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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-10769
National Bancorp of Alaska, Inc.
(Exact name of registrant as specified in its charter)
Delaware 92-0087646
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Northern Lights Boulevard and C Street, Anchorage, AK 99503
(Address of principal executive offices) (Zip Code)
(907) 276-1132
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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___
The registrant has one class of Common Stock, $10 par value.
Number of shares outstanding as of November 8, 1995: 7,968,800
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Table of Contents
Page
PART I
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II
Item 2 Changes in Securities 9
Item 3 Defaults Upon Senior Securities 9
Item 4 Submission of Matters to a Vote of Security Holders 9
Item 5 Other Information 9
Item 6 Exhibits and Reports on Form 8-K 9
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<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
THREE MONTHS NINE MONTHS
(In Thousands Except Statistics) ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans & Lease Financing Including Fees $34,073 $29,819 $97,879 $87,463
Balances with Banks 15 66 34 113
Federal Funds Sold 103 690 159 1,152
Investment Securities Including Dividends
U.S. Treasury Securities 3,454 3,182 10,493 7,612
Obligations of Other U. S. Government
Agencies and Corporation 5,711 4,559 17,273 12,659
Obligations of States & Political
Subdivisions 215 88 656 223
Mortgage and Asset Backed Securities 2,514 2,211 7,908 6,544
Other Securities 2,097 630 6,120 2,730
TOTAL INTEREST INCOME 48,182 41,245 140,522 118,496
INTEREST EXPENSE:
Deposits 12,519 10,195 37,661 27,330
Federal Funds Purchased & Securities Sold
Under Agreement to Repurchase 4,461 2,648 14,156 6,962
Other Purchased Funds 6 4 16 11
TOTAL INTEREST EXPENSE 16,986 12,847 51,833 34,303
NET INTEREST INCOME 31,196 28,398 88,689 84,193
Provision for Loan Losses 600 600 (2,100) 1,800
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 30,596 27,798 90,789 82,393
OTHER INCOME:
Trust Department Income 486 521 1,570 1,483
Service Charges on Deposit Accounts 3,072 2,799 9,014 7,985
Mortgage Loan Servicing Fees 1,964 1,908 5,916 5,623
Securities Transactions 115 (231) (3,832) 282
Credit Card Service Fees 1,783 1,648 4,525 4,170
Other 2,425 2,224 6,788 7,579
TOTAL OTHER INCOME 9,845 8,869 23,981 27,122
OTHER EXPENSE:
Salaries 9,311 9,297 27,631 28,093
Profit Sharing & Other Employee Benefits 2,772 2,601 7,951 7,884
Net Occupancy Expense of Bank Premises 1,685 1,874 5,456 5,257
Furniture & Equipment Expense 1,933 1,929 6,076 5,864
Other 6,587 6,620 21,559 20,039
TOTAL OTHER EXPENSE 22,288 22,321 68,673 67,137
Income Before Income Taxes 18,153 14,346 46,097 42,378
Applicable Income Taxes 6,402 5,085 15,801 14,912
NET INCOME $11,751 $ 9,261 $30,296 $27,466
Per Share Statistics
Net Income $1.47 $1.17 $3.80 $3.45
Average Number of Shares Outstanding 7,968,800 7,968,800 7,968,800 7,968,800
(See note to consolidated statements.)
</TABLE>
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<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CONDITION (Unaudited)
September 30 December 30
(In Thousands Except Statistics) 1995 1994 1994
<S> <C> <C> <C>
ASSETS:
Cash and Due from Banks $ 138,370 $ 149,311 $ 134,379
Interest-Bearing Balances with Banks 1,047 1,079 195
Federal Funds Sold -- 25,000 10,000
Investment Securities:
Obligations of Other U. S. Government
Agencies and Corporations 304,399 345,675 345,319
Obligations of States and Political Subdivisions 16,672 11,406 20,239
Mortgage and Asset-Backed Securities 138,150 162,691 157,781
Other Securities 102,464 22,013 55,393
Total Investment Securities 561,685 541,785 578,732
(Market Value $563,203 in 1995)
Securities Available for Sale 261,236 277,379 273,723
Net Loans and Lease Financing 1,340,026 1,251,500 1,226,164
Less Reserve for Possible Loan Losses (20,605) (19,346) (19,226)
Net loans and Lease Financing Less Reserves 1,319,421 1,232,154 1,206,938
Loans Held for Sale 46,903 27,277 19,627
Premises and Equipment 62,297 58,401 58,241
Other Assets 72,353 60,642 62,843
Total Assets $2,463,312 $2,373,028 $2,344,678
LIABILITIES AND SHAREHOLDERS EQUITY:
Demand Deposits $ 575,888 $ 561,703 $ 522,285
Interest-Bearing Deposits:
NOW 151,474 157,382 163,088
Savings 300,375 309,025 304,164
Money Market Savings 287,338 318,226 326,386
Time 463,035 404,040 431,698
Total Interest-Bearing Deposits 1,202,222 1,188,673 1,225,336
Total Deposits 1,778,110 1,750,376 1,747,621
Federal Funds Purchased 3,347 5,787 1,757
Securities Sold Under Agreement to Repurchase 307,300 280,332 258,226
Other Purchased Funds 1,539 737 1,703
Other Liabilities 30,560 28,464 22,599
Total Liabilities 2,120,856 2,065,696 2,031,906
Shareholders Equity
Common Stock-$10 Par Value 1995 1994 80,000 80,000 80,000
Shares Authorized 10,500,000 10,500,000
Shares Outstanding 8,000,000 8,000,000
Capital Surplus 63,000 63,000 63,000
Retained Earnings 196,702 167,907 175,969
Net Unrealized Holding Losses on
Available-For-Sale Securities 3,180 (3,149) (5,771)
Less Treasury Stock at Cost
31,200 Shares on September 30, 1995 (426) (426) (426)
and September 30, 1994
Total Shareholders Equity 342,456 307,332 312,772
Total Liabilities and Shareholders Equity $2,463,312 $2,373,028 $2,344,678
Per Share Statistics
Net Book Value $42.97 $38.57 $39.25
(See note to consolidated statements.)
</TABLE>
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<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands) Nine Months Ended September 30 1995 1994
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OPERATING ACTIVITIES:
Net Income $ 30,296 $ 27,466
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Provision for Loan Losses (2,100) 1,800
Deferred Taxes (1,188) (826)
Depreciation and Amortization 5,064 4,761
Amortization (Accretion) on Securities 567 3,264
Investment Security Transactions 3,832 (282)
Gain on Loan Sales (120) (1,503)
Loss (Gain) on Disposal of Premises and Equipment (15) 81
Loss (Gain) on Disposal of Other Assets (72) (216)
Net Decrease (Increase) in Loans Held for Sale (27,111) 138,407
Decrease (Increase) in Interest Receivable,
Prepaid Expense, and Other Assets (2,150) (3,192)
Increase (Decrease) in Interest Payable, Accrued
Expenses and Other Liabilities 5,776 1,369
Net cash Provided by Operating Activities 12,779 171,129
INVESTING ACTIVITIES:
Net Decrease in Federal Funds Sold and Interest
Bearing Deposits with Other Banks 9,148 (5,294)
Proceeds from Maturities of Securities Held to Maturity 67,580 160,505
Proceeds from Sales of Securities -- --
Proceeds from Sales of Securities Available for Sale 183,626 62,740
Purchases of Securities Held to Maturity (50,997) (219,624)
Purchase of Securities Available For Sale (160,146) (140,582)
Net Increase in Lending Activities (111,613) (125,715)
Proceeds from Sale of Premises and Equipment 24 498
Proceeds from Sale of Other Assets 5,189 2,293
Purchases of Premises, Equipment, and Other Assets (24,221) (11,130)
Acquisition of Banks (100) (10,040)
Net Cash Used by Investing Activities (81,510) (286,349)
FINANCING ACTIVITIES:
Net Increase in Total Deposit 30,589 156,687
Net Increase (Decrease) in Short-Term Borrowings 50,500 2,172
Cash Dividends (8,367) (5,977)
Net Cash Provided by Financing Activities 72,722 152,882
Decrease in Cash and Cash Equivalents 3,991 37,662
Cash and Cash Equivalents at Beginning of Year 134,379 111,649
Cash and Cash Equivalents at End of September $138,370 $149,311
</TABLE>
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National Bancorp of Alaska
Notes to the Consolidated Financial Statements
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statement have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions and regulations for filing
Form 10-Q. Operating results for the nine-month period ended
September 30, 1995, are not necessarily indicative of the results that may
be expected for the year ending December 31, 1995.
The statements should be read in conjunction with the summary of accounting
policies and notes to the financial statements included in the Registrant's
annual report for the year ended December 31, 1994. In the opinion of
management, all adjustments (consisting of normal recurring accruals
necessary for a fair presentation) have been included.
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Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations
National Bancorp of Alaska (the Corporation) recorded earnings of $11.7 million
in the third quarter of 1995 compared to $9.3 million for the third quarter of
1994. Earnings per share were $1.47 for the third quarter 1995, up 25.6% from
the $1.17 earned in the third quarter of 1994.
Return on average assets using annualized income from operations plus
year-to-date net security gains and nonrecurring loan loss recoveries was 1.67%
for the nine-month period ended September 30, 1995, compared to 1.59% for the
nine-month period ended September 30, 1994. The annualized return on average
stockholders' equity was 12.26% for the first nine months of 1995.
Net interest income increased $8,396,000 after the provision for loan loss
recoveries during the first nine months of 1995 compared to the same period
during the previous year. The increase is due to a recovery of loan loss of
$3.9 million, which was taken to income providing a net recovery for loan loss
of $2.1 million. Interest on earning assets increased $6.9 million from the
third quarter of 1994 to the third quarter of 1995, while interest expense
increased $4.1 million as rates rose and funds shifted from core deposit
categories to time certificates of deposits.
The provision for loan loss recoveries was $2,100,000 at September 30, 1995,
compared to a provision for loan loss of $1,800,000 at September 30, 1994. The
reserve for loan loss was 1.54% of outstanding loans at September 30, 1995 and
1.55% at September 30, 1994 and 1.57% at December 31, 1994. Nonperforming
assets, defined as other real estate owned, nonaccrual loans, restructured
loans, and loans past due 90 days and still accruing, as a percentage of total
loans and other real estate owned decreased to 0.90% at September 30,
1995 from 1.42% at September 30, 1994, and decreased from 1.22% at December 31,
1994.
Non-interest income increased $976,000 for the third quarter from the same
period in 1994. This increase is primarily due to reductions in security losses
compared to the second quarter of 1994 and increases in income from deposit fees
and credit card servicing related to higher activity levels. Non-interest
expense decreased by $33,000 over the third quarter one year ago. FDIC
insurance expese decreased $989,000 over the same quarter of 1994 as rate were
lowered. Travel expense increased $211,000 due to the acquisition of a
corporate jet, and professional services increased $98,000 due to litigation.
Profit sharing, supplies expense and computer processing expense also increased
compared to the third quarter of 1994.
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Material Changes in Financial Condition
Total assets at September 30, 1995, were $2,463,312,000 an increase of 3.8% or
$90,284,000 from the same period one year earlier, and an increase of
$118,634,000 or 5.1% from December 31, 1994. Investment securities have
increased by $20 million over the third quarter of 1994. Loans and leases and
loans held for sale have increased $108 million over the same period in 1994.
Total deposits have increased by $27,734,000 from September 30, 1994 and
$30,489,000 from December 31, 1994. As interest rates increased, time
certificates of deposit balances have increased as compared to balances in other
interest bearing accounts composed of negotiable orders of withdrawal, savings,
and money market savings. These accounts have decreased by $45,446,000, as
compared to an increase in time deposits of $58,995,000 at September 30, 1995
over September 30, 1994.
Liquidity
The Corporation maintains sufficient excess liquidity to satisfy contractual
liabilities, meet withdrawal requirements of depositors, fund operations, and
provide for customers' credit needs. Management knows of no demand,
commitments, or events that would result in liquidity changing in a material
amount.
Capital Resources
Shareholders' equity increased by $30 million from December 31, 1994, to $342.5
million at September 30, 1995. Federal regulatory agencies have established
capital adequacy guidelines setting a minimum for leverage and risk based
capital ratios. These minimum and the Corporation's ratios are as follows:
September 30 December 31
Minimum 1995 1994 1994
Tier 1 Risk Based Capital Ratio 4% 17.97% 18.13% 18.57%
Total Risk Based Capital Ratio 8 19.07 19.27 19.70
Leverage Ratio 4 13.73 13.26 13.20
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PART II - OTHER INFORMATION
Item 1: Legal Proceedings
Not applicable.
Item 2: Changes in Securities
Not applicable.
Item 3: Defaults Upon Senior Securities
Not applicable.
Item 4: Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5: Other Information
Not applicable.
Item 6: Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 27 Financial Data Schedule
b. Form 8-K
Not applicable
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SIGNATURES
Pursuant to the requirements of Sections 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.
NATIONAL BANCORP OF ALASKA, INC.
November 10, 1995 /s/Richard Strutz
____________________ _________________________________
Date Richard Strutz, President
November 10, 1995 /s/Gary Dalton
____________________ _________________________________
Date Gary Dalton, Executive Vice
President and Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 138,370
<INT-BEARING-DEPOSITS> 1,047
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 261,236
<INVESTMENTS-CARRYING> 561,685
<INVESTMENTS-MARKET> 563,203
<LOANS> 1,340,026
<ALLOWANCE> 20,605
<TOTAL-ASSETS> 2,463,312
<DEPOSITS> 1,778,110
<SHORT-TERM> 312,186
<LIABILITIES-OTHER> 30,560
<LONG-TERM> 0
<COMMON> 342,456
0
0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 2,463,312
<INTEREST-LOAN> 97,879
<INTEREST-INVEST> 42,450
<INTEREST-OTHER> 193
<INTEREST-TOTAL> 140,522
<INTEREST-DEPOSIT> 37,661
<INTEREST-EXPENSE> 51,833
<INTEREST-INCOME-NET> 88,689
<LOAN-LOSSES> (2,100)
<SECURITIES-GAINS> (3,832)
<EXPENSE-OTHER> 68,673
<INCOME-PRETAX> 46,097
<INCOME-PRE-EXTRAORDINARY> 30,296
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,296
<EPS-PRIMARY> 3.80
<EPS-DILUTED> 3.80
<YIELD-ACTUAL> 0
<LOANS-NON> 3,806
<LOANS-PAST> 4,852
<LOANS-TROUBLED> 196
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 19,226
<CHARGE-OFFS> 2,554
<RECOVERIES> 6,033
<ALLOWANCE-CLOSE> 20,605
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
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