<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 June 30, 1998, or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
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Commission file number 03502
First National of Nebraska, Inc.
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(Exact name of registrant as specified in its charter)
Nebraska 47-0523079
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(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 August 8, 1998, the number of outstanding shares of the registrant's
common stock ($5.00 par value) was 335,000.
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Part I. Item 1. Financial Statements
FIRST NATIONAL OF NEBRASKA, INC.
Consolidated Statements of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
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Assets June 30, December 31,
1998 1997
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(In Thousands)
<S> <C> <C>
Cash and due from banks $ 426,780 $ 428,832
Federal funds sold and other short-term investments 212,015 327,010
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Total cash and cash equivalents 638,795 755,842
Securities available-for-sale (amortized cost $289,406,000 and $378,714,000) 291,322 381,337
Securities held-to-maturity (fair value $761,964,000 and $874,646,000) 760,428 872,907
Loans 5,566,793 5,010,982
Less: Allowance for loan losses 124,300 128,990
Unearned income 14,076 13,380
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Net loans 5,428,417 4,868,612
Premises and equipment, net 138,709 129,163
Other assets 338,072 324,160
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Total assets $ 7,595,743 $ 7,332,021
=================================================================================================================================
Liabilities and Stockholders' Equity
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Deposits:
Noninterest-bearing $ 880,479 $ 842,195
Interest-bearing 5,767,211 5,558,850
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Total deposits 6,647,690 6,401,045
Federal funds purchased and securities sold under repurchase agreements 166,803 217,891
Other liabilities 98,225 80,530
Other borrowings 39,221 28,446
Capital notes 93,458 94,052
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Total liabilities 7,045,397 6,821,964
Stockholders' equity:
Common stock, $5 par value, 346,767 shares authorized,
335,000 shares issued and outstanding 1,675 1,675
Additional paid-in capital 2,515 2,515
Retained earnings 544,935 504,184
Net unrealized appreciation on available-for-sale securities,
net of tax 1,221 1,683
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Total stockholders' equity 550,346 510,057
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Total liabilities and stockholders' equity $ 7,595,743 $ 7,332,021
=================================================================================================================================
</TABLE>
See notes to consolidated financial statements.
2
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FIRST NATIONAL OF NEBRASKA, INC.
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
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Quarter Ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
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(In Thousands, Except Share and Per Share Data)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans and lease financing $ 193,439 $ 185,063 $ 367,780 $ 367,442
Interest on securities:
Taxable interest income 16,209 15,643 34,073 29,177
Nontaxable interest income 228 246 443 507
Interest on federal funds sold
and other short-term investments 2,919 2,039 6,797 5,201
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Total interest income 212,795 202,991 409,093 402,327
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Interest expense:
Interest on deposits 76,097 70,104 150,488 138,151
Interest on commercial paper and
commercial paper based borrowings -- 3,907 -- 7,767
Interest on federal funds purchased and
securities sold under repurchase agreements 2,362 1,986 4,232 3,544
Interest on other borrowings and capital notes 2,507 2,026 4,955 4,025
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Total interest expense 80,966 78,023 159,675 153,487
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Net interest income 131,829 124,968 249,418 248,840
Provision for loan losses 39,489 47,309 77,629 96,892
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Net interest income after provision for loan losses 92,340 77,659 171,789 151,948
Noninterest income:
Processing services 35,949 29,899 67,904 53,120
Deposit services 6,281 5,917 12,049 11,427
Trust and investment services 5,565 4,896 11,402 9,863
Commissions 2,707 2,329 10,435 8,811
Gain on sales of loans 2,924 -- 6,873 --
Miscellaneous 6,913 7,625 33,216 14,553
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Total noninterest income 60,339 50,666 141,879 97,774
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Noninterest expense:
Salaries and employee benefits 43,980 37,453 89,058 76,218
Communications and supplies 9,742 13,264 33,562 27,838
Loan services purchased 10,003 8,734 19,008 16,669
Purchased processing 8,121 5,670 13,951 10,958
Net occupancy expense of premises 7,546 4,878 14,714 10,633
Equipment rentals, depreciation and maintenance 9,401 7,213 17,633 14,263
Other professional services purchased 13,041 12,166 25,354 23,247
Miscellaneous 8,756 6,500 17,848 12,111
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Total noninterest expense 110,590 95,878 231,128 191,937
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Income before income taxes 42,089 32,447 82,540 57,785
Income tax expense(benefit):
Current 16,289 12,958 32,688 25,707
Deferred (18) (352) 308 (2,232)
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Total income tax expense 16,271 12,606 32,996 23,475
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Net income $ 25,818 $ 19,841 $ 49,544 $ 34,310
====================================================================================================================================
Average number of common shares outstanding 335,000 346,250 335,000 346,507
====================================================================================================================================
Net income per common share $ 77.07 $ 57.30 $ 147.89 $ 99.02
====================================================================================================================================
Cash dividends declared per common share $ 17.50 $ 16.88 $ 26.25 $ 25.32
====================================================================================================================================
</TABLE>
See notes to consolidated financial statements.
3
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FIRST NATIONAL OF NEBRASKA, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
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Six Months Ended June 30,
1998 1997
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(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 49,544 $ 34,310
Adjustments to reconcile net income to net cash
flows from operating activities:
Provision for loan losses 77,629 96,892
Depreciation and amortization 21,684 19,500
Amortization of interest only strip 9,460 --
Provision for deferred taxes 308 (2,232)
Origination of mortgage loans for resale (50,739) (18,547)
Proceeds from the sale of mortgage loans for resale 49,018 14,580
Gain on sales of loans (6,873) --
Other asset and liability activity, net 19,479 326
- -----------------------------------------------------------------------------------------------------------------------------
Net cash flows from operating activities 169,510 144,829
CASH FLOWS FROM INVESTING ACTIVITIES
Maturities and sales of securities available-for-sale 119,025 81,530
Purchases of securities available-for-sale (30,087) (135,268)
Maturities of securities held-to-maturity 244,968 87,129
Purchases of securities held-to-maturity (132,348) (175,753)
Net change in loans, excluding purchases (312,796) 199,608
Purchase of loan portfolios (357,534) (291,460)
Purchases of premises and equipment, net (15,543) (14,157)
Other, net 814 1,223
- -----------------------------------------------------------------------------------------------------------------------------
Net cash flows from investing activities (483,501) (247,148)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 246,645 161,519
Net change in federal funds purchased and
securities sold under repurchase agreements (51,088) 5,462
Issuance of other borrowings and capital notes 48,903 75,062
Principal repayments of other borrowings
and capital notes (38,722) (27,753)
Net change in commercial paper and
commercial paper based borrowings -- (16,054)
Repurchase of common stock -- (42,361)
Cash dividends paid (8,794) (8,780)
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Net cash flows from financing activities 196,944 147,095
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Net change in cash and cash equivalents (117,047) 44,776
Cash and cash equivalents at beginning of period 755,842 674,914
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Cash and cash equivalents at end of period $ 638,795 $ 719,690
=============================================================================================================================
Cash paid during the period for:
Interest $ 160,364 $ 149,847
Income taxes $ 31,195 $ 22,110
=============================================================================================================================
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1998
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 six months ended June 30, 1998, are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1998. The notes to the consolidated financial statements contained
in the Annual Report on Form 10-K for the year ended December 31, 1997 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: Comprehensive Income
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS No.
130, "Reporting Comprehensive Income," which is effective for fiscal years
beginning after December 15, 1997. This statement establishes standards for the
reporting and display of comprehensive income and its components. Comprehensive
income is defined as the change in equity of a business enterprise during a
period from transactions and other events or circumstances from nonowner
sources. Comprehensive income includes net income and other items of
comprehensive income meeting the above criteria. The Company's only component of
other comprehensive income is the change in unrealized holding gains and losses
on available-for-sale securities. For the six months ended June 30, 1998, total
comprehensive income was $49 million which includes net income of $49.5 million
less the reduction in net unrealized holding gains on available-for-sale
securities of $462,000.
Part I. Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
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 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 different results.
Year 2000
- ---------
The Company has implemented a company-wide program to prepare its computer
systems for the Year 2000. This program follows the guidelines issued by the
Federal Financial Institutions Examination Council (FFIEC). The FFIEC guidelines
set forth expectations for the development and implementation of written testing
strategies and plans applicable to internal systems and for use in evaluating
Year 2000 readiness of external parties. The FFIEC guidelines also identify key
milestones for the completion of Year 2000 implementation testing. These
milestones establish June 30, 1999 as the date testing of mission critical
systems should be complete and implementation should be substantially complete.
Currently, the Company is meeting the key milestones established by the FFIEC
guidelines by completion of its written testing strategies and plans.
As part of the Company's Year 2000 preparation, it is reviewing vendors,
customers, third party processors and other external parties with whom it
conducts business for Year 2000 readiness. The Company is also developing
contingency plans, where feasible, should system failure occur with internal
systems or external parties. Even with the Company's dedication to preparation
for Year 2000 readiness, it is unable to completely assess the degree to which
it is susceptible to potential problems and it is unable to fully quantify
possible losses that may be associated with external parties.
5
<PAGE>
The Company does not anticipate the overall costs to identify and remedy Year
2000 issues to have a material financial impact on the Company in any single
year. A major portion of these costs will be met from existing resources through
reprioritization of technology development initiatives.
Results of Operations
- ---------------------
Overview:
Net income for the quarter ending June 30, 1998 was $25.8 million, or $77.07 per
common share, increasing 30.1% from $19.8 million, or $57.30 per common share
for the same period in 1997. Net income for the six months ending June 30, 1998
was $49.5 million, or $147.89 per common share, increasing 44.4% from $34.3
million, or $99.02 per common share for the same period in 1997. These favorable
increases relate primarily to decreases in the provision for loan losses as
compared to the same periods in the prior year and the recognition of income
related to the settlement of litigation in the first quarter of 1998.
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 quarter ended June 30, 1998, net interest income increased $6.9 million or
5.5% to $131.8 million compared to $125 million for the same period in 1997
primarily due to increased loans and securities outstanding, net of increased
interest-bearing liabilities as compared to the same period last year. For the
six months ended June 30, 1998, net interest income was $249.4 million compared
to $248.8 million for the same period in 1997 due to an increase in net interest
earning assets offset by a decrease in the net yield related to increased credit
card loan sales.
Provision for loan losses:
On a monthly basis, the Company evaluates its allowance for loan losses 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 the quarter ended June 30, 1998,
the provision for loan losses decreased $7.8 million or 16.5% to $39.5 million
compared to $47.3 million for the same period in 1997. For the six months ended
June 30, 1998, the provision for loan losses decreased $19.3 million or 19.9% to
$77.6 million compared to $96.9 million for the same period in 1997. These
decreases are primarily due to increased credit card loan sales and decreased
net charge-off activity on total loans compared to the same periods last year.
However, the credit card industry continues to experience high consumer debt
levels and other unfavorable consumer credit conditions resulting in high levels
of delinquencies and charge-offs.
Noninterest income:
For the quarter ended June 30, 1998, noninterest income increased $9.7 million
or 19.1% to $60.3 million compared to the same period in 1997. For the six
months ended June 30, 1998, noninterest income increased $44.1 million or 45.1%
to $141.9 million compared to the same period in 1997. This increase is
primarily attributable to the increase in miscellaneous income which largely
reflects the settlement of litigation in the first quarter. A portion of this
increase was also due to processing services income increasing by 20.2% for the
quarter and 27.8% for the six months ended June 30, 1998 resulting from the
growth in credit card loan servicing net of interest only strip amortization.
Income related to trust and investment services and commissions increased
generally as a result of growth in the Company's customer base. Noninterest
income also includes gains recorded on sales of loans of $2.9 million for the
quarter and $6.9 million for the six months ended June 30, 1998.
Noninterest expense:
For the quarter ended June 30, 1998, noninterest expense increased $14.7 million
or 15.3% to $110.6 million compared to the same period in 1997. For the six
months ended June 30, 1998, noninterest expense increased $39.2 million or 20.4%
to $231.1 million compared to the same period in 1997. A portion of the increase
in noninterest expense is due to salaries and employee benefits which increased
17.4% for the quarter and 16.8% for the six months ended June 30, 1998 and
relates to overall Company growth. Additionally, for the six months ended June
30, 1998, communications and supplies expense increased 20.6% from the same
period last year primarily due to increased advertising expenses. Increases in
remaining expense categories for purchased processing, loan services, net
occupancy and equipment expenses, other professional services and miscellaneous
expenses also relate to general Company growth including increased processing
volumes and continued investments in technology. Management continues to focus
on expense control in their operating decisions to improve the efficiencies of
the Company.
6
<PAGE>
Asset Quality
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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 historically high levels of
delinquencies and charge-offs. As a major credit card issuer, the Company also
continues to experience high net charge-off and delinquency rates. Although net
charge-offs as a percentage of average total loans have improved during the
first six months of 1998 compared to the same six months last year, the Company
cannot predict whether this downward trend in total net charge-off activity will
continue. Selected segments of consumers may continue to experience declines in
credit quality which could result in continued unfavorable net charge-off and
delinquency rates. Management continues to evaluate credit standards and monitor
consumer behavior.
The following table reflects the delinquency rates for the Company's overall
loan portfolio and for credit cards and related plans. 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
3.79% at June 30, 1998 compared with 3.56% at December 31, 1997. The delinquency
rate as a percentage of total credit cards loans and related plans was 6.05% at
June 30, 1998 compared to 6.26% at December 31, 1997.
Delinquent Loans:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
----------------------------------------------------------------------------------
(Amounts in Thousands)
Total Loans % of Loans % of Loans
- ----------- --------------- ----------------
<S> <C> <C> <C> <C>
Loans outstanding $5,566,793 $5,010,982
Loans delinquent:
30 - 89 days $139,629 2.51% $112,300 2.24%
90 days or more & still accruing 71,512 1.28% 66,221 1.32%
------------------------------------- --------------------------------------
Total delinquent loans $211,141 3.79% $178,521 3.56%
===================================== ======================================
Nonaccrual loans $9,382 .17% $5,289 .11%
===================================== ======================================
Credit Cards and Related Plans
- ------------------------------
Loans outstanding $2,791,404 $2,442,527
Loans delinquent:
30 - 89 days $103,912 3.72% $89,902 3.68%
90 days or more & still accruing 65,134 2.33% 62,969 2.58%
------------------------------------- --------------------------------------
Total delinquent loans $169,046 6.05% $152,871 6.26%
===================================== ======================================
Nonaccrual loans -- -- -- --
===================================== ======================================
</TABLE>
The Company's policy is to charge off credit card and related plans 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. 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 $85.1 million for
the six months ended June 30, 1998 compared to $95 million for the same period
in 1997. Net charge-offs as a percentage of average total loans were 1.61% for
the six months ended June 30, 1998 compared to 1.85% for the same period last
year. The allowance as a percentage of loans decreased to 2.23% as of June 30,
1998 compared to 2.32% for the same period last year.
7
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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:
For the Six Months Ended June 30,
1998 1997
----------------------------------
(Amounts in Thousands)
Balance at January 1 $ 128,990 $ 104,812
Addition due to acquisitions 11,771 10,862
Reduction due to sales of loans (8,990) --
Provision for loan losses 77,629 96,892
Loans charged off:
Credit cards and related plans (99,026) (104,127)
All other loans (2,390) (4,002)
Loans recovered:
Credit cards and related plans 15,157 11,828
All other loans 1,159 1,252
------------- -------------
Total net charge-offs (85,100) (95,049)
------------- -------------
Balance at June 30 $ 124,300 $ 117,517
============= =============
Allowance as a percentage
of loans 2.23% 2.32%
Total net charge-offs as a percentage
of average total loans 1.61% 1.85%
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 and its bank subsidiaries must meet specific capital guidelines that
involve quantitative measures of assets, liabilities, and certain off-balance
sheet items as calculated under regulatory accounting practices. As of June 30,
1998, the most recent notification from the OCC categorized the Company's
banking subsidiaries as "well capitalized" under the regulatory 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.
In 1995, First National Bank of Omaha issued $75 million of 15 year subordinated
capital notes. These subordinated capital notes, along with $18 million in
capital notes outstanding as of June 30, 1998 issued in connection with the
Company's previous acquisitions, count towards meeting the required capital
standards, subject to certain limitations.
Liquidity Management
- --------------------
Adequate liquidity levels are necessary to ensure that sufficient funds are
available for loan growth and deposit withdrawals. These funding needs 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
sources. These other sources include securities sold under repurchase
agreements, federal funds purchased, securitization, other short-term and
long-term debt, and subordinated capital notes. The parent company's cash flows
are dependent upon the receipt of dividends from its banking subsidiaries which
are subject to regulatory restrictions.
The Company utilizes credit card-backed securitization vehicles to assist in its
management of liquidity, interest rate risk and capital. At June 30, 1998 and
1997, $655 million and $620 million, respectively, of the Company's managed
credit card portfolio was securitized. In addition, during the quarter ended
June 30, 1998, the Company purchased credit card loan portfolios totaling $329
million. At June 30, 1998, the parent company had $19 million outstanding under
a
8
<PAGE>
syndicated revolving credit facility reflected in other borrowings. As part of
this syndicated credit facility arranged for the parent company, a $150 million
revolving credit facility for the Bank is also available for general liquidity
purposes.
Part I. Item 3. Market Risk
The Company's primary component of market risk is interest rate volatility. It
is the goal of the Company to maximize profits while effectively managing rather
than eliminating interest rate risk. Two primary measures are used to measure
and manage interest rate risk: Net Interest Income Simulation Modeling and
Interest Rate Sensitivity Gap Analysis.
Net Interest Income Simulation:
The Company uses a simulation model to analyze net interest income sensitivity
to movements in interest rates. The simulation model projects net interest
income based on both upward and downward interest rate shifts over a twelve
month period. Alternative scenarios are simulated by applying immediate shifts
in interest rates (rate shocks) and gradual shifts in interest rates (rate
ramps). These interest rate shifts are applied to a projected balance sheet for
the Company for the twelve month simulation period. Based on the information and
assumptions in effect at June 30, 1998, management believes that a 200 basis
point rate shock or rate ramp over a twelve month period, up or down, would not
significantly affect the Company's annualized net interest income.
The Company has established guidelines that limit the acceptable potential
change in net interest margin and net income under these interest rate and
balance sheet scenarios. Given the minimal potential for significant risk
exposure relating to potential losses in future earnings, fair values or cash
flows of interest-rate-sensitive instruments illustrated by the simulations, the
Company does not engage in derivative transactions such as hedges, swaps, or
futures.
Interest Rate Sensitivity Gap Analysis:
The Company uses interest rate sensitivity gap analysis to monitor the
relationship between the maturity and repricing of its interest-earning assets
and interest-bearing liabilities, while maintaining an acceptable interest rate
spread. Interest rate sensitivity gap is defined as the difference between the
amount of interest-earning assets maturing or repricing within a specific time
period and the amount of interest-bearing liabilities maturing or repricing
within that time period. A gap is considered positive when the amount of
interest-rate-sensitive assets exceeds the amount of interest-rate-sensitive
liabilities, and is considered negative when the amount of
interest-rate-sensitive liabilities exceeds the amount of
interest-rate-sensitive assets. Generally, during a period of rising interest
rates, a negative gap would adversely affect net interest income, while a
positive gap would result in an increase in net interest income. Conversely,
during a period of falling interest rates, a negative gap would result in an
increase in net interest income, while a positive gap would negatively affect
net interest income. Management's goal is to maintain a reasonable balance
between exposure to interest rate fluctuations and earnings.
Part II. Other Information
Items 1, 2 and 3: Not applicable or negative response.
Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The annual meeting of Company's stockholders
was held on June 17, 1998 for the purpose of
electing two directors for terms of three
years. Proxies for the meeting were
solicited pursuant to Sections 14(a) of the
Securities Exchange Act of 1934, and there
was no solicitation in opposition to
management's nominees. Each of management's
nominees for director as listed in the Proxy
Statement was elected. The voting tabulation
for the elected directors was as follows:
Shares Shares Shares
Voted Voted Voted
"FOR" "AGAINST" "ABSTAIN"
Bruce R. Lauritzen 317,167 0 66
Charles R. Walker 317,167 0 66
9
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Item 5: OTHER INFORMATION.
The proxy for the 1999 annual meeting of shareholders
will confer discretionary authority on the Board of
Directors to vote on any matter proposed by any
shareholder for consideration at the meeting if the
Company did not receive written notice of the matter
from the proponent on or before March 31, 1999. Such
notice must be submitted in writing and mailed by
certified mail to the Secretary of the Company, One
First National Center, Omaha, Nebraska 68102.
Item 6(a): Amended and Restated Articles of Incorporation and
Amended and Restated Bylaws of the Parent Company
(previously filed as Exhibits to form 10-Q filed with
the Securities and Exchange Commission by the Company on
June 30, 1997) is incorporated herein by reference.
Fiscal and Paying Agency Agreement entered into in
connection with the issuance of $75 million of
Subordinated Notes by First National Bank of Omaha (the
"Bank") dated December 7, 1995 between the Bank as
"Issuer" and the Bank as "Fiscal and Paying Agent"
incorporated by reference to the Company's Report on
Form 8-K, filed December 12, 1995.
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, incorporated by reference to Exhibit 10(a) of
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992.
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, incorporated by reference to Exhibit 10(b) of
the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992.
First National of Nebraska Senior Management Long Term
Incentive Plan, incorporated by reference to Exhibit
10(c) of the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992.
Management Incentive Plan, incorporated by reference to
Exhibit 10(d) of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1992.
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, incorporated by reference to Exhibit 10(f) of the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992.
Employment Contract between the Parent Company and Bruce
R. Lauritzen, incorporated by reference to Exhibit 10(i)
of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.
Item 6(b): Not applicable or negative response.
10
<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 Dennis A. O'Neal
---------------------------------------
Dennis A. O'Neal
Executive Vice President and Treasurer,
Principal Financial Officer
Date: August 10, 1998
-----------------------
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 426,780
<INT-BEARING-DEPOSITS> 5,767,211
<FED-FUNDS-SOLD> 212,015
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 291,322
<INVESTMENTS-CARRYING> 760,428
<INVESTMENTS-MARKET> 761,964
<LOANS> 5,566,793
<ALLOWANCE> 124,300
<TOTAL-ASSETS> 7,595,743
<DEPOSITS> 6,647,690
<SHORT-TERM> 0
<LIABILITIES-OTHER> 98,225
<LONG-TERM> 132,679<F1>
0
0
<COMMON> 1,675
<OTHER-SE> 548,671
<TOTAL-LIABILITIES-AND-EQUITY> 7,595,743
<INTEREST-LOAN> 367,780
<INTEREST-INVEST> 34,516
<INTEREST-OTHER> 6,797
<INTEREST-TOTAL> 409,093
<INTEREST-DEPOSIT> 150,488
<INTEREST-EXPENSE> 159,675
<INTEREST-INCOME-NET> 249,418
<LOAN-LOSSES> 77,629
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 231,128
<INCOME-PRETAX> 82,540
<INCOME-PRE-EXTRAORDINARY> 49,544
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,544
<EPS-PRIMARY> 147.89
<EPS-DILUTED> 147.89
<YIELD-ACTUAL> 0<F2>
<LOANS-NON> 9,382
<LOANS-PAST> 71,512
<LOANS-TROUBLED> 0<F2>
<LOANS-PROBLEM> 0<F2>
<ALLOWANCE-OPEN> 128,990
<CHARGE-OFFS> 101,416
<RECOVERIES> 16,316
<ALLOWANCE-CLOSE> 124,300
<ALLOWANCE-DOMESTIC> 0<F2>
<ALLOWANCE-FOREIGN> 0<F2>
<ALLOWANCE-UNALLOCATED> 0<F2>
<FN>
<F1>INCLUDES 93,458 IN CAPITAL NOTES
<F2>THIS INFORMATION IS NOT REQUIRED FOR INTERIM REPORTING PURPOSES.
</FN>
</TABLE>
