<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, 2000
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.
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(Exact name of registrant as specified in its charter)
Delaware 92-0087646
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(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Northern Lights Boulevard and C Street, Anchorage, AK 99503
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(Address of principal executive offices) (Zip Code)
(907) 276-1132
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(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, $2.50 par value.
Number of shares outstanding as of May 10, 2000: 30,224,177
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.............................8
Part II
Item 1 Legal Proceedings..............................................13
Item 2 Changes in Securities..........................................13
Item 3 Defaults Upon Senior Securities................................13
Item 4 Submission of Matters to a Vote of Security Holders............13
Item 5 Other Information..............................................13
Item 6 Exhibits and Reports on Form 8-K...............................13
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<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In Thousands Except Statistics) Three Months Ended March 31
2000 1999
INTEREST INCOME:
Loans & Lease Financing Including Fee $40,845 $36,747
Balances with Banks 3 -
Federal Funds Sold 251 464
Investment Securities Including Dividends
U.S. Government 2,087 2,226
U. S. Agencies 6,846 6,591
States & Political Subdivisions 204 198
Mortgage and Asset-Backed Securities 4,034 4,199
Other Securities 1,821 1,751
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TOTAL INTEREST INCOME 56,091 52,176
INTEREST EXPENSE:
Deposits 14,346 13,713
Federal Funds Purchased & Securities Sold
Under Agreement to Repurchase 5,239 3,789
Other Purchased Funds 2 2
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TOTAL INTEREST EXPENSE 19,587 17,504
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NET INTEREST INCOME 36,504 34,672
Provision for Loan Losses 1,200 1,200
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NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 35,304 33,472
OTHER INCOME:
Trust Department Income 711 712
Service Charges on Deposit Accounts 3,613 3,363
Loan Servicing Fees 2,671 2,491
Securities Transactions (1,515) -
Net gains on Limited Partnership Investments 4,151 331
Credit Card Service Fees 1,910 1,610
Other 4,380 4,546
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TOTAL OTHER INCOME 15,921 13,053
OTHER EXPENSE:
Salaries 11,461 10,628
Profit Sharing & Other Employee Benefits 3,666 3,510
Net Occupancy Expense of Bank Premises 1,971 1,995
Furniture & Equipment Expense 1,859 2,156
Other 9,682 8,453
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TOTAL OTHER EXPENSE 28,639 26,742
Income Before Income Taxes 22,586 19,783
Applicable Income Taxes 8,134 7,063
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NET INCOME $14,452 $12,720
===================================================================
Per Share Statistics
Net Income $ 0.48 $ 0.42
===================================================================
Average Number of Shares Outstanding 30,224,177 30,560,760
(See note to consolidated statements.)
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<PAGE> 4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands Except Statistics) Three Months Ended March 31
2000 1999
Net income $14,452 $12,720
Other comprehensive income, net of taxes:
Unrealized losses securities:
Unrealized holding losses arising during period (1,484) (642)
Less: reclassification adjustment for
losses included in net income (892) -
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Other comprehensive income (592) (642)
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Comprehensive Income $13,860 $12,078
==========================================================================
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<PAGE> 5
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
March 31 December 31
(In Thousands Except Statistics) 2000 1999 1999
<S> <C> <C> <C>
ASSETS:
Cash and Due from Banks $ 142,182 $ 139,755 $ 151,703
Interest-Bearing Balances with Banks 309 155 253
Securities Purchased under agreement to resell - 126,000 25,000
Investment Securities:
U. S. Agencies 356,811 326,421 376,652
States and Political Subdivisions 18,682 18,108 22,558
Mortgage and Asset-Backed Securities 234,536 237,104 248,188
Other Securities 46,392 60,110 58,493
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Total Investment Securities 656,421 641,743 705,891
(Market Value $642,372 in 2000)
Securities Available for Sale at Market 247,898 222,243 258,159
Loans and Lease Financing 1,666,848 1,502,589 1,656,562
Reserve for Loan Losses (26,714) (25,690) (27,565)
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Net Loans and Lease Financing 1,640,134 1,476,899 1,628,997
Loans Held for Sale 51,931 71,553 66,478
Net Premises and Equipment 68,348 71,415 69,392
Limited partnership investments 86,528 76,533 69,658
Other Assets 80,580 64,374 77,974
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Total Assets $2,974,331 $2,890,670 $3,053,505
============================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Demand Deposits $ 587,438$ 572,783$ 605,620
Interest-Bearing Deposits:
NOW 237,186 222,792 236,252
Savings 297,970 297,912 313,397
Money Market Savings 304,582 305,823 321,749
Time 644,938 674,214 680,799
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Total Interest-Bearing Deposits 1,484,676 1,500,741 1,552,197
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Total Deposits 2,072,114 2,073,524 2,157,817
Federal Funds Purchased 14,048 242 1,332
Securities Sold Under Agreement to Repurchase 384,222 350,637 404,456
Other Purchased Funds 93 165 110
Other Liabilities 43,156 45,270 38,418
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Total Liabilities 2,513,633 2,469,838 2,602,133
Shareholders' Equity 2000 1999
Common Stock - $2.50 Par Value 80,000 80,000 80,000
Shares Authorized 40,000,000 40,000,000
Shares Outstanding 32,000,000 32,000,000
Capital Surplus 63,106 63,099 63,106
Retained Earnings 361,415 315,707 351,497
Net Unrealized Gains on
Available-for-Sale Securities, Net of Tax (1,666) 1,992 (1,074)
Treasury Stock at Cost
(1,775,823 Shares on March 31, 2000 and
1,691,817 Shares on March 31, 1999) (42,157) (39,966) (42,157)
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Total Shareholders' Equity 460,698 420,832 451,372
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Total Liabilities and Shareholders Equity $2,974,331 $2,890,670 $3,053,505
============================================================================================
Per Share Statistics
Net Book Value $15.24 $13.89 $14.93
============================================================================================
</TABLE>
(See note to consolidated statements.)
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<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In Thousands) Three Months Ended March 31 2000 1999
OPERATING ACTIVITIES:
Net Income $ 14,452 $ 12,720
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Provision for Loan Losses 1,200 1,200
Deferred Taxes Expense (Credit) 34 (201)
Depreciation and Amortization 2,002 2,112
Net amortization on Securities 288 88
Gain on Security and Limited Partnership Transactions (4,353) (331)
Loss on Security and Limited Partnership Transactions 1,717 -
Loss (Gain) on Loan Sales 10 (483)
Loss (Gain) on Sales of Premises and Equipment (2) 1
Gain on Sale of Other Assets 42 -
Net Decrease in Loans Held for Sale 14,537 73,665
Decrease in Interest Receivable, Prepaid Expense,
and Other Assets 242 194
Increase in Interest Payable, Accrued
Expenses and Other Liabilities 4,738 4,667
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Net Cash Provided by Operating Activities 34,907 93,632
INVESTING ACTIVITIES:
Net Decrease (Increase) in Federal Funds Sold, and
Interest Bearing Deposits with Other Banks 24,944 (126,039)
Proceeds from Maturities of Securities Held to Maturity 49,681 141,327
Purchases of Securities Held to Maturity (432) (8,080)
Proceeds from Maturities of Securities Available for Sale 37 26,394
Purchases of Securities Available for Sale - (10,315)
Proceeds from Securities Available for Sale 7,636 -
Net Increase in Loans and Lease Financing (12,781) (15,750)
Proceeds from Sales of Premises and Equipment 3 2
Purchases of Premises and Equipment (579) (2,921)
Proceeds from Sale of Limited Partnership Investments 2,314 367
Purchases of Limited Partnership Investments (16,587) (5,153)
Acquisition of NBA Insurance Services LLP - (3,500)
Proceeds from Sale of Other Assets 802 -
Purchases of Other Assets (1,694) (1,309)
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Net Cash Provided by (Used in) Investing Activities 53,344 (4,977)
FINANCING ACTIVITIES:
Net Decrease in Total Deposit (85,703) (63,432)
Net Decrease in Short-Term Borrowings (7,535) (24,953)
Acquisition of Treasury Stock - (9,167)
Proceeds from Sale of Treasury Stock - 116
Cash Dividends Paid (4,534) (4,607)
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Net Cash Used in Financing Activities (97,772) (102,043)
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Decrease in Cash and Cash Equivalents (9,521) (13,388)
Cash and Cash Equivalents at Beginning of Year 151,703 153,143
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Cash and Cash Equivalents at End of March $142,182 $139,755
=============================================================================
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<PAGE> 7
National Bancorp of Alaska
Notes to the Consolidated Financial Statements
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements 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, 2000, are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000.
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, 1999. 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> 8
Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations
National Bancorp of Alaska (the Corporation) recorded earnings of $14.45
million in the first quarter of 2000 compared to $12.72 million for the first
quarter of 1999. Earnings per share were $0.48 as of March 31, 2000 up 14%
from the $0.42 earned through March 31, 1999.
Return on average assets using annualized income from operations plus year-to-
date net security gains and nonrecurring loan loss recoveries was 1.79% for the
three-month period ended March 31, 2000, compared to 1.78% for the three-month
period ended March 31, 1999. The annualized return on average stockholders'
equity was 11.69% for the first three months of 2000.
Net interest income increased $1,832,000 after the provision for loan losses
during the first three months of 2000 compared to the same period during the
previous year. The increase is due to increase of interest income on earning
assets. Interest on earning assets increased $3,915,000 from the first quarter
of 1999 to the first quarter of 2000, while interest expense increased
$2,083,000.
The provision for loan loss was $1,200,000 at March 31, 2000, compared to a
provision for loan losses $1,200,000 at March 31, 1999. The reserve for loan
loss was 1.60% of outstanding loans at March 31, 2000 and 1.71% at March 31,
1999 and 1.66% at December 31, 1999. 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 0.65% at March 31, 2000 from 0.70% at March 31, 1999, and
decreased from 0.77% at December 31, 1999.
Non-interest income increased $2,868,000 for the first quarter from the same
period in 1999 due to the increase in net gains on limited partnership
investment partially offset with net security losses. Non-interest expense
increased by $1,897,000 over the first quarter of 1999 with $989,000 attributed
to personnel and benefits expenses. Other non-interest expense increased
$1,229,000, which includes $461,000 in real estate, legal and accounting fees
related to the Wells Fargo merger.
Material Changes in Financial Condition
Total assets at March 31, 2000, were $2,974,331,000 an increase of 2.9% or $84
million from the same period one year earlier, and an decrease of $79 million
or 2.6% from December 31, 1999. Investment securities and securities available
for sale have increased by $40 million over the first quarter of 1999. Loans
and leases and loans held for sale have increased $145 million over the same
period in 1999. Limited partnership investments increased $10 million over the
first quarter of 1999. Total deposits have decreased by $1 million from March
31, 1999, and decreased by $86 million from December 31, 1999.
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.
-8-
<PAGE> 9
Capital Resources
Shareholders' equity increased by $9.3 million from December 31, 1999, to
$460.7 million at March 31, 2000. Federal regulatory agencies have established
capital adequacy guidelines setting a minimum for Tier 1, total capital and
leverage ratios which were 4%, 8% and 3%, respectively. The Corporation's and
National Bank of Alaska"s ratios are as follows:
March 31 December 31
2000 1999 1999
Tier 1 Risk Based Capital Ratio
National Bancorp of Alaska, Inc. 18.69% 18.29% 18.02%
National Bank of Alaska 11.18 11.86 11.66
Total Risk Based Capital Ratio
National Bancorp of Alaska, Inc. 19.78% 19.43% 19.14%
National Bank of Alaska 12.36 13.09 12.85
Leverage Ratio
National Bancorp of Alaska 15.33% 14.51% 14.46%
National Bank of Alaska 8.89 9.04 9.01
-9-
<PAGE> 10
Statistical Disclosures
Selected Guide 3-Statistical Disclosure by Bank Holding Companies
III. Loan Portfolio
C. Risk Elements
Nonperforming Assets
March 31 December 31
(In Thousands) 2000 1999 1999
Nonaccrual
Commercial and industrial $ 6,925 $ 2,321 $ 8,996
Real estate construction - - 140
Real estate long-term 1,527 4,465 826
Other 41 - -
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Total 8,493 6,786 9,962
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Restructured Loans
Real estate long-term - - -
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Total - - -
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Accruing loans past due 90 days or more 1,468 3,039 1,884
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Other real estate owned 840 723 840
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Total nonperforming assets $10,801 $10,548 $12,686
Nonperforming assets as a percentage
of loans and leases and other real
estate owned at end of period 0.65% 0.70% 0.77%
Potential Problem Loans
At March 31, 2000, an additional $59,405,000 in loans are being closely
monitored by management. These loans are not included in any category of non-
performing loans. However, management has concerns about the borrower'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> 11
IV. Summary of Loan Loss Experience
A: Analysis of Reserve for Loan Loss
(In Thousands) March 31, 2000 December 31, 1999
Balance January 1 $27,565 $24,678
Provision charged to operations 1,200 4,950
Recoveries on loans previously charged off 1,043 4,165
Less loans charged off (3,094) (6,228)
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Balance at end of period $26,714 $27,565
========================================================================
Composition of Loan Charge Off and Recoveries
Loans Charged Off:
Commercial loans and leases $ 1,848 $ 1,880
Real estate construction 20 -
Real estate long-term 46 41
Consumer 888 3,383
Visa 292 924
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Total Charge Offs 3,094 6,228
Recoveries:
Commercial loans and leases 60 792
Real estate construction - 194
Real estate long-term 58 794
Consumer 838 1,972
Visa 87 224
Nontaxable - 189
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Total Recoveries 1,043 4,165
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Net Charge Offs $ 2,051 $ 2,063
========================================================================
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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, 2000
Commercial and Industrial 39.8% 5.6% $ 1,495
Real Estate Construction 4.3 0.1 33
Real Estate Long Term 29.3 0.6 149
Installment 22.1 32.1 8,581
Nontaxable 4.1 - -
Lease Financing 0.4 - -
Unallocated - 61.6 16,456
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100.0% 100.0% $26,714
December 31, 1999
Commercial and Industrial 39.1% 7.8% $ 2,148
Real Estate Construction 5.3 0.2 57
Real Estate Long Term 29.3 1.1 312
Installment 21.8 33.4 9,194
Nontaxable 4.0 - -
Lease Financing 0.5 - -
Unallocated - 57.5 15,854
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100.0% 100.0% $27,565
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<PAGE> 13
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) Reports on Form 8-K
There were three Form 8-K's during the quarter ended
March 31, 2000.
On January 12, 2000, a Form 8-K reported the signing of a
definitive agreement and plan of reorganization for the merger
of the Corporation and Wells Fargo and Company.
On February 15, 2000, a Form 8-K reported an amendment to the
Corporation's and Wells Fargo & Company's agreement and plan of
reorganization dated as of January 12, 2000 to redefine "Wells
Fargo Measurement Price".
On March 30, 2000, a Form 8-K reported the "Wells Fargo
Measurement Price" and rate of exchange of Wells Fargo &
Company common stock for the Corporation's common stock.
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<PAGE> 14
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, 2000 /s/Edward B. Rasmuson
Date Edward B. Rasmuson, Chairman
of the Board
May 12, 2000 /s/Richard Strutz
Date Richard Strutz, President
May 12, 2000 /s/Gary Dalton
Date Gary Dalton, Executive Vice
President and Controller
(Principal Accounting Officer)
-14-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 142,182
<INT-BEARING-DEPOSITS> 309
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 247,898
<INVESTMENTS-CARRYING> 656,421
<INVESTMENTS-MARKET> 642,372
<LOANS> 1,666,848
<ALLOWANCE> 26,714
<TOTAL-ASSETS> 2,974,331
<DEPOSITS> 2,072,114
<SHORT-TERM> 398,363
<LIABILITIES-OTHER> 43,156
<LONG-TERM> 0
<COMMON> 460,698
0
0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 2,974,331
<INTEREST-LOAN> 40,845
<INTEREST-INVEST> 14,992
<INTEREST-OTHER> 254
<INTEREST-TOTAL> 56,091
<INTEREST-DEPOSIT> 14,346
<INTEREST-EXPENSE> 19,587
<INTEREST-INCOME-NET> 36,504
<LOAN-LOSSES> 1,200
<SECURITIES-GAINS> (1,515)
<EXPENSE-OTHER> 28,639
<INCOME-PRETAX> 22,586
<INCOME-PRE-EXTRAORDINARY> 22,586
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,452
<EPS-BASIC> 0.48
<EPS-DILUTED> 0.48
<YIELD-ACTUAL> 0
<LOANS-NON> 8,493
<LOANS-PAST> 1,468
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 59,405
<ALLOWANCE-OPEN> 27,565
<CHARGE-OFFS> 3,094
<RECOVERIES> 1,043
<ALLOWANCE-CLOSE> 26,714
<ALLOWANCE-DOMESTIC> 10,258
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 16,456
</TABLE>
