UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-11132
FIRST BANKING CENTER, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1391327
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Milwaukee Ave., Burlington, WI 53105
(Address of principal executive offices) (Zip Code)
(414) 763-3581
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. Common Stock,
$1.00 par value, 1,463,148 shares outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED BALANCE SHEET
March 31, 1995
vs
December 31, 1994
(Amounts in Thousands)
ASSETS 03/31/95 12/31/94
Cash and due from banks $6,775 $11,521
Federal funds sold 8,812 566
Total Cash and Cash Equivalents 15,587 12,087
Interest bearing deposits in banks 1,547 1,899
Investment securities - Held to Maturity 29,020 30,132
Investment securities - Available for Sale 24,503 21,655
Loans 159,403 157,773
Less:
Allowance for loan losses (2,156) (2,095)
Total Net Loans 157,247 155,678
Property and Equipment 4,637 4,707
Other Assets 4,901 4,927
TOTAL ASSETS $237,442 $231,085
LIABILITIES
Deposits
Non-interest bearing demand $24,472 $29,294
Interest bearing demand 17,993 20,082
Money market demand 34,480 37,063
Savings 25,674 27,237
Time 87,023 73,434
Total Deposits 189,642 187,110
Fed Funds Sold & Securities sold
under agreements to repurchase 14,021 13,755
Short-term borrowings 1,861 697
Long-term borrowings 7,805 6,805
Accrued interest and other liabilities 2,281 1,892
TOTAL LIABILITIES $215,610 $210,259
STOCKHOLDERS' EQUITY
Common Stock, $1.00 par value 3,000,000
shares authorized 1,468,464 shares issued $1,468 $1,468
Surplus 3,986 3,986
Retained Earnings 17,019 16,353
Net unrealized loss on available
for sale securitites (587) (927)
Subtotal 21,886 20,880
Treasury Stock (54) (54)
TOTAL STOCKHOLDERS' EQUITY $21,832 $20,826
TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $237,442 $231,085
<PAGE>
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED STATEMENT OF INCOME
as of March 31, 1995 and 1994
(Amounts in Thousands)
Quarter-to-Date Year-to-Date
03/31/95 03/31/94 03/31/94 03/31/95
INTEREST INCOME
Interest and fees on loans $3,431 $2,845 $3,431 $2,845
Interest on deposits in banks 29 82 29 82
Interest on federal funds sold
and repurchase agreements 51 24 51 24
Interest on securities:
U.S. Government and other 698 543 698 543
Tax Exempt Securities 121 145 121 145
TOTAL INTEREST INCOME 4,330 3,639 4,330 3,639
INTEREST EXPENSE
Interest on deposits 1,667 1,450 1,667 1,450
Int. on short-term borrowings 223 102 223 102
Int. on long-term borrowings 97 82 97 82
TOTAL INTEREST EXPENSE 1,987 1,634 1,987 1,634
Net interest Income 2,343 2,005 2,343 2,005
Provision for loan losses 68 68 68 68
NET INT. INC. AFTER PROVISION
FOR LOAN LOSSES 2,275 1,937 2,275 1,937
OTHER OPERATING INCOME
Trust department income 75 75 75 75
Service charges on deposits 164 141 164 141
Invest. security gains/(losses) (11) (2) (11) (2)
Other income 83 73 83 73
TOTAL OTHER OPERATING INCOME 311 287 311 287
OTHER OPERATING EXPENSE
Employee expense 782 690 782 690
Occupancy expense 144 132 144 132
Equipment expense 132 81 132 81
Computer services 70 69 70 69
Other expense 468 412 468 412
TOTAL OTHER OPERATING EXPENSE 1,596 1,384 1,596 1,384
Income before income taxes 990 840 990 840
Income taxes 324 267 324 267
NET INCOME $666 $573 $666 $573
Earnings per share $0.46 $0.39 $0.46 $0.39
Average shares outstanding 1,463,148 1,451,898 1,463,148 1,451,898
<PAGE>
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
BURLINGTON, WISCONSIN
Y-T-D ending March 31, 1995 and 1994
Increase (decrease) in Cash and Cash Equivalents
(Amounts in Thousands)
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $666 $573
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 124 81
Provision for loan losses 68 68
Provision for deferred taxes 0 0
Amortization and accretion of bond
premiums and discounts - net 27 44
Amortization of excess cost over equity in
underlying net assets of subsidiary 0 0
Investment securities (gains) losses 11 2
(Increase) decrease in assets:
Interest receivable (64) 49
Other assets 90 (139)
Increase (decrease) in liabilities:
Taxes payable 301 164
Interest payable 142 10
Other liabilities (54) 2
TOTAL ADJUSTMENTS 645 281
NET CASH PROVIDED FROM OPERATING ACTIVITIES $1,311 $854
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing deposits $352 $4,748
Proceeds from sale of investment securities 1,000 1,360
Proceeds from maturity of investment securities 12,420 8,910
Purchase of investment securities (14,854) (8,703)
Net (increase) decrease in loans (1,637) (4,857)
Purchase of office buildings and equipment (54) (204)
NET CASH USED IN INVESTING ACTIVITIES ($2,773) $1,254
<PAGE>
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
BURLINGTON, WISCONSIN
Y-T-D ending March 31, 1995 and 1994
Increase (decrease) in Cash and Cash Equivalents
(Amounts in Thousands)
1995 1994
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits $2,532 ($3,600)
Dividends paid 0 0
Net increase (decrease) in Short-term Borrowings 1,164 (561)
Net increase (decrease) in Long-term Borrowings 1,000 415
Net increase (decrease) in securities sold under
repurchase agreements 266 (699)
Proceeds from stock options exercised 0 0
NET CASH PROVIDED BY FINANCING ACTIVITIES $4,962 ($4,445)
Net increase (decrease) in cash and cash equivalents 3,500 (2,337)
Cash and cash equivalents at beginning of year 12,087 10,728
Cash and cash equivalents at end of quarter $15,587 $8,391
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) during the year for:
Interest $1,845 $1,630
Income taxes (received) $23 $39
<PAGE>
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED STATEMENT OF CHANGES
IN COMPONENTS OF STOCKHOLDERS' EQUITY
As of March 31, 1995
(Amounts in Thousands)
COMMON RETAINED AVAILABLE TREASURY
STOCK SURPLUS EARNINGS FOR SALE STOCK
SECURITIES
Balances
December 31, 1993 $1,468 $3,975 $14,519 $0 ($110)
Net income-YTD 1994 573
Cash dividend paid
$0.00 per share
Exercise of
Stock options
Change in unrealized
loss on available
for sale securities (215)
Balances
March 31, 1994 $1,468 $3,975 $15,092 ($215) ($110)
Balances
December 31, 1994 $1,468 $3,986 $16,353 ($927) ($54)
Net income-YTD 1995 666
Cash dividend paid
$0.00 per share
Exercise of
Stock options
Change in unrealized
loss on available
for sale securities 340
Balances
March 31, 1995 $1,468 $3,986 $17,019 ($587) ($54)
<PAGE>
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As of March 31, 1995
The following is a discussion of the financial condition,
changes in financial condition and results of operations of the
Company.
Financial Condition
During the first three months of 1995, the Company's
stockholders' equity increased $1,006,000 or an annualized 19.3%.
At March 31, 1995, the Company had 5,316 shares of Treasury Stock
at an average cost of $10.02 per share.
In December 1990, the Federal Reserve Board's risk-based
guidelines became effective. Under these guidelines, capital is
measured against the Company's risk-adjusted assets. Each asset on
the balance sheet, as well as a balance sheet equivalent amount of
contingent obligations that are off-balance sheet, is assigned a
risk weighing from zero to 100 percent. The sum of the weighted
assets constitutes risk-adjusted assets. The Company's tier 1
capital (common stockholders' equity less goodwill) to risk-
adjusted assets was approximately 14.55% at March 31, 1995, well
above the 4 percent minimum required. Total capital to risk-
adjusted assets approximated 14.55%, also well above the minimum
requirement.
Asset Quality
We continue our commitment to credit quality in 1995. Net
charge-offs as a percentage of average loans for the first three
months of 1995 were .016%. At March 31, 1995, non-performing
assets were $1,032,000 or .43%. Non-performing assets consist
primarily of real estate loans.
At March 31, 1995, the allowance for possible loan losses was
$2,156,000 or 1.35% of gross loans compared with $1,942,000 or
1.39% of gross loans at March 31, 1994. Management considers the
allowance more than adequate to cover possible losses in the loan
portfolio.
<PAGE>
Asset/Liability Management
The principal function of asset/liability management is to
manage the balance sheet mix, maturities, repricing characteristics
and pricing components to provide an adequate and stable net
interest margin with an acceptable level of risk over time and
through interest rate cycles.
Interest-sensitive assets and liabilities are those that are
subject to repricing within a specific relevant time horizon. The
Company measures interest-sensitive assets and liabilities, and
their relationship with each other at terms of immediate, monthly
intervals up to 12 months, and over 1 year.
Changes in net interest income, other than volume-related,
arise when interest rates on assets reprice in a time frame or
interest rate environment that is different from the repricing
period for liabilities. Changes in net interest income also arise
from changes in the mix of interest-earning assets and interest-
bearing liabilities.
The Company's strategy with respect to asset/liability
management is to maximize net interest income while limiting our
exposure to a potential downward movement. Strategy is implemented
by the Bank's management, which takes action based upon its
analysis of the Bank's present positioning, its desired future
positioning, economic forecasts and its goals.
Liquidity
The liquidity position of the Company is managed to insure
that sufficient funds are available to meet customers' needs for
loans and deposit withdrawals. Liquidity to meet demand is
provided by maintaining marketable investment securities and money
market assets such as Interest Bearing Deposits in Banks and
Federal Funds Sold. Other sources of liquidity include deposit
growth and short and long term borrowings.
The loan to deposit ratio for the Company was 82.7% at March
31, 1995.
Management is unaware of any recommendations by regulatory
authorities, known trends, events or uncertainties that will have
or that are reasonably likely to have a material effect on the
Company's liquidity.
<PAGE>
Results of Operations for Three Months Ended March 1995 and 1994
Results of Operations Overview
In the first three months of 1995 the Company reported
earnings of $666,000 an increase of $93,000 or 16.2% over the same
period in 1994. The interest margin before allowance for loan
losses was $2,343,000 for the first three months of 1995 compared
to $2,005,000 for the three months ended March 31, 1994.
Interest Income
Interest and fees on loans was $3,431,000 for the first three
months of 1995. This represents a increase of $586,000 or 20.5% in
comparison to the same period in 1994. The increase was the result
of an increase in rates charged on loans as well as an increase in
the balance of loans.
Interest on deposits at other financial institutions decreased
$53,000 for the first three months of 1995 compared to the same
period in 1994. The decrease was the result of a decrease in
average balances.
Interest on investment securities was $819,000 for the first
three months of 1995. This represents an increase of $131,000 or
19% over the same period in 1994. Income on Federal Funds Sold
increased by $27,000 or 112.5%. The increase in investment income
is primarily due to an increase in interest rates.
Interest Expense
Interest expense increased 353,000 or 21.6% during the first
three months of 1995. The increase in interest interest expense is
due to increased Interest-Bearing Deposits as well as increased
interest rates as compared to March 31, 1994.
Allowance for Loan Losses
The Banks evaluate the adequacy of the allowance for loan
losses based on an analysis of specific problem loans, as well as
on an aggregate basis. Management reviews a calculation of the
allowance for loan losses on a monthly basis and feels that the
allowance for loan losses is adequate to provide for potential
future losses. The level of the allowance is based on management's
periodic and comprehensive evaluation of the loan portfolio,
including past loan loss experience; current and projected economic
trends; the volume, growth and composition of the loan portfolio;
and other relevant factors. Reports of examinations furnished by
State and federal banking authorities are also considered by
management in this regard.
<PAGE>
The Banks have established the allowance for loan losses to
reduce the gross level of loans outstanding by an estimate of
uncollectible loans. As loans are deemed uncollectible, they are
charged against the allowance. A provision for loan losses is
expensed against current income on a monthly basis. This provision
acts to replenish the allowance for loan losses to accommodate
charge-offs and growth in the loan portfolio, thereby maintaining
the allowance at an adequate level.
For the first three months of 1995 provisions charged against
1995 income were $68,000 which was the same as the provision during
the same period in 1994.
Other Operating Income
Other operating income increased $24,000 or 8.3%. Service charge
income increased 16.3%. All other income increased by $10,000 or
13.7%. Trust income remain unchanged at $75,000.
Other Operating Expense
Other operating expense increased $212,000 or 15.3%. Employee
expenses increased $92,000 or 13.3%. Occupancy expense increased
$34,000 compared to the first three months of last year or 9%.
Equipment expenses increased $51,000 or 62.9%. The increase in
equipment expense is primarily due to depreciation charges associated
with the computer and item processing equipment the banks purchased
during 1994. Computer services increased $1,000 or 1.4%. All other
expenses increased $56,000 or 13.6%.
PART II - OTHER INFORMATION
Item I. Legal Proceedings
none
Item II. Changes in Securities
none
Item III. Defaults Upon Senior Securities
none
Item IV. Submission of Matters to a Vote of Security Holders
none
Item V. Other Information
none
Item VI. Exhibits and Reports on Form 8-K
none
<PAGE>
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
SIGNATURES
Pursuant to the requirement 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 Banking Center, Inc.
May 15, 1995 ________________________________________
Date Roman Borkovec, President and Chief
Executive Officer
May 15, 1995 ________________________________________
Date James Schuster, Chief Accounting Officer
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<NAME> FIRST BANKING CENTER, INC
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