SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- - ------------------------------------------------------------------------
F O R M 1 0 - Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-27982
FIRST NORTHERN CAPITAL CORP.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1830142
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
201 NORTH MONROE AVENUE
P.O. BOX 23100
GREEN BAY, WISCONSIN 54305-3100
(414) 437-7101
(Address, including Zip Code, and telephone number,
including area code, of registrant's principal executive offices)
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
THE NUMBER OF SHARES OUTSTANDING OF THE ISSUER'S COMMON STOCK, $1.00
PAR VALUE PER SHARE, WAS 4,420,100, AT JULY 31, 1997.
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
PAGE NO.
ITEM 1. FINANCIAL STATEMENTS
Unaudited Consolidated Statements of Financial
Condition as of June 30, 1997
and December 31, 1996. . . . . . . . . . . . . . . . . . . . . . . . 3
Unaudited Consolidated Statements of Income
for the Three Months Ended
June 30, 1997 and June 30, 1996. . . . . . . . . . . . . . . . . . . 4
Unaudited Consolidated Statements of Income
for the Six Months Ended
June 30, 1997 and June 30, 1996. . . . . . . . . . . . . . . . . . . 5
Unaudited Consolidated Statements of Cash
Flows for the Six Months Ended
June 30, 1997 and June 30, 1996. . . . . . . . . . . . . . . . . . . 6
Notes to Unaudited Consolidated
Financial Statements . . . . . . . . . . . . . . . . . . . . . . 7 - 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . 10 - 22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK. . . . . . . . . . . . . . . . . . . . . . . . . 23
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . 23
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . 23
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST NORTHERN CAPITAL CORP.
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
------------- -----------------
(In Thousands)
ASSETS
<S> <C> <C>
Cash $ 6,733 $ 1,965
Interest-earning deposits 99 1,598
-------- --------
CASH AND CASH EQUIVALENTS 6,832 3,563
Securities available-for-sale, at fair value
Investment securities 7,578 5,635
Mortgage-related securities 1,461 1,837
Securities held-to-maturity
Investment securities
(estimated fair value of
$19,270 - 1997; $16,633 - 1996) 19,242 16,583
Mortgage-related securities
(estimated fair value of
$10,024 - 1997; $9,247 - 1996) 10,132 9,325
Loans held for sale 568 2,532
Loans receivable 568,580 553,995
Accrued interest receivable 3,474 3,295
Foreclosed properties and repossessed assets 85 189
Office properties and equipment 8,575 8,350
Federal Home Loan Bank stock 4,273 3,773
Prepaid expenses and other assets 6,925 6,426
-------- --------
$637,725 $615,503
======== ========
LIABILITIES
Deposits $477,889 $458,323
Borrowings 77,319 77,272
Advance payments by borrowers
for taxes and insurance 6,464 5,447
Other liabilities 4,164 4,237
-------- --------
TOTAL LIABILITIES 565,836 545,279
STOCKHOLDERS' EQUITY
Cumulative preferred stock, $1 par value; 10,000,000
shares authorized; none outstanding
Common stock, $1 par value; 30,000,000
shares authorized; shares issued:
4,568,052 - 1997 and 1996 4,568 4,568
Additional paid-in capital 14,069 14,389
Unrealized gains on securities
available-for-sale, net of taxes 495 385
Treasury stock at cost
(151,017 shares - 1997;
180,623 shares - 1996) (2,411) (2,853)
Retained earnings 55,168 53,735
-------- --------
TOTAL STOCKHOLDERS' EQUITY 71,889 70,224
-------- --------
$637,725 $615,503
======== ========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
<PAGE>
FIRST NORTHERN CAPITAL CORP.
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30
1997 1996
--------- ----------
(In Thousands,
Except Per Share Amounts)
Interest income:
<S> <C> <C>
Mortgage loans $ 7,751 $ 7,049
Consumer loans 3,022 2,527
Investment securities 458 386
Interest-earning deposits 12 25
Mortgage-related securities 172 173
-------- --------
TOTAL INTEREST INCOME 11,415 10,160
Interest expense:
Deposits 5,273 5,039
Borrowings 1,143 522
Advance payments by borrowers
for taxes and insurance 28 30
-------- --------
TOTAL INTEREST EXPENSE 6,444 5,591
-------- --------
NET INTEREST INCOME 4,971 4,569
Provision for loan losses 65 60
-------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,906 4,509
Non-interest income:
Fees on serviced loans 83 87
Loan fees and service charges 77 59
Deposit account service charges 305 212
Insurance commissions 63 97
Gains on sales of loans 72 62
Gain on sale of assets 22 19
Other 160 131
-------- --------
TOTAL NON-INTEREST INCOME 782 667
Non-interest expense:
Compensation, payroll taxes and
other employee benefits 1,779 1,686
Federal insurance premiums 75 259
Occupancy 222 213
Data processing 363 282
Furniture and equipment 123 129
Telephone and postage 118 108
Marketing 79 90
Other 575 530
-------- --------
TOTAL NON-INTEREST EXPENSE 3,334 3,297
-------- --------
INCOME BEFORE INCOME TAXES 2,354 1,879
Income taxes 895 698
-------- --------
NET INCOME $ 1,459 $ 1,181
======== ========
PRIMARY NET INCOME PER SHARE $0.32 $0.26
===== =====
CASH DIVIDENDS PAID PER SHARE $0.16 $0.15
===== =====
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
<PAGE>
FIRST NORTHERN CAPITAL CORP.
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
1997 1996
---------- ----------
(In Thousands,
Except Per Share Amounts)
Interest income:
<S> <C> <C>
Mortgage loans $15,349 $14,047
Consumer loans 5,911 5,035
Investment securities 877 772
Interest-earning deposits 22 45
Mortgage-related securities 350 307
------- -------
TOTAL INTEREST INCOME 22,509 20,206
Interest expense:
Deposits 10,334 10,137
Borrowings 2,299 1,025
Advance payments by borrowers
for taxes and insurance 42 45
------- -------
TOTAL INTEREST EXPENSE 12,675 11,207
------- -------
NET INTEREST INCOME 9,834 8,999
Provision for loan losses 140 120
------- -------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 9,694 8,879
Non-interest income:
Fees on serviced loans 166 179
Loan fees and service charges 137 105
Deposit account service charges 594 414
Insurance commissions 169 158
Gains on sales of loans 122 154
Gain on sale of assets 22 19
Other 308 234
------- -------
TOTAL NON-INTEREST INCOME 1,518 1,263
Non-interest expense:
Compensation, payroll taxes and
other employee benefits 3,565 3,368
Federal insurance premiums 135 520
Occupancy 460 446
Data processing 701 585
Furniture and equipment 248 265
Telephone and postage 247 234
Marketing 179 156
Other 1,094 1,033
------- -------
TOTAL NON-INTEREST EXPENSE 6,629 6,607
------- -------
INCOME BEFORE INCOME TAXES 4,583 3,535
Income taxes 1,739 1,265
------- -------
NET INCOME $ 2,844 $ 2,270
======= =======
PRIMARY NET INCOME PER SHARE $0.63 $0.49
===== =====
CASH DIVIDENDS PAID PER SHARE $0.32 $0.30
===== =====
</TABLE>
See Notes to Unaudited Consolidated Financial Statements
<PAGE>
FIRST NORTHERN CAPITAL CORP.
AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
1997 1996
--------- ---------
(In Thousands)
Operating Activities
<S> <C> <C>
Net income $ 2,844 $ 2,270
Adjustments to reconcile net
income to cash provided
by operating activities:
Provision for losses on loans and real estate 140 120
Provision for depreciation and amortization 436 376
Gains on sales of loans (122) (154)
Loans originated for sale (5,670) (6,491)
Proceeds from loan sales 7,633 9,318
Increase in interest receivable (179) (69)
Increase in interest payable 114 215
Other (370) (687)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,826 4,898
------- -------
Investing Activities
Proceeds from maturities of investment securities
and interest-earning deposits 2,800 7,750
Purchases of investment securities (7,220) (7,561)
Principal repayments of
mortgage-related securities 553 241
Purchase of mortgage-related securities (989) (5,697)
Loan originations and purchases (84,614) (79,344)
Loan principal repayments 69,947 61,811
Purchases of office properties and equipment (661) (225)
Purchase of Federal Home Loan Bank stock (500) (5)
------- -------
NET CASH USED BY INVESTING ACTIVITIES (20,684) (23,030)
Financing Activities
Net increase in deposits 19,452 5,218
Net increase (decrease) in short-term borrowings (9,728) 8,130
Proceeds from long term borrowings 33,275 24,500
Repayments of long term borrowings (22,500) (10,000)
Maturity of security sold under
agreement to repurchase (1,000)
Cash dividends paid (1,412) (1,349)
Purchase of treasury stock (441) (2,868)
Proceeds from exercise of stock options 465 162
Net increase in advance payments by
borrowers for taxes and insurance 1,016 403
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 19,127 24,196
INCREASE IN CASH AND CASH EQUIVALENTS 3,269 6,064
Cash and cash equivalents at beginning of period 3,563 1,274
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,832 $ 7,338
======= =======
Supplemental Information to the Statement of Cash Flows:
Interest credited and paid on deposits $10,259 $9,922
Interest paid on borrowings 2,266 923
Payments for federal and state income taxes 1,111 1,445
Loans transferred to foreclosed properties
and repossessed assets 175 189
See Notes to Unaudited Consolidated Financial Statements
</TABLE>
<PAGE>
FIRST NORTHERN CAPITAL CORP.
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
(1) The consolidated financial statements include the accounts of First Northern
Capital Corp. ("First Northern" or the "Company") and its wholly-owned
subsidiary First Northern Savings Bank, S.A. and its subsidiaries
(collectively, the "Savings Bank"): Great Northern Financial Services
Corporation ("GNFSC"), First Northern Investments Incorporated ("FNII"),
Keystone Financial Services, Incorporated ("Keystone") and First Northern
Financial Services, Incorporated. All significant intercompany balances and
transactions have been eliminated according to generally accepted
accounting principles. The Savings Bank's ownership of Savings Financial
Corporation ("SFC"), a 50% owned subsidiary, is accounted for by the
equity method.
(2) The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information, Rule 10-01 of Regulation S-X and the instructions
to Form 10-Q. The financial statements do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial information. In the opinion of First
Northern, the accompanying Unaudited Consolidated Statements of Financial
Condition, Unaudited Consolidated Statements of Income and Unaudited
Consolidated Statements of Cash Flows contain all adjustments, which are
of a normal recurring nature, necessary to present fairly the consolidated
financial position of the Company and subsidiaries at June 30, 1997 and
December 31, 1996, the results of their operations for the three and six
months ended June 30, 1997 and 1996, and their cash flows for the six
months ended June 30, 1997 and 1996. The accompanying Unaudited
Consolidated Financial Statements and related notes should be read in
conjunction with First Northern's 1996 Annual Report to Stockholders.
(3) In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share," which is effective for interim and annual
periods ending after December 15, 1997. At that time, First Northern will
be required to change the method currently used to compute earnings per
share and to restate all prior periods. Under the new requirements,
primary earnings per share will be replaced by basic earnings per share and
the dilutive effect of stock options will be excluded. Statement No. 128
will increase primary earnings per share $0.01 for the three months ended
June 30, 1997, and will have no impact on primary earnings per share for
the three months ended June 30, 1996. Statement No. 128 will increase
primary earnings per share $0.01 for the six months ended June 30, 1997 and
1996, respectively. The impact of Statement No. 128 on the calculation
of fully diluted earnings per share for these quarters is not material.
<PAGE>
(4) Securities Available-for-Sale
The amortized cost and estimated fair values of securities
available-for-sale are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
--------- ---------- ---------- ----------
(In Thousands)
At June 30, 1997:
<S> <C> <C> <C> <C>
Asset Management Funds $ 490 $ (7) $ 483
Federal Home Loan Mortgage
Corporation stock 33 $807 840
U.S. government and
agency securities 6,237 29 (11) 6,255
------ ---- ---- ------
6,760 836 (18) 7,578
Mortgage-related securities 1,457 4 1,461
------ ---- ---- ------
$8,217 $840 $(18) $9,039
====== ==== ==== ======
At December 31, 1996:
Asset Management Funds $ 476 $ (5) $ 471
Federal Home Loan Mortgage
Corporation stock 33 $629 662
U.S. government and
agency securities 4,495 22 (15) 4,502
------ ---- ---- ------
5,004 651 (20) 5,635
Mortgage-related securities 1,828 9 1,837
------ ---- ---- ------
$6,832 $660 $(20) $7,472
====== ==== ==== ======
</TABLE>
(5) Securities Held-to-Maturity
The amortized cost and estimated fair values of investment securities
held-to-maturity, which consist of U.S. government and agency securities,
are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
--------- ---------- ---------- ----------
(In Thousands)
<S> <C> <C> <C> <C>
At June 30, 1997 $19,242 $56 $(28) $19,270
======= === ==== =======
At December 31, 1996 $16,583 $86 $(36) $16,633
======= === ==== =======
</TABLE>
At June 30, 1997, these investment securities have the following maturities:
<TABLE>
<CAPTION>
Amortized Estimated
Cost Fair Value
--------- ----------
(In Thousands)
<S> <C> <C>
Due in one year or less $ 7,504 $ 7,535
Due after one year through 5 years 11,738 11,735
------- -------
$19,242 $19,270
======= =======
</TABLE>
The amortized cost and estimated fair values of mortgage-related securities
held-to-maturity are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
--------- ---------- ---------- ------------
(In Thousands)
At June 30, 1997:
<S> <C> <C> <C> <C>
Federal Home Loan
Mortgage Corporation $ 6,400 $41 $(102) $ 6,339
Federal National
Mortgage Association 3,732 11 ( 58) 3,685
------- --- ----- -------
$10,132 $52 $(160) $10,024
======= === ===== =======
At December 31, 1996:
Federal Home Loan
Mortgage Corporation $5,595 $50 $ (89) $5,556
Federal National
Mortgage Association 3,730 17 (56) 3,691
------ --- ----- ------
$9,325 $67 $(145) $9,247
====== === ===== ======
</TABLE>
(6) Loans Receivable
Loans receivable consist of the following:
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
--------- ------------
(In Thousands)
First mortgage loans:
<S> <C> <C>
One to four family residential $383,700 $376,189
Five or more family residential 21,429 20,154
Commercial real estate 8,786 9,975
Construction-residential 17,841 16,306
Construction-commercial 1,052 1,701
Other 2,127 1,900
-------- --------
434,935 426,225
Consumer loans:
Consumer 18,621 18,179
Second mortgage 64,122 59,148
Automobile 63,692 60,339
-------- --------
146,435 137,666
-------- --------
581,370 563,891
Less:
Undisbursed loan proceeds 8,745 5,942
Allowance for losses 3,043 2,937
Unearned loan fees 1,002 1,017
-------- --------
12,790 9,896
-------- --------
$568,580 $553,995
======== ========
</TABLE>
(7) The weighted average number of shares outstanding, including common stock
equivalents, for the three months ended June 30, 1997 and 1996, were
4,524,560 and 4,569,597, respectively and for the six months ended
June 30, 1997 and 1996, were 4,516,767 and 4,632,175, respectively.
(8) Certain amounts in 1996 financial statements have been reclassified to
conform to the 1997 presentations.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CAUTIONARY FACTORS
This 10-Q contains various forward-looking statements concerning the Company's
prospects that are based on the current expectations and beliefs of management.
Forward-looking statements may also be made by the Company from time to time
in other reports and documents as well as oral presentations. When used in
written documents or oral statements, the words "anticipate," "believe,"
"estimate," "expect," "objective" and similar expressions are intended to
identify forward-looking statements. The statements contained herein and such
future statements involve or may involve certain assumptions, risks and
uncertainties, many of which are beyond the Company's control, that could
cause the Company's actual results and performance to differ materially from
what is expected. In addition to the assumptions and other factors referenced
specifically in connection with such statements, the following factors could
impact the business and financial prospects of the Company: general economic
conditions; legislative and regulatory initiatives; monetary and fiscal
policies of the federal government; deposit flows; disintermediation; the
cost of funds; general market rates of interest; interest rates or investment
returns on competing investments; demand for loan products; demand for
financial services; changes in accounting policies or guidelines; and changes
in the quality or composition of the Savings Bank's loan and investment
portfolios and the investment portfolio of FNII.
FINANCIAL CONDITION
BALANCE SHEET
CASH AND CASH EQUIVALENTS. Cash and cash equivalents were $3.3 million greater
at June 30, 1997, as compared to December 31, 1996, primarily as the result
of regular month end customer deposits made to demand deposit accounts on
June 30, 1997. These funds are not available to be used until the following
day. Any cash that is not immediately needed to fund loans or operations is
invested in overnight interest-earning deposits.
SECURITIES AVAILABLE-FOR-SALE. Investment securities available-for-sale
increased approximately $1.9 million as of June 30, 1997, as compared to
December 31, 1996, primarily as the result of purchases of U.S. Government
and Agency securities and increases in the market value of some investment
securities.
SECURITIES HELD-TO-MATURITY. Investment securities held-to-maturity increased
$2.7 million primarily as a result of purchases of U.S. Government and agency
securities.
Mortgage-related securities held-to-maturity increased $0.8 million primarily
as a result of purchases of mortgage-related securities.
LOANS HELD FOR SALE. At June 30, 1997, First Northern had $0.6 million of
fixed interest rate mortgage and education loans classified as loans held for
sale. First Northern originates and sells most of its 30 year fixed interest
rate mortgage loans and all of its education loans. Fifteen (15) year fixed
interest rate mortgage loan originations are retained in First Northern's loan
portfolio.
LOANS RECEIVABLE. Loans receivable increased $14.6 million at June 30, 1997, as
compared to December 31, 1996, as a result of mortgage loan originations and
purchases. Loan originations and purchases are as follows:
LOAN ORIGINATIONS AND PURCHASES
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ---------------
1997 1996 1997 1996
(In Thousands) (In Thousands)
Mortgage loans originated and purchased:
<S> <C> <C> <C> <C>
Construction $ 7,636 $ 9,576 $ 9,914 $15,279
Loans on existing property 18,893 13,842 24,651 21,217
Refinancing 9,389 8,366 16,224 22,570
Other loans 371 673 977 1,396
------- ------- ------- -------
Total mortgage loans originated
and purchased 36,289 32,457 51,766 60,462
Consumer loans originated and purchased:
Consumer 3,205 3,098 5,092 4,687
Second mortgage 11,310 9,567 18,794 15,889
Automobile 13,776 10,474 22,194 16,711
Education 98 106 1,052 748
------- ------- ------- -------
Total consumer loans originated
and purchased 28,389 23,245 47,132 38,035
------- ------- ------- -------
Total loans originated and purchased $64,678 $55,702 $98,898 $98,497
======= ======= ======= =======
</TABLE>
Mortgage loan originations and purchases for the second quarter of 1997
increased as compared to the same period in 1996 primarily as the result of
purchases of single-family residential mortgage loans and multi-family
participations located in Wisconsin. First Northern purchases mortgage loans
and participates in multi-family originations, in Wisconsin, when the return on
these loans is greater than alternative investments. In the second quarter of
1997, First Northern purchased approximately $4.4 million of such loans.
Mortgage loan originations within First Northern's normal market area for the
second quarter of 1997 and the six months ended June 30, 1997 as compared to
the same periods in 1996 have decreased primarily as a result of a general
slowdown of home buying and building activity in First Northern's market area.
Management believes the slowdown in home buying and building is the result of
a slight increase in mortgage loan origination interest rates early in 1997,
and since early 1997, the relatively stable interest rate environment which
can reduce the dollar amount of mortgage loans that are refinanced.
First Northern sold $2.4 million of fixed interest rate mortgage loans in the
second quarter of 1997 as compared to $3.3 million for the same period in 1996
and $5.3 million in the first six months of 1997 as compared to $2.6 million
for the same period in 1996. First Northern retains all adjustable interest
rate mortgage loan originations in its portfolio; whereas, most 30 year fixed
interest rate mortgage loan originations are sold in the secondary market.
In addition, $2.3 million of education loans were sold in the six months ended
June 30, 1997. In 1995, First Northern's management contractually committed to
sell its existing education loan portfolio and to sell its ongoing education
loan originations.
Consumer loan originations and purchases increased in the second quarter of
1997 as compared to the second quarter of 1996 primarily as a result of an
increase in automobile loan originations in the Savings Bank's jointly owned
subsidiary, SFC, and second mortgage loan originations. SFC automobile loan
originations increased as a result of developing new business relationships
with automobile dealers throughout the state of Wisconsin. First Northern has
actively promoted second mortgage loan originations by establishing a reduced
introductory interest rate and increasing its direct mail and newspaper
advertising.
DEPOSITS. Deposits increased $19.6 million for the first six months of 1997 as
a result of offering competitive interest rates, the acquisition of "jumbo"
(CD's in excess of $100,000) deposits and increased demand deposits. At times,
jumbo deposits are a cheaper source of funds than retail deposits or borrowing.
First Northern's jumbo deposits have increased $8.1 million in
the first six months of 1997.
BORROWINGS. Federal Home Loan Bank ("FHLB") borrowings increased slightly in
the first six months of 1997, primarily as the result of the growth in deposits
and loan originations that were up slightly over 1996. First Northern will
borrow monies if the borrowing interest rate is a less costly form of funding
for loans and investments than acquiring deposits. At June 30, 1997,
$69.4 million are fixed interest rate borrowings and $7.9 million are
overnight borrowings. First Northern anticipates that it will continue to
utilize borrowings throughout 1997 if this incrementally adds to the overall
profitability of the Company.
ADVANCE PAYMENTS BY BORROWERS FOR TAXES AND INSURANCE. Advance payments by
borrowers for taxes and insurance ("escrow") increased $1.0 million at
June 30, 1997, as compared to December 31, 1996. The increase in escrow
dollars was the result of mortgage loan customers accumulating escrow dollars
for payment of their real estate taxes.
STOCKHOLDERS' EQUITY. First Northern paid a cash dividend of $0.16 per share
on May 14, 1997 to stockholders of record on April 30, 1997. The increase of
$0.01 per share represents a 6.7% increase over the second quarter of 1996 cash
dividend of $0.15 per share.
On October 19, 1996, First Northern approved a second stock repurchase program
to repurchase 219,057 shares (5% of total shares outstanding) through the open
market. On April 18, 1997, the second stock repurchase program was extended to
October 17, 1997. These repurchased shares will be used to satisfy exercises
of stock options. At June 30, 1997, 30,400 shares had been purchased at an
average price of $17.23 per share or a total of $0.5 million.
Subsequent to the end of the second quarter of 1997, First Northern's Board of
Directors declared a cash dividend, on a pre-split basis, of $0.16 per share
and two-for-one stock split in the form of a 100% stock dividend to
stockholders' of record on August 1, 1997. The cash dividend will be paid on
August 15, 1997 and the 100% stock dividend will be paid on August 18, 1997.
<PAGE>
ASSET QUALITY
First Northern currently classifies any loan on which a payment is 90 days or
more past due as non-performing. The following table summarizes non-performing
loans and assets:
<TABLE>
<CAPTION>
NON-PERFORMING LOANS AND ASSETS
At June 30 At December 31
1997 1996
---------- --------------
(Dollars in Thousands)
<S> <C> <C>
Non-accrual mortgage loans $222 $509
Non-accrual consumer loans 74 235
---- ----
Total non-performing loans 296 744
Properties subject to foreclosure 2 157
Foreclosed properties and
repossessed assets 83 32
---- ----
Total non-performing assets $381 $933
==== ====
Non-performing loans as a percent
total loans .05% .13%
=== ===
Non-performing assets as a percent
of total assets .06% .15%
=== ===
</TABLE>
Total non-performing loans decreased $448,000 as of June 30, 1997, as compared
to December 31, 1996, primarily as a result of the good economy in First
Northern's market areas which assisted loan customers to bring their loan
current. Management believes non-performing loans and assets, expressed as a
percentage of total loans and assets, are far below state and national
averages. There are no accruing, material loans which, at June 30, 1997,
management has reason to believe will become non-performing or result in
potential losses.
In addition, management believes that the Savings Bank's allowances for loan
losses are adequate. While management uses available information to recognize
losses on loans and real estate owned, future additions to the allowances may
be necessary based on changes in economic conditions. Furthermore, various
regulatory agencies, as an integral part of their examination process,
periodically review First Northern's allowances for losses on loans and real
estate owned. Such agencies may require First Northern to recognize additions
to the allowances based on their judgment of information available to them at
the time of their examination.
<PAGE>
All of First Northern's loans are domestic. A summary of the allowance for
losses is shown below.
<TABLE>
<CAPTION>
LOAN LOSS ALLOWANCES
At and for the At and for the
Six Months Ended Year Ended
June 30, 1997 December 31, 1996
----------------- ------------------
(Dollars in Thousands)
Mortgage Loans:
<S> <C> <C>
Balance at the beginning of the period $1,453 $1,578
Provisions for the period 100 10
Recoveries
Commercial real estate 1 1
Transfer of loss reserve (136)
------ ------
Balance at the end of the period 1,554 1,453
Consumer Loans:
Balance at the beginning of the period 1,484 1,030
Provisions for the period 40 360
Charge-offs
Consumer (17) (23)
Automobile (27) (43)
Recoveries
Consumer 6 11
Automobile 3 13
Transfer of loss reserve 136
------ ------
Balance at the end of the period 1,489 1,484
------ ------
Total loan loss allowances at the
end of the period $3,043 $2,937
====== ======
Allowance as a percent of total loans .53% .53%
=== ===
Allowance as a percent of
non-performing loans 1,028.04% 394.76%
======== ======
Allowance as a percent of total assets .48% .48%
=== ===
Allowance as a percent of
non-performing assets 798.69% 314.79%
====== ======
</TABLE>
<PAGE>
RESULTS OF OPERATIONS
AVERAGE BALANCE SHEET AND YIELD/RATE ANALYSIS
The following table presents, for the periods indicated, the total dollar
amount of interest income from average interest-earning assets, the resultant
yields, and the interest expense on average interest-bearing liabilities,
expressed both in dollars and rates. No tax equivalent adjustments were made.
Average balances are derived from average daily balances. The yields and rates
are established by dividing income or expense dollars by the average balance
of the asset or liability. The yields and rates for the six months ended
June 30, 1997 and 1996 have been annualized.
<TABLE>
<CAPTION>
Six Months Ended June 30
----------------------------------------------------
1997 1996
----------------------------------------------------
Interest Interest
Average Earned/ Yield/ Average Earned/ Yield/
Balance Paid Rate Balance Paid Rate
--------- -------- ------- -------- -------- ------
(Dollars In Thousands)
Interest-earning assets (1):
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans $419,927 $15,349 7.31% $392,763 $14,047 7.15%
Consumer loans 141,710 5,911 8.34 118,592 5,035 8.49
Investment securities (2) 27,948 877 6.28 24,677 772 6.26
Interest-earning deposits 732 22 6.01 1,689 45 5.33
Mortgage-related securities (2) 10,959 350 6.39 9,376 307 6.55
-------- ------- ---- -------- ------ ----
TOTAL 601,276 22,509 7.49 547,097 20,206 7.39
Interest-bearing liabilities:
Passbook accounts 59,148 637 2.15 58,033 652 2.25
NOW and variable rate insured
money market accounts 103,193 1,229 2.38 99,976 1,155 2.31
Time deposits 302,391 8,468 5.60 293,351 8,330 5.68
Advance payments by borrowers
for taxes and insurance 3,765 42 2.23 4,064 45 2.21
Borrowings 78,761 2,299 5.84 35,206 1,025 5.82
-------- ------- ---- -------- ------ ----
TOTAL 547,258 12,675 4.63 490,630 11,207 4.57
-------- ------- ---- -------- ------ ----
Net interest-earning assets
balance and interest
rate spread $ 54,018 2.86% $ 56,467 2.82%
======== ==== ======== ====
Average interest-earning
assets, net interest income
and net yield on average
interest-earning assets $601,276 $ 9,834 3.27% $547,097 $ 8,999 3.29%
======== ======= ==== ======== ======= ====
Average interest-earning assets
to interest-bearing liabilities 109.9% 111.5%
===== ===== ====
</TABLE>
- - -------------------------
(1) For the purpose of these computations, non-accruing loans are included in
the average loan amounts outstanding.
(2) For the purpose of these computations, the available-for-sale investment
securities and mortgage-related securities are presented and yields
calculated based upon the historical cost basis.
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------
1996
--------------------------------------
Interest
Average Earned/ Yield/
Balance Paid Rate
----------- ---------- --------
(Dollars In Thousands)
Interest-earning assets (1):
<S> <C> <C> <C>
Mortgage loans $401,652 $28,831 7.18%
Consumer loans 126,177 10,725 8.50
Investment securities (2) 25,215 1,582 6.27
Interest-earning deposits 1,220 66 5.41
Mortgage-related securities (2) 10,344 672 6.50
-------- ------- ----
TOTAL 564,608 41,876 7.42
Interest-bearing liabilities:
Passbook accounts 58,744 1,313 2.24
NOW and variable rate insured
money market accounts 102,338 2,388 2.33
Time deposits 292,477 16,543 5.66
Advance payments by borrowers
for taxes and insurance 7,142 162 2.27
Borrowings 48,393 2,797 5.78
-------- -------- ----
TOTAL 509,094 23,203 4.56
-------- -------- ----
Net interest-earning assets balance
and interest rate spread $ 55,514 2.86%
======== ====
Average interest-earning
assets, net interest income
and net yield on average
interest-earning assets $564,608 $18,673 3.31%
======== ======= ====
Average interest-earning assets
to interest-bearing liabilities 110.9%
=====
</TABLE>
- - ---------------------
(1) For the purpose of these computations, non-accruing loans are included
in the average loan amounts outstanding.
(2) For the purpose of these computations, the available-for-sale investment
securities and mortgage-related securities are presented and yields
calculated based upon the historical cost basis.
<PAGE>
RATE VOLUME ANALYSIS OF NET INTEREST INCOME
The interaction of changes in volume and rates earned or paid with regard to
interest-earning assets and interest-bearing liabilities has a significant
impact on net income between periods. The volume of interest-earning dollars
in loans and investments compared to the volume of interest-bearing dollars in
deposits and borrowings combined with the interest rate spread produces the
changes in net interest income between periods.
The following table sets forth the relative contribution of changes in volume
and effective interest rates on changes in net interest income for the periods
indicated.
<TABLE>
<CAPTION>
Six Months Ended June 30
-------------------------------
1997 vs 1996
-------------------------------
Increase(decrease) due to:
-------------------------------
(In Thousands)
Rate/
Rate Volume Volume Total
------ -------- -------- ------
Interest-earning assets:
<S> <C> <C> <C> <C>
Mortgage loans $314 $ 966 $ 22 $1,302
Consumer loans (89) 982 (17) 876
Investment securities 2 103 105
Interest-earning deposits 6 (26) (23)
Mortgage-related securities (8) 52 (1) 43
---- ------ ---- ------
TOTAL $225 $2,077 $ 1 2,303
==== ====== ==== ------
Interest-bearing liabilities:
Passbook accounts $ (27) $ 13 $ (1) (15)
NOW and variable rate
insured money market accounts 35 38 1 74
Time deposits (115) 257 (4) 138
Advance payments by borrowers
for taxes and insurance (3) (3)
Borrowings 4 1,266 4 1,274
----- ------ ---- ------
TOTAL $(103) $1,571 $ -- 1,468
===== ====== ==== -------
Net change in net interest
income $ 835
=======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31
---------------------------------
1996 vs 1995
---------------------------------
Increase(decrease) due to:
---------------------------------
(In Thousands)
Rate/
Rate Volume Volume Total
------- ------- -------- --------
Interest-earning assets:
<S> <C> <C> <C> <C>
Mortgage loans $ 734 $1,086 $ 29 $ 1,849
Consumer loans 71 701 5 777
Investment securities (52) 23 (1) (30)
Interest-earning deposits (13) (24) 3 (34)
Mortgage-related securities (30) 347 (28) 289
------ ------ ---- ------
TOTAL $ 710 $2,133 $ 8 2,851
====== ====== ==== ------
Interest-bearing liabilities:
Passbook accounts $ (149) $ (40) $ 4 (185)
NOW and variable rate
insured money market accounts 102 381 21 504
Time deposits 340 13 353
Advance payments by borrowers
for taxes and insurance 15 (29) (2) (16)
Borrowings (340) 1,000 (149) 511
------ ------ ----- ------
TOTAL $ (32) $1,325 $(126) 1,167
====== ====== ===== ------
Net change in net interest
income $1,684
======
</TABLE>
STATEMENTS OF INCOME
GENERAL. Net income for the second quarter and the first six months of 1997 as
compared to the second quarter and the first six months of 1996 increased 23.5%
and 25.3%, respectively. The increase was primarily the result of increased
average interest-earning assets, an increase in non-interest income and a
reduction in Savings Association Insurance Fund ("SAIF") deposit insurance
premiums.
Interest Income. Interest income on mortgage loans increased $702,000 in the
second quarter of 1997 and $1,302,000 for the six months ended June 30, 1997,
as compared to the same periods in 1996 as a result of the increased dollar
amount of mortgage loans outstanding and the increased average yield on the
mortgage portfolio. The average mortgage loans outstanding for the six
months ended June 30, 1997, increased 6.9% as compared to the average mortgage
loans outstanding for the same period in 1996. The mortgage loan portfolio
growth is a result of a stable interest rate environment, competitive pricing
of adjustable interest rate mortgage loans and increased marketing of mortgage
loans. The increased yield on the mortgage loan portfolio is primarily the
result of interest rate adjustments on existing adjustable interest rate
mortgage loans in the portfolio.
Interest income on consumer loans increased $495,000 and $876,000 for the three
months and six months ended June 30, 1997, as compared to the same periods in
1996, as a result of increased consumer loans outstanding. Average consumer
loans outstanding for the six months ended June 30, 1997, were $23.1 million
more than average consumer loans outstanding for the six months ended
June 30, 1996. This increase in average consumer loans is primarily the result
of increased marketing of second mortgage loans and the use of a lower
introductory interest rate which remains constant for an initial period of one
year. After the initial fixed interest rate period, the interest rate is
adjusted to Midwest Prime Interest Rate, as published in the midwest region of
The Wall Street Journal, plus a margin of 2%.
Average investment securities outstanding for the first six months of 1997 as
compared to the same period in 1996 increased $3,271,000 which resulted in an
increase in investment securities income of $72,000 for the second quarter of
1997 and $105,000 for the six months ended June 30, 1997. First Northern
purchases investment securities to aid in its asset and liability management
and when the rate of return on an investment is attractive in comparison with
loans or other types of investments.
Interest income on mortgage-related securities in the second quarter of 1997
was approximately equal to the second quarter of 1996 however, for the six
months ended June 30, 1997, as compared to the same period in 1996, increased
$43,000 as a result of additional mortgage-related securities outstanding.
INTEREST EXPENSE. Interest expense on deposits increased $234,000 in the
second quarter of 1997 and $197,000 for the six months ended June 30, 1997,
as compared to the same periods in 1996, as a result of increased dollar
amount of deposits. Average deposits increased $13,372,000 for the six months
ended June 30, 1997, as compared to the six months ended June 30, 1996. First
Northern has utilized non-traditional time deposit terms as well as "special"
interest rates on those non-traditional time deposit terms to attract new
deposits. In addition, the Savings Bank has acquired jumbo deposits to aid in
its deposit growth.
Interest expense on borrowings increased substantially in the second quarter of
1997 and the first six months of 1997, as compared to the same periods in 1996,
as a result of increased average borrowings outstanding. First Northern
anticipates it will continue to borrow in the third quarter of 1997 to fund
anticipated loan demand.
Provision for Loan Losses. First Northern increased its provision for loan
losses in the second quarter of 1997, and the first six months of 1997, as a
result of growth in the loan portfolio. The loan loss allowance as of
June 30, 1997, was $3,043,000 or .53% of total loans and 1,028.0% of
non-performing loans.
Management believes that the current loan loss allowance is adequate; however,
the adequacy of the loan loss allowance is reviewed as historical loan loss
experience changes, the size and composition of the loan portfolio changes,
changes occur in the general economy and as may otherwise be deemed necessary.
NON-INTEREST INCOME. Loan fees and service charges increased $18,000 and
$32,000 for the three and six months ended June 30, 1997, respectively, as
compared to the same periods in 1996 as a result of a pre-payment fee
collected on a large mortgage loan payoff, increased charges collected for
late payments on loans and fees collected and accrued for the overdraft
protection feature on checking accounts.
Deposit account service charges increased substantially in the second quarter
of 1997 and in the six months ended June 30, 1997, primarily as a result of
increased NOW (checking) accounts and their related fees and debit card fee
income. Each time a Savings Bank debit card is used, a fee, which varies
with each merchant, is paid to the Savings Bank by the debit card company.
The Savings Bank promotes the use of its debit card by direct mail.
Insurance commissions decreased $34,000 in the second quarter of 1997 and
increased $11,000 for the six months ended June 30, 1997, as compared to the
same periods in 1996, primarily as a result of bonuses earned from insurance
carriers and the timing of when those bonuses are paid. Insurance bonuses can
be earned if First Northern obtains a predetermined threshold of insurance
sales and insurance losses are at or below another threshold.
Gains on the sale of loans increased $10,000 in the second quarter of 1997 and
decreased $32,000 for the six months ended June 30, 1997, as compared to the
same periods in 1996 as a result of decreased loan sales. For the three
months ended June 30, 1997, $2.4 million of fixed interest rate mortgage loans
were sold as compared to $3.3 million in the second quarter of 1996 and for the
six months ended June 30, 1997, $5.3 million of fixed interest mortgage loans
were sold as compared to $6.3 million for the six months ended June 30, 1996.
In addition, $1.5 million and $2.3 million of education loans were sold in the
second quarter of 1997 and for the six months ended June 30, 1997,
respectively, as compared to $1.2 million and $3.0 million for the three and
six months ended June 30, 1996, respectively.
Other income increased $29,000 in the second quarter of 1997 and $74,000 for
the six months ended June 30, 1997, as compared to the same period in 1996
primarily as a result of increased fees earned on brokerage commissions. GNFSC
offers full brokerage service to the public, which includes but is not limited
to, mutual fund sales, tax-deferred annuity sales and the sale of stock.
NON-INTEREST EXPENSE. Compensation expense increased $93,000 in the second
quarter of 1997 and $197,000 for the first six months of 1997 as a result of
salary increases and related expenses and education costs. First Northern
has continued its emphasis on employee education, especially with the
introduction of a new teller system in the first quarter of 1997.
Federal insurance premiums decreased $184,000 in the second quarter of 1997 and
$385,000 for the six months ended June 30, 1997, as a result of reduced SAIF
deposit insurance premiums and a $15,000 refund of deposit insurance premiums
from prior periods. In 1997, First Northern, like other SAIF insured financial
institutions, had its SAIF insurance premium reduced to $0.065 per one hundred
dollars of assessable deposits as compared to $0.23 per one hundred dollars of
assessable deposits in 1996. This premium reduction was the result of the
special SAIF assessment charged to each SAIF insured institution in the third
quarter of 1996 to recapitalize the SAIF insurance fund. First Northern's
special assessment, which was paid in the third quarter of 1996,
was $2,856,000.
Data processing expense increased $81,000 in the second quarter of 1997 and
$116,000 for the six months ended June 30, 1997, primarily as the result of
the installation of a new PC based teller system. First Northern completed
its installation of a new PC based teller system in the first quarter of 1997
to further automate and improve the delivery of information and customer
service.
Marketing expense decreased $11,000 for the three months ended June 30, 1997,
and increased $23,000 for the six months ended June 30, 1997, as compared to
the same periods in 1996. The decrease in the second quarter of 1997 is
primarily the result of timing of the payment of marketing expense. Marketing
expense increased for the six months ended June 30, 1997, as a result of
increased marketing of deposit and loan products. First Northern believes
that growth in lending and deposit volumes necessitates increased marketing
and hence, increased marketing costs.
Other expenses increased for the three and six months ended June 30, 1997, as
compared to the same period in 1996 primarily as the result of costs
associated with SFC operating costs, bad check charge-offs and costs associated
with the debit card.
INCOME TAXES. The effective income tax rate for the second quarter of 1997 was
38.0% as compared to 37.1% for the same period in 1996.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY
Federal regulations historically have required the Savings Bank to maintain
minimum levels of liquid assets. The required percentage has varied from
time to time based upon economic conditions and savings flows, and is
currently 5% of net withdrawable deposits and borrowings payable on demand or
in one year or less during the preceding calendar month. Liquid assets for
purposes of this ratio include cash, certain time deposits, U.S. Government
and agency securities and other obligations generally having remaining
maturities of less than five years. The Savings Bank has historically
maintained its liquidity ratio at a level in excess of that required by the
OTS (as defined below). The Savings Bank's monthly average short-term
liquidity and total liquidity ratio at June 30, 1997, was 3.34% and 6.47%,
respectively, as compared to 3.04% and 5.97%, respectively, at
December 31, 1996. The June 30, 1997, liquidity ratios increased slightly as
compared to the ratios at December 31, 1996, as a result of the purchase of
investment securities. The Savings Bank believes that its maintenance of
excess liquidity, above the 5% federally required total liquidity ratio, is
an appropriate strategy to aid in proper asset and liability management.
Liquidity management is both a daily and long-term responsibility of
management. The Savings Bank adjusts its investments in liquid assets based
upon managements' assessment of: (i)expected loan demand; (ii) expected
deposit flows; (iii) yields available on interest-earning deposits; and
(iv) the objectives of its asset and liability management program. Excess
liquidity is invested generally in interest-earning overnight deposits and
other short-term government and agency obligations. When the Savings Bank
requires funds beyond its ability to generate them internally, it can borrow
funds from the FHLB of Chicago or other sources. The FHLB of Chicago limits
advances to member institutions to an aggregate amount not to exceed 35% of the
member institution's total assets. Wisconsin law permits First Northern to
borrow, without the prior written approval of the Wisconsin Department of
Financial Institutions --- Division of Savings Institutions, to borrow in the
aggregate amount not to exceed 50% of its total assets.
CAPITAL RESOURCES AND REGULATORY INFORMATION
First Northern's net worth to total assets ratio at June 30, 1997, for State of
Wisconsin regulatory requirements was 11.1% or almost two times the Wisconsin
minimum legal requirement of 6.00% of total assets established by the
Division of Savings Institutions of the Department of Financial Institutions,
which regulates First Northern. The Office of Thrift Supervision ("OTS")
adopted capital regulations for savings institutions effective
December 7, 1989. The capital rules require savings associations to meet
three separate capital standards: (i)Tangible capital equal to 1.5% of adjusted
total assets; (ii) Core capital equal to 3% of adjusted total assets; and
(iii) Risk-based capital equal to 8.0% of the value of risk weighted assets.
As of June 30, 1997, the most recent notification from the OTS categorized the
Savings Bank as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized the Savings Bank
must maintain minimum tangible, core and risk based ratios as set forth in
the table. As a state-chartered savings institution, the Savings Bank is also
subject to a minimum capital requirement of the State of Wisconsin. Management
believes, as of June 30, 1997, that the Savings Bank exceeds all capital
adequacy requirements to which it is subject. There are no conditions or
events since that notification that management believes have changed
the Savings Bank's categorization as well capitalized.
The Savings Bank's required and actual capital amounts and ratios are presented
in the following table.
<TABLE>
<CAPTION>
Excess
Required Actual Capital
Regulatory Over Required
Actual Capital Regulatory Capital
-------------- -------------- ------------------
Amount Rate Amount Rate Amount Rate
------ ---- ------ ---- ------ ----
(Dollars in Thousands)
As of June 30, 1997
<S> <C> <C> <C> <C> <C> <C>
Tangible Capital $66,153 10.4% $ 9,539 1.5% $56,714 8.9%
(to Tangible Assets)
Core Capital 66,153 10.4% 19,078 3.0% 47,075 7.4%
(to Tangible Assets)
Risk-Based Capital 69,196 17.1% 32,305 8.0% 36,891 9.1%
(to Risk-Weighted Assets)
State of Wisconsin Capital 70,764 11.1% 38,264 6.0% 32,500 5.1%
(to Total Assets)
As of December 31, 1996:
Tangible Capital $64,489 10.5% $ 9,204 1.5% $55,285 9.0%
(to Tangible Assets)
Core Capital 64,489 10.5% 18,409 3.0% 46,080 7.5%
(to Tangible Assets)
Risk-Based Capital 67,426 17.8% 30,295 8.0% 37,131 9.8%
(to Risk-Weighted Assets)
State of Wisconsin Capital 68,754 11.2% 36,915 6.0% 31,839 5.2%
(to Total Assets)
</TABLE>
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At First Northern's Annual Meeting of Stockholders held on
April 30, 1997, all of the Board of Directors' nominees named in the
tabulation of votes below were elected as directors, by the votes cast
for and withheld with respect to each nominee indicated, to serve for
a three year term for the class of directors whose terms expire in 2000.
There was no solicitation in opposition to the nominees proposed in the
Proxy Statement and there were no abstentions or broker non-votes with
respect to the election of directors.
NAME OF NOMINEE FOR WITHHELD
-------------------------------------------------------------------------
Directors with terms expiring in 2000
Thomas J. Lopina, Sr. 3,585,008 94,821
Robert B. Olson 3,585,008 95,220
Messrs. Michael D. Meeuwsen and J. Gus Swoboda terms as directors
continue until 1998. Messrs. Howard M. Frankenthal, Robert J. Mettner
and Richard C. Smits terms as directors continue until 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
See Exhibit Index following the signature page of this report,
which is incorporated herein by reference.
(b) Reports on Form 8-K:
No Form 8-K was filed during the quarter for which this report
is filed.
<PAGE>
SIGNATURE
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 Northern Capital Corp.
------------------------------------------
(Registrant)
Date: August 13, 1997 /S/ RICK B. COLBERG
-------------------------- -----------------------------------------
Rick B. Colberg
Vice President and Chief Financial Officer
(Mr. Colberg is also duly authorized to
sign on behalf of registrant)
<PAGE>
FIRST NORTHERN CAPITAL CORP.
(THE "REGISTRANT")
COMMISSION FILE NO. 0-27982
* * * * *
EXHIBIT INDEX
TO
SECOND QUARTER 1997 REPORT ON FORM 10-Q
Exhibit Incorporated Herein Filed or Submitted
Number Description By Reference To Herewith
- - ------- ------------------------------ ------------------- -----------------
11.1 Statement regarding computation
of per share earnings X
27.1 Financial Data Schedule, which is
submitted electronically to the
Securities and Exchange
Commission for information
only and not filed. X
<PAGE>
<TABLE>
<CAPTION>
Exhibit 11.1
FIRST NORTHERN CAPITAL CORP.
COMPUTATION OF NET INCOME PER COMMON SHARE
Three Months Six Months
Ended June 30 Ended June 30
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
PRIMARY:
<S> <C> <C> <C> <C>
Weighted average common shares
outstanding during each period 4,419,329 4,460,763 4,414,305 4,521,074
Incremental shares relating to:
Dilutive stock options outstanding
at end of each period (1) 105,231 108,834 102,462 111,101
--------- --------- --------- --------
4,524,560 4,569,597 4,516,767 4,632,175
========= ========= ========= =========
FULLY DILUTED:
Weighted average common shares
outstanding during each period 4,419,329 4,460,763 4,414,305 4,521,074
Incremental shares relating to:
Dilutive stock options outstanding
at end of each period (2) 125,584 115,260 132,921 114,364
--------- --------- --------- ----------
4,544,913 4,576,023 4,547,226 4,635,438
========= ========= ========= =========
NET INCOME FOR EACH PERIOD $1,459,119 $1,181,074 $2,844,186 $2,269,940
========== ========== ========== ==========
PER COMMON SHARE AMOUNTS:
Primary, as presented in
the Statement of Operations $0.32 $0.26 $0.63 $0.49
===== ===== ===== =====
Fully diluted $0.32 $0.26 $0.63 $0.49
===== ===== ===== =====
</TABLE>
- - -------------------------
Notes:
(1) Based on treasury stock method using average market price.
(2) Based on treasury stock method using period end market price, if higher
than average market price.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF FIRST NORTHERN CAPITAL CORP. FOR THE
SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 6,733,000
<INT-BEARING-DEPOSITS> 99,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9,039,000
<INVESTMENTS-CARRYING> 29,374,000
<INVESTMENTS-MARKET> 29,294,000
<LOANS> 572,191,000
<ALLOWANCE> 3,043,000
<TOTAL-ASSETS> 637,725,000
<DEPOSITS> 477,889,000
<SHORT-TERM> 7,894,000
<LIABILITIES-OTHER> 10,628,000
<LONG-TERM> 68,925,000
0
0
<COMMON> 71,889,000
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 637,725,000
<INTEREST-LOAN> 10,773,000
<INTEREST-INVEST> 642,000
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 11,415,000
<INTEREST-DEPOSIT> 5,273,000
<INTEREST-EXPENSE> 6,444,000
<INTEREST-INCOME-NET> 4,971,000
<LOAN-LOSSES> 65,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,334,000
<INCOME-PRETAX> 2,354,000
<INCOME-PRE-EXTRAORDINARY> 1,459,000
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</TABLE>
