<PAGE>
Page 1 of 19
Exhibit Index on Page 17
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 QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
0-14511
--------
(Commission File Number)
TODAY'S BANCORP, INC.
---------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-2902424
-------- ----------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
TODAY'S Bank Center
P.O. Box 30
Freeport, Illinois 61032
- -------------------------------------- ------
Address of principal executive offices) (Zip Code)
(815) 235-8459
---------------
(Registrant's telephone number)
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
--- ---
Number of shares of common stock outstanding:
Shares outstanding
Title of each class September 30, 1995
------------------- ------------------
Common stock, par value
$5.00 per share 2,742,865
<PAGE>
Page 2
Part I. Item I.
TODAY'S BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
unaudited
<TABLE>
<CAPTION>
September 30 December 31
---------------- ------------
1995 1994 1994
---- ---- -----
<S> <C> <C> <C>
ASSETS
Cash and due from banks................ $ 17,501 $ 17,489 $ 15,144
Federal funds sold..................... 16,650 1,200 11,570
-------- -------- --------
Total cash and cash equivalents 34,151 18,689 26,714
Mortgage loans held for sale........... 2,141 3,493 1,288
Time deposits in other banks........... 595 1,521 1,607
Trading account securities............. - - 6,350
Securities available for sale, at fair
value................................ 62,486 72,934 63,298
Securities held to maturity with
aggregate fair values of $44,410,
$36,910 and $35,476, respectively.... 44,170 37,260 36,243
Loans.................................. 352,813 323,567 330,782
Allowance for possible loan losses... (3,320) (3,247) (3,144)
-------- -------- --------
Net loans 349,493 320,320 327,638
Premises and equipment................. 12,911 12,549 12,637
Accrued interest and other assets...... 12,317 14,570 13,591
-------- -------- --------
Total assets $518,264 $481,336 $489,366
-------- -------- --------
-------- -------- --------
LIABILITIES
Deposits:
Non interest bearing................. $ 48,095 $ 41,118 $ 45,937
Interest bearing..................... 392,602 370,243 371,810
-------- -------- --------
Total deposits 440,697 411,361 417,747
Federal funds purchased, securities
sold under agreements to repurchase
and other short-term borrowings...... 13,102 12,258 13,130
Other liabilities...................... 3,754 3,640 3,860
Other borrowings....................... 15,647 14,122 13,797
-------- -------- --------
Total liabilities 473,200 441,381 448,534
-------- -------- --------
CAPITAL
Preferred stock, without par value:
Authorized - 200,000 shares, issuable
in series; none issued or outstanding - - -
Common stock, par value $5 per share:
Authorized - 6,000,000 shares;
Issued - 2,742,865, 2,705,745 and
2,705,745 shares, respectively;
Outstanding - 2,742,865, 2,692,003
and 2,705,257 shares, respectively. 13,717 13,529 13,529
Capital surplus........................ 6,354 5,918 6,036
Retained earnings...................... 24,809 21,563 22,396
Unrealized gain (loss) on securities... 184 (990) (1,127)
Treasury shares - None, 13,742 and........
488 shares, respectively, at cost.... - (65) (2)
-------- -------- --------
Total capital 45,064 39,955 40,832
-------- -------- --------
Total liabilities and capital $518,264 $481,336 $489,366
-------- -------- --------
-------- -------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Page 3
TODAY'S BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
unaudited
<TABLE>
<CAPTION>
Three Months Ended
September 30
-------------
1995 1994
---- ----
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans....................... $8,158 $6,247
Interest on federal funds sold and
time deposits in other banks................... 129 83
Interest and fees on mortgage loans
originated for sale............................ 73 196
Interest on investment securities
Taxable........................................ 1,401 1,132
Exempt from federal income taxes............... 255 269
------ ------
TOTAL INTEREST INCOME 10,016 7,927
------ ------
INTEREST EXPENSE
Interest on deposits............................. 4,643 3,325
Interest on federal funds purchased,
securities sold under agreement to
repurchase and other short-term borrowings..... 173 88
Interest on other borrowings..................... 276 117
------ ------
TOTAL INTEREST EXPENSE 5,092 3,530
------ ------
NET INTEREST INCOME BEFORE PROVISION
FOR POSSIBLE LOAN LOSSES 4,924 4,397
Provision for possible loan losses............... 285 129
------ ------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 4,639 4,268
------ ------
OTHER OPERATING INCOME
Trust department income.......................... 415 350
Service charges on deposit accounts.............. 470 364
Mortgage banking fees and gain on sale of
mortgage servicing rights...................... 275 359
Securities gains, net............................ 6 1
Other income..................................... 184 155
------ ------
TOTAL OTHER OPERATING INCOME 1,350 1,229
OTHER OPERATING EXPENSES
Salaries, wages and employee benefits............ 1,888 1,752
Net occupancy expense............................ 391 309
Furniture and equipment expense.................. 332 282
Printing, stationery and supplies................ 150 105
FDIC insurance expense........................... (28) 160
Data processing expense.......................... 244 208
Marketing and advertising........................ 170 74
Other expenses................................... 724 720
------ ------
TOTAL OTHER OPERATING EXPENSES 3,871 3,610
------ ------
Income before income taxes....................... 2,118 1,887
Income tax provision............................. 756 647
------ ------
NET INCOME $1,362 $1,240
------ ------
------ ------
Net income per common share...................... $ 0.50 $ 0.46
------ ------
------ ------
Dividends declared per common share.............. $0.1375 $0.125
------ ------
------ ------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Page 4
TODAY'S BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
unaudited
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-------------
1995 1994
---- ----
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans....................... $23,614 $ 17,304
Interest on federal funds sold and
time deposits in other banks................... 452 215
Interest and fees on mortgage loans
originated for sale............................ 152 720
Interest on investment securities
Taxable........................................ 4,132 3,139
Exempt from federal income taxes............... 749 822
------- -------
TOTAL INTEREST INCOME 29,099 22,200
------- -------
INTEREST EXPENSE
Interest on deposits............................. 13,335 9,305
Interest on federal funds purchased,
securities sold under agreement to
repurchase and other short-term borrowings..... 464 254
Interest on other borrowings..................... 806 319
------- -------
TOTAL INTEREST EXPENSE 14,605 9,878
------- -------
NET INTEREST INCOME BEFORE PROVISION
FOR POSSIBLE LOAN LOSSES 14,494 12,322
Provision for possible loan losses............... 615 367
------- -------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 13,879 11,955
------- -------
OTHER OPERATING INCOME
Trust department income.......................... 1,216 1,103
Service charges on deposit accounts.............. 1,347 1,002
Mortgage banking fees and gain on sale of
mortgage servicing rights...................... 587 505
Securities gains, net............................ 140 76
Other income..................................... 601 433
------- -------
TOTAL OTHER OPERATING INCOME 3,891 3,119
------- -------
OTHER OPERATING EXPENSES
Salaries, wages and employee benefits............ 5,783 5,581
Net occupancy expense............................ 1,102 794
Furniture and equipment expense.................. 991 797
Printing, stationery and supplies................ 543 342
FDIC insurance expense........................... 447 587
Data processing expense.......................... 781 678
Marketing and advertising........................ 500 247
Other expenses................................... 2,247 2,346
------- -------
TOTAL OTHER OPERATING EXPENSES 12,394 11,372
------- -------
Income before income taxes....................... 5,376 3,702
Income tax provision............................. 1,874 1,194
------- -------
NET INCOME $ 3,502 $ 2,508
------- -------
------- -------
Net income per common share...................... $ 1.29 $ 0.94
------- -------
------- -------
Dividends declared per common share.............. $ 0.40 $ 0.375
------- -------
------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Page 5
TODAY'S BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
unaudited
<TABLE>
<CAPTION>
Nine Months Ended
September 30
-------------
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income....................................... $ 3,502 $ 2,508
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation................................. 1,215 859
Amortization of goodwill..................... 284 153
Benefit for deferred income taxes............ (136) (37)
Provision for possible loan losses........... 615 367
Amortization of premiums, net................ 268 468
Securities gains, net........................ (63) (76)
Trading account security gains............... (77) -
Loans originated for sale.................... (35,163) (140,440)
Loans sold................................... 34,310 161,197
(Increase) decrease in accrued interest
and other assets........................... 299 (1,785)
Decrease in other liabilities................ (106) (928)
------- -------
Net cash provided by operating activities 4,948 22,286
------- -------
INVESTING ACTIVITIES
(Purchase of)/proceeds from maturities of time
deposits in other banks........................ 1,018 (183)
Proceeds from sale of trading account securities. 6,427 -
Securities available for sale:
Proceeds from sales, maturities and repayments
of mortgage-backed securities................ 632 1,969
Proceeds from sales of investment securities... 5,039 8,188
Proceeds from calls and maturities of
investment securities........................ 19,294 12,948
Purchase of investment securities.............. (22,125) (23,892)
Securities held to maturity:
Proceeds from sales, maturities and repayments
of mortgage-backed securities................ 2,023 4,809
Proceeds from sale of investment securities.... 347 -
Proceeds from calls and maturities of
investment securities........................ 1,560 3,195
Purchase of investment securities.............. (11,958) (5,687)
Net increase in loans held for portfolio......... (22,470) (39,890)
Payment for acquisitions, net of cash and cash
equivalents acquired of $2,613 - (3,487)
Purchases of premises and equipment.............. (1,489) (3,468)
------- -------
Net cash used by investing activities (21,702) (45,498)
------- -------
</TABLE>
<PAGE>
Page 6
TODAY'S BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(dollars in thousands)
unaudited
<TABLE>
<CAPTION>
Nine Months Ended
September 30
------------
1995 1994
---- ----
<S> <C> <C>
FINANCING ACTIVITIES
Net increase in deposits......................... $ 22,950 $ 27,799
Net increase (decrease) in federal funds
purchased, securities sold under agreements to
repurchase and other short-term borrowings..... (28) 2,336
Payment on other borrowings...................... (1,150) (16,178)
Cash dividends paid.............................. (1,089) (1,003)
Proceeds from exercise of stock options.......... 508 557
Increase in other borrowings..................... 3,000 10,300
------- -------
Net cash provided by financing activities....... 24,191 23,811
------- -------
Net increase in cash and cash equivalents 7,437 599
Cash and cash equivalents at beginning of period 26,714 18,090
------- -------
Cash and cash equivalents at end of period $ 34,151 $ 18,689
------- -------
------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Page 7
TODAY'S BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
(dollars in thousands)
Note 1 - Accounting Policies
The accompanying consolidated financial statements have been
prepared in accordance with accounting policies set forth in the
Company's 1994 Annual Report on Form 10-K and should be read in
conjunction with the notes to the consolidated financial
statements contained therein.
Note 2 - Consolidated Financial Statements
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principals for interim financial information and with the
instructions of Form 10-Q and Article 10 of Regulation S-X except
for the December 31, 1994 balance sheet which was derived from
audited financial statements, but does not include all
disclosures required by generally accepted accounting principles.
Certain reclassifications, which had no effect on net income,
have been made in the prior period financial statements to
conform with the current period's presentation.
In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at
September 30, 1995 and for all periods presented have been made.
All significant inter company balances and transactions have been
eliminated in consolidation. Results of operations for interim
periods are not necessarily indicative of the results that may be
expected for the entire fiscal year.
Note 3 - Non-cash Investing Activity
During the first nine months of 1995, the securities available
for sale were written up $2.1 million to reflect the current
market price at September 30, 1995. The offsetting entries were
to other assets which were decreased by $827 thousand to reflect
the deferred income tax impact and to the capital account,
unrealized gain (loss) on securities, which was increased by $1.3
million moving from a negative position of $1.1 million at
December 31, 1994 to a positive $184 thousand at September 30,
1995.
Note 4 - Change in Accounting for Impaired Loans
Effective January 1, 1995, the Company adopted Statement of
Financial Accounting Standard No. 114 (as amended by No. 118),
"Accounting by Creditors for Impairment of a Loan". As a result
of applying the new rules, certain impaired loans were written
down to the present value of expected future cash flows using
each loan's effective interest rate, or as a practical expedient,
at each loan's observable market price or the fair value of the
collateral if the loan was collateral dependent. A portion of
<PAGE>
Page 8
the allowance for loan losses was allocated to such loans. No
additional bad debt expense was incurred as a result of adopting
this standard. The average balance of impaired loans for the
first nine months of 1995 and the September 30, 1995 balance was
$1.3 million and $853 thousand, respectively. The portion of
allowance for loan losses allocated to the impaired loan balance
as of September 30, 1995 was $30 thousand. No interest income
was recognized on impaired loans for the nine month period ended
September 30, 1995.
Note 5 - Reorganization
Early in 1995, the Company combined its five subsidiary banks
into two separate banking units which are named TODAY'S BANK
(East and West). State Bank of Freeport, Bank of Pecatonica and
First State Bank of Rockford combined into a single entity on
January 1, 1995 and First National Bank of Galena and Tri-State
Bank merged on February 1, 1995.
In addition, the Company has changed the name of its mortgage
banking subsidiary to TODAY'S MORTGAGE SOURCE. Effective July 1,
1995, the Company restructured the activities of TODAY'S MORTGAGE
SOURCE. While still maintaining the present sales structure, all
operational support is now provided by an outside company.
The Company has set up a new financial services company called
TODAY'S FINANCIAL SERVICES COMPANY. TODAY'S FINANCIAL SERVICES
COMPANY includes the operations of trust, asset management, full
service investment brokerage, insurance and other fee-based
services, currently provided by the individual banks.
<PAGE>
Page 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(dollars in thousands)
The following discussion and analysis provides an overview of
significant factors which affected TODAY'S BANCORP, INC.'s
("TODAY") financial statements and results of operations. This
commentary is intended to provide readers with a more
comprehensive review than is apparent from the consolidated
financial statements and notes alone.
On September 30, 1994, TODAY acquired all of the outstanding
common stock of Tri-State Bank and Trust Company of East Dubuque
and all of the common stock of Tri-State Insurance Company. The
transaction has been treated as a purchase for accounting
purposes. Therefore, TODAY's consolidated balance sheets from
that date include the assets and liabilities of these companies;
however, earnings prior to that date are not included in the
consolidated statements of income.
EARNINGS OVERVIEW
The Company's third quarter earnings of $1,362 or $0.50 per
share, was greater than the $1,161 or $0.43 per share recorded in
the second quarter of 1995. Year-to-date earnings of $3,502 or
$1.29 per share, represent an increase of 39% or $0.35 per share
compared to nine months ending September 30, 1994.
The increase for the three month period ended September 30, 1995
was attributable to continued earning improvements at the Bank
affiliates and the mortgage subsidiary. Part of the earning
improvements in the bank affiliates resulted from the reduction
in the FDIC insurance premiums paid. On August 8, the Federal
Deposit Insurance Corporation's Board of Directors voted to
reduce the deposit insurance premiums paid to $0.04 per $100 for
"Well Capitalized Institutions" and refund the overpayment in
September. This resulted in a $268 refund of premiums previously
expensed. The projected savings for the fourth quarter of 1995
is approximately $200.
For the three months ended September 30, 1995, the mortgage
subsidiary incurred a net loss of $53 compared to a second
quarter net loss of $160. The Company began to out source
operational functions during the third quarter which resulted in
a reduction to fixed overhead costs and personnel.
TODAY's annualized return on average equity was 12.12% and
10.87%, respectively, for the three month and nine month periods
ending September 30, 1995. The return on average assets was 1.06%
and .94%, respectively, for the three month and nine month
periods ending September 30, 1995. For the same periods in 1994,
the annualized return on average equity was 12.44% and 8.44%,
respectively, while the annualized return on average assets was
1.15% and .79%, respectively.
<PAGE>
Page 10
NET INTEREST INCOME
Net interest income, defined as the difference between interest
income and interest expense (the "margin"), remains TODAY's most
significant source of profitability. The third quarter margin
decreased by $42, or .85% from the prior quarter. The decline
was due to higher costs associated with deposit fundings.
Compared to the nine months ending September 30, 1994, the margin
increased approximately $2.2 million of which approximately $1.2
million is attributable to the purchase of Tri-State Bank and
Trust. Year-to-date, the Company continued to experience loan
growth which resulted from the Company's ongoing business
development efforts. This success was negated by higher costs
associated with time deposits. Throughout much of 1994,
increases in deposit costs lagged behind rises in asset yields.
However, this is no longer the case as most deposits have been
repriced and additional growth is coming in the form of more
expensive funds.
The Company believes it has a very stable deposit base and sound,
high quality loan and investment portfolios. While there may be
some additional margin compression in the future, the overall
effect of this is thought to be minimal due to the limited rate
risk associated with the affiliate Banks' repricing schedules.
Given the competitive nature of deposit pricing, additional loan
related growth may be restrained.
OTHER OPERATING INCOME
TODAY'S earnings from non-interest sources for the three months
ended September 30, 1995 were $1.4 million, an increase of $100,
or 8% from the prior quarter. Compared to the nine months ended
September 30, 1994, non-interest revenues have increased $772 or
25%.
Trust department revenues for the third quarter were $415, an
increase of $65, or 19% from the same quarter prior year. This
increase was attributable to higher market values in the trust
assets which is the basis for most fees.
Deposit fees reflect additional income as a result of
standardizing related fees within the affiliates and a more
aggressive posture of charging for accounts being overdrawn. The
$470 recorded in the third quarter represents an increase of
$106, or 29% from the same quarter prior year.
Mortgage activity remained strong during the third quarter as
interest rates were relatively low. The mortgage banking unit had
revenues of $272 for the third quarter, an increase of $29, or
12%, from the prior quarter. Revenues for the nine months ended
September 30, 1995 were $580, an increase of $176, or 44% from
the same period in 1994.
OTHER OPERATING EXPENSE
Total other operating expenses were $3.9 million for the third
quarter as compared to $4.3 million for the second quarter. For
<PAGE>
Page 11
the nine months ended September 30, 1995, other operating
expenses were $12.4 million. This represents an increase of $1.0
million, or 9% from the same period in 1994. The Tri-State
purchase accounted for approximately $450 of the increase between
1995 and 1994.
Personnel costs continue to be the largest component of other
operating expenses. Employee related costs totaled $1.9 million
for the third quarter. This reflects a decrease of $91 or 5%,
from the prior quarter. Mortgage banking employee costs declined
$116 due to management's decision to implement a plan which
resulted in a staff reduction in the third quarter. For the nine
months ended September 30, 1995, personnel costs were $5.8
million, an increase of $202, or 4% from the same period in 1994.
The addition of Tri-State added approximately $300 in employee
costs for the first nine months of 1995 as compared to the same
period in 1994.
Employee costs represented 30% of net interest and non-interest
revenues for the third quarter, a decrease of 2% from the prior
quarter. This important indicator was also 31% for the first
nine months of 1995 compared to 36% in the first nine months of
1994. TODAY continues additional efforts to further improve in
this area.
Net occupancy and equipment expenses for the third quarter were
$723 as compared to $669 for the second quarter. This increase
is due to higher utility costs from the warmer weather conditions
experienced during the summer months. Net occupancy and
equipment expenses for the nine months ended September 30, 1995,
were $2.1 million as compared to $1.6 million for the same
period in 1994, an increase of 31%. This is due to higher levels
of depreciation on personnel computers and increased costs of
maintenance.
In August, the FDIC Board of Directors determined the Bank
Insurance Fund (BIF) was recapitalized as of May 31, 1995 and
voted to reduce the insurance rates. In September, the FDIC
refunded the insurance premium overpayments made since the BIF
was recapitalized. This resulted in the FDIC insurance expense
for the third quarter to be $(28). It is anticipated that the
reduction in the Company's fourth quarter FDIC premiums will be
approximately $200.
During the first three quarters of 1995, the Company experienced
additional costs associated with the name change and the
reorganization of its affiliates. Additional costs associated
with these efforts increased expenses about $400 over normal
operating expenses for the nine months ended September 30, 1995.
The major components of the additional costs were supplies and
forms ($140), marketing and advertising ($160), postage ($31),
employee overtime ($20), and data processing ($10). While the
majority of these expenses are one time in nature, increased
marketing and advertising are planned for the balance of the
year.
<PAGE>
Page 12
STATEMENT OF CONDITION
Total assets of $518.3 million were reported as of September 30,
1995. This represents a $10.2 million, or 2% increase, over the
$508.1 million reported as of June 30, 1995 and a $37.0 million,
or 8% increase, over the $481.3 million reported as of September
30, 1994.
Mortgage loans held for sale declined $2.3 million to $2.1
million in the third quarter from the prior quarter and they were
39% lower than at September 30, 1994. Mortgage loans held for
sale are expected to remain constant in the foreseeable future.
Funds from this reduction were utilized to sell federal funds and
to fund other asset growth.
Loans represent the largest component of TODAY's earning asset
base and lending activities continue to show positive results.
At the end of the current quarter, total net loans were $349.5
million. This represents a $400 decrease from the prior quarter
total of $349.9 million and a $29.2 million, or 9% increase, over
the $320.3 million reported September 30, 1994. TODAY's strong
emphasis on sales to capture more business from current customers
and to attract new relationships by offering high quality and
diversified loan products, should allow for continued growth of
the loan portfolio if cost effective fundings are secured.
Securities totaled $106.7 million at September 30, 1995, a
decrease of $4.5 million, or 4%, from the $111.2 million reported
for the prior quarter and a $3.5 million decrease over the $110.2
million reported September 31, 1994. The relatively stable
balances within the investment portfolio are indicative of using
deposit growth to fund lending opportunities.
On the liability side of the balance sheet, deposits totaled
$440.7 million at September 30, 1995. They grew $9.1 million, or
2%, from the $431.6 million reported on June 30, 1995, and $29.3
million, or 7% from the $411.4 million reported on September 30,
1994. Much of the deposit growth during 1995 was attributable to
increased market penetration in the Rockford area. Specialized
products were developed to meet the needs of targeted groups such
as small businesses. These new funding sources were specifically
identified and used to match commercial loan growth.
Short term borrowings totaled $13.1 million at September 30,
1995. This was an increase of $300 or 2% from the prior quarter
and an increase of $800 or 7% from the $12.3 million reported at
September 30, 1994. This increase in short-term borrowings from
September 30, 1994 was mainly caused by higher demand for
repurchase agreements.
Other borrowings decreased $700 from June 30, 1995 to the current
balance of $15.6 million. This represents an increase of $1.5
million since September 30, 1994. This increase came in the form
of advances from the Federal Home Loan Bank. Again, these funds
were used to provide additional lending capacity.
<PAGE>
Page 13
ASSET QUALITY
TODAY continues to emphasize asset quality as evidenced by its
ratio of non-performing loans being only .72% of gross loans at
September 30, 1995. This compares to .92% for the prior quarter
and .95% for the same date last year. Non-performing loans as a
percent of capital have decreased to 5.4%, compared to 7.3% for
the prior quarter. Annualized net charge-offs as a percent of
average loans was .25% at September 30, 1995. This is slightly
higher than TODAY'S three year average of .16%. In comparison to
peer group data, these numbers continue to indicate better than
average asset quality.
TODAY evaluates the allowance for possible loan losses on an on-
going basis. The results of these reviews are reported to the
Board of Directors. The level of the allowance is a matter of
judgment and is dependent upon many factors, including a
prospective view of losses inherent in the loan portfolio,
delinquency trends, historic charge-off percentages and other
factors management believes may affect the quality of the
portfolio. Based on current projections, TODAY is unaware of any
information or uncertainties concerning material credits that
would significantly impact future operations, liquidity or
capital. Due to the loan growth experienced in the first nine
months of 1995, management decided to increase the provision to
the allowance for possible loan losses during the third and
fourth quarters of 1995. The third quarter provision was
increased $120 and the fourth quarter increase is projected to be
an additional $180
INTEREST RATE SENSITIVITY AND LIQUIDITY
The Asset/Liability Committees of the affiliate banks continually
monitor TODAY's liquidity and rate sensitivity position.
Management of rate sensitivity seeks to maximize the growth of
net interest income on a consistent basis by minimizing the
fluctuations associated with changing market interest rates along
with meeting cash flow requirements that may arise from increases
in demand for loans or other assets or from decreases in deposits
or other funding sources.
TODAY's liquidity position has been influenced by its funding
base and asset mix as identified in the Consolidated Statement of
Cash Flows. Funding for the first nine months of 1995 was
primarily provided by proceeds from the sales, calls and
maturities of trading securities, investment securities and
mortgage-backed securities of $35.3 million, an increase in other
borrowings of $3.0 million and an increase in deposits of $23.0
million. The funds were primarily utilized to: purchase
investment securities totaling $34.1 million, purchase premises
and equipment totaling $1.5 million, and provide $22.6 million
for lending activities.
<PAGE>
Page 14
The following rate sensitivity table reflects the earlier of the
maturity or repricing dates for various assets and liabilities at
September 30, 1995:
<TABLE>
<CAPTION>
0-3 MO 4-12 MO 1-5 YR. 5 YR. TOTAL
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
USES OF FUNDS
Investment securities,
excluding valuation
allowance $ 8,429 $ 20,422 $ 67,205 $10,343 $106,399
Time deposits in banks 496 99 - - 595
Federal funds sold 16,650 - - - 16,650
Mortgage loans held
for sale 2,141 - - - 2,141
Loans, excluding non-
accrual loans 147,683 49,046 113,021 41,755 351,505
- ------------------------------------------------------------------------------------------------------------------------------
Total Uses $175,399 $ 69,567 $180,226 $52,098 $477,290
- ------------------------------------------------------------------------------------------------------------------------------
SOURCES OF FUNDS
Int. bearing checking $ 49,987 $ - $ - $ - $ 49,987
Money market savings 39,485 - - 7,800 47,285
Regular savings - - 39,654 - 39,654
Time deposits 90,893 54,741 72,243 7,028 224,905
Other interest bearing 10,055 7,120 11,664 1,932 30,771
Short-term borrowings 13,102 - - - 13,102
Term borrowings and
advances from FHLB 8,372 5,100 2,175 - 15,647
- ------------------------------------------------------------------------------------------------------------------------------
Total interest bearing 211,894 66,961 125,736 16,760 421,351
Net other sources - - - 55,939 55,939
- ------------------------------------------------------------------------------------------------------------------------------
Total Sources $211,894 $ 66,961 $125,736 $72,699 $477,290
- ------------------------------------------------------------------------------------------------------------------------------
CUMULATIVE MATURITY/RATE
SENSITIVE GAP ($36,495) ($33,889) $ 20,601 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
On a cumulative basis, TODAY's one year interest gap resulted in
$(33.9) million more interest sensitive liabilities than assets.
This generally indicates that net interest income would decline
in a rising rate environment. However, in tracking interest rate
movements of deposit rates compared to market based rates during
past interest rate cycles, TODAY notes that certain deposit rates
have a tendency to lag. When the cumulative rate sensitivity gap
is adjusted for this factor, TODAY feels it is in a near matched
position, allowing for limited interest rate exposure.
The cumulative rate sensitivity gap provides a general indication
of interest sensitivity at a specific point in time. TODAY
further utilizes simulation to analyze the impact of changes in
interest rates and volumes on the net interest income.
CAPITAL
TODAY's capital position provides a margin of safety for
depositors and stockholders, and enables the Company to take
advantage of acquisition opportunities and provide for future
growth. Each of the subsidiary banks are subject to regulatory
capital guidelines as shown below. At September 30, 1995, TODAY
had Tier I capital of 10.2%, Tier II capital of 11.0% and a
leverage ratio of 7.7%.
The following table illustrates in tabular form the various
ratios:
<TABLE>
<CAPTION>
MINIMUM
REGULATORY
AMOUNT RATIO GUIDELINES
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
RISK-BASED CAPITAL RATIOS
Tier I capital $ 38,733 10.2% 4.0%
Tier II capital 42,053 11.0 8.0
Risk-weighted assets 380,960 - -
<PAGE>
Page 15
SUPPLEMENTAL RATIOS
Leverage ratio 38,733 7.7 3.0
Total average assets 500,154 - -
</TABLE>
Bank regulators have established risk-based capital guidelines
which are intended to reflect the varying degrees of risk
associated with different balance sheet and off-balance-sheet
items. Tier I capital includes equity capital less goodwill to
risk-weighted assets, and Tier II capital includes Tier I capital
plus the allowed portion of the allowance for possible loan
losses to risk-weighted assets. The leverage ratio is defined as
Tier I capital to total assets.
Under the risk-based capital guidelines presently in effect for
banks and bank holding companies, minimum capital levels are
based on the perceived risk in the various asset categories.
Certain off-balance-sheet instruments such as loan commitments
and letters of credit require capital allocations. Bank holding
companies are required to maintain minimum risk-basked capital
ratios. TODAY's ratios are above the regulatory minimum guide-
lines and each of its subsidiary banks met the regulatory
criteria to be categorized as "well capitalized" institutions at
September 30, 1995. For each of the subsidiary banks, the "well
capitalized" classification permits the banks to minimize the
cost of FDIC insurance assessments by being charged a lesser rate
than those who do not meet this definition. Designation as a
"well capitalized" institution does not constitute a recommend-
ation by federal bank regulators.
The deposits of the Company are insured up to $100,000 per
insured member (as defined by law and regulation) by the FDIC
with such insurance backed by the full faith and credit of the
United States government. The Company's deposits are dominantly
insured by the Bank Insurance Fund ("BIF") which is administered
by the FDIC.
As insurer, the FDIC assesses deposit insurance premiums and is
authorized to conduct examinations of, and require reporting by,
FDIC-insured institutions. Deposit insurance premiums are based
upon risk classifications that are determined by the insured
institution's capital ratios and the result of such institution's
supervisory examinations. Institutions assigned higher risk
classifications pay deposit insurance premiums at a higher rate
than the institutions assigned lower risk classifications.
The Banks were previously assessed an annual deposit insurance
premium at a rate of $.23 per $100 of insured deposits, which was
the lowest insurance rate imposed by the FDIC. This recently was
changed to $.04 per $100 of insured deposits for "well
capitalized" institutions. This reduction in premiums is
reflected in the Company's current quarterly results.
Federal banking regulators and law makers are believed to favor
the merging of the BIF and Savings Association Insurance Fund
("SAIF"). Congressional hearings on the resolution of the issues
have been held and future hearings are scheduled. The outcome of
such hearings and the impact of deposit insurance premiums
<PAGE>
Page 16
assessed and the likelihood of the merger of the BIF and SAIF
cannot be determined at this time.
OTHER DEVELOPMENTS
Management is not aware of any trends, events or uncertainties,
other than those discussed above, or of any recommendations by
regulatory authorities which, if they were to be implemented,
would impact the future operations, liquidity or capital of the
company.
Recent publicity regarding the usage of derivative investment
instruments has caused concern about the safety and soundness of
financial institutions using such products. TODAY and it
subsidiaries have not entered into any such arrangements at this
time.
In May 1995, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 122, "Accounting for Mortgage Servicing Rights,
an amendment of FASB No 65", which will be effective for the
Company's year ending December 31, 1995. This statement amends
the accounting for mortgage servicing rights to allow
capitalization of certain costs related to internally originated
loans. It is anticipated that this statement will not have a
material impact on the financial position or results of
operations of the Company.
<PAGE>
Page 17
Part II.
Item 5. Other Information
On October 17, 1995, the Board of Directors approved an $0.1375
per share cash dividend to all shareholders of record as of
November 1, 1995, payable on November 10, 1995.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11, Computation of Per Share Income is presented on
page 19.
(b) There were no reports on Form 8-K filed during this
reporting period.
<PAGE>
Page 18
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.
TODAY'S BANCORP, INC.
---------------------
(Registrant)
DATE: November 13, 1995 --------------------------------
Richard W. Owen
Executive Vice President
and Chief Financial Officer
<PAGE>
Page 19
TODAY'S BANCORP, INC.
Exhibit 11 - Computation of Per Share Income
for the Nine Months ended September 30
1995 1994
---- ----
Net income $3,502,000 $2,508,000
---------- ----------
---------- ----------
Weighted average shares outstanding* 2,723,444 2,675,039
Net additional shares resulting from
assumed exercise of stock options** 25,987 31,471
------ ------
Total weighted average common shares and
equivalents outstanding 2,749,431 2,706,510
---------- ----------
---------- ----------
Net income per common share:
Primary $1.29 $0.94
----- -----
----- -----
Assuming full dilution $1.27 $0.93
----- -----
----- -----
- -------------------------------------------
* The average number of shares outstanding is used for the computation
of primary earnings per share since the change caused by common stock
equivalents is less than 3% and thus does not need to be considered as
dilutive.
**Assumes proceeds from exercise of stock options used to purchase treasury
shares at market on the last business day of the quarter.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<CIK> 0000216729
<NAME> TODAY'S BANCORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 17,501
<INT-BEARING-DEPOSITS> 595
<FED-FUNDS-SOLD> 16,650
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 62,486
<INVESTMENTS-CARRYING> 44,170
<INVESTMENTS-MARKET> 44,410
<LOANS> 354,954
<ALLOWANCE> 3,320
<TOTAL-ASSETS> 518,264
<DEPOSITS> 440,697
<SHORT-TERM> 13,102
<LIABILITIES-OTHER> 3,754
<LONG-TERM> 15,647
<COMMON> 13,717
0
0
<OTHER-SE> 31,347
<TOTAL-LIABILITIES-AND-EQUITY> 518,264
<INTEREST-LOAN> 23,614
<INTEREST-INVEST> 4,881
<INTEREST-OTHER> 604
<INTEREST-TOTAL> 29,099
<INTEREST-DEPOSIT> 13,335
<INTEREST-EXPENSE> 14,605
<INTEREST-INCOME-NET> 14,494
<LOAN-LOSSES> 615
<SECURITIES-GAINS> 140
<EXPENSE-OTHER> 12,394
<INCOME-PRETAX> 5,376
<INCOME-PRE-EXTRAORDINARY> 3,502
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,502
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.27
<YIELD-ACTUAL> 4.18
<LOANS-NON> 1,308
<LOANS-PAST> 866
<LOANS-TROUBLED> 363
<LOANS-PROBLEM> 2,329
<ALLOWANCE-OPEN> 3,144
<CHARGE-OFFS> 697
<RECOVERIES> 258
<ALLOWANCE-CLOSE> 3,320
<ALLOWANCE-DOMESTIC> 976
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,344
</TABLE>