<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997, 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 03502
First National of Nebraska, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nebraska 47-0523079
- --------------------------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One First National Center Omaha, NE 68102
- --------------------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (402) 341-0500
--------------------------
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
------- -------.
As of May 3, 1997, the number of outstanding shares of the registrant's common
stock ($5.00 par value) was 346,767.
<PAGE>
Part I. Item 1. Financial Statements
FIRST NATIONAL OF NEBRASKA, INC.
Consolidated Statements of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Assets March 31, December 31,
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Cash and due from banks $ 418,362 $ 397,886
Federal funds sold and other short-term investments 349,164 277,028
- ---------------------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 767,526 674,914
Securities available-for-sale (amortized cost $194,848,000 and $255,653,000) 194,102 256,919
Securities held-to-maturity (fair value $759,462,000 and $650,897,000) 762,931 649,799
Loans 5,125,821 5,107,041
Less: Allowance for loan losses 109,497 104,812
Unearned income 11,827 11,494
- ---------------------------------------------------------------------------------------------------------------------------
Net loans 5,004,497 4,990,735
Premises and equipment, net 113,810 111,700
Other assets 225,604 227,990
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $ 7,068,470 $ 6,912,057
===========================================================================================================================
Liabilities and Stockholders' Equity
- ---------------------------------------------------------------------------------------------------------------------------
Deposits:
Noninterest-bearing $ 761,824 $ 721,448
Interest-bearing 5,190,125 5,114,721
- ---------------------------------------------------------------------------------------------------------------------------
Total deposits 5,951,949 5,836,169
Federal funds purchased and securities sold under repurchase agreements 174,379 146,015
Commercial paper and commercial paper based borrowings 264,596 273,298
Other liabilities 77,551 64,733
Long-term debt and other interest-bearing obligations 7,025 7,260
Capital notes 94,745 96,616
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 6,570,245 6,424,091
Stockholders' equity:
Common stock, par value $5 a share; 346,767 shares authorized,
issued and outstanding 1,734 1,734
Additional paid-in capital 2,604 2,604
Retained earnings 494,360 482,819
Net unrealized (depreciation)appreciation on available-for-sale securities,
net of tax (473) 809
- ---------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 498,225 487,966
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 7,068,470 $ 6,912,057
===========================================================================================================================
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
FIRST NATIONAL OF NEBRASKA, INC.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Quarter Ended March 31,
1997 1996
- ------------------------------------------------------------------------------------------------------------------------
(In Thousands, Except Share and Per Share Data)
<S> <C> <C>
Interest income:
Interest and fees on loans and lease financing $ 182,379 $ 163,306
Interest on securities:
Taxable interest income 13,534 12,505
Nontaxable interest income 261 282
Interest on federal funds sold
and other short-term investments 3,162 3,729
- ------------------------------------------------------------------------------------------------------------------------
Total interest income 199,336 179,822
- ------------------------------------------------------------------------------------------------------------------------
Interest expense:
Interest on deposits 68,047 62,454
Interest on commercial paper and
commercial paper based borrowings 3,860 4,227
Interest on federal funds purchased
and U.S. Treasury notes 1,558 1,088
Interest on long-term debt, other obligations
and capital notes 1,999 2,049
- ------------------------------------------------------------------------------------------------------------------------
Total interest expense 75,464 69,818
- ------------------------------------------------------------------------------------------------------------------------
Net interest income 123,872 110,004
Provision for loan losses 49,583 38,197
- ------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 74,289 71,807
Noninterest income:
Processing services 23,962 22,413
Deposit services 5,510 4,138
Trust and investment services 4,967 3,975
Commissions 6,482 5,967
Miscellaneous 7,725 5,513
- ------------------------------------------------------------------------------------------------------------------------
Total noninterest income 48,646 42,006
- ------------------------------------------------------------------------------------------------------------------------
Income before other operating expense 122,935 113,813
Noninterest expense:
Salaries and employee benefits 38,765 35,036
Communications and supplies 14,574 18,676
Loan services purchased 7,935 7,638
Purchased processing 5,288 4,681
Net occupancy expense of premises 5,755 5,165
Equipment rentals, depreciation and maintenance 7,050 6,364
Other professional services purchased 11,081 10,922
Miscellaneous 7,149 6,008
- ------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 97,597 94,490
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes 25,338 19,323
Income tax expense/(benefit):
Current 12,749 11,061
Deferred (1,880) (3,336)
- ------------------------------------------------------------------------------------------------------------------------
Total income tax expense 10,869 7,725
- ------------------------------------------------------------------------------------------------------------------------
Net income $ 14,469 $ 11,598
========================================================================================================================
Average number of common shares outstanding 346,767 346,767
========================================================================================================================
Net income per common share $ 41.73 $ 33.45
========================================================================================================================
Cash dividends declared per common share $ 8.44 $ 11.90
========================================================================================================================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
FIRST NATIONAL OF NEBRASKA, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31,
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 14,469 $ 11,598
Adjustments to reconcile net income to net cash
flows from operating activities:
Provision for loan losses 49,583 38,197
Depreciation and amortization 9,274 8,666
Provision for deferred taxes (1,880) (3,336)
Origination of loans for resale (5,635) (9,482)
Proceeds from the sale of loans 7,238 8,264
Other asset and liability activity, net 16,217 10,716
- ---------------------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities 89,266 64,623
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions, net of cash received (1) $ -- $ 395
Maturities and sales of securities available-for-sale 77,526 --
Purchases of securities available-for-sale (18,693) --
Maturities of securities held-to-maturity 48,055 51,286
Purchases of securities held-to-maturity (159,505) (113,596)
Net change in loans (65,057) 15,274
Purchases of premises and equipment, net (7,466) (10,735)
Other, net 119 130
- ---------------------------------------------------------------------------------------------------------------------------
Net cash flows from investing activities (125,021) (57,246)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in customer deposits $ 115,780 $ 86,691
Net change in federal funds purchased 28,364 (55,669)
Issuance of debt and capital notes 21,000 11,600
Principal repayments of debt and capital notes (23,106) (15,569)
Net change in commercial paper and
commercial paper based borrowings (10,744) (16,840)
Cash dividends paid (2,927) (4,127)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash flows from financing activities 128,367 6,086
- ---------------------------------------------------------------------------------------------------------------------------
Net change in cash and cash equivalents 92,612 13,463
Cash and cash equivalents at beginning of period 674,914 618,636
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 767,526 $ 632,099
===========================================================================================================================
Cash paid during the year for:
Interest $ 73,503 $ 67,986
Income taxes $ 3,207 $ 2,706
===========================================================================================================================
NON-CASH INVESTING AND FINANCING ACTIVITIES
Increase to assets and liabilities from business
acquisitions $ -- $ 723
===========================================================================================================================
</TABLE>
See notes to consolidated financial statements.
(1) In business combinations during 1996, the Company assumed liabilities of
$103,000 and non-cash assets of $431,000.
4
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1997
Note A: Basis of Presentation
The accompanying unaudited consolidated financial statements of First National
of Nebraska, Inc. and subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete consolidated
financial statements. For purposes of comparability, certain prior period
amounts have been reclassified.
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 as of the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the financial statements have
been included. Operating results for the three months ended March 31, 1997, are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1997. The notes to the consolidated financial statements
contained in the Annual Report on Form 10-K for the year ended December 31, 1996
should be read in conjunction with these consolidated financial statements.
Note B: Earnings per Common Share
Net income per share is calculated by dividing net income by the average number
of common shares outstanding during the period.
Note C: Pending Transactions
On April 29, 1997, the Company entered into agreements with Mutual of Omaha
Insurance Company and United of Omaha Life Insurance Company (the "Sellers") to
acquire 11,767 shares of the Company's common stock for redemption and 2,750
shares of the Company's common stock for the account of the Company's Senior
Management Incentive Plan at a purchase price of $3,600 per share. The purchase
price was negotiated at arm's length and reflected the fair market value of the
Company's common stock as of the date of the agreements. The consummation of the
purchase by the Company for redemption is subject to the receipt of all
necessary regulatory approvals. The transactions are expected to close on or
before June 30, 1997.
Note D: New Accounting Pronouncements
The Financial Accounting Standards Board recently issued SFAS 128, Earnings per
Share which is effective for financial statements for both interim and annual
periods ending after December 15, 1997. SFAS 128 supersedes APB 15 and replaces
the presentation of primary earnings per share (EPS) with a presentation of
basic EPS. It also requires dual presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures
and provides guidance on other computational changes. Management believes that
the adoption of SFAS 128 will have no impact on the Company's earnings per share
calculation.
Part I. Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
- -------
The Company consists of the parent company, which is a Nebraska-based interstate
bank holding company, and its consolidated subsidiaries. Its principal
subsidiaries include First National Bank of Omaha and its wholly-owned
subsidiaries (the "Bank"); First National Bank and Trust Company of Columbus;
First National Bank, North Platte; Platte Valley State Bank and Trust Company,
Kearney; The Fremont National Bank and Trust Company; First National Bank of
Kansas, Overland Park, Kansas; First National Bank South Dakota, Yankton, South
Dakota; and First National of Colorado, Inc., and its wholly-owned Colorado
subsidiaries: First National Bank, Fort Collins; Union Colony Bank, Greeley; and
The Bank of Boulder. The Company also has nonbanking subsidiaries, which in the
aggregate are not material.
5
<PAGE>
In addition to its position as a regional bank holding company, First National
of Nebraska, Inc. was one of the originators of the bank credit card industry
and has over 40 years' experience in this line of business. Through a banking
subsidiary, the Company conducts a significant consumer credit card service
under license arrangements with VISA USA and MasterCard International, Inc. The
Company's credit card customers are located throughout the United States, but
primarily in the Midwest. At December 31, 1996, the Company ranked among the top
25 card issuing entities based on the amount of managed credit card loans
outstanding. The Company originates all new credit card accounts for itself and
its affiliates and has not purchased existing accounts from other originators.
The Company performs all credit card servicing activities on behalf of its
subsidiary banks including data processing, payment processing, statement
rendering, marketing, customer service, credit administration and card
embossing. The Company primarily funds its credit card loans through the core
deposits of its subsidiary banks.
Competitors of the Company include other commercial banks, savings and loan
associations, consumer and commercial finance companies, credit unions and other
financial services companies. The Company's credit card operation competes with
other issuers of credit cards ranging from other national issuers of bank cards
to local retailers which provide their own credit cards.
The Company continues to make substantial investments in data processing
technology for both its own data processing needs and to provide various data
processing services for unaffiliated parties. The services provided include
automated clearinghouse transactions, merchant credit card processing, and check
processing. The Company ranks as one of the larger merchant credit card
processors in the United States with over $15 billion processed in 1996 and $13
billion processed in 1995. It also ranked among the 25 largest automated
clearinghouse processors in the country during 1996 and is one of the largest
check processors in its market area. Furthermore, the Company provides data
processing services to over 45 non-affiliated banks located in ten states. Fee
income continues to increase through the ongoing expansion of these services.
The Company continues to closely monitor the risks and competitive conditions as
they relate to pricing and technological issues associated with these processing
services.
Management's discussion and analysis contains forward looking statements which
reflect management's current views and estimates of future economic
circumstances, industry conditions, company performance and the financial
results. The statements are based on many assumptions and factors, including
general economic conditions, consumer behavior, competitive environment and
related market conditions, operating efficiencies, and actions of governments.
Any changes in such assumptions or factors could produce significantly different
results.
Results of Operations
- ---------------------
Overview:
Net income for the three months ending March 31, 1997 was $14.5 million, or
$41.73 per common share, increasing 24.8% from $11.6 million, or $33.45 per
common share for the same period in 1996. In spite of an increase in the
provision for loan losses, earnings remain strong due to continued growth in net
interest income and noninterest income which continues to surpass the growth
rate of operating expenses.
Net interest income:
The Company's primary source of income is net interest income which is defined
as the difference between interest income and fees derived from earning assets
and interest expense on interest-bearing liabilities. Interest income and
expense are affected by changes in the volume and mix of interest-earning assets
and interest-bearing liabilities, in addition to changes in interest rates.
For the three months ended March 31, 1997, net interest income increased $13.9
million or 12.6% to $123.9 million compared to the same period in 1996. This
increase is primarily attributable to increased earning assets net of an
increase in the volume of interest-bearing liabilities and decreases in the
related yields. The favorable trend of increased net interest income corresponds
to the Company's strong loan growth and to its successful asset and liability
management strategies.
Provision for loan losses:
The Company evaluates the adequacy of its allowance for loan losses on a monthly
basis. This review of the adequacy of the allowance for loan losses is based
upon a review of collateral values, delinquencies, nonaccruals, payment
histories and various other analytical and subjective measures relating to the
various loan portfolios within the Company.
6
<PAGE>
For the three months ended March 31, 1997, the provision for loan losses
increased $11.4 million or 29.8% to $49.6 million compared to $38.2 million for
the same period in 1996. The increase in the provision for loan losses relates
to higher net charge-offs, growth in the loan portfolio, and strengthening of
the loan loss allowance for potential future losses. The increase in net
charge-offs is primarily attributable to the significant rise in delinquencies
on credit card loans which is being experienced throughout the credit card
industry due to increased consumer debt levels and other factors. The increase
is further augmented by the large volume of credit card and other consumer loans
originated in earlier years which continue to mature and contribute to higher
credit loss experience.
Noninterest income:
For the three months ended March 31, 1997, noninterest income increased $6.6
million or 15.8% to $48.6 million compared to the same period in 1996. A portion
of this increase was due to processing services income increasing by 6.9% for
the quarter relating to the growth in volumes processed from new and existing
customers in merchant processing. Deposit services income increased 33.2% for
the quarter due primarily to the growth in total deposits. Income related to
trust and investment services and commissions increased as a result of the
general growth of the Company. The increase in miscellaneous income was due to
general business fluctuations.
Noninterest expense:
For the three months ended March 31, 1997, noninterest expense increased $3.1
million or 3.3% to $97.6 million compared to the same period in 1996. A portion
of the increase in noninterest expense is due to salaries and employee benefits,
which increased 10.6% for the quarter and relates to overall Company growth.
Increases in remaining expense categories for purchased processing, net
occupancy and equipment expenses, and miscellaneous expenses also relate to
general Company growth including increased processing volumes, the acquisition
of new customer relationships, and continued investments in technology. These
increases are partially offset by communication and supplies which decreased
22.0% for the quarter due to a reduction in marketing expenditures. Management
continues to focus on expense control in their operating decisions to improve
the efficiencies of the Company.
Asset Quality
- -------------
The Company's loan delinquency rates and net charge-off activity reflect, among
other factors, general economic conditions, the quality of the loans, the
average seasoning of the loans and the success of the Company's collection
efforts. The Company's objective in managing its loan portfolio is to balance
and optimize the profitability of the loans within the context of acceptable
risk characteristics. The Company continually monitors the risks embedded in the
loan portfolio with the use of statistically-based computer simulation models.
The consumer credit industry continues to experience increased delinquencies and
charge-offs. As a major credit card issuer, the Company also continues to
experience increased net charge-off and delinquency rates. As a result, the
Company has increased its allowance for loan losses by $4.7 million, or 4.5%,
from December 31, 1996 to March 31, 1997. The increased charge-off trends are
likely to continue as the large volume of credit card loans originated in
previous years continue to season. The Company anticipates selected segments of
consumers will continue to experience a decline in credit quality. Therefore,
management continues to evaluate credit standards and has reduced marketing
expenditures. Consumer behavior is being closely monitored to determine if
future changes will be required.
The following table reflects the delinquency rates of the Company's loan
portfolio. An account is contractually delinquent if the minimum payment is not
received by the specified billing date. The overall delinquency rate as a
percentage of total loans was 3.82% at March 31, 1997 compared with 3.86% at
December 31, 1996.
<TABLE>
<CAPTION>
Delinquent Loans:
March 31, 1997 December 31, 1996
-------------------------------------------------------------------------------
(Amounts in Thousands)
Total Loans % of Loans % of Loans
- ----------- ---------------------- ------------------
<S> <C> <C> <C> <C>
Loans outstanding $5,125,821 $5,107,041
Loans delinquent:
30 - 89 days $121,770 2.38% $123,420 2.42%
90 days or more & still accruing 73,776 1.44% 73,580 1.44%
------------------------------------- ----------------------------------
Total delinquent loans $195,546 3.82% $197,000 3.86%
===================================== ==================================
Nonaccrual loans $7,146 .14% $7,231 .14%
===================================== ==================================
Credit Cards and Related Plans
- ------------------------------
Loans outstanding $2,893,066 $2,916,392
Loans delinquent:
30 - 89 days $99,299 3.43% $102,538 3.52%
90 days or more & still accruing 70,665 2.44% 68,827 2.36%
---------------------------------- --------------------------------------
Total delinquent loans $169,964 5.87% $171,365 5.88%
================================== ======================================
Nonaccrual loans -- -- -- --
================================== ======================================
</TABLE>
7
<PAGE>
Generally, the Company's policy is to charge off loans when they become 180 days
contractually past due. Net loan charge-offs include the principal amount of
losses resulting from borrowers' unwillingness or inability to pay, in addition
to bankrupt and deceased borrowers, less current period recoveries of previously
charged-off loans. The allowance for loan losses is intended to cover losses
inherent in the Company's loan portfolio as of the reporting date and is
continually monitored using statistically-based computer simulation models. The
provision for loan losses is charged against earnings to cover both current
period net charge-offs and to maintain the allowance at an acceptable level to
cover losses inherent in the portfolio as of the reporting date. Net charge-offs
for the Company's overall portfolio were $44.9 million for the three months
ended March 31, 1997 compared to $30.1 million for the same period in 1996. Net
charge-offs as a percentage of average loans were 0.88% for the three months
ended March 31, 1997 compared to 0.68% for the same period last year. The
allowance as a percentage of loans has increased to 2.14% for the quarter ended
March 31, 1997 compared to 1.72% for the same period last year.
The following table presents the activity in the Company's allowance for loan
losses with a breakdown of charge-off and recovery activity related to credit
cards and related plans.
Allowance for Loan Losses:
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
1997 1996
------------------------------------------
(Amounts in Thousands)
<S> <C> <C>
Balance at January 1 $104,812 $67,740
Addition due to acquisition
Provision for credit losses 49,583 38,197
Loans charged off:
Credit cards and related plans (49,077) (33,911)
All other loans (1,995) (650)
Loans recovered:
Credit cards and related plans 5,690 4,135
All other loans 484 320
---------------- ---------------
Total net charge-offs (44,898) (30,106)
---------------- ---------------
Balance at March 31 $109,497 $75,831
================ ===============
Allowance as a percentage
of loans 2.14% 1.72%
Total net charge-offs as a percentage
of average loans 0.88% 0.68%
</TABLE>
Capital Resources
- -----------------
The Company and its banking subsidiaries are required to maintain minimum
capital in accordance with regulatory guidelines. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Company must meet specific capital guidelines that involve quantitative measures
of the Company's assets, liabilities, and certain off-balance sheet items as
calculated under regulatory accounting practices. These quantitative measures
require the Company to maintain minimum total risk-based capital (as defined in
the regulations) of 8%, Tier 1 risk-based capital (as defined) of 4%, and Tier 1
leverage capital (as defined) of 4%. As of March 31, 1997, the most recent
notification from the OCC categorized the Company's banking subsidiaries as well
capitalized under the framework for prompt corrective action. To be categorized
as well capitalized, the Company's banking subsidiaries must maintain minimum
total risk-based capital of 10%, Tier 1 risk-based capital of 6%, and Tier 1
leverage capital of 5%. There are no conditions or events since that
notification that management believes have changed the institution's category.
The Company intends to maintain sufficient capital in each of its banking
subsidiaries to remain in the well capitalized category.
8
<PAGE>
In 1995, First National Bank of Omaha issued $75 million in 15 year subordinated
capital notes. These subordinated capital notes, along with $20 million in
capital notes outstanding as of March 31, 1997 issued in connection with the
Company's previous acquisitions, count towards meeting the required capital
standards, subject to certain limitations. The Company has historically retained
85% of net income in capital to fund the growth of future operations and to
maintain minimum capital standards.
Liquidity and Interest Rate Risk Management
- -------------------------------------------
Adequate liquidity levels are necessary to ensure that sufficient funds are
available for loan growth and deposit withdrawals. These funding demands are
offset by funds generated from loan repayments, investment maturities, and core
deposit growth. The Company's Asset/Liability Committee is responsible for
monitoring the current and forecasted balance sheet structure to ensure
anticipated funding needs can be met at a reasonable cost. Contingency plans are
in place to meet unanticipated funding needs or loss of funding sources.
Domestic retail deposits are used as the primary source of funding for all
banking subsidiaries. In order to maintain flexibility and diversity in
liquidity management the Company also has access to a variety of other funding
tools. These other sources include securities sold under repurchase agreements,
federal funds purchased, commercial paper, securitization, other short-term and
long-term debt, and subordinated capital notes.
At March 31, 1997, the Company had facilities to access the commercial paper
market up to a maximum of $315,000,000, of which $264,596,000 was outstanding
and maturing in 59 days. These issues are supported for liquidity purposes by
loan commitments from various financial institutions.
The Company's securitization program was established in 1995, providing further
diversity of credit card funding. At March 31, 1997, $200 million of the
Company's managed credit card portfolio was securitized. Due to balance sheet
management of both liquidity and capital, the Company intends to increase its
securitized asset level by approximately $420 million. The structure and
maturity type have not been finalized, but the additional securitization will
assist the Company in the purchase of a credit card portfolio during the second
quarter of 1997, as well as support the capital redemption expected to occur in
the second quarter.
The Company's goal is to maximize profits while effectively managing rather than
eliminating interest rate risk. Since changes in the marketplace cannot be
reliably predicted, the Company uses net interest income simulation modeling to
simulate several possible events. These events include immediate and sustained
shifts in interest rates upward and downward, and gradual and sustained shifts
in interest rates upward and downward. Possible changes in balance sheet
structure over a forecast period of three years are also simulated. The Company
has established guidelines that limit the acceptable potential change in net
interest margin and net income under these balance sheet and interest rate
scenarios. The Company also uses static gap analysis to measure the difference
between rate-sensitive assets and rate-sensitive liabilities.
Part II. Other Information
Items 1,2,3,4,5,and 6(b): Not applicable or negative response.
Item 6(a): Articles of Incorporation of the Parent
Company (previously filed as Exhibit No. 1
to Form 10-K filed with the Securities and
Exchange Commission by the Company on
March 31, 1993) is incorporated herein by
reference.
9
<PAGE>
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.
FIRST NATIONAL OF NEBRASKA, INC.
By /s/ Bruce R. Lauritzen
-----------------------
Bruce R. Lauritzen
President and Treasurer,
Principal Accounting and
Financial Officer and Director
Date: May 3, 1997
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 418,362
<INT-BEARING-DEPOSITS> 5,190,125
<FED-FUNDS-SOLD> 349,164
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 762,931
<INVESTMENTS-MARKET> 759,462
<LOANS> 5,125,821
<ALLOWANCE> 109,497
<TOTAL-ASSETS> 7,068,470
<DEPOSITS> 5,951,949
<SHORT-TERM> 0
<LIABILITIES-OTHER> 77,551
<LONG-TERM> 101,770<F1>
1,734
0
<COMMON> 0
<OTHER-SE> 496,491
<TOTAL-LIABILITIES-AND-EQUITY> 7,068,470
<INTEREST-LOAN> 182,379
<INTEREST-INVEST> 13,795
<INTEREST-OTHER> 3,162
<INTEREST-TOTAL> 199,336
<INTEREST-DEPOSIT> 68,047
<INTEREST-EXPENSE> 75,464
<INTEREST-INCOME-NET> 123,872
<LOAN-LOSSES> 49,583
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 97,597
<INCOME-PRETAX> 25,338
<INCOME-PRE-EXTRAORDINARY> 14,469
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,469
<EPS-PRIMARY> 41.73
<EPS-DILUTED> 41.73
<YIELD-ACTUAL> 0<F2>
<LOANS-NON> 7,146
<LOANS-PAST> 73,776
<LOANS-TROUBLED> 0<F2>
<LOANS-PROBLEM> 0<F2>
<ALLOWANCE-OPEN> 104,812
<CHARGE-OFFS> 51,075
<RECOVERIES> 6,177
<ALLOWANCE-CLOSE> 109,497
<ALLOWANCE-DOMESTIC> 0<F2>
<ALLOWANCE-FOREIGN> 0<F2>
<ALLOWANCE-UNALLOCATED> 0<F2>
<FN>
<F1>INCLUDES 94,745 IN CAPITAL NOTES
<F2>THIS INFORMATION IS NOT REQUIRED FOR INTERIM REPORTING PURPOSES.
</FN>
</TABLE>
