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, 1998
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, 1,484,818 shares outstanding.
PART I. FINANCIAL INFORMATION
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED BALANCE SHEET
March 31, 1998
vs
December 31, 1997
(Amounts in Thousands)
ASSETS 3/31/98 12/31/97
Cash and due from banks $10,547 $16,286
Federal funds sold 2,888 0
Total Cash and Cash Equivalents 13,435 16,286
Interest bearing deposits in banks 751 820
Investment securities - Available for Sale 64,570 74,601
Loans 234,022 224,108
Less:
Allowance for loan losses (3,227) (3,132)
Total Net Loans 230,795 220,976
Property and Equipment 7,871 7,650
Other Assets 7,611 7,500
TOTAL ASSETS $325,033 $327,833
LIABILITIES
Deposits
Non-interest bearing demand $36,413 $40,090
Interest bearing transaction 20,417 25,628
Money market and Savings 87,874 80,865
Time 107,589 106,316
Total Deposits 252,293 252,899
Fed Funds Purchased and Securities sold
under agreements to repurchase 23,546 30,286
U S Treasury note account 540 540
Long-term borrowings 15,530 11,957
Accrued interest and other liabilities 3,420 3,231
TOTAL LIABILITIES $295,329 $298,913
STOCKHOLDERS' EQUITY
Common Stock, $1.00 par value 3,000,000
shares authorized 1,477,215 shares issued $1,485 $1,485
Surplus 4,223 4,221
Retained Earnings 23,607 22,846
Net unrealized gain on available
for sale securities 389 368
Subtotal 29,704 28,920
Treasury Stock 0 0
TOTAL STOCKHOLDERS' EQUITY $29,704 $28,920
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $325,033 $327,833
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED STATEMENT OF INCOME
as of March 31, 1998 and 1997
(Amounts in Thousands)
Quarter-to-Date Year-to-Date
3/31/98 3/31/97 3/31/98 3/31/97
INTEREST INCOME
Interest and fees on loans $5,092 $4,336 $5,092 $4,336
Interest on deposits in banks 12 71 12 71
Interest on federal funds sold
and repurchase agreements 41 94 41 94
Interest on securities:
U.S. Government and other 649 695 649 695
Tax Exempt Securities 311 259 311 259
TOTAL INTEREST INCOME 6,105 5,455 6,105 5,455
INTEREST EXPENSE
Interest on deposits 2,475 2,297 2,475 2,297
Int on fed funds purch. and securities
sold under agreements to repurchase 321 265 321 265
Int on U S Treasury Note Account 6 5 6 5
Int on long-term borrowings 197 158 197 158
TOTAL INTEREST EXPENSE 2,999 2,725 2,999 2,725
Net interest Income 3,106 2,730 3,106 2,730
Provision for loan losses 83 83 83 83
NET INT. INC. AFTER PROVISION
FOR LOAN LOSSES 3,023 2,647 3,023 2,647
OTHER OPERATING INCOME
Trust department income 89 96 89 96
Service charges on deposits 261 246 261 246
Invest. security gains/(losses) 0 0 0 0
Other income 239 160 239 160
TOTAL OTHER OPERATING INCOME 589 502 589 502
OTHER OPERATING EXPENSE
Employee expense 1,385 1,211 1,385 1,211
Occupancy expense 187 184 187 184
Equipment expense 267 232 267 232
Computer services 112 113 112 113
Other expense 606 521 606 521
TOTAL OTHER OPERATING EXPENSE 2,557 2,261 2,557 2,261
Income before income taxes 1,055 888 1,055 888
Income taxes 294 242 294 242
NET INCOME $761 $646 $761 $646
Earnings per share $0.51 $0.44 $0.51 $0.44
Average shares outstanding 1,484,786 1,476,337 1,484,786 1,476,337
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
as of March 31, 1998 and 1997
(Amounts in Thousands)
Quarter-to-Date Year-to-Date
3/31/98 3/31/97 3/31/98 3/31/97
Net Income 761 646 761 646
Other comprehensive income:
Unrealized gains (losses) arising
during the period 21 (262) 21 (262)
Less reclassified adjustment for (gains)
losses included in net income 0 0 0 0
TOTAL OTHER COMPREHENSIVE INCOME 21 (262) 21 (262)
COMPREHENSIVE INCOME 782 384 782 384
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
BURLINGTON, WISCONSIN
Y-T-D ending March 31, 1998 and 1997
Increase (decrease) in Cash and Cash Equivalents
(Amounts in Thousands)
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $761 $646
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 220 201
Provision for loan losses 83 83
Provision for deferred taxes 0 0
Amortization and accretion of bond
premiums and discounts - net 16 27
Amortization of excess cost over equity in
underlying net assets of subsidiary 26 26
Investment securities (gains) losses 0 0
(Increase) decrease in assets:
Interest receivable (64) (341)
Other assets (87) (60)
Increase (decrease) in liabilities:
Taxes payable 235 196
Interest payable 27 (102)
Other liabilities (74) (64)
TOTAL ADJUSTMENTS 382 (34)
NET CASH PROVIDED FROM OPERATING ACTIVITIES $1,143 $612
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing deposits $69 $3,444
Proceeds from sales of available for sale securities 0 0
Proceeds from maturities of available for sale securities 55,886 23,112
Purchase of available for sale securities (45,838) (25,835)
Proceeds from maturity of held to maturity securities 0 0
Purchase of held to maturity securities 0 0
Net (increase) decrease in loans (9,901) (5,312)
Proceeds from sale of office equipment 0 0
Purchase of office buildings and equipment (440) (162)
NET CASH USED IN INVESTING ACTIVITIES ($224) ($4,753)
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
BURLINGTON, WISCONSIN
Y-T-D ending March 31, 1998 and 1997
Increase (decrease) in Cash and Cash Equivalents
(Amounts in Thousands)
1998 1997
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits ($606) $6,377
Dividends paid 0 0
Net increase (decrease) in Long-term Borrowings 3,573 (150)
Net increase (decrease) in U S Treasury Note Account 0 0
Net increase (decrease) in fed funds purchased and
securities sold under repurchase agreements (6,739) (14,395)
Proceeds from stock options exercised 2 3
NET CASH PROVIDED BY FINANCING ACTIVITIES ($3,770) ($8,165)
Net increase (decrease) in cash and cash equivalents (2,851) (12,306)
Cash and cash equivalents at beginning of year 16,286 29,317
Cash and cash equivalents at end of quarter $13,435 $17,011
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) during the year for:
Interest $2,981 $2,827
Income taxes (received) $75 $47
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED STATEMENT OF CHANGES
IN COMPONENTS OF STOCKHOLDERS' EQUITY
As of March 31, 1998
(Amounts in Thousands)
COMMON RETAINED AVAILABLE TREASURY
STOCK SURPLUS EARNINGS FOR SALE STOCK
SECURITIES
Balances
December 31, 1996 $1,476 $4,091 $20,703 ($30) $0
Net income-YTD 1997 646
Cash dividend paid
$0.00 per share
Exercise of
Stock options 3 0
Change in unrealized
loss on available
for sale securities (262)
Balances
March 31, 1997 1,476 4,094 21,349 (292) 0
Balances
December 31, 1997 $1,485 $4,221 $22,846 $368 $0
Net income-YTD 1998 761
Cash dividend paid
$0.00 per share
Exercise of
Stock options 2
Change in unrealized
loss on available
for sale securities 21
Balances
March 31, 1998 $1,485 $4,223 $23,607 $389 $0
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 1998
Note 1. Basis of Presentation
In the opinion of Management, the accompanying unaudited consolidated financial
statements reflect all adjustments which are necessary to present a fair
statement of the results for the interim periods.
The accounting policies followed by the registrant are set forth in Note A to
the registrant's financial statements in the 1997 First Banking Center, Inc.
(the "Company") annual report which is incorporated by reference herein (see
exhibit A).
Item 2
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As of March 31, 1998
The following is a discussion of the financial condition and results of
operations of the Company for the year-to-date ended March 31, 1998.
Financial condition
Loans
As of March 31, 1998, loans outstanding were $234 million an increase
of $10 million or 4.4% from December 31, 1997. During this three month
period, Real Estate loans increased by $6 million or 3.8%. The increase
in real estate loans is represented by an increase of $6 million or 7.7%
in 1-4 Family Residential loans. At March 31, 1998, Construction and
and Land Development loans were at $23.6 million or 10.1% of total loans,
Residential Real Estate loans were at $91.3 million or 39% of total loans,
and Commercial loans were at $35.1 million or 15% of total loans with
Commercial Real Estate loans at $51.1 million or 21.9% of total loans.
Allowance for Loan Losses
The allowance for possible loan losses was $3.2 million or 1.38% of gross
loans on March 31, 1998, compared with $3.1 million or 1.40% of gross
loans on December 31, 1997. Net charge-offs for the three month period ended
March 31, 1998, were -$12 thousand, or -.005% of gross loans, compared to
$14 thousand or .007% of gross loans for the same period in 1997. As of
March 31, 1998, loans on non-accrual status totaled 1.5 million or .6%
of gross loans, compared to $448 thousand or .22% of gross loans on March
31, 1997, and $824 thousand or .37% of gross loans on December 31, 1997.
The non-accrual loans consisted primarily of real estate loans. On March
31, 1998, the ratio of non-accrual loans to the allowance for loan losses
was 45.6% compared to 26.3% on December 31, 1997.
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
quarterly basis and feels that the allowance for loan losses is adequate.
The allowance for loan losses is maintained at a level considered 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.
During this three month period ended March 31, 1998, $83 thousand was
charged to current earnings and added to the allowance for loan losses.
Investment securities - Available for Sale
The securities available-for-sale portfolio showed a decrease of $10
million from December 31, 1997, to March 31, 1998.
Deposits and Borrowed Funds
As of March 31, 1998, total deposits were $252.3 million, which is a slight
decrease of $606 thousand or 5.24% from December 31, 1997. Interest Bearing
Transaction Accounts decreased $5.2 million or 20.3%. Demand deposits
decreased 3.7 million or 9.1% since December 31, 1997. Time deposits
increased $1 million or .9% since December 31, 1997. Insured Money Market
savings increased $7 million due to the shifting of funds from other deposit
areas. Securities sold under agreements to repurchase decreased $6.7 million
or 22.3%.
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, quarterly
intervals up to 1 year, 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. The banks are members of the Federal Home
Loan Bank system which provides the company with an additional source
of liquidity.
Securities Sold Under Agreements to Repurchase (Repos) declined by
$6.7 million. This decline was funded by a net decrease in Cash and
Cash Equivalents of $2.9 million or 17.5% and an increase in long-term
borrowings of $3.6 million. Total Loans increased $10 million. This
increase was funded by the $10 million decrease of investment securities
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.
Results of Operations Overview
For the three month period ended March 31, 1998 the Company reported
earnings of $761 thousand an increase of $115 thousand or 17.8% over the
same period in 1997.
Net Interest Income
Net interest income for the three months ended March 31, 1998, was
$3.1 million compared to $2.7 million for the same period in 1997. The
increase in net interest income is the result of a $650 thousand increase
in interest income and only a $247 thousand increase in interest expense.
The increase in interest income is a result of a 4.8% increase in average
loan balances. The increase in interest expense is due to increased rates
paid and increased average balances of 2.4%.
Provision for Loan Losses
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.
During the first three months of 1998, provisions charged against
1997 income were $83 thousand which was the same as compared to the
same period in 1997.
Non-interest income and expense
Non-interest income for the first three months of 1998 increased $87 thousand
or 17.3% from the same period in 1997. This increase is due to $15 thousand
increased income from service charges on deposit, and $79 thousand increase
of other income due primarily to non-customer ATM surcharges of $49 thousand.
Non-interest expense for the first three months of 1998 as compared to the
same period during 1997 increased 296 thousand or 13.1%. Occupancy
expense increased $3 thousand or 1.6%, and equipment expense increased
$35 thousand or 15.1%. Employee expense showed the largest increase
of $174 thousand or 14.4%. These increases are a result of an increase
in personnel, new locations, and upgrading computer equipment
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
EXHIBIT A:
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1997, 1996, 1995
Note A. Summary of Significant Accounting Policies
1. Consolidation:
The consolidated financial statements of First Banking Center, Inc. include the
accounts of its wholly owned subsidiaries, First Banking Center - Burlington and
First Banking Center - Albany. First Banking Center - Burlington includes the
accounts of its wholly owned subsidiary, First Banking Center Burlington
Investment Corporation. The consolidated financial statements have been
prepared in conformity with generally accepted accounting principles and conform
to general practices within the banking industry. All significant intercompany
accounts and transactions have been eliminated in the consolidated financial
statements.
2. Nature of banking activities:
The consolidated income of First Banking Center, Inc. is principally from income
of the two bank subsidiaries. The subsidiary Banks grant agribusiness,
commercial, residential and consumer loans, accepts deposits and provides trust
services to customers primarily in southeastern and south central Wisconsin.
The subsidiary Banks are subject to competition from other financial
institutions and nonfinancial institutions providing financial products.
Additionally the Company and the subsidiary Banks are subject to the regulations
of certain regulatory agencies and undergo periodic examination by those
regulatory agencies.
3. Basis of financial statement presentation:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
4. Cash and cash equivalents:
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks, federal funds sold and investments with an
original maturity of three months or less. Generally, federal funds are sold
for one-day periods.
The subsidiary Banks maintain amounts due from banks which, at times, may exceed
federally insured limits. The subsidiary Banks have not experienced any losses
in such accounts.
5. Available for sale securities:
Securities classified as available for sale are those debt securities that the
subsidiary Banks intend to hold for an indefinite period of time, but not
necessarily to maturity. Any decision to sell a security classified as
available for sale would be based on various factors, including significant
movements in interest rates, changes in the maturity mix of the subsidiary
Banks' assets and liabilities, liquidity needs, regulatory capital
consideration, and other similar factors. Securities classified as available
for sale are carried at fair value. Unrealized gains or losses are reported as
increases or decreases in comprehensive income, net of the related deferred tax
effect. Realized gains or losses, determined on the basis of the cost of
specific securities sold, are included in earnings.
<PAGE> 10
Note A. Summary of Significant Accounting Policies (continued)
6. Loans:
Loans that management has the intent and ability to hold for the foreseeable
future or until maturity or payoff are reported at the amount of unpaid
principal, reduced by the allowance for loan losses. Interest on loans is
calculated by using the simple interest method on daily balances of the
principal amount outstanding. The accrual of interest income on impaired loans
is discontinued when, in the opinion of management, there is reasonable doubt
as to the borrower's ability to meet payment of interest or principal when they
become due. When interest accrual is discontinued, all unpaid accrued interest
is reversed. Cash collections on impaired loans are credited to the loan
receivable balance, and no interest income is recognized on those loans until
the principal balance is current. Accrual of interest is generally resumed when
the customer is current on all principal and interest payments and has been
paying on a timely basis for a period of time.
7. Allowance for loan loses:
The allowance for loan losses is established through a provision for loan losses
charged to expense. Loans are charged against the allowance for loan losses when
management believes that the collectibility of the principal is unlikely. The
allowance is an amount that management believes will be adequate to absorb
possible losses on existing loans that may become uncollectible, based on
evaluation of the collectibility of loans and prior loan loss experience. The
evaluations take into consideration such factors as changes in the nature and
volume of the loan portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the borrower's
ability to pay. While management uses the best information available to make
its evaluation, future adjustments to the allowance may be necessary if there
are significant changes in economic conditions. Impaired loans are measured
based on the present value of expected future cash flows discounted at the
loan's effective interest rate or, as a practical expedient, at the loan's
observable market price or the fair value of the collateral if the loan is
collateral dependent. A loan is impaired when it is probable the creditor will
be unable to collect all contractual principal and interest payments due in
accordance with the terms of the loan agreement.
In addition, various regulatory agencies periodically review the allowance for
loan losses. These agencies may require the banks to make additions to the
allowance for loan losses based on their judgments of collectibility based on
information available to them at the time of their examination.
8. Office buildings and equipment:
Depreciable assets are stated at cost less accumulated depreciation. Provisions
for depreciation are computed on straight-line and accelerated methods over the
estimated useful lives of the assets, which range from 15 to 50 years for
buildings and 3 to 15 years for equipment.
9. Profit-sharing plan:
The Company has established a trusteed contributory 401(k) profit-sharing plan
for qualified employees. The Company's policy is to fund contributions as
accrued.
10. Other real estate owned:
Other real estate owned, acquired through partial or total satisfaction of loans
is carried at the lower of cost or fair value less cost to sell. At the date of
acquisition losses are charged to the allowance for loan losses. Revenue and
expenses from operations and changes in the valuation allowance are included in
loss on foreclosed real estate.
<PAGE> 11
Note A. Summary of Significant Accounting Policies (continued)
11. Income taxes:
The Company files a consolidated federal income tax return and individual
subsidiary state income tax returns. Accordingly, amounts equal to tax benefits
of those companies having taxable federal losses or credits are reimbursed by
the other companies that incur federal tax liabilities.
Amounts provided for income tax expense are based on income reported for
financial statement purposes and do not necessarily represent amounts currently
payable under tax laws. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible amounts in the future
based on enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes. The differences relate principally to the reserve
for loan losses, nonaccrual loan income, deferred compensation and pension,
fixed assets and unrealized gains and losses on available for sale securities.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.
12. Off-balance-sheet financial instruments:
In the ordinary course of business the subsidiary Banks have entered into off-
balance-sheet financial instruments consisting of commitments to extend credit,
commitments under credit card arrangements, commercial letters of credit and
standby letters of credit. Such financial instruments are recorded in the
financial statements when they are funded or related fees are incurred or
received.
13. Trust assets and fees:
Property held for customers in fiduciary or agency capacities is not included in
the accompanying balance sheet, since such items are not assets of the Company.
In accordance with established industry practice, income from trust fees is
reported on the cash basis. Reporting of trust fees on an accrual basis would
have no material effect on reported income.
14. Earnings per share:
Earnings per share are computed based upon the weighted average number of common
shares outstanding during each year. In the computation of diluted earnings per
share, all dilutive stock options are assumed to be exercised at the beginning
of each year and the proceeds are used to purchase shares of the Company's
common stock at the average market price during the year.
15. Fair value of financial instruments:
Financial Accounting Standards Board Statement No. 107, "Disclosures About Fair
Value of Financial Instruments", requires disclosure of fair value information
about financial instruments, whether or not recognized in the balance sheet, for
which it is practicable to estimate that value. In cases where quoted market
prices are not available, fair values are based on estimates using present value
or other valuation techniques. Those techniques are significantly affected by
the assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument. Statement No. 107 excludes certain
financial instruments from its disclosure requirements. Accordingly, the
aggregate fair value amounts presented do not represent the underlying value of
the Company.
<PAGE> 12
Note A. Summary of Significant Accounting Policies (continued)
15. Fair value of financial instruments: (continued)
The following methods and assumptions were used by the Company in estimating the
fair value of its financial instruments:
Carrying amounts approximate fair values for the following instruments:
Cash and cash equivalents
Federal funds sold
Interest-bearing deposits in banks
Short-term borrowing
Accrued interest receivable
Accrued interest payable
Variable rate loans that reprice frequently where no
significant change in credit risk has occurred
Demand deposits
Variable rate money market accounts
Variable rate certificate of deposit
Available for sale securities
Discounted cash flows:
Using interest rates currently being offered on instruments with
similar terms and with similar credit quality:
All loans except variable rate loans described above
Fixed rate certificates of deposit
Notes payable and other borrowing
Quoted fees currently being charged for similar instruments:
Taking into account the remaining terms of the agreements and the
counterparties' credit standing:
Off-balance-sheet instruments:
Guarantees
Letters of credit
Lending commitments
Since the majority of the Company's off-balance-sheet instruments consists of
nonfee-producing, variable rate commitments, the Company had determined it does
not have a distinguishable fair value.
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
1943, 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, 1998
Date Brantly Chappell
President & Chief Executive Officer
May 15, 1998
Date James Schuster
Chief Financial Officer
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</TABLE>
