PAGE 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended June 30, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to
Commission File Number 0-11138
SUBURBAN BANCORP, INC.
____________________________
(Exact name of registrant as specified in its charter)
DELAWARE 36-3150316
_______________________ ___________________
(State of Incorporation) (I.R.S. Employer
Identification No.)
50 N. Brockway, Palatine, Illinois 60067
___________________________________________
(Address of principal executive offices and zip code)
(708) 359-1077
______________
(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.
Class Outstanding at July 28, 1994
_____________________ ____________________
Common Stock,
Class A, $1 par value 2,121,543
Class B, $1 par value 1,248,457
PAGE 2
CONTENTS
PAGE
_____
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income - Six Months 4
Earnings and Dividends per Share Information - Six Months 4
Consolidated Statements of Income - Three Months 5
Earnings and Dividends per Share Information - Three Months 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities Holders 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
PAGE 3
SUBURBAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
(Unaudited) June 30, December 31,
1994 1993
_____________ _____________
<S> <C> <C>
ASSETS
Cash and due from banks $ 60,063,913 $ 50,010,965
Interest-bearing deposits with banks 1,369,757 2,282,212
Federal funds sold and resale agreements 66,295,000 57,025,000
Investment securities available for sale,
at fair value in 1994, and at lower of
cost or fair value in 1993 (Note 4) 464,734,143 401,194,961
Mortgage-backed and related securities
available for sale, at fair value
in 1994 and at lower of cost
or fair value in 1993 (Note 4) 160,739,149 187,614,298
Loans 604,576,492 578,027,259
Less allowance for loan losses (11,566,830) (11,074,631)
_____________ _____________
Net loans 593,009,662 566,952,628
Buildings, equipment and
leasehold improvements, net 24,699,862 23,621,140
Goodwill and other intangibles, net 8,032,239 8,495,415
Accrued interest and other assets 22,046,026 18,911,387
_____________ _____________
TOTAL ASSETS $1,400,989,751 $1,316,108,006
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 256,208,641 $ 229,293,520
Interest-bearing 1,008,815,917 962,754,364
_____________ _____________
Total deposits 1,265,024,558 1,192,047,884
Federal funds purchased and
repurchase agreements 20,541,552 13,410,412
Notes payable 3,800,000 500,000
Accrued interest and other liabilities 11,840,917 9,341,264
_____________ _____________
Total liabilities 1,301,207,027 1,215,299,560
_____________ _____________
Stockholders' equity
Preferred stock, no par value,
500,000 shares authorized; none issued - -
Common stock:
Class A, $1 par value; 6,000,000 shares
authorized; shares issued 3,149,863
in 1994; 3,141,834 in 1993 3,149,863 3,141,834
Class B, $1 par value; 3,000,000 shares
authorized; shares issued 1,284,221
in 1994; 1,292,250 in 1993 1,284,221 1,292,250
Surplus 41,931,982 41,931,982
Retained earnings 77,224,330 72,912,667
Unrealized holding losses, net of deferred
tax benefit of $1,142,823
in 1994 (Note 4) (2,122,384) -
Treasury stock, at cost,
1,064,084 shares in 1994;
and 987,078 shares in 1993 (21,685,288) (18,470,287)
______________ ______________
Total stockholders' equity 99,782,724 100,808,446
______________ ______________
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,400,989,751 $1,316,108,006
============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
PAGE 4
SUBURBAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR SIX MONTHS ENDED JUNE 30, 1994 AND 1993
<TABLE>
(Unaudited)
1994 1993
__________ __________
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $24,486,108 $21,758,217
Interest on securities available for sale:
U.S. Treasury securities 7,643,205 7,251,758
Obligations of other U.S. government
agencies and corporations 5,164,195 5,476,320
Obligations of states and political
subdivisions 2,983,996 2,957,449
Other securities 61,405 229,729
Interest on federal funds sold
and resale agreements 1,117,181 936,316
Interest on deposits with banks 47,502 3,971
___________ ___________
41,503,592 38,613,760
___________ ___________
INTEREST EXPENSE
Interest on deposits 15,565,095 15,202,403
Interest on notes payable 65,707 50,496
Other interest expense 390,985 383,093
___________ ___________
16,021,787 15,635,992
___________ ___________
Net interest income 25,481,805 22,977,768
Provision for loan losses 597,200 1,395,000
___________ ___________
Net interest income after
provision for loan losses 24,884,605 21,582,768
___________ ___________
NONINTEREST INCOME
Service fees 5,282,886 4,808,126
Securities gains (losses) (104,291) 1,087,877
Trust department income 602,664 438,998
Other income 670,052 478,951
___________ ___________
6,451,311 6,813,952
___________ ___________
NONINTEREST EXPENSE
Salaries and employee benefits 11,468,617 9,821,102
Occupancy expense, net 1,998,463 2,107,614
Furniture and equipment expense 1,708,146 1,496,622
Deposit insurance expense 1,322,933 1,182,740
Merger related charges (Note 6) 806,253 -
Other expenses 5,539,719 5,076,903
___________ ___________
22,844,131 19,684,981
___________ ___________
Income before income taxes and cumulative
effect of a change in
accounting principle 8,491,785 8,711,739
Applicable income taxes (Note 5) 2,533,474 2,174,506
___________ ___________
Income before cumulative effect of a
change in accounting principle 5,958,311 6,537,233
___________ ___________
Cumulative effect on prior years of a change
in accounting for income taxes (Note 5) - 1,500,000
___________ ___________
Net income $ 5,958,311 $ 8,037,233
=========== ===========
Per common share based upon a daily weighted
average shares of outstanding of 3,405,738 3,342,057
Income before cumulative effect of a change
in accounting principle, per share $ 1.75 $ 1.96
Net income, per share $ 1.75 $ 2.40
Dividends per common share
Class A Common $ 0.500 $ 0.440
Class B Common $ 0.455 $ 0.400
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
PAGE 5
SUBURBAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THREE MONTHS ENDED JUNE 30, 1994 AND 1993
<TABLE>
(Unaudited)
1994 1993
__________ __________
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $12,650,118 $11,054,930
Interest on securities available for sale:
U.S. Treasury securities 4,099,803 3,508,859
Obligations of other U.S. government
agencies and corporations 2,486,134 2,819,852
Obligations of states and political
subdivisions 1,524,270 1,526,468
Other securities 25,893 108,875
Interest on federal funds sold
and resale agreements 632,527 459,671
Interest on deposits with banks 20,580 1,824
___________ ___________
21,439,325 19,480,479
___________ ___________
INTEREST EXPENSE
Interest on deposits 8,068,631 7,588,387
Interest on notes payable 55,217 14,849
Other interest expense 197,495 188,280
___________ ___________
8,321,343 7,791,516
___________ ___________
Net interest income 13,117,982 11,688,963
Provision for loan losses 299,000 568,000
___________ ___________
Net interest income after
provision for loan losses 12,818,982 11,120,963
___________ ___________
NONINTEREST INCOME
Service fees 2,537,904 2,545,340
Securities gains (losses) (30,829) 524,026
Trust department income 325,445 235,727
Other income 389,016 255,858
___________ ___________
3,221,536 3,560,951
___________ ___________
NONINTEREST EXPENSE
Salaries and employee benefits 5,751,546 4,914,008
Occupancy expense, net 969,848 993,614
Furniture and equipment expense 875,231 750,540
Deposit insurance expense 664,607 590,439
Merger related charges (Note 6) 806,253 -
Other expenses 3,022,717 2,682,469
___________ ___________
12,090,202 9,931,070
___________ ___________
Income before income taxes and cumulative
effect of a change
in accounting principle 3,950,316 4,750,844
Applicable income taxes (Note 5) 1,315,905 1,199,700
___________ ___________
Income before cumulative effect of a
change in accounting principle 2,634,411 3,551,144
___________ ___________
Cumulative effect on prior years of a change
in accounting for income taxes (Note 5) - -
___________ ___________
Net income $ 2,634,411 $ 3,551,144
=========== ===========
Per common share based upon a daily weighted
average shares of outstanding of 3,370,000 3,341,816
Income before cumulative effect of a change
in accounting principle, per share $ 0.78 $ 1.06
Net income, per share $ 0.78 $ 1.06
Dividends per common share
Class A Common $ 0.250 $ 0.220
Class B Common $ 0.227 $ 0.200
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
PAGE 6
SUBURBAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1994, 1993
<TABLE>
(Unaudited)
1994 1993
___________ ___________
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 5,958,311 $ 8,037,233
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Cumulative effect on prior years of a
change in accounting principles - (1,500,000)
Provision for loan losses 597,200 1,395,000
Depreciation and amortization of
premises and equipment 1,684,265 1,560,320
Loss (Gains) on sales
of securities held for sale 104,291 (1,087,877)
Amortization and accretion on securities 3,452,933 2,562,389
Losses (gains) on sale of other real estate 3,921 13,030
Amortization of goodwill
and other intangibles 463,176 364,474
Deferred income taxes (195,129) (333,420)
Increase in interest receivable (1,846,341) 319,109
Increase (decrease) in interest payable 169,260 (18,464)
Others - net 2,074,924 1,506,001
___________ ___________
Net cash provided
by operating activities 12,466,811 12,817,795
___________ ___________
INVESTING ACTIVITIES
Net decrease in interest-bearing
deposits with banks 912,455 159,932
Net (increase) decrease in federal funds sold
and resale agreements (9,270,000) 5,030,000
Purchases of investment securities
available for sale (223,536,658) (42,019,972)
Purchases of mortgage backed securities
available for sale (7,683,000) (107,267,539)
Proceeds from sales of investment
securities available for sale 99,923,492 33,199,780
Proceeds from sales of mortgage backed
securities available for sale - 33,483,197
Proceeds from maturities and principle
reductions of investment securities
available for sale 65,172,298 31,501,250
Proceeds from maturities and principle
reductions of mortgage backed
securities available for sale 22,637,404 23,172,743
Net increase in loans (26,811,508) (36,995,528)
Purchases of premises and equipment (2,762,987) (1,095,187)
Proceeds from sale of land held for sale - 1,036,000
Proceeds from sale of other real estate 458,476 964,009
___________ ___________
Net cash used
in investing activities (80,960,028) (58,831,315)
___________ ___________
</TABLE>
PAGE 7
SUBURBAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1994, 1993 - CONTINUED
<TABLE>
(Unaudited)
1994 1993
___________ ___________
<S> <C> <C>
FINANCING ACTIVITIES
Net increase in deposits 72,976,674 45,569,589
Net increase in securities sold
under repurchase agreements 7,131,140 8,266,064
Proceeds from notes payable 5,750,000 850,000
Payment of notes payable (2,450,000) (4,350,000)
Purchase of treasury stock (3,215,001) (220,000)
Cash dividends paid (1,646,648) (1,420,327)
___________ ___________
Net cash provided
by financing activities 78,546,165 48,695,326
___________ ___________
Net increase in cash
and due from banks 10,052,948 2,681,806
Cash and due from banks
at beginning of year 50,010,965 52,081,494
___________ ___________
Cash and due from banks
at end of period $60,063,913 $54,763,300
=========== ===========
Supplemental disclosures as to cash flow:
Cash paid during the period for:
Interest $15,762,527 $15,645,423
=========== ===========
Income taxes $ 2,745,000 $ 2,665,000
=========== ===========
Transfer to other real estate from loans $ 164,405 $ 90,100
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
PAGE 8
SUBURBAN BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The six months and quarterly consolidated financial statements of Suburban
Bancorp, Inc. ("the Company") include the accounts of the Company and its
wholly owned subsidiaries, and have been prepared without audit from the
books and records of the Company. All adjustments included in these consol-
idated financial statements are of a normal recurring nature and reflect all
adjustments and disclosures which are, in the opinion of management, neces-
sary for a fair presentation of the results of operation for the interim
periods presented. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
Note 2. Loans
The major classifications of loans at June 30, 1994 and December 31, 1993
were as follows:
<TABLE>
June 30, December 31,
1994 1993
___________ ___________
<S> <C> <C>
Commercial and industrial $99,421,096 $92,827,896
Real estate-construction 36,152,973 37,213,612
Real estate-mortgage
Residential 255,591,727 241,991,588
Home equity 43,444,773 41,339,297
Commercial 132,299,241 126,345,626
Consumer 40,231,036 40,946,572
___________ ___________
Total loans 607,140,846 580,664,591
Deferred loan fees (1,965,171) (1,980,955)
Unearned discount (599,183) (656,377)
___________ ___________
604,576,492 578,027,259
Allowance for loan losses (11,566,830) (11,074,631)
___________ ___________
$593,009,662 $566,952,628
============ ============
</TABLE>
PAGE 9
SUBURBAN BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Changes in the allowance for loan losses were as follows:
<TABLE>
Six Months Ended June 30,
__________________________
1994 1993
___________ ___________
<S> <C> <C>
Balance, beginning $11,074,631 $ 9,602,586
Provision charged to operations 597,200 1,395,000
Recoveries 316,843 391,299
Loans charged off (421,844) (931,894)
___________ ___________
Balance, ending $11,566,830 $10,456,991
=========== ===========
</TABLE>
Note 3. Commitments and Contingent Liabilities
In the normal course of business, the Company's subsidiary banks make con-
tractual commitments to extend credit and issue standby letters of credit.
These contracted commitments are subject to the banks' credit approval and
monitoring procedures. Contracted commitments to extend credit aggregated
approximately $65,412,000 and $35,862,000 at June 30, 1994 and December 31,
1993, respectively. Commitments under standby letters of credit aggregated
$10,310,000 and $7,844,000 at June 30, 1994 and December 31, 1993, respec-
tively. The Company does not anticipate any material losses as a result of
such commitments and contingent liabilities.
The Company is a defendant in legal actions arising from normal business
activities. Management believes that the ultimate liability, if any, result-
ing from these legal actions will not materially affect the Company's finan-
cial position.
Note 4. Securities
Effective January 1, 1994, the Company adopted Statement of Financial Ac-
counting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS 115"), which resulted in an increase to stockhold-
ers' equity, on that date, of $8,751,432, net of deferred taxes of
$4,712,309. SFAS 115 requires that all debt and equity securities be classi-
fied as: held to maturity, trading assets, or available for sale. Securities
held to maturity are classified as such only when the Company determines it
has the ability and intent to hold these securities to maturity. Trading
account assets include securities acquired as part of trading activities and
PAGE 10
SUBURBAN BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
are typically purchased with the expectation of near-term profit. All secu-
rities not qualifying for held to maturity or trading treatment are classi-
fied as available for sale, even if the Company has no intention to sell the
security.
Securities available-for-sale, which include securities to be held for
indefinite periods of time and which may be sold, are carried at fair value
with unrealized holding gains and losses included, on an after-tax basis, in
a separate component of stockholders' equity.
Application of SFAS 115 to prior periods is not permitted and, accordingly,
prior period financial statements have not been restated to reflect the
change in accounting principle. There is no cumulative effect on the Com-
pany's Consolidated Statement of Income for the six months ended June 30,
1994, from adopting SFAS 115. The ending balance of Stockholders' Equity was
decreased by $2,122,384, which represents the unrealized holding losses, net
of deferred tax benefit of $1,142,823.
Note 5. Change in Accounting For Income Taxes
Effective January 1, 1993, the Company adopted Statement of Financial Ac-
counting Standards No. 109, "Accounting for Income Taxes," prospectively.
The cumulative effect of adopting this standard was to increase income by
$1,500,000, ($0.45 per share) for the first quarter of 1993. The impact
resulted from the requirement to adjust the net deferred tax asset to the
rate of 34%, expected to be in effect when the assets are recognized. Subse-
quent to the first quarter of 1993 and as a consequence of the enactment of
the Revenue Reconciliation Act of 1993, the effective federal income tax rate
was increased to 35%.
The provisions for income tax expense were as follows:
<TABLE>
Six Months Ended June 30,
__________________________
1994 1993
___________ ___________
<S> <C> <C>
Current federal $ 2,728,603 $ 2,507,926
Deferred (195,129) (333,420)
___________ ___________
$ 2,533,474 $ 2,174,506
=========== ===========
</TABLE>
PAGE 11
SUBURBAN BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(Unaudited)
Note 6. Pending Merger
On April 15, 1994, the Company entered into a Merger Agreement providing
for the merger of the Company with and into Harris Bankmont, Inc., a wholly-
owned subsidiary of Bank of Montreal ("BMO"). Pursuant to the agreement,
each issued and outstanding share of the Company's Class A and Class B Common
Stock will be exchanged for shares of BMO common stock based on a conversion
rate of 3.9352 shares of BMO common stock for each share of the Company's
Class A and Class B Common Stock, subject to adjustment. The consummation of
the merger is subject to regulatory approval and approval of the Company's
stockholders, among other conditions. Stockholders owning shares represent-
ing more than a majority of the voting power of the Company have entered into
a Voting Agreement pursuant to which they have agreed to vote in favor of the
merger.
Merger related charges represent legal, investment banking and other con-
sulting fees incurred in connection with the pending merger. These charges
are not deductible for income tax purposes, and accordingly the provision for
income tax expense does not include the corresponding benefit normally asso-
ciated with deductible charges.
PAGE 12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation
RESULTS OF OPERATIONS
Income before the cumulative effect of a change in accounting principle for
the first half of 1994, amounted to $5.96 million, or $1.75 per share, com-
pared to income of $6.54 million, or $1.96 per share, in the first half of
1993. The decrease in earnings for the first six months of 1994 was primari-
ly the result of nonrecurring merger related charges amounting to $806,000,
or $0.24 per share. Net income for the first half of 1994, was $5.96 mil-
lion, or $1.75 per share, compared to $8.04 million, or $2.40 per share, for
the same period in 1993. The 1993 net income included a cumulative effect of
a change in accounting principle of $1.5 million, or $0.45 per share.
Net interest margin, the Company's net interest income expressed as a per-
centage of average earning assets, on a fully taxable equivalent basis, was
4.45% for the second quarter of 1994, compared to 4.55% for the same period
in 1993. The net interest margin earned in the second quarter of 1994 is an
increase from the 4.34% level attained in the first quarter of 1994.
Short-term interest rates rose significantly in the first half of 1994,
which may benefit the Company's net interest margin in future quarters. On
average, new securities are being purchased at higher yields than those
maturing. In addition, adjustable rate mortgage backed securities have begun
resetting upward in response to the higher short-term interest rates. If
prevailing short-term interest rates continue to increase, the Company's net
interest margin will depend, in part, on the Company's ability to generate
loan growth in excess of deposit growth and contain interest expense.
Noninterest income, exclusive of security gains and losses, for the first
half of 1994 increased 14% from the 1993 level. The increase in revenue from
service fees was driven primarily by fees generated by mortgage origination
activity, on mortgage loans sold in the secondary market. Security losses
were recognized in the first six months of 1994 on the sale of selected secu-
rities which were sold to increase the yield of the Company's investment
portfolio by utilizing the tax benefit associated with the losses on these
sales and reinvesting the proceeds at higher prevailing interest rates.
PAGE 13
Noninterest expense for the first half of 1994 increased 16% over the com-
parable period in 1993, driven principally by increases in salaries and em-
ployee benefits and other expenses. Increases in salaries and employee bene-
fits were the result of increased staffing levels required by increases in
mortgage origination and trust activity. Merger related charges include
legal, investment banking and other consulting fees incurred in connection
with the pending merger with the Bank of Montreal.
Allowance for Loan Losses
The $597,200 provision for loan losses during first half of 1994 increased
the allowance for loan losses to $11.6 million, or 1.9% of quarter end loans.
In the opinion of management, the June 30, 1994 allowance for loan losses is
adequate to absorb all future losses inherent in the Company's consolidated
loan portfolio at that date.
FINANCIAL CONDITION
The Company's deposits grew by $73 million from year-end 1993, representing
an annualized growth rate of 12.2%. Funds provided by this growth were in-
vested primarily in securities available for sale and loans, which grew at
annualized growth rates of 12.5% and 9.2%, respectively.
The following table presents major components of deposits at June 30, 1994
and December 31, 1993.
<TABLE>
June 30, December 31,
1994 1993 Change
_____________ _____________ _____________
<S> <C> <C> <C>
Noninterest-bearing $ 256,208,641 $ 229,293,520 $ 26,915,121
Regular savings 112,845,258 109,510,121 3,335,137
NOW accounts 156,801,698 156,489,398 312,300
Money market 404,277,825 382,387,432 21,890,393
Certificates of deposit
$100,000 and over 69,176,970 66,770,364 2,406,606
Certificates of deposit 182,389,012 167,005,993 15,383,019
Individual retirement accounts 83,325,154 80,591,056 2,734,098
_____________ _____________ ____________
$1,265,024,558 $1,192,047,884 $ 72,976,674
============== ============== ============
</TABLE>
PAGE 14
Nonperforming Assets and Loan Charge-offs
The following table presents nonperforming assets at June 30, 1994 and
December 31, 1993.
<TABLE>
June 30, December 31,
1994 1993
__________ __________
<S> <C> <C>
Other real estate $1,405,466 $1,703,458
Nonaccrual loans 6,112,075 6,222,529
Restructured loans 623,457 89,805
Loans past due 90 days and over 730,377 902,469
_________ _________
Total $8,871,375 $8,918,261
========== ==========
</TABLE>
Nonperforming assets have remained relatively stable from the December 31,
1993 level. The allowance for loan losses represented 155% of total nonper-
forming loans and 130% of total nonperforming assets at June 30, 1994.
The following table presents loan charge-offs and recoveries recorded by
the Company during the first half of 1994.
<TABLE>
Charge-offs Recoveries Net
___________ __________ __________
<S> <C> <C> <C>
Commercial $(262,731) $162,721 $(100,010)
Consumer (72,375) 93,684 21,309
Real Estate (86,738) 60,438 (26,300)
__________ ________ _________
$(421,844) $316,843 $(105,001)
========= ======== =========
</TABLE>
Capital Resources
Stockholders' equity at June 30, 1994, was $99.8 million, a slight decrease
from the $100.8 million level at December 31, 1993. Management believes the
Company remains well capitalized. Stockholders equity represented 7.12% of
total assets at June 30, 1994, compared to 7.66% at December 31, 1993.
Bank regulators have established capital guidelines which have been phased
in over several years and are currently effective in their entirety. The
guidelines assign different risk weighting to assets and certain off-balance
sheet activities. Capital is defined as: Tier I Capital, which includes
PAGE 15
stockholders' equity reduced by intangibles; and Tier II Capital, which in-
cludes certain long-term debt and a portion of the allowance for loan losses.
The guidelines require that bank holding companies must have ratios of at
least 4% and 8% for Tier I and total capital (which includes Tier II
Capital), respectively. At June 30, 1994, the Company's ratio of Tier I
Capital and total capital to risk adjusted assets was 14.39% and 15.64%,
respectively, substantially exceeding the minimum standards.
The elements of the Company's Risk-based Capital levels, on a fully phased
in basis, are shown below (dollars in thousands):
<TABLE>
June 30, December 31,
1994 1993
________ ________
<S> <C> <C>
Stockholders' equity $99,783 $100,808
Unrealized holding losses 2,122 -
Less: Goodwill and other intangibles (8,032) (8,495)
________ ________
Total Tier I capital 93,873 92,313
Allowable allowance for loan losses 8,152 7,946
________ ________
Total Tier II capital 8,152 7,946
________ ________
Total capital $ 102,025 $ 100,259
========= =========
Risk-adjusted assets $652,138 $635,694
======== ========
Tier I capital to risk-adjusted assets 14.39% 14.52%
===== =====
Total capital to risk-adjusted assets 15.64% 15.77%
===== =====
</TABLE>
Liquidity
The Company depends primarily upon cash and cash equivalents, unpledged
U.S. Government and Agency securities maturing in less than five years, and
federal funds sold as sources of liquidity. The Company's liquidity has
remained stable since December 31, 1993. Historically the Company has not
had, nor does management foresee any unusual short-term or long-term liquidi-
ty needs. Management intends to continue maintaining high levels of liquidi-
ty.
PAGE 16
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities Holders
a) The Annual Meeting of Stockholders of the Company was held
April 15, 1994.
b) Without solicitation in opposition, the following nominees
listed in its Proxy Statement soliciting proxies pursuant to Regulation 14A
under the Securities Exchange Act of 1934 (the "Act") were elected as Direc-
tors to the Board of Directors of the Company:
Directors Elected by Holders of Class A Common Stock
<TABLE>
Votes Broker
Name Votes For Withheld Non Votes
_____________________ _________ ________ _________
<S> <C> <C> <C>
John V. Crowe 1,440,576 22,924 0
Joseph F. Lizzadro 1,445,848 17,652 0
James H. Sammons, M.D. 1,440,576 22,924 0
Directors Elected by Holders of Class B Common Stock
Votes Broker
Name Votes For Withheld Non Votes
_____________________ _________ ________ _________
Francis Catini 11,434,960 3,080 0
Donald J. Cooney 11,434,960 3,080 0
Gerald F. Fitzgerald 11,434,960 3,080 0
Gerald F. Fitzgerald, Jr. 11,434,960 3,080 0
James G. Fitzgerald 11,434,960 3,080 0
Thomas G. Fitzgerald 11,434,960 3,080 0
Richard J. Riordan 11,434,960 3,080 0
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) None
(b) On April 18, 1994, The Company filed Form 8-K Current Report dated
April 15, 1994 which described, pursuant to Item 2 of such Report, the pend-
ing merger and related Merger Agreement, dated April 15, 1994, by and among
the Company, Bank of Montreal and Harris Bankmont, Inc.
PAGE 17
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUBURBAN BANCORP, INC.
(Registrant)
Date: July 29, 1994 By: /s/ Gerald F. Fitzgerald, Jr.
________________________ ____________________________
Gerald F. Fitzgerald Jr.
President and
Chief Executive Officer
Date: July 29, 1994 By: /s/ Edward C. Murawski
________________________ ____________________________
Edward C. Murawski,
Senior Vice President and
Chief Accounting Officer
