000. The decrease over the six
month period ended June 30, 2001 as compared to the same period a year ago, is
due to a decrease in average securities combined with a 24 basis point decrease
in securities yields. The decrease over the three-month period ended June 30,
2001 as compared to the same period a year ago, is due to a decrease in average
securities combined with a 43 basis point decrease in securities yields.
Interest income on fed funds sold for the six-month period ended June 30, 2001
is down 81.2% over the same period for 2000 from $851,000 to $160,000 and is
down 69.1% for the three-month period ending June 30, 2001 over the same period
for 2000 from $330,000 to $102,000. The decrease in fed funds income over the
six-month period ended June 30, 2001 was due to a decrease in average fed funds
sold combined with a decrease in fed funds rates. The decrease in fed funds
income over the three-month period ended June 30, 2001 was due to a decrease in
average fed funds sold combined with a decrease in fed funds rates.
Interest Expense
- ----------------
Interest expense on deposits was up 7.07% for the six-month period ending June
30, 2001 over the same period in 2000 from $4,231,000 to $4,530,000 and was up
4.3% for the three-month period ending June 30, 2001 over the same period in
2000 from $2,145,000 to $2,237,000. The increased interest expense over the
six-month period ended June 30, 2001 was due to increased average deposits,
which was partially offset by lower deposit rates. The increased interest
expense over the three-month period ended June 30, 2001 was due to increased
average deposits, which was partially offset by lower deposit rates.
Provision for Loan Losses
- -------------------------
There was a recovery of $308,000 in the provision for loan losses for the six-
month period ending June 30, 2001 compared to a zero provision for the same
period in 2000. The recovery and zero provision for those periods were due to
continued favorable market conditions and loan quality in the Company's loan
portfolio. The June 30, 2001 allowance for loan losses of approximately
$6,902,000 is 2.7% of total loans compared to $7,228,000 or 3.3% of total loans
at December 31, 2000.
Other Operating Income
- ----------------------
Other operating income was down 3.6% for the six-month period ended June 30,
2001 over the same period in 2000 from $1,595,000 to $1,538,000. This decrease
was primarily due to a decrease in gains on available for sale securities,
combined with decreases in gains on other real estate owned and alternative
investment fees, which were partially offset by increases in service charges on
deposit accounts, including higher overdraft charges, primarily due to the
effect of new fee structures that were implemented in the second quarter of
2000; gains on sales of loans; loan origination fees and other miscellaneous
income. The decrease in gains on available for sale securities was due to an
other than temporary decline in value of a corporate bond and the sale of an
impaired corporate bond, which were partially offset by other sales. The
increase in other miscellaneous income was due, for the most part, to visa
check/debit card fees.
Other operating income was up 22.8% for the three-month period ended June 30,
2001 over the same period in 2000 from $880,000 to $1,081,000. This increase was
due to an increase in gains on available for sale securities; service charges on
deposit accounts, including higher overdraft charges, primarily due to the
effect of new fee structures that were implemented in the second quarter of
2000; gains on sales of loans; loan origination fees and other miscellaneous
income, which was partially offset by a decrease in alternative investment
fees. The increase in gains on available for sale securities was due to sales,
which were partially offset by the sale of an impaired corporate bond. The
increase in other miscellaneous income was due, for the most part, to visa
check/debit card fees.
Other Operating Expense
- -----------------------
Total other operating expense was up 7.0% for the six-month period ending June
30, 2001 over the same period in 2000 from $7,540,000 to $8,065,000 and was up
5.2% for the three-month period ending June 30, 2001 over the same period in
2000 from $3,891,000 to $4,093,000.
8
The main reasons for the increase in the six-month period ending June 30, 2001
was a combination of: increases in salaries & benefits; occupancy and equipment;
and data processing, combined with decreases in advertising and other
miscellaneous expense. The increase in salaries & benefits was due to increases
in the number of employees and increases in profit sharing and incentive
compensation provisions due to increased income combined with increases in
commissions for real estate loans. The increase in data processing was due to
increased usage during this period compared to the same period in 2000. The
decreases in stationery and supplies and advertising were due to decreased usage
as compared to the same period in 2000. The increase in occupancy and equipment
was due to increased computer hardware depreciation and utilities, which was
partially offset by decreased furniture and equipment depreciation. The decrease
in other miscellaneous expense was due to: decreased legal fees; accounting and
audit fees; and software service contracts, which was partially offset by
increased consulting fees; miscellaneous loan and lease expense; sundry losses;
computer software and hardware service contracts; and computer software
depreciation.
The main reasons for the increase in the three-month period ending June 30, 2001
was a combination of: increases in salaries & benefits; occupancy and equipment;
and data processing, combined with decreases in advertising and other
miscellaneous expense. The increase in salaries & benefits was due to increases
in the number of employees and increases in profit sharing and incentive
compensation provisions due to increased income combined with increases in
commissions for real estate loans. The increase in data processing was due to
increased usage during this period compared to the same period in 2000. The
decrease in advertising was due to decreased usage as compared to the same
period in 2000. The increase in occupancy and equipment was due to increased
computer hardware depreciation, which was partially offset by decreased
furniture and equipment depreciation. The decrease in other miscellaneous
expense was due to: decreased legal fees; accounting and audit fees; sundry
losses; and software service contracts, which was partially offset by increased
miscellaneous loan and lease expense; computer software and hardware service
contracts; and computer software depreciation.
Asset Quality
- -------------
The Company manages asset quality and credit risk by maintaining diversification
in its loan portfolio and through review processes that include analysis of
credit requests and ongoing examination of outstanding loans and delinquencies,
with particular attention to portfolio dynamics and mix. The Company strives to
identify loans experiencing difficulty early enough to correct the problems, to
record charge-offs promptly based on realistic assessments of current collateral
values, and to maintain an adequate allowance for loan losses at all times.
It is generally the Company's policy to discontinue interest accruals once a
loan is past due as to interest or principal payments for a period of ninety
days. When a loan is placed on non-accrual, interest accruals cease and
uncollected accrued interest is reversed and charged against current income.
Payments received on non-accrual loans are applied against principal. A loan
may only be restored to an accruing basis when it again becomes well secured and
in the process of collection or all past due amounts have been collected.
Non-accrual loans amounted to $670,000 at June 30, 2001, and were comprised of
six commercial loans and two agricultural loans. At December 31, 2000, non-
accrual loans amounted to $742,000 and were comprised of six commercial loans
and two agricultural loans. At June 30, 2000, non-accrual loans amounted to
$1,500,000 and were comprised of seven commercial loans and two agricultural
loans.
At June 30, 2001, the Company had loans 90 days past due and still accruing
totaling $5,000. Such loans amounted to $-0- at December 31, 2000 and $2,000 at
June 30, 2000.
Liquidity and Capital Resources
- -------------------------------
To be able to serve our market area, the Company must maintain proper liquidity
and adequate capital. Liquidity is measured by various ratios, with the most
common being the ratio of loans to deposits. This ratio was 70.4% on June 30,
2001. In addition, on June 30, 2001, the Company had the following short term
investments: $12,750,000 in fed funds sold; $11,000,000 in securities due
within one year; and $38,000,000 in securities due in one to five years.
To meet unanticipated funding requirements, the Company maintains short-term
lines of credit with other banks totaling $14,700,000.
9
Capital adequacy is generally measured by comparing the total of equity capital
and reserve for loan losses to total assets. On June 30, 2001 this ratio was
11.3% and on December 31, 2000 it was 11.2%. These figures are well above the
levels currently considered adequate by bank regulators.
The Company's primary source of liquidity on a stand-alone basis is dividends
from the Bank. Dividends from the Bank are subject to regulatory restrictions.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the quantitative and qualitative
disclosures about market risks as of June 30, 2001, from that presented in the
First Northern Community Bancorp's Annual Report on Form 10-K for the fiscal
year ended December 31, 2000.
PART II - OTHER INFORMATION AND SIGNATURES
ITEM 1.
Legal Proceedings
Not Applicable.
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.
There were no Reports on Form 8 - K.
10
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 to sign on behalf of the registrant.
FIRST NORTHERN COMMUNITY BANCORP
Date: August 9, 2001 By: /s/ Louise A. Walker
-------------------------------- ----------------------------------
Louise A. Walker, Sr. Vice
President / Chief Financial
Officer
11