<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, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 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 7, 1997: 7,784,533
<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
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
THREE MONTHS NINE MONTHS
(In Thousands Except Statistics) ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
INTEREST INCOME: 1997 1996 1997 1996
<S> <C> <C> <C> <C>
Loans & Lease Financing Including Fees $38,442 $35,854 $111,574 $105,343
Balances with Banks 15 15 30 39
Federal Funds Sold 1,434 678 1,597 711
Investment Securities Including Dividends
U.S. Treasury Securities 3,044 2,919 9,156 9,057
Obligations of Other U. S. Government
Agencies and Corporation 5,453 5,631 17,159 17,003
Obligations of States & Political
Subdivisions 154 95 481 280
Mortgage and Asset Backed Securities 2,408 2,325 7,421 7,094
Other Securities 2,421 2,555 7,380 6,963
---------------------------------------------
TOTAL INTEREST INCOME 53,371 50,072 154,798 146,490
INTEREST EXPENSE:
Deposits 13,956 12,895 40,134 36,847
Federal Funds Purchased & Securities Sold
Under Agreement to Repurchase 4,511 3,889 13,420 12,535
Other Purchased Funds 2 4 11 13
---------------------------------------------
TOTAL INTEREST EXPENSE 18,469 16,788 53,565 49,395
---------------------------------------------
NET INTEREST INCOME 34,902 33,284 101,233 97,095
Provision for Loan Losses 900 750 2,700 2,250
---------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 34,002 32,534 98,533 94,845
OTHER INCOME:
Trust Department Income 688 571 1,865 1,599
Service Charges on Deposit Accounts 3,226 3,109 9,539 9,344
Mortgage Loan Servicing Fees 2,060 2,021 6,124 6,038
Securities Transactions 89 1,036 632 1,036
Credit Card Service Fees 2,151 1,895 5,337 4,696
Other 3,897 4,075 10,760 8,596
---------------------------------------------
TOTAL OTHER INCOME 12,111 12,707 34,257 31,309
OTHER EXPENSE:
Salaries 9,757 9,610 28,832 28,684
Profit Sharing & Other Employee Benefits 3,186 2,901 9,370 8,629
Net Occupancy Expense of Bank Premises 1,870 1,884 5,583 5,546
Furniture & Equipment Expense 2,293 2,391 6,867 6,841
Other 7,757 9,227 22,547 22,942
--------------------------------------------
TOTAL OTHER EXPENSE 24,863 26,013 73,199 72,642
Income Before Income Taxes 21,250 19,228 59,591 53,512
Applicable Income Taxes 7,726 6,911 21,063 19,125
---------------------------------------------
NET INCOME $13,524 $12,317 $38,528 $34,387
=============================================
Per Share Statistics
Net Income $1.73 $1.55 $4.90 $4.32
=============================================
Average Number of Shares Outstanding 7,830,409 7,957,387 7,865,943 7,964,968
(See note to consolidated statements.)
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CONDITION (Unaudited)
September 30 December 30
(In Thousands Except Statistics) 1997 1996 1996
ASSETS:
<S> <C> <C> <C>
Cash and Due from Banks $ 162,607 $ 144,458 $ 166,771
Interest-Bearing Balances with Banks 199 1,467 233
Federal Funds Sold 87,000 45,000 20,000
Investment Securities:
Obligations of Other U. S. Government
Agencies and Corporations 315,141 284,496 317,145
Obligations of States and Political Subdivisions 13,215 10,062 15,878
Mortgage and Asset-Backed Securities 131,334 124,939 144,738
Other Securities 114,812 118,374 118,712
-----------------------------------
Total Investment Securities 574,502 537,871 596,473
(Market Value $579,483 in 1997)
Securities Available for Sale 229,849 262,407 253,552
Net Loans and Lease Financing 1,456,076 1,447,489 1,446,978
Less Reserve for Possible Loan Losses (22,709) (20,276) (23,002)
-----------------------------------
Net loans and Lease Financing Less Reserves 1,433,367 1,427,213 1,423,976
Loans Held for Sale 90,804 28,196 31,563
Premises and Equipment 70,486 71,055 71,212
Other Assets 99,423 87,070 84,704
-----------------------------------
Total Assets $2,748,237 $2,604,737 $2,648,484
===================================
LIABILITIES AND SHAREHOLDERS EQUITY:
Demand Deposits $ 571,739 $ 584,045 $ 539,309
Interest-Bearing Deposits:
NOW 185,889 170,525 174,470
Savings 283,645 289,688 297,058
Money Market Savings 301,360 294,914 304,000
Time 595,231 533,826 552,216
-----------------------------------
Total Interest-Bearing Deposits 1,366,125 1,288,953 1,327,744
-----------------------------------
Total Deposits 1,937,864 1,872,998 1,867,053
Federal Funds Purchased 1,673 1,903 7,655
Securities Sold Under Agreement to Repurchase 382,467 324,317 356,914
Other Purchased Funds 175 3,281 898
Other Liabilities 34,076 32,888 38,561
-----------------------------------
Total Liabilities 2,356,255 2,235,387 2,271,081
Shareholders Equity
Common Stock-$10 Par Value 1997 1996 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 261,061 226,143 234,303
Net Unrealized Holding Losses on
Available-For-Sale Securities 2,480 1,559 2,405
Less Treasury Stock at Cost
215,467 Shares on September 30, 1997
and 46,200 Shares on September 30, 1996 (14,559) (1,352) (2,305)
-----------------------------------
Total Shareholders Equity 391,982 369,350 377,403
-----------------------------------
Total Liabilities and Shareholders Equity $2,748,237 $2,604,737 $2,648,484
===================================
Per Share Statistics
Net Book Value $50.35 $46.44 $47.54
===================================
(See note to consolidated statements.)
</TABLE>
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands) Nine Months Ended September 30 1997 1996
OPERATING ACTIVITIES:
Net Income $ 38,528 $ 34,387
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Provision for Loan Losses 2,700 2,250
Deferred Taxes 942 (190)
Depreciation and Amortization 5,734 6,271
Amortization (Accretion) on Securities (610) (1,290)
Investment Security Transactions (632) (1,036)
Gain on Loan Sales (230) (1,035)
Loss (Gain) on Disposal of Premises and Equipment 9 (160)
Loss (Gain) on Disposal of Other Assets (10) 2
Net Decrease (Increase) in Loans Held for Sale (59,011) 5,938
Increase in Interest Receivable, Prepaid Expense,
and Other Assets (271) (811)
Increase (Decrease) in Interest Payable, Accrued
Expenses and Other Liabilities 444 (2,843)
-----------------
Net cash Provided by (Used in) Operating Activities (12,407) 41,483
INVESTING ACTIVITIES:
Net Increase in Federal Funds Sold and Interest
Bearing Deposits with Other Banks (66,966) (45,174)
Proceeds from Maturities of Securities Held to Maturity 112,083 104,282
Proceeds from Maturities of Securities Available for Sale 37,129 35,000
Proceeds from Sales of Securities Available for Sale 25,148 15,024
Purchases of Securities Held to Maturity (87,293) (86,742)
Purchase of Securities Available For Sale (40,344) (43,911)
Net Increase in Lending Activities (12,301) (124,152)
Proceeds from Sale of Premises and Equipment 41 284
Proceeds from Sale of Other Assets 1,940 2,816
Purchases of Premises, Equipment, and Other Assets (23,824) (25,358)
-----------------
Net Cash Used in Investing Activities (54,387) (167,931)
FINANCING ACTIVITIES:
Net Increase in Total Deposit 67,883 132,517
Net Increase in Short-Term Borrowings 18,848 1,961
Acquisition of Treasury Stock (12,254) (926)
Cash Dividends (11,847) (11,953)
-----------------
Net Cash Provided by Financing Activities 62,630 121,599
-----------------
Decrease in Cash and Cash Equivalents (4,164) (4,849)
Cash and Cash Equivalents at Beginning of Year 166,771 149,307
-----------------
Cash and Cash Equivalents at End of September $162,607 $144,458
=================
<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, 1997,
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1997.
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, 1996. 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 $13.5 million
in the third quarter of 1997 compared to $12.3 million for the third quarter of
1996. Earnings per share were $1.73 for the third quarter 1997, up 11.6% from
the $1.55 earned in the third quarter of 1996.
Return on average assets using annualized income from operations plus year-to-
date net security gains was 1.94% for the nine-month period ended September 30,
1997, compared to 1.82% for the nine-month period ended September 30, 1996.
The annualized return on average stockholders' equity was 13.38% for the first
nine months of 1997.
Net interest income increased $3,688,000 after the provision for loan losses
during the first nine months of 1997 compared to the same period during the
previous year. Interest on earning assets increased $8.3 million for the first
nine months of 1997 compared to the same period in 1996, while interest expense
increased $4.2 million.
The provision for loan loss was $2,700,000 at September 30, 1997, compared to
$2,250,000 at September 30, 1996. The reserve for loan loss was 1.56% of
outstanding loans at September 30, 1997 and 1.40% at September 30, 1996 and
1.59% at December 31, 1996. 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 0.85% at September 30, 1997 from 1.25% at September 30, 1996, and
decreased from 1.10% at December 31, 1996.
Non-interest income increased $2,948,000 for the first nine months 1997 over
the same period in 1996 mainly due to increase investment and income from Low
Income Housing Partnerships. Non-interest expense increased by $557,000 over
the first nine months of 1996 primarily due to an increase in employee
benefits.
<PAGE> 8
Material Changes in Financial Condition
Total assets at September 30, 1997, were $2.7 billion, an increase of 5.5% or
$143 million from the same period one year earlier, and an increase of $100
million or 3.8% from December 31, 1996. Investment securities have increased
by $37 million from the third quarter of 1996. Loans, leases and loans held
for sale have increased $71 million over the same period in 1996. Included in
loans held for sale ate September 30, 1997 are $50 million in consumer
installment loans. Total deposits have increased by $65 million from September
30, 1996 and $71 million from December 31, 1996.
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 $15 million from December 31, 1996, to $392
million at September 30, 1997. 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 1997 1996 1996
Tier 1 Risk Based Capital Ratio 4% 18.62% 18.47% 18.45%
Total Risk Based Capital Ratio 8 19.70 19.49 19.58
Leverage Ratio 4 14.32 14.22 14.13
<PAGE> 9
Statistical Disclosures
Selected Guide 3-Statistical Disclosure by Bank Holding Companies
III. Loan Portfolio
C. Risk Elements
Nonperforming Assets
September 30 December 31
(In Thousands) 1997 1996 1996
Nonaccrual
Commercial and industrial $4,198 $2,698 $1,451
Real estate construction 222 166 166
Real estate long-term 4,412 4,023 3,841
Other 284 45 35
--------------------------
Total 9,116 6,932 5,493
--------------------------
Restructured Loans
Real estate construction 75 87 85
Real estate long-term 92 483 95
--------------------------
Total 167 570 180
--------------------------
Accruing loans past due 90 days or more 3,124 8,432 9,945
--------------------------
Other real estate owned -- 2,180 326
--------------------------
Total nonperforming assets $12,407 $18,114 $15,944
Nonperforming assets as a percentage
of loans and leases and other real
estate owned at end of period 0.85% 1.25% 1.10%
Potential Problem Loans
At September 30, 1997, an additional $31,148,000 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 borrower'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, 1997 December 31, 1996
Balance January 1 $23,002 $21,529
Provision charged to operations 2,700 6,650
Recoveries on loans previously charged off 2,124 2,560
Less loans charged off (5,117) (7,737)
--------------------------
Balance at end of period $22,709 $23,002
==========================
Composition of Loan Charge Off and Recoveries
Loans Charged Off:
Commercial loans and leases $ 1,307 $ 1,867
Real estate construction - 6
Real estate long-term 71 1,574
Consumer 2,991 3,232
Visa 748 1,058
--------------------------
Total Charge Offs 5,117 7,737
--------------------------
Recoveries:
Commercial loans and leases 253 403
Real estate construction 11 5
Real estate long-term 355 286
Consumer 1,372 1,633
Visa 133 233
--------------------------
Total Recoveries 2,124 2,560
--------------------------
Net Charge Offs $ 2,993 $ 5,177
==========================
<PAGE> 11
B. Allocation of the Allowance for Loan Loss
Allocation of Reserves
To Loan Categories
Loan Category As a % % of Total Amount of
of Total Loans Reserve Reserves(000's)
September 30, 1997
Commercial and Industrial 36.8% 8.0% $ 1,825
Real Estate Construction 2.7 0.1 15
Real Estate Long Term 33.2 3.5 792
Installment 22.8 27.4 6,237
Nontaxable 3.6 - -
Lease Financing 0.9 0.5 104
Unallocated - 60.5 13,736
----------------------------------
100.0% 100.0% $22,709
December 31, 1996
Commercial and Industrial 34.8% 1.4% $ 329
Real Estate Construction 2.4 - 5
Real Estate Long Term 32.0 0.7 150
Installment 26.3 24.8 5,708
Nontaxable 3.8 - -
Lease Financing 0.7 - -
Unallocated - 73.1 16,810
----------------------------------
100.0% 100.0% $23,002
<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, 1997 /s/Richard Strutz
Date Richard Strutz, President
November 12, 1997 /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> SEP-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 162,607
<INT-BEARING-DEPOSITS> 199
<FED-FUNDS-SOLD> 87,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 229,849
<INVESTMENTS-CARRYING> 574,502
<INVESTMENTS-MARKET> 579,483
<LOANS> 1,456,076
<ALLOWANCE> 22,709
<TOTAL-ASSETS> 2,748,237
<DEPOSITS> 1,937,864
<SHORT-TERM> 384,315
<LIABILITIES-OTHER> 34,076
<LONG-TERM> 0
<COMMON> 391,982
0
0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 2,748,237
<INTEREST-LOAN> 111,574
<INTEREST-INVEST> 41,597
<INTEREST-OTHER> 1,627
<INTEREST-TOTAL> 154,798
<INTEREST-DEPOSIT> 40,134
<INTEREST-EXPENSE> 53,565
<INTEREST-INCOME-NET> 101,233
<LOAN-LOSSES> 2,700
<SECURITIES-GAINS> 632
<EXPENSE-OTHER> 73,199
<INCOME-PRETAX> 59,591
<INCOME-PRE-EXTRAORDINARY> 59,591
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,528
<EPS-PRIMARY> 4.90
<EPS-DILUTED> 4.90
<YIELD-ACTUAL> 0
<LOANS-NON> 9,116
<LOANS-PAST> 3,124
<LOANS-TROUBLED> 167
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 23,002
<CHARGE-OFFS> 5,117
<RECOVERIES> 2,124
<ALLOWANCE-CLOSE> 22,709
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
