<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 March 31, 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 May 9, 1997: 7,887,003
<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 1 Legal Proceedings.................................................. 12
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
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<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(In Thousands Except Statistics) Three Months Ended March 31
1997 1996
INTEREST INCOME:
Loans & Lease Financing Including Fee $35,204 $33,579
Balances with Banks 6 10
Federal Funds Sold 176 -
Investment Securities Including Dividends
U.S. Treasury Securities 3,143 3,253
Obligations of Other U. S. Government
Agencies and Corporation 5,915 5,584
Obligations of States & Political
Subdivisions 170 93
Mortgage and Asset-Backed Securities 2,498 2,407
Other Securities 2,500 2,036
-------------------
TOTAL INTEREST INCOME 49,612 46,962
INTEREST EXPENSE:
Deposits 12,986 11,690
Federal Funds Purchased & Securities Sold
Under Agreement to Repurchase 4,178 4,235
Other Purchased Funds 3 5
-------------------
TOTAL INTEREST EXPENSE 17,167 15,930
-------------------
NET INTEREST INCOME 32,445 31,032
Provision for Loan Losses 900 750
-------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 31,545 30,282
OTHER INCOME:
Trust Department Income 597 501
Service Charges on Deposit Accounts 3,079 3,039
Mortgage Loan Servicing Fees 2,000 2,016
Securities Transactions 188 -
Credit Card Service Fees 1,363 1,314
Other 3,288 2,378
-------------------
TOTAL OTHER INCOME 10,515 9,248
OTHER EXPENSE:
Salaries 9,448 9,468
Profit Sharing & Other Employee Benefits 3,075 2,891
Net Occupancy Expense of Bank Premises 1,845 1,872
Furniture & Equipment Expense 2,259 2,058
Other 7,093 6,815
-------------------
TOTAL OTHER EXPENSE 23,720 23,104
-------------------
Income Before Income Taxes 18,340 16,426
Applicable Income Taxes 6,338 5,801
-------------------
NET INCOME $12,002 $10,625
===================
Per Share Statistics
Net Income $ 1.52 $ 1.33
===================
Average Number of Shares Outstanding 7,894,305 7,968,800
(See note to consolidated statements.)
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<PAGE> 4
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CONDITION (Unaudited)
March 31 December 31
(In Thousands Except Statistics) 1997 1996 1996
ASSETS:
<S> <C> <C> <C>
Cash and Due from Banks $ 124,953 $ 130,096 $ 166,771
Interest-Bearing Balances with Banks 451 1,080 233
Federal Funds Sold -- -- 20,000
Investment Securities:
Obligations of Other U. S. Government
Agencies and Corporations 330,371 289,376 317,145
Obligations of States and Political Subdivisions 15,211 8,365 15,878
Mortgage and Asset-Backed Securities 144,601 130,072 144,738
Other Securities 119,137 102,798 118,712
----------------------------------
Total Investment Securities 609,320 530,611 596,473
(Market Value $607,697 in 1997)
Securities Available for Sale 231,529 250,933 253,552
Net Loans and Lease Financing 1,466,318 1,356,451 1,446,978
Less Reserve for Possible Loan Losses (23,524) (21,389) (23,002)
----------------------------------
Net Loans and Lease Financing Less Reserves 1,442,794 1,335,062 1,423,976
Loans Held for Sale 22,396 72,652 31,563
Premises and Equipment 70,161 65,843 71,212
Other Assets 95,291 78,063 84,704
----------------------------------
Total Assets $2,596,895 $2,464,340 $2,648,484
==================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Demand Deposits $ 483,488 $ 511,378 $ 539,309
Interest-Bearing Deposits:
NOW 166,315 143,180 174,470
Savings 288,721 296,129 297,058
Money Market Savings 288,077 293,012 304,000
Time 564,043 459,766 552,216
----------------------------------
Total Interest-Bearing Deposits 1,307,156 1,192,087 1,327,744
----------------------------------
Total Deposits 1,790,644 1,703,465 1,867,053
Federal Funds Purchased 39,088 65,452 7,655
Securities Sold Under Agreement to Repurchase 343,831 303,826 356,914
Other Purchased Funds 877 1,480 898
Other Liabilities 41,635 34,703 38,561
----------------------------------
Total Liabilities 2,216,075 2,108,926 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
Surplus 63,000 63,000 63,000
Undivided Profits 242,361 210,343 234,303
Net Unrealized Holding Gains(Losses) on
Available-for-Sale Securities 1,373 2,497 2,405
Less Treasury Stock at Cost
112,997 on March 31, 1997 and
31,200 Shares on March 31, 1996 (5,914) (426) (2,305)
---------------------------------
Total Shareholders' Equity 380,820 355,414 377,403
----------------------------------
Total Liabilities and Shareholders Equity $2,596,895 $2,464,340 $2,648,484
==================================
Per Share Statistics
Net Book Value $48.28 $44.60 $47.54
(See note to consolidated statements.) ==================================
</TABLE>
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<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands) Three Months Ended March 31 1997 1996
OPERATING ACTIVITIES:
Net Income $ 12,002 $ 10,625
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Provision for Loan Losses 900 750
Deferred Taxes (482) (499)
Depreciation and Amortization 1,897 1,804
Net amortization on Securities 62 (366)
Investment Security Transactions (188) --
Gain on Loan Sales (82) (116)
Loss (Gain) on Disposal of Premises and Equipment 19 (12)
Loss (Gain) on Sale of Other Assets (2) 119
Net Decrease (Increase) in Loans Held for Sale 9,249 (39,436)
Decrease (Increase) in Interest Receivable, Prepaid
Expense, and Other Assets (1,365) (1,547)
Increase in Interest Payable, Accrued
Expenses and Other Liabilities 3,911 2,012
-----------------
Net Cash Provided by (Used in) Operating Activities 25,921 (26,666)
INVESTING ACTIVITIES:
Net Decrease in Federal Funds Sold, and Interest
Bearing Deposits with Other Banks 19,782 213
Proceeds from Maturities of Securities Held to Maturity 31,633 28,226
Proceeds from Maturities of Securities Available for Sale 20,000 20,000
Proceeds from Sales of Securities Available for Sale 25,148 --
Purchases of Securities Held to Maturity (44,253) (5,212)
Purchases of Securities Available for Sale (25,000) --
Net Increase in Lending Activities (19,928) (30,502)
Proceeds from Sales of Premises and Equipment 4 13
Proceeds from Sale of Other Assets 296 532
Purchases of Premises, Equipment, and Other Assets (6,835) (8,033)
-----------------
Net Cash Provided by Investing Activities 847 5,237
FINANCING ACTIVITIES:
Net Decrease in Total Deposit (79,337) (37,016)
Net Increase in Short-Term Borrowings 18,329 43,218
Acquisition of treasury stock (3,609) --
Cash Dividends (3,969) (3,984)
-----------------
Net Cash Provided by (Used in) Financing Activities (68,586) 2,218
-----------------
Decrease in Cash and Cash Equivalents (41,818) (19,211)
Cash and Cash Equivalents at Beginning of Year 166,771 149,307
-----------------
Cash and Cash Equivalents at End of March $124,953 $130,096
=================
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<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 three-month period ended March 31, 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.
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<PAGE> 7
Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations
National Bancorp of Alaska (the Corporation) recorded earnings of $12.0 million
in the first quarter of 1997 compared to $10.63 million for the first quarter
of 1996. Earnings per share were $1.52 as of March 31, 1997 up 14% from the
$1.33 earned through March 31, 1996.
Return on average assets using annualized income from operations plus year-to-
date net security gains and nonrecurring loan loss recoveries was 1.87% for the
three-month period ended March 31, 1997, compared to 1.77% for the three-month
period ended March 31, 1996. The annualized return on average stockholders'
equity was 12.81% for the first three months of 1997.
Net interest income increased $1,263,000 after the provision for loan losses
during the first three months of 1997 compared to the same period during the
previous year. The increase is due to increased loan activity. Interest on
earning assets increased $2.6 million from the first quarter of 1996 to the
first quarter of 1997, while interest expense increased $1.2 million.
The provision for loan loss was $900,000 at March 31, 1997, compared to a
provision for loan losses $750,000 at March 31, 1996. The reserve for loan
loss was 1.60% of outstanding loans at March 31, 1997 and 1.58% at March 31,
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 1.00% at March 31, 1997 from 1.24% at March 31, 1996, and
decreased from 1.10% at December 31, 1996.
Non-interest income increased $1,267,000 for the first quarter from the same
period in 1996. Non-interest expense increased by $616,000 over the first
quarter one year ago. Increases include $164,000 in personnel and benefits
expenses and $278,000 in other expense.
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<PAGE> 8
Material Changes in Financial Condition
Total assets at March 31, 1997, were $2,596,895,000 an increase of 5.4% or
$132,555,000 from the same period one year earlier, and an decrease of
$51,589,000 or 1.9% from December 31, 1996. Investment securities have
increased by $13 million over the first quarter of 1996. Loans and leases and
loans held for sale have increased $10 million over the same period in 1996.
Total deposits have increased by $87,179,000 from March 31, 1996, and decreased
by $76,409,000 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 $3.4 million from December 31, 1996, to
$380.8 million at March 31, 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:
March 31 December 31
Minimun 1997 1996 1996
Tier 1 Risk Based Capital Ratio 4% 18.77% 18.40% 18.45%
Total Risk Based Capital Ratio 8 19.93 19.52 19.58
Leverage Ratio 4 14.71 14.54 14.13
-8-
<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
March 31 December 31
(In Thousands) 1997 1996 1996
Nonaccrual
Commercial and industrial $3,618 $2,387 $1,451
Real estate construction 166 214 166
Real estate long-term 4,070 5,497 3,841
Other 35 45 35
--------------------------
Total 7,889 8,143 5,493
--------------------------
Restructured Loans
Real estate construction 83 92 85
Real estate long-term 94 241 95
--------------------------
Total 177 333 180
--------------------------
Accruing loans past due 90 days or more 6,161 6,385 9,945
--------------------------
Other real estate owned 396 2,476 326
--------------------------
Total nonperforming assets $14,623 $17,337 $15,944
Nonperforming assets as a percentage
of loans and leases and other real
estate owned at end of period 1.00% 1.24% 1.10%
Potential Problem Loans
At March 31, 1997, an additional $29,239,000 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.
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<PAGE> 10
IV. Summary of Loan Loss Experience
A: Analysis of Reserve for Loan Loss
(In Thousands) March 31, 1997 December 31, 1996
Balance January 1 $23,002 $21,529
Provision charged to operations 900 6,650
Recoveries on loans previously charged off 852 2,560
Less loans charged off (1,230) (7,737)
-------------------------
Balance at end of period $23,524 $23,002
=========================
Composition of Loan Charge Off and Recoveries
Loans Charged Off:
Commercial loans and leases $ 202 $ 1,867
Real estate construction - 6
Real estate long-term - 1,574
Consumer 799 3,232
Visa 229 1,058
-------------------------
Total Charge Offs 1,230 7,737
-------------------------
Recoveries:
Commercial loans and leases 59 403
Real estate construction 2 5
Real estate long-term 327 286
Consumer 424 1,633
Visa 40 233
------------------------
Total Recoveries 852 2,560
------------------------
Net Charge Offs $ 378 $ 5,177
========================
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<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)
March 31, 1997
Commercial and Industrial 35.6% 6.6% $ 1,553
Real Estate Construction 2.3 0.1 23
Real Estate Long Term 31.8 1.7 391
Installment 26.0 24.6 5,783
Nontaxable 3.6 - -
Lease Financing 0.7 - 5
Unallocated - 67.0 15,769
------------------------------------
100.0% 100.0% $23,524
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
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<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
The Annual Meeting of Shareholders was held in Anchorage on March 18,
1997. At that time shareholders elected 24 Directors to the Board.
All Directors stand for election annually.
Votes for Votes Withheld
Director Director from Director
Donald B. Abel, Jr. 7,448,155 12,033
Gary M. Baugh 7,448,155 12,033
Carl F. Brady, Jr. 7,447,876 12,312
Alec W. Brindle 7,448,155 12,033
Sharon (Burrell) Wikan 7,446,947 13,241
James O. Campbell 7,448,155 12,033
Jeffry J. Cook 7,447,304 12,884
Patrick S. Cowan 7,447,304 12,884
Roy Huhndorf 7,447,274 12,914
James H. Jansen 7,448,155 12,033
Donald L. Mellish 7,448,155 12,033
Emil R. Notti 7,447,379 12,809
Howard R. Nugent 7,447,910 12,278
Tennys B. Owens 7,447,768 12,420
Eugene A. Parrish, Jr. 7,448,155 12,033
J. Michael Pate 7,447,938 12,250
Martin R. Pihl 7,447,462 12,726
Edward F. Randolph 7,447,304 12,884
Edward B. Rasmuson 7,448,155 12,033
Maj. Gen. John Schaeffer (Ret.) 7,398,477 61,711
Michael K. Snowden 7,447,768 12,420
Richard J. Strutz 7,447,304 12,884
George S. Suddock 7,448,155 12,033
Richard A. Wien 7,448,155 12,033
A total of 7,460,188 votes were presented in proxy and in person.
Absent or no proxy votes amounted to 429,913.
The shareholders also approved an amendment to the Company's
Certificate of Incorporation to narrow the provision of preemptive
rights by eliminating the preferential rights of shareholders to
purchase treasury shares.
For Against Abstain Total
7,384,360 46,713 29,115 7,460,188
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
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<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.
May 12, 1997 /s/Edward B. Rasmuson
Edward B. Rasmuson, Chairman
of the Board
May 12, 1997 /s/Richard Strutz
Richard Strutz, President
May 12, 1997 /s/Gary Dalton
Gary Dalton, Executive Vice
President and Controller
(Principal Accounting Officer)
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<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 124,953
<INT-BEARING-DEPOSITS> 451
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 231,529
<INVESTMENTS-CARRYING> 609,320
<INVESTMENTS-MARKET> 607,697
<LOANS> 1,466,318
<ALLOWANCE> 23,524
<TOTAL-ASSETS> 2,596,895
<DEPOSITS> 1,790,644
<SHORT-TERM> 383,796
<LIABILITIES-OTHER> 41,635
<LONG-TERM> 0
<COMMON> 380,820
0
0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 2,596,895
<INTEREST-LOAN> 35,204
<INTEREST-INVEST> 14,226
<INTEREST-OTHER> 182
<INTEREST-TOTAL> 49,612
<INTEREST-DEPOSIT> 12,986
<INTEREST-EXPENSE> 17,167
<INTEREST-INCOME-NET> 32,445
<LOAN-LOSSES> 900
<SECURITIES-GAINS> 188
<EXPENSE-OTHER> 12,720
<INCOME-PRETAX> 18,340
<INCOME-PRE-EXTRAORDINARY> 18,340
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,002
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 1.52
<YIELD-ACTUAL> 0
<LOANS-NON> 7,889
<LOANS-PAST> 6,161
<LOANS-TROUBLED> 177
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 23,002
<CHARGE-OFFS> 1,230
<RECOVERIES> 852
<ALLOWANCE-CLOSE> 23,524
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
