<PAGE> 1
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, 1996
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, 1996: 7,953,800
<PAGE> 2
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 12
Item 3 Defaults Upon Senior Securities 12
Item 4 Submission of Matters to a Vote of
Security Holders 12
Item 5 Other Information 12
Item 6 Exhibits and Reports on Form 8-K 12
<PAGE> 3
<TABLE>
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
<CAPTION>
THREE MONTHS NINE MONTHS
(In Thousands Except Statistics) ENDED SEPTEMBER 30
ENDED SEPTEMBER 30
<S> <C> <C> <C> <C>
INTEREST INCOME: 1996 1995 1996 1995
Loans & Lease Financing Including Fees $35,854 $34,073 $105,343 $97,879
Balances with Banks 15 15 39 34
Federal Funds Sold 678 103 711 159
Investment Securities Including Dividends
U.S. Treasury Securities 2,919 3,454 9,057 10,493
Obligations of Other U. S. Government
Agencies and Corporation 5,631 5,711 17,003 17,273
Obligations of States & Political
Subdivisions 95 215 280 656
Mortgage and Asset Backed Securities 2,325 2,514 7,094 7,908
Other Securities 2,555 2,097 6,963 6,120
------------------------------------
TOTAL INTEREST INCOME 50,072 48,182 146,490 140,522
INTEREST EXPENSE:
Deposits 12,895 12,519 36,847 37,661
Federal Funds Purchased & Securities Sold
Under Agreement to Repurchase 3,889 4,461 12,535 14,156
Other Purchased Funds 4 6 13 16
------------------------------------
TOTAL INTEREST EXPENSE 16,788 16,986 49,395 51,833
------------------------------------
NET INTEREST INCOME 33,284 31,196 97,095 88,689
Provision for Loan Losses 750 600 2,250 (2,100)
------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 32,534 30,596 94,845 90,789
OTHER INCOME:
Trust Department Income 571 486 1,599 1,570
Service Charges on Deposit Accounts 3,109 3,072 9,344 9,014
Mortgage Loan Servicing Fees 2,021 1,964 6,038 5,916
Securities Transactions 1,036 115 1,036 (3,832)
Credit Card Service Fees 1,895 1,783 4,696 4,525
Other 4,075 2,425 8,596 6,788
------------------------------------
TOTAL OTHER INCOME 12,707 9,845 31,309 23,981
OTHER EXPENSE:
Salaries 9,610 9,311 28,684 27,631
Profit Sharing & Other Employee Benefits 2,901 2,772 8,629 7,951
Net Occupancy Expense of Bank Premises 1,884 1,685 5,546 5,456
Furniture & Equipment Expense 2,391 1,933 6,841 6,076
Other 9,227 6,587 22,942 21,559
------------------------------------
TOTAL OTHER EXPENSE 26,013 22,288 72,642 68,673
Income Before Income Taxes 19,228 18,153 53,512 46,097
Applicable Income Taxes 6,911 6,402 19,125 15,801
------------------------------------
NET INCOME $12,317 $11,751 $34,387 $30,296
====================================
Per Share Statistics
Net Income $1.55 $1.47 $4.32 $3.80
====================================
Average Number of Shares Outstanding 7,957,387 7,968,800 7,964,968 7,968,800
(See note to consolidated statements.)
</TABLE>
<PAGE> 4
<TABLE>
CONSOLIDATED STATEMENT OF CONDITION (Unaudited)
<CAPTION>
September 30 December 31
(In Thousands Except Statistics) 1996 1995 1995
ASSETS:
<S> <C> <C> <C>
Cash and Due from Banks $ 144,458 $ 138,370 $ 149,307
Interest-Bearing Balances with Banks 1,467 1,047 1,293
Federal Funds Sold 45,000 -- --
Investment Securities:
Obligations of Other U. S. Government
Agencies and Corporations 284,496 304,399 303,304
Obligations of States and Political Subdivisions 10,062 16,672 9,008
Mortgage and Asset-Backed Securities 124,939 138,150 138,498
Other Securities 118,374 102,464 102,591
-----------------------------------
Total Investment Securities 537,871 561,685 553,401
(Market Value $539,700 in 1996)
Securities Available for Sale 262,407 261,236 273,391
Net Loans and Lease Financing 1,447,489 1,340,026 1,326,840
Less Reserve for Possible Loan Losses (20,276) (20,605) (21,529)
-----------------------------------
Net loans and Lease Financing Less Reserves 1,427,213 1,319,421 1,305,311
Loans Held for Sale 28,196 46,903 33,099
Premises and Equipment 71,055 62,297 62,217
Other Assets 87,070 72,353 72,902
-----------------------------------
Total Assets $2,604,737 $2,463,312 $2,450,921
===================================
LIABILITIES AND SHAREHOLDERS EQUITY:
Demand Deposits $ 584,045 $ 575,888 $ 539,714
Interest-Bearing Deposits:
NOW 170,525 151,474 148,896
Savings 289,688 300,375 303,432
Money Market Savings 294,914 287,338 291,325
Time 533,826 463,035 457,114
-----------------------------------
Total Interest-Bearing Deposits 1,288,953 1,202,222 1,200,767
-----------------------------------
Total Deposits 1,872,998 1,778,110 1,740,481
Federal Funds Purchased 1,903 3,347 42,812
Securities Sold Under Agreement to Repurchase 324,317 307,300 283,047
Other Purchased Funds 3,281 1,539 1,681
Other Liabilities 32,888 30,560 32,580
-----------------------------------
Total Liabilities 2,235,387 2,120,856 2,100,601
Shareholders Equity
Common Stock-$10 Par Value 1996 1995 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 226,143 196,702 203,702
Net Unrealized Holding Losses on
Available-For-Sale Securities 1,559 3,180 4,044
Less Treasury Stock at Cost
46,200 Shares on September 30, 1996 (1,352) (426) (426)
and 31,200 Shares on September 30, 1995
-----------------------------------
Total Shareholders Equity 369,350 342,456 350,320
-----------------------------------
Total Liabilities and Shareholders Equity $2,604,737 $2,463,312 $2,450,921
===================================
Per Share Statistics
Net Book Value $46.44 $42.97 $43.96
===================================
(See note to consolidated statements.)
</TABLE>
<PAGE> 5
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>
(In Thousands) Nine Months Ended September 30 1996 1995
OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $ 34,387 $ 30,296
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Provision for Loan Losses 2,250 (2,100)
Deferred Taxes (190) (1,188)
Depreciation and Amortization 6,271 5,064
Amortization (Accretion) on Securities (1,290) 567
Investment Security Transactions (1,036) 3,832
Gain on Loan Sales (1,035) (120)
Gain on Disposal of Premises and Equipment (160) (15)
Loss (Gain) on Disposal of Other Assets 2 (72)
Net Decrease (Increase) in Loans Held for Sale 5,938 (27,111)
Increase in Interest Receivable, Prepaid Expense,
and Other Assets (811) (2,150)
Increase (Decrease) in Interest Payable, Accrued
Expenses and Other Liabilities (2,843) 5,776
--------------------
Net cash Provided by Operating Activities 41,483 12,779
INVESTING ACTIVITIES:
Net Decrease (Increase) in Federal Funds Sold and Interest
Bearing Deposits with Other Banks (45,174) 9,148
Proceeds from Maturities of Securities Held to Maturity 104,282 67,580
Proceeds from Maturities of Securities Available for Sale 35,000 --
Proceeds from Sales of Securities Available for Sale 15,024 183,626
Purchases of Securities Held to Maturity (86,742) (50,997)
Purchase of Securities Available For Sale (43,911) (160,146)
Net Increase in Lending Activities (124,152) (111,613)
Proceeds from Sale of Premises and Equipment 284 24
Proceeds from Sale of Other Assets 2,816 5,189
Purchases of Premises, Equipment, and Other Assets (25,358) (24,221)
Acquisition of Banks -- (100)
--------------------
Net Cash Used in Investing Activities (167,931) (81,510)
FINANCING ACTIVITIES:
Net Increase in Total Deposit 132,517 30,589
Net Increase in Short-Term Borrowings 1,961 50,500
Acquisition of Treasury Stock (926) --
Cash Dividends (11,953) (8,367)
--------------------
Net Cash Provided by Financing Activities 121,599 72,722
--------------------
Increase (Decrease) in Cash and Cash Equivalents (4,849) 3,991
Cash and Cash Equivalents at Beginning of Year 149,307 134,379
--------------------
Cash and Cash Equivalents at End of September $144,458 $138,370
====================
</TABLE>
<PAGE> 6
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, 1996,
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996.
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, 1995. In the opinion of
management, all adjustments (consisting of normal recurring accruals necessary
for a fair presentation) have been included.
<PAGE> 7
Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations
National Bancorp of Alaska (the Corporation) recorded earnings of $12.3 million
in the third quarter of 1996 compared to $11.7 million for the third quarter of
1995. Earnings per share were $1.55 for the third quarter 1996, up 5.4% from
the $1.47 earned in the third quarter of 1995.
Return on average assets using annualized income from operations plus year-to-
date net security gains and nonrecurring loan loss recoveries was 1.82% for the
nine-month period ended September 30, 1996, compared to 1.67% for the nine-
month period ended September 30, 1995. The annualized return on average
stockholders' equity was 12.77% for the first nine months of 1996.
Net interest income increased $4,056,000 after the provision for loan losses
during the first nine months of 1996 compared to the same period during the
previous year. Interest on earning assets increased $6.0 million for the first
nine months of 1996 compared to the same period in 1995, while interest expense
decreased $2.4 million.
The provision for loan loss was $2,250,000 at September 30, 1996, compared to a
provision for loan loss recoveries of $2,100,000 at September 30, 1995. The
reserve for loan loss was 1.40% of outstanding loans at September 30, 1996 and
1.54% at September 30, 1995 and 1.62% at December 31, 1995. 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 increased to 1.25% at September 30, 1996
from .90% at September 30, 1995, and increased from .83% at December 31, 1995.
The increase is due to nonaccrual long term real estate loans and loans
accruing past due 90 days.
Non-interest income increased $7,328,000 for the first nine months 1996 over
the same period in 1995. This increase is primarily due to $3.9 million in
losses taken on securities held for sale in the first quarter of 1995. Non-
interest expense increased by $3,969,000 over the first nine months of 1995.
Cost increass from the first nine months of 1996 over 1995 include personnel
and benefit expenses of $1,731,000 for profit sharing and loan activity and
other expenses of $1,383,000 related to outsourced computer and
telecommunication expenses.
<PAGE>8
Material Changes in Financial Condition
Total assets at September 30, 1996, were $2.6 billion, an increase of 5.7% or
$141 million from the same period one year earlier, and an increase of $154
million or 6.3% from December 31, 1995. Investment securities have decreased
by $24 million from the third quarter of 1995. Loans, leases and loans held
for sale have increased $89 million over the same period in 1995. Total
deposits have increased by $95 million from September 30, 1995 and $133 million
from December 31, 1995.
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 $19 million from December 31, 1995, to $369
million at September 30, 1996. 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 1996 1995 1995
Tier 1 Risk Based Capital Ratio 4% 18.47% 17.97% 18.40%
Total Risk Based Capital Ratio 8 19.49 19.07 19.55
Leverage Ratio 4 14.22 13.73 13.90
<PAGE> 9
Statistical Disclosures
The information as requested by the Securities and Exchange Commission of
selected Guide 3-Statistical Disclosure by Bank Holding Companies as follows:
III. Loan Portfolio
C. Risk Elements
Nonperforming Assets
September 30 December 31
(In Thousands) 1996 1995 1995
Nonaccrual
Commercial and industrial $2,698 $2,216 $ 700
Real estate construction 166 204 166
Real estate long-term 4,023 1,386 1,162
Other 45 - 45
-------------------------
Total 6,932 3,806 2,073
Restructured Loans
Real estate construction 87 96 94
Real estate long-term 483 100 242
-------------------------
Total 570 196 336
Accruing loans past due 90 days or more 8,432 4,846 5,459
Other real estate owned 2,180 3,178 3,127
--------------------------
Total nonperforming assets $18,114 $12,026 $10,995
Nonperforming assets as a percentage
of loans and leases and other real
estate owned at end of period 1.25% 0.90% 0.83%
Potential Problem Loans
At September 30, 1996, an additional $13,767,000 in loans are being closely
monitored by management. These loans are not include in any category of non-
performing loans. However, management has concern about the borrow's abilities
to comply with their present loan repayment terms. These loans are reviewed
monthly to assess any change in collectability.
<PAGE> 10
IV. Summary of Loan Loss Experience
A: Analysis of Allowance for Loan Loss
(In Thousands) September 30, 1996 December 31, 1995
Balance January 1 $21,529 $19,226
Provision charged to operations 2,250 (3,100)
Recoveries on loans previously charged off 1,841 9,947
Less loans charged off (5,344) (4,544)
----------------------
Balance at end of period $20,276 $21,529
=====================
Composition of Loan Charge Off and Recoveries
Loans Charged Off:
Commercial loans and leases $ 764 $ 954
Real estate construction - 113
Real estate long-term 1,497 116
Consumer 2,311 2,644
Visa 772 717
--------------------
Total Charge Offs 5,344 4,544
Recoveries:
Commercial loans and leases 277 7,643
Real estate construction 3 16
Real estate long-term 227 657
Consumer 1,144 1,445
Visa 190 167
Non Taxable - 19
--------------------
Total Recoveries 1,841 9,947
--------------------
Net Charge Offs $3,503 $(5,403)
====================
<PAGE> 11
B. Allocation of the Allowance for Loan Loss
Allocation of Reserves
To Loan Categories
-------------------------------
Loan Category As a % % of Total Amount of
September 30, 1996 of Total Loans Reserve Reserves(000's)
Commercial and Industrial 36.2% 2.4% $ 489
Real Estate Construction 2.1 0.0 10
Real Estate Long Term 30.9 1.4 292
Installment 25.9 17.0 3,442
Nontaxable 4.1 - -
Lease Financing 0.8 - -
Unallocated - 79.2 16,043
------------------------------------
100.0% 100.0% $20,276
December 31, 1995
Commercial and Industrial 35.5% 2.2% $ 468
Real Estate Construction 1.9 - 3
Real Estate Long Term 31.9 1.2 267
Installment 25.0 15.3 3,288
Nontaxable 4.8 0.4 81
Lease Financing 0.9 0.0 -
Unallocated - 80.9 17,422
------------------------------------
100.0% 100.0% $21,529
<PAGE> 12
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) Not applicable
<PAGE> 13
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 12, 1996 /s/ Richard Strutz
Date Richard Strutz, President
November 12, 1996 /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-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 144,458
<INT-BEARING-DEPOSITS> 1,467
<FED-FUNDS-SOLD> 45,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 262,407
<INVESTMENTS-CARRYING> 537,871
<INVESTMENTS-MARKET> 539,700
<LOANS> 1,447,489
<ALLOWANCE> 20,276
<TOTAL-ASSETS> 2,604,737
<DEPOSITS> 1,872,998
<SHORT-TERM> 329,501
<LIABILITIES-OTHER> 32,888
<LONG-TERM> 0
<COMMON> 369,350
0
0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 2,604,737
<INTEREST-LOAN> 105,343
<INTEREST-INVEST> 40,397
<INTEREST-OTHER> 750
<INTEREST-TOTAL> 146,490
<INTEREST-DEPOSIT> 36,847
<INTEREST-EXPENSE> 49,395
<INTEREST-INCOME-NET> 97,095
<LOAN-LOSSES> 2,250
<SECURITIES-GAINS> 1,036
<EXPENSE-OTHER> 72,642
<INCOME-PRETAX> 53,512
<INCOME-PRE-EXTRAORDINARY> 34,387
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,387
<EPS-PRIMARY> 4.32
<EPS-DILUTED> 4.32
<YIELD-ACTUAL> 0
<LOANS-NON> 6,932
<LOANS-PAST> 8,432
<LOANS-TROUBLED> 570
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 21,529
<CHARGE-OFFS> 5,344
<RECOVERIES> 1,841
<ALLOWANCE-CLOSE> 20,276
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
