<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996, or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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
-------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $5.00 par value
-----------------------------
(Title of class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
---
As of February 27, 1997, the aggregate market value of the voting shares held by
nonaffiliates of the registrant was $508,643,900.
The number of outstanding shares of the registrant's common stock, as of March
26, 1997 was 346,767.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents have been incorporated by reference into this Form 10-K
as indicated below:
Annual Report to Shareholders for fiscal year ended December 31, 1996 (Parts I
and II).
Proxy statement of the registrant to be filed with the Securities and Exchange
Commission (Part III).
<PAGE>
PART I
ITEM 1. BUSINESS.
THE COMPANY
First National of Nebraska, Inc. (the "Parent Company") is a Nebraska-based
interstate multi-bank holding company. It was organized in 1968 and owns or
substantially owns all of the common stock of ten banking subsidiaries and nine
nonbanking subsidiaries.
First National of Nebraska, Inc. and subsidiaries (the "Company") was one of the
originators of the bank credit card industry and has over 40 years' experience
in this 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 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. Gross revenues
associated with credit card loans were 54% of total gross revenues in 1996.
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. 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. The Company provides data processing
services to non-affiliated banks located in ten states.
BANKING SUBSIDIARIES
First National Bank of Omaha (the "Bank") is a national banking association
founded in 1863 and substantially owns six nonbanking subsidiaries. As of
December 31, 1996, the Bank had assets in excess of $3,491,000,000 and was
ranked as the second largest bank in Nebraska. The Bank is engaged in a general
banking business and offers complete banking and trust services to retail,
commercial, industrial and agricultural customers in Nebraska, Iowa, Kansas,
South Dakota, Colorado and other nearby states. The Bank offers time and demand
deposits, certificates of deposits, individual retirement accounts and other
products. The Bank also provides customers with trust services, safe deposit
boxes, cash management and investment services. The Bank makes a variety of
loans such as individual consumer loans (including credit card, installment and
home equity loans), agricultural, real estate, and commercial loans. The Bank
has branch locations in Omaha, Bellevue, Beatrice, and David City, Nebraska.
2
<PAGE>
In addition to the Bank, the Parent Company owns all of the outstanding common
stock of the following banks. These banks engage in general banking business
and offer complete banking services to retail, commercial, industrial and
agricultural customers.
<TABLE>
<CAPTION>
Bank Locations
- --------------------------------------------------------------------------------
<S> <C>
The Bank of Boulder Boulder, Colorado
First National Bank Fort Collins, Colorado
Loveland, Colorado
First National Bank of Kansas Overland Park, Kansas
Fairway, Kansas
Olathe, Kansas
First National Bank North Platte, Nebraska
Alliance, Nebraska
Chadron, Nebraska
Gering, Nebraska
Scottsbluff, Nebraska
First National Bank and Trust Company Columbus, Nebraska
of Columbus Norfolk, Nebraska
Union Colony Bank Greeley, Colorado
Windsor, Colorado
Fremont National Bank & Trust Company Fremont, Nebraska
Platte Valley Bank & Trust Company Kearney, Nebraska
First National Bank South Dakota Yankton, South Dakota
</TABLE>
Refer to Note L of the Company's consolidated financial statements for details
regarding the Company's most recent acquisitions.
COMPETITION
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. In addition, the
Company's banking subsidiaries compete for interest-bearing funds with mutual
funds and issuers of commercial paper and other securities. As the industry
consolidates and nonbanking companies continue to offer products traditionally
offered by banks, competitive forces continue to impact product pricing and
profitability.
3
<PAGE>
EMPLOYEES
The Company had 4,130 full-time-equivalent employees as of December 31, 1996.
REGULATION
The Company is governed by various regulatory agencies. Bank holding companies
and their nonbanking subsidiaries are regulated by the Federal Reserve Board.
National banks are primarily regulated by the Office of the Comptroller of the
Currency (OCC). All federally-insured banks are also regulated by the FDIC.
The Parent Company's banking subsidiaries include seven national banks and three
state-chartered banks, all of which are insured by the FDIC. The state-
chartered banks are also regulated by the state banking authorities.
Various requirements and restrictions under federal and state laws regulate the
operations of the Company. These laws, among other things, require the
maintenance of reserves against deposits, impose certain restrictions on the
nature and terms of loans, restrict investments and other activities, and
regulate mergers and the establishment of branches and related operations. In
addition, subsidiary national banks are subject to limitations under federal law
in the amount of dividends they may declare.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
imposed a significant amount of regulation on the banking industry. One of the
major provisions of this legislation established levels of capitalization with
more scrutiny and restrictions placed on institutions with lower levels of
capital. The legislation also includes regulations which relate to corrective
regulatory action, audit and reporting requirements, standards of safety and
soundness and various deposit insurance reforms.
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
December 31, 1996, 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
I risk-based capital of 6%, and Tier I leverage capital of 5%. There are no
conditions or events since that notification that management believes have
changed the institution's category. For further discussion, see Note J in the
Annual Report to Shareholders of the Company, an exhibit to this report which is
incorporated herein by reference.
4
<PAGE>
The banking industry is also affected by the monetary and fiscal policies of
regulatory authorities, including the Federal Reserve Board. Through open market
securities transactions, variations in the discount rate, the establishment of
reserve requirements, and the regulation of certain interest rates payable by
member banks, the Federal Reserve Board exerts considerable influence over the
cost and availability of funds obtained for lending and investing. Changes in
interest rates, deposit levels, and loan demand are influenced by the changing
conditions in the national economy and in the money markets, as well as the
effect of actions by monetary and fiscal authorities.
ADDITIONAL FINANCIAL INFORMATION
The following tables set forth statistical data, as specified by Guide 3, or are
incorporated by reference from the Company's Annual Report to Shareholders for
the year ended December 31, 1996. Such data should be read in conjunction with
the other financial statements and related notes with respect to the Company and
in conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations, which is included in the Annual Report. The
information with respect to such tables should not be construed to imply any
conclusion on the part of management that the results, causes or trends
indicated therein will continue in the future.
5
<PAGE>
SCHEDULE I.A. - AVERAGE CONSOLIDATED BALANCE SHEETS
The following table presents the average consolidated balance sheets of the
Company for the years 1994 through 1996 (1):
<TABLE>
<CAPTION>
For the year ended December 31,
ASSETS 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------
(Amounts in Thousands)
<S> <C> <C> <C>
Cash and due from banks (2) $ 260,258 $ 234,563 $ 228,897
Federal funds sold and other short-term
investments 181,632 177,915 134,327
Securities:
Taxable 918,315 770,064 614,132
Nontaxable 20,832 24,632 25,196
Loans net of allowance for loan losses and
unearned income 4,517,487 4,209,515 3,355,462
Premises and equipment, net 113,423 98,323 80,204
Other assets 178,858 156,385 121,215
- ------------------------------------------------------------------------------------------------------------------
Total assets $ 6,190,805 $ 5,671,397 $ 4,559,433
==================================================================================================================
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------
Deposits: (2)
Non-interest bearing $ 561,713 $ 510,920 $ 475,017
Interest bearing 4,623,506 4,263,650 3,431,635
- ------------------------------------------------------------------------------------------------------------------
Total deposits 5,185,219 4,774,570 3,906,652
- ------------------------------------------------------------------------------------------------------------------
Federal funds purchased and securities sold under
repurchase agreements 117,715 67,295 62,286
Commercial paper and commercial
paper based borrowings 265,775 284,914 171,293
Other liabilities 56,595 49,375 39,796
Long-term debt and other interest-bearing obligations 11,247 69,021 48,279
Capital notes 96,906 31,049 10,975
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 5,733,457 5,276,224 4,239,281
- ------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock 1,734 1,734 1,734
Additional paid-in capital 2,604 2,604 2,604
Retained earnings 452,956 390,835 315,814
Net unrealized appreciation on available-for-sale
securities, net of tax 54 - -
- ------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 457,348 395,173 320,152
- ------------------------------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 6,190,805 $ 5,671,397 $ 4,559,433
==================================================================================================================
</TABLE>
(1) All significant intercompany balances have been eliminated in
consolidation.
(2) The December 31 balances are higher than the average balances as
shown in this schedule due to significant growth during the year and many of the
Company's customers making large deposits at year-end.
6
<PAGE>
SCHEDULE I.B. - INTEREST RATES AND DIFFERENTIAL
The following tables present an analysis of net interest earnings for the years
1994 through 1996:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
For the year ended December 31,
ASSETS 1996 1995 1994
- ------------------------------------------------------------------------------------------------
(Amounts in Thousands Except Percents)
<S> <C> <C> <C>
Average amount outstanding for year:
Loan and lease financing (1) (5) $ 4,593,550 $ 4,267,290 $ 3,403,324
Taxable securities (4) 918,315 770,064 614,132
Nontaxable securities (4) 20,832 24,632 25,196
Federal funds sold and
other short-term investments 181,632 177,915 134,327
- ------------------------------------------------------------------------------------------------
Total $ 5,714,329 $ 5,239,901 $ 4,176,979
================================================================================================
Total interest earned during the year:
Loan and lease financing (1) (2) $ 700,472 $ 634,157 $ 490,169
Taxable securities 54,295 45,492 32,777
Nontaxable securities (3) 1,716 2,210 2,254
Federal funds sold and
other short-term investments 9,531 10,298 5,780
- ------------------------------------------------------------------------------------------------
Total $ 766,014 $ 692,157 $ 530,980
================================================================================================
Yield:
Loan and lease financing 15.25% 14.86% 14.40%
Taxable securities 5.91% 5.91% 5.34%
Nontaxable securities (3) 8.24% 8.97% 8.95%
Federal funds sold and
other short-term investments 5.25% 5.79% 4.30%
Total 13.41% 13.21% 12.71%
================================================================================================
</TABLE>
(1) Non-accruing loans are included within the average loan and lease
financing amount outstanding. No interest on these non-accruing loans is
included within the "Total interest earned during the year" amount.
(2) Loan fees of approximately $107,018,000; $83,452,000; and
$71,283,000 are included for 1996, 1995, and 1994, respectively.
(3) Calculated on a taxable equivalent basis with a 35% marginal tax
rate in 1996, 1995 and 1994.
(4) Includes securities held-to-maturity, securities available-for-
sale, and trading securities.
(5) Calculated net of unearned income.
7
<PAGE>
SCHEDULE I.B. - INTEREST RATES AND DIFFERENTIAL (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
For the year ended December 31,
LIABILITIES 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------
(Amounts in Thousands Except Percents)
<S> <C> <C> <C>
Average amount outstanding for year:
Interest bearing deposits $ 4,623,506 $ 4,263,650 $ 3,431,635
Federal funds purchased and securities sold under
repurchase agreements 117,715 67,295 62,286
Commercial paper and commercial paper
based borrowings 265,775 284,914 171,293
Long-term debt and other interest-bearing
obligations and capital notes 108,153 100,070 59,254
- ----------------------------------------------------------------------------------------------------------------
Total $ 5,115,149 $ 4,715,929 $ 3,724,468
================================================================================================================
Total interest expensed during the year:
Interest bearing deposits $ 250,170 $ 234,694 $ 152,746
Federal funds purchased and securities sold under
repurchase agreements 5,667 3,642 2,333
Commercial paper and commercial paper
based borrowings 15,943 18,435 8,797
Long-term debt and other interest-bearing
obligations and capital notes 8,451 7,689 4,340
- ----------------------------------------------------------------------------------------------------------------
Total $ 280,231 $ 264,460 $ 168,216
================================================================================================================
Yield:
Interest bearing deposits 5.41% 5.50% 4.45%
Federal funds purchased and securities sold under
repurchase agreements 4.81% 5.41% 3.75%
Commercial paper and commercial paper
based borrowings 6.00% 6.47% 5.14%
Long-term debt and other interest-bearing
obligations and capital notes 7.81% 7.68% 7.32%
Total 5.48% 5.61% 4.52%
================================================================================================================
Net interest income (1) $ 485,783 $ 427,697 $ 362,764
Net yield on earning assets 8.50% 8.16% 8.68%
================================================================================================================
</TABLE>
(1) Reflects the effect of interest on nontaxable securities calculated on a
taxable equivalent basis with a 35% marginal tax rate in 1996, 1995 and 1994.
8
<PAGE>
SCHEDULE I. C. - INTEREST RATE AND VOLUME CHANGES
The following table presents the changes in interest income and interest expense
and the amounts attributable to changes in volume and changes in rates (1):
<TABLE>
<CAPTION>
Year 1996 Over 1995 Year 1995 Over 1994
------------------------------------ ------------------------------------
Variance Variance
Attributable to Attributable to
Amount Rate Volume Amount Rate Volume
---------- ---------- ---------- ---------- ---------- ----------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Loan and lease financing $ 66,315 $ 16,886 $ 49,429 $ 143,988 $ 16,036 $ 127,952
Taxable securities 8,803 38 8,765 12,715 3,767 8,948
Nontaxable securities (2) (494) (171) (323) (44) 7 (51)
Federal funds sold and other
short-term investments (767) (978) 211 4,518 2,329 2,189
Interest bearing deposits 15,476 (4,052) 19,528 81,948 40,479 41,469
Federal funds purchased and
securities sold under repurchase
agreements 2,025 (441) 2,466 1,309 1,109 200
Commercial paper and commercial
paper based borrowings (2,492) (1,297) (1,195) 9,638 2,712 6,926
Long-term debt and other
interest-bearing obligations and
capital notes 762 132 630 3,349 223 3,126
</TABLE>
(1) Variances attributable to rate and volume were calculated as follows:
A. A rate variance is the change in rate times the prior period volume.
B. A volume variance is the change in volume times the prior period
rate.
C. The remaining variance is due to a combination of rate and volume
changes. This amount was allocated proportionately to the rate and
volume changes obtained in A and B.
(2) Calculated on a taxable equivalent basis with a 35% marginal tax rate in
1996, 1995 and 1994.
9
<PAGE>
SCHEDULE II. A. - SECURITIES PORTFOLIO
The following table indicates the amortized cost of securities of the Company as
of December 31 for the years indicated:
<TABLE>
<CAPTION>
1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
(Amounts in Thousands)
<S> <C> <C> <C>
Available-for-sale securities:
U.S. Government obligations $245,218 - -
Obligations of states and political subdivisions 305 - -
Other securities 10,130 - -
- ------------------------------------------------------------------------------------------------------------------------------
Total securities available-for-sale $255,653 $ - $ -
==============================================================================================================================
Held-to-maturity securities:
U.S. Government obligations $626,690 $811,338 $748,483
Obligations of states and political subdivisions 19,588 21,438 21,524
Other securities 3,521 13,961 12,043
- ------------------------------------------------------------------------------------------------------------------------------
Total securities held-to-maturity $649,799 $846,737 $782,050
==============================================================================================================================
</TABLE>
SCHEDULE II. B. - SECURITIES MATURITIES
The following table presents the maturity of securities held on December 31,
1996 and the weighted average yield for each range (stated on a taxable
equivalent basis assuming a 35% marginal tax rate). Yield information for
securities available-for-sale does not give effect to changes in fair value that
are reflected as a component of stockholders' equity.
<TABLE>
<CAPTION>
Held-to-Maturity Securities: Available-for-Sale Securities:
---------------------------------- ----------------------------------
Amortized Weighted Amortized Weighted
Cost Average Yield Cost Average Yield
- ------------------------------------------------------------------------------------------------------------------------------------
(Amounts in Thousands)
<S> <C> <C> <C> <C>
U.S. Government obligations:
One year or less $267,491 5.82% $41,608 5.94%
After one through five years 358,971 5.80% 203,610 6.05%
After five through ten years 228 7.09% - -
After ten years - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total $626,690 5.81% $245,218 6.03%
====================================================================================================================================
Obligations of states and
political subdivisions:
One year or less $5,635 9.17% $151 6.46%
After one through five years 10,052 9.80% 154 10.13%
After five through ten years 3,245 8.73% - -
After ten years 656 10.79% - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total $19,588 9.48% $305 8.31%
====================================================================================================================================
Other securities:
One year or less $1,767 6.09% - -
After one through five years 186 8.52% - -
After five through ten years 755 7.25% - -
After ten years 813 8.85% 10,130 6.08%
- ------------------------------------------------------------------------------------------------------------------------------------
Total $3,521 7.10% $10,130 6.08%
====================================================================================================================================
</TABLE>
10
<PAGE>
SCHEDULE III. A. - LOAN PORTFOLIO TYPES
The following table indicates the distribution of loans, net of unearned income,
of the Company as of December 31, for the years indicated:
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Individual consumer (1) 3,290,374 $ 2,895,617 $ 2,646,865 $ 2,066,266 $ 1,699,337
Commercial and financial 668,585 565,075 486,540 393,760 325,771
Real estate-mortgage 630,768 517,375 394,920 366,204 275,565
Agricultural 284,580 268,940 246,267 225,124 186,366
Real estate-construction 152,035 131,196 105,347 71,908 56,368
Lease financing 57,050 50,447 48,976 44,521 42,506
Other 12,155 10,777 5,003 5,103 5,446
- --------------------------------------------------------------------------------------------------------------
5,095,547 4,439,427 3,933,918 3,172,886 2,591,359
Less:
Allowance for loan losses 104,812 67,740 55,265 49,589 41,298
- --------------------------------------------------------------------------------------------------------------
Net Loans 4,990,735 $ 4,371,687 $ 3,878,653 $ 3,123,297 $ 2,550,061
==============================================================================================================
</TABLE>
(1) Individual consumer loans include credit cards and related plans.
SCHEDULE III. B. - LOAN MATURITIES AND SENSITIVITIES OF LOANS TO
CHANGES IN INTEREST RATES
The following table presents certain consolidated loan maturities by ranges
based upon contract dates. Also included for loans maturing after one year are
the amounts which have predetermined interest rates and floating or adjustable
interest rates.
<TABLE>
<CAPTION>
Maturities as of December 31, 1996
- --------------------------------------------------------------------------------------------------------------
--AFTER ONE YEAR--
After One Predetermined Adjustable
One Year Through After Five Interest Interest
or Less Five Years Years Rates Rates
- --------------------------------------------------------------------------------------------------------------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Individual consumer 2,781,273 $ 467,217 $ 41,884 $ 221,693 $ 287,408
Commercial and financial 428,119 209,993 30,473 89,249 151,217
Real estate-mortgage 170,555 264,666 195,547 231,318 228,895
Agricultural 214,889 65,850 3,841 42,504 27,187
Real estate-construction 78,976 56,495 16,564 21,354 51,705
Lease financing 15,247 39,524 2,279 41,803 -
Other 11,617 537 1 538 -
- --------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
SCHEDULE III. C. - RISK ELEMENTS
1. Nonaccrual, Restructured and Past Due Loans:
<TABLE>
<CAPTION>
As of December 31,
1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------------
(Amounts in Thousands)
<S> <C> <C> <C> <C> <C>
Nonaccrual loans (a) $7,231 $8,718 $5,830 $8,257 $11,143
Restructured loans (b) 972 1,527 1,887 2,469 3,241
---------------------------------------------------------------------
Total nonaccrual and restructured
loans (c) 8,203 10,245 7,717 10,726 14,384
Loans past due 90 days or more (d) 73,580 46,396 27,305 25,219 19,301
---------------------------------------------------------------------
Total nonaccrual, restructured and
past due loans $81,783 $56,641 $35,022 $35,945 $33,685
=====================================================================
</TABLE>
(a) Loans are placed on nonaccrual status when there is sufficient evidence
to indicate the borrower may be unable to meet the obligation.
(b) Does not include loans classified in the nonaccrual loans or loans past
due 90 days or more categories.
(c) The gross amount of interest income which would have been recorded on
these loans for the year ended December 31, 1996 if such loans had been
current is $1,228,000. The amount of interest income on these loans that was
included in net income for the same year is $358,000.
(d) Does not include loans classified in the nonaccrual loans category. For
further information regarding the increase in loans past due 90 days or more,
see the Asset Quality section of Management's Discussion and Analysis in the
Annual Report to Shareholders of the Company, an exhibit to this report which
is incorporated herein by reference.
It is the Company's policy for a committee of senior loan officers to review all
loans 90 days or more past due for placement on nonaccrual status. If there is
sufficient evidence to indicate that the borrower may be unable to meet the
obligation, the loan is placed on nonaccrual status. Loans may be placed on
nonaccrual status prior to reaching 90 days or more past due if circumstances
warrant.
2. Potential Problem Loans for the Year Ended December 31, 1996:
The following table presents potential problem loans categorized by loan type.
Potential problem loans include all loans that are classified by management as
substandard and doubtful less non-accrual loans, restructured loans and loans
past due 90 days or more.
<TABLE>
<CAPTION>
(Amounts in
Thousands)
----------------
<S> <C>
Individual consumer $ 750
Commercial and financial 12,644
Real estate-mortgage 3,103
Agricultural 7,653
Real estate-construction 2,519
Lease financing 178
Other -
</TABLE>
3. Foreign Outstandings: None
4. Loan Concentrations: There were no concentrations of loans exceeding 10%
of total loans which are not otherwise disclosed as a category of loans under
III.A.
12
<PAGE>
SCHEDULE III. D. - OTHER INTEREST BEARING ASSETS
There were no other interest bearing assets that would require disclosure under
Item III.C.1. or 2., if such assets were loans.
SCHEDULE IV. - SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes activity in the allowance for loan losses of the
Company:
<TABLE>
<CAPTION>
For the year ended December 31,
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------
(Amounts in Thousands Except Percents)
<S> <C> <C> <C> <C> <C>
Average amount of loans
outstanding $ 4,593,550 $ 4,267,290 $ 3,403,324 $ 2,706,475 $ 2,323,610
Allowance for loan losses:
Balance, beginning of year 67,740 55,265 49,589 41,298 35,819
Opening balance of acquired banks 1,738 1,568 189 4,565 -
Provision charged to operations 180,059 102,767 71,698 67,083 64,467
Loans charged off:
Individual consumer 163,320 107,370 80,933 73,456 69,906
Commercial and financial 631 922 694 62 399
Real estate-mortgage 57 96 159 2,107 99
Agricultural 645 302 148 498 187
Real estate-construction - - - - -
Lease financing 11 67 41 150 216
Other 47 - 17 - 48
Loans recovered:
Individual consumer 19,082 16,250 15,295 12,626 11,288
Commercial and financial 478 317 205 86 273
Real estate-mortgage 219 52 91 66 65
Agricultural 77 176 83 43 81
Real estate-construction 50 5 2 - -
Lease financing 61 42 81 70 85
Other 19 55 24 25 75
- ----------------------------------------------------------------------------------------------------------------
Net loans charged off 144,725 91,860 66,211 63,357 58,988
- ----------------------------------------------------------------------------------------------------------------
Balance, end of year $ 104,812 $ 67,740 $ 55,265 $ 49,589 $ 41,298
================================================================================================================
Ratio of net charge-offs to
average loans outstanding 3.15% 2.15% 1.95% 2.34% 2.54%
================================================================================================================
</TABLE>
13
<PAGE>
SCHEDULE IV. - SUMMARY OF LOAN LOSS EXPERIENCE (Continued)
The following table presents the loan loss allowance by loan category and the
percentage of loans in each category to loans, net of unearned income, as of
December 31 for the years indicated:
<TABLE>
<CAPTION>
(Amounts in Thousands Except Percents)
1996 1995 1994 1993 1992
------------------- ------------------- ------------------- ------------------- -------------------
Percent Percent Percent Percent Percent
of Loans of Loans of Loans of Loans of Loans
in Each in Each in Each in Each in Each
Category Category Category Category Category
to Total Loan Loss to Total Loan Loss to Total Loan Loss to Total Loan Loss to Total Loan Loss
Loans Allowance Loans Allowance Loans Allowance Loans Allowance Loans Allowance(1)
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Individual consumer 64.6% $ 85,810 65.2% $52,453 67.3% $38,897 65.1% $35,140 65.6% $29,281
Commercial and financial 13.1% 8,243 12.7% 6,143 12.4% 8,436 12.4% 6,399 12.6% 5,327
Real estate-mortgage 12.4% 4,559 11.7% 4,444 10.0% 3,182 11.5% 4,635 10.6% 3,841
Agriculture 5.6% 3,767 6.1% 3,156 6.3% 3,074 7.1% 2,507 7.2% 2,106
Real estate-construction 3.0% 1,551 3.0% 862 2.7% 1,009 2.3% 567 2.2% 454
Lease financing 1.1% 419 1.1% 389 1.2% 331 1.4% 302 1.6% 248
Other 0.2% 463 0.2% 293 0.1% 336 0.2% 39 0.2% 41
- ----------------------------------------------------------------------------------------------------------------------------------
Total 100.0% $104,812 100.0% $67,740 100.0% $55,265 100.0% $49,589 100.0% $41,298
==================================================================================================================================
</TABLE>
(1) Certain reclassifications were made to prior years Schedule IV Summary of
Loan Loss Experience Loan Loss Allowance numbers to conform them to the revised
allocation method used since 1993. These reclassifications more accurately
depict the Company's procedure in determining the required loan loss allowance
for each loan category and had no effect on net income or the total loan loss
allowance.
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. Management's 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.
For further discussion, see the Asset Quality section of Management's Discussion
and Analysis in the Annual Report to Shareholders of the Company, an exhibit to
this report which is incorporated herein by reference.
14
<PAGE>
SCHEDULE V. - DEPOSITS
The following table shows the breakdown of average deposits of the Company for
the years 1994 through 1996:
<TABLE>
<CAPTION>
For the year ended December 31,
1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------------------
(Amounts in Thousands Except Percents)
Amount Rate Amount Rate Amount Rate
<S> <C> <C> <C> <C> <C> <C>
Average non-interest bearing
demand deposits $ 561,713 0.0% $ 510,920 0.0% $ 475,017 0.0%
Average interest bearing demand deposits 470,303 2.1% 464,244 2.3% 405,228 2.0%
Average interest bearing savings deposits 897,295 4.2% 635,504 4.1% 554,127 3.0%
Average time deposits 3,255,908 6.2% 3,163,902 6.2% 2,472,280 5.2%
Average deposits of foreign banks - - - - - -
- --------------------------------------------------------------------------------------------------------------------------------
Average total deposits $ 5,185,219 $ 4,774,570 $ 3,906,652
================================================================================================================================
</TABLE>
The following table indicates the maturity of time certificates of deposit and
other time deposits issued in amounts of $100,000 or more as of December 31,
1996:
<TABLE>
<CAPTION>
(Amounts in Thousands)
- --------------------------------------------------------------------------------------------------------------------------------
Time CD's Other Time
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Three months or less $ 190,553 $ 3,443
Over three months through six months 90,786 -
Over six months through twelve months 152,138 500
Over twelve months 161,810 -
- --------------------------------------------------------------------------------------------------------------------------------
Total $ 595,287 $ 3,943
================================================================================================================================
</TABLE>
15
<PAGE>
SCHEDULE VI. - RETURN ON EQUITY AND ASSETS
The following table presents the return on average assets, the return on average
equity, the dividend payout ratio and the equity to assets ratio of the Company:
<TABLE>
<CAPTION>
For the year ended December 31,
1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
(Amounts in Thousands Except Percents and Per Share Data)
<S> <C> <C> <C>
Average total assets $ 6,190,805 $ 5,671,397 $ 4,559,433
Average equity 457,348 395,173 320,152
Net income 70,232 82,241 77,133
Net income per share 202.53 237.17 222.43
Dividends per share 37.22 33.73 38.07
Return on average assets 1.1% 1.5% 1.7%
Return on average equity 15.4% 20.8% 24.1%
Dividend payout ratio 18.4% 14.2% 17.1%
Average equity to average assets ratio 7.4% 7.0% 7.0%
</TABLE>
The return on average assets and the return on average equity remain favorable
although they have declined over the past three years. The primary reason for
the overall reduction in these performance ratios relates to the increases in
the provision for loan losses as a result of increased delinquencies and
charge-offs on credit card and other consumer loans.
SCHEDULE VII. - SHORT-TERM BORROWINGS
Transactions in short-term borrowings are summarized below:
<TABLE>
<CAPTION>
Federal funds purchased and securities
sold under repurchase agreements (1) Commercial paper (2)
-------------------------------------- --------------------------------------
1996 1995 1994 1996 1995 1994
-------------------------------------- --------------------------------------
(Amounts in Thousands Except Percents)
<S> <C> <C> <C> <C> <C> <C>
Amount outstanding at year-end $ 146,015 $ 133,488 $ 99,363 $ 273,298 $ 289,827 $ 302,253
Weighted average interest rate
at year-end 5.3% 5.6% 5.0% 5.4% 5.6% 5.8%
Maximum amount outstanding 253,222 133,488 130,081 290,728 302,828 302,253
Average amount outstanding 117,715 67,295 62,286 265,775 284,914 171,293
Weighted average interest rate
during the year 4.8% 5.4% 3.7% 6.0% 6.5% 5.1%
</TABLE>
(1) The majority of federal funds purchased and securities sold under
repurchase agreements mature each day and are replaced by a new issue.
(2) As of December 31, 1996, all commercial paper matures within 59
days and is collateralized by individual consumer loans.
16
<PAGE>
ITEM 2. PROPERTIES.
The Company owns a 22 story office building in Omaha, Nebraska where its primary
corporate offices are located. The Company's business is also operated at
various other facilities in the Omaha area which are either owned or leased by
the Company. The Company's banking business is operated in facilities located
in Nebraska, South Dakota, Kansas, and Colorado. Refer to Item 1., pages 2 and
3 for locations of the branches. Of the 52 branch locations, 34 are owned by
the Company and 18 are leased. The leases on the branches and office space (not
assuming renewals of exercise options) run through the year 2014.
For more explanation or detail, please see Notes D, F, and I to the consolidated
financial statements contained in the Annual Report to Shareholders of the
Company, an exhibit to this report which is incorporated herein by reference.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending legal proceedings, other than routine litigation incidental
to the Company's business, to which the Company is a party or of which any of
its properties is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Company's security holders during the
fourth quarter of 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Reference is made to page 28 of the Annual Report to Shareholders of the Company
for the fiscal year ended December 31, 1996, an exhibit to this report which is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Reference is made to page 28 of the Annual Report to Shareholders of the Company
for the fiscal year ended December 31, 1996, an exhibit to this report which is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Reference is made to pages 23-27 of the Annual Report to Shareholders of the
Company for the fiscal year ended December 31, 1996, an exhibit to this report
which is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Reference is made to pages 4-22 and page 28 of the Annual Report to Shareholders
of the Company for the fiscal year ended December 31, 1996, an exhibit to this
report which is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
17
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Reference is made to the section of the Company's proxy statement captioned
"Election of Directors" to be filed with the Securities and Exchange Commission,
which is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Reference is made to the section of the Company's proxy statement captioned
"Compensation of Directors and Executive Officers" to be filed with the
Securities and Exchange Commission, which is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Reference is made to the section of the Company's proxy statement captioned
"Security Ownership of Certain Beneficial Owners and Management" to be filed
with the Securities and Exchange Commission, which is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Reference is made to the section of the Company's proxy statement captioned
"Information Concerning Certain Interests of Directors and Transactions with
Management" to be filed with the Securities and Exchange Commission, which is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
The following documents are filed as a part of this report and are either
attached hereto or incorporated by reference to documents previously filed with
the Securities and Exchange Commission as exhibits:
(a) (1) Financial Statements: (See Item 8 for a listing of all financial
statements).
(2) Financial Statement Schedules:
All schedules normally required by Form 10-K are omitted since
they either are not applicable or the required information is
shown in the financial statements or the notes thereto.
(3) Exhibits: See exhibit index on page 22.
(b) The Company filed no reports on Form 8-K for the quarter ended
December 31, 1996.
18
<PAGE>
(c) Exhibits to this Form 10-K are attached or incorporated by
reference as stated above.
(d) No financial statement schedules are filed, and as such are
excluded from the Annual Report as provided by Exchange Act Rule
14a-3(b)(i).
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 18, 1997
--------------
Pursuant to the requirements of the Securitites Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ F. Phillips Giltner
-----------------------
F. Phillips Giltner
Chairman of the Board and Secretary
and Director
Date: March 18, 1997
--------------
/s/ Bruce R. Lauritzen
----------------------
Bruce R. Lauritzen
President and Treasurer, Principal
Accounting and Financial Officer
and Director
Date: March 18, 1997
--------------
20
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
3(i) Articles of Incorporation of the Parent Company. *
3(ii) Bylaws of the Parent Company. *
4 Fiscal and Paying Agency Agreement entered into in
connection with the issuance of $75 million of Subordinated
Notes by the Bank dated December 7, 1995 between the Bank
as "Issuer" and the Bank as "Fiscal and Paying Agent". *
10(a) Deferred Compensation and Consultative Services Agreement
between the Bank and John R. Lauritzen and Amendment to
Deferred Compensation and Consultative Services Agreement
between the Bank and John R. Lauritzen. *
10(b) Deferred Compensation and Consultative Services Agreement
between the Bank and F. Phillips Giltner and Amendment to
Deferred Compensation and Consultative Services Agreement
between the Bank and F. Phillips Giltner. *
10(c) First National of Nebraska Senior Management Long Term
Incentive Plan. *
10(d) Management Incentive Plan. *
10(e) Amended Split Dollar Agreement between the Bank and
John R. Lauritzen and Elizabeth Davis Lauritzen and
written description of the amendment to the Amended Split
Dollar Agreement between the Bank and John R. Lauritzen and
Elizabeth Davis Lauritzen. *
10(f) Amended Split Dollar Agreement between the Bank, F. Phillips
Giltner, and First National Bank of Omaha, as Trustee of the
F. Phillips Giltner Irrevocable Insurance Trust. *
10(g) Employment Contract between the Parent Company and John R.
Lauritzen. *
10(h) Employment Contract between the Parent Company and F. Phillips
Giltner. *
10(i) Employment Contract between the Parent Company and Bruce R.
Lauritzen. *
13 Annual Report to Shareholders of the Company for the fiscal
year ended December 31, 1996 (incorporated by reference).
21 Subsidiaries of the Corporation.
27 Financial Data Schedule.
</TABLE>
* incorporated by reference (see Part IV, Item 14(a)(3)).
21
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF FIRST NATIONAL OF NEBRASKA. INC.
<TABLE>
<CAPTION>
State or Other Jurisdiction of
Name Incorporation or Organization
<S> <C> <C>
1. First National Bank of Omaha United States (pursuant to
the National Bank Act)
2. First National Credit Corporation Nebraska
3. First National Bank South Dakota United States (pursuant to
the National Bank Act)
4. MCV Acceptance Corporation Nebraska
5. Credit Card Finance Corporation Nebraska
6. Data Management Products, Inc. Nebraska
7. First National Bank and Trust United States (pursuant to
Company of Columbus the National Bank Act)
8. First National Bank (doing United States (pursuant to
business as First National the National Bank Act)
Bank of Alliance-Chadron-
Gering-North Platte-Scottsbluff)
9. Collection Corporation of Nebraska
America
10. Platte Valley State Bank & Trust Nebraska (state-chartered bank)
Company
11. The Fremont National Bank and Trust United States (pursuant to
Company the National Bank Act)
12. First National Services Corporation Nebraska
13. First National Bank of Kansas United States (pursuant to
the National Bank Act)
14. First National of Colorado, Inc. Delaware
15. Platte Valley Finance Company Nebraska
16. First Technology Solutions, Inc. Nebraska
</TABLE>
EXHIBIT 21 (Continued)
SUBSIDIARIES OF FIRST NATIONAL BANK OF OMAHA
<TABLE>
<CAPTION>
State or Other Jurisdiction of
Name Incorporation or Organization
<S> <C> <C>
1. First Security Savings Company Nebraska
2. First of Omaha Service Corporation Nebraska
3. EFC, Inc. Nebraska
4. SPC, Inc. Nebraska
5. RPSI, Inc. Nebraska
6. FIS, Inc. Nebraska
<CAPTION>
SUBSIDIARIES OF FIRST NATIONAL OF COLORADO, INC.
State or Other Jurisdiction of
Name Incorporation or Organization
<S> <C> <C>
1. First National Bank United States (pursuant to the
National Bank Act)
2. Union Colony Bank Colorado (state-chartered bank)
3. The Bank of Boulder Colorado (state-chartered bank)
4. Professional Career Services, Inc. Colorado
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 397,886
<INT-BEARING-DEPOSITS> 5,114,721
<FED-FUNDS-SOLD> 277,028
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 256,919
<INVESTMENTS-CARRYING> 649,799
<INVESTMENTS-MARKET> 650,897
<LOANS> 5,107,041
<ALLOWANCE> 104,812
<TOTAL-ASSETS> 6,912,057
<DEPOSITS> 5,836,169
<SHORT-TERM> 0
<LIABILITIES-OTHER> 64,733
<LONG-TERM> 103,876<F1>
0
0
<COMMON> 1,734
<OTHER-SE> 486,232
<TOTAL-LIABILITIES-AND-EQUITY> 6,912,057
<INTEREST-LOAN> 700,472
<INTEREST-INVEST> 55,411
<INTEREST-OTHER> 9,531
<INTEREST-TOTAL> 765,414
<INTEREST-DEPOSIT> 250,170
<INTEREST-EXPENSE> 280,231
<INTEREST-INCOME-NET> 485,183
<LOAN-LOSSES> 180,059
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 371,256
<INCOME-PRETAX> 114,353
<INCOME-PRE-EXTRAORDINARY> 70,232
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 70,232
<EPS-PRIMARY> 202.53
<EPS-DILUTED> 202.53
<YIELD-ACTUAL> 13.41
<LOANS-NON> 7,231
<LOANS-PAST> 73,580
<LOANS-TROUBLED> 972
<LOANS-PROBLEM> 26,847
<ALLOWANCE-OPEN> 67,740
<CHARGE-OFFS> 164,711
<RECOVERIES> 19,986
<ALLOWANCE-CLOSE> 104,812
<ALLOWANCE-DOMESTIC> 104,812
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>INCLUDES 96,616 IN CAPITAL NOTES
</FN>
</TABLE>
