UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
[Fee Required]
For the Fiscal year ended December 31, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
[Fee Required]
For the transition period from____________ to_________________
Commission file number 0-12047
UNITED OKLAHOMA BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 73-0969432
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 S.E. 29th Street
Del City, Oklahoma 73115
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (405) 677-8711
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
stock,$1 par value
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by section 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.
[X] Yes No [ ]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
As of March 4,1997, based on the reported average bid
and asked prices, the aggregate market value of the common
stock held by non-affiliates of the registrant was
approximately $759,000.
As of March 4, 1997, 2,532,237 shares of the registrant's
common stock, par value $1.00 per share, were outstanding.
NOTE: See pages 48-51 for Form 10-K Cross Reference Index
<PAGE> 1
BUSINESS
United Oklahoma Bankshares, Inc. (the "Company") is a one-bank
holding company registered under the Bank Holding Company Act
of 1956, as amended. The principal business of the Company is
the ownership and supervision of United Bank ("UB"), Del City,
Oklahoma. As of December 31, 1996, the Company and its
subsidiaries had 50 full time equivalent employees. UB is a
state chartered banking association whose deposits are insured
pursuant to the Federal Deposit Insurance Act. UB, which
operates primarily in Oklahoma, competes with other financial
institutions in its trade area in providing a full range of
traditional banking and related financial services to the
commercial, consumer, energy, real estate and financial
sectors. UB operates two wholly owned subsidiaries, United Del
City Tower, Inc. ("UDCT") and 4600 Corporation.
UDCT owns and manages United Del City Tower of which the first
and part of the second floors are occupied by UB. The facility
is approximately 98% occupied at year end. 4600 Corporation
was formed to sell assets on which UB foreclosed.
In 1991, the Company borrowed the sum of $1,400,000 from John
E. Kirkpatrick of Oklahoma City, Oklahoma, a preferred
stockholder of the Company at that time. The note was collateralized by
100% of the stock of UB. The note was paid in full as of
December 31, 1994.
PROPERTIES
The Company's corporate headquarters are located in United Del
City Tower at 4600 S.E. 29th Street, Del City, Oklahoma. This
facility is located on approximately 8 acres and comprises
approximately 77,000 square feet of usable space. The Tower
houses the main banking functions and the Company's executive
offices. UB occupies 25% of the building and approximately 73%
is leased to various tenants. In 1993, UB completed
construction of a new drive-in facility attached to the United
Del City Tower. UB also sold its previous drive-in facility
during 1993.
LEGAL PROCEEDINGS
The Company and its subsidiaries are not defendants in any
material legal proceedings.
COMMON STOCK
On January 30, 1995, certain shareholders of the Company entered into a Stock
Purchase Agreement with Ameribank Corporation ("Ameribank"). The shareholders
collectively agreed to sell all their common stock in the Company and their
9% cumulative, non-voting preferred stock in the Company. The shareholders
collectively owned approximately 27.7% of all the issued and outstanding
shares of common stock and 63.9% of the issued and outstanding preferred stock
of the Company. The Stock Purchase Agreement was closed and the shares
transferred on May 16, 1995. In July, Ameribank made an offer to purchase
stock and acquired an additional 5.7% of the preferred stock.
On November 3, 1995, Ameribank made a tender offer to the common stock
shareholders of the Company. After the purchase of shares through the tender
offer, Ameribank owned an additional 23.2% of the common stock of the Company.
Ameribank has continued to purchase common stock and preferred stock in
private transactions and presently owns a total of 1,559,498 shares of common
stock and 129,016 of preferred stock representing approximately 61.58% of the
outstanding shares of common stock and 88.85% of the outstanding preferred
stock, respectively.
There is a proposed merger between the Company and Ameribank subject to
approval by regulatory authorities. The Merger Agreement provides that,
subject to the approval of the Merger Agreement by the Shareholders of the
Company and satisfaction of other conditions, the Company will be merged into
Ameribank, with Ameribank being the surviving corporation.
DISCLAIMER
This annual report has not been reviewed, or confirmed for
accuracy or relevance, by the Federal Deposit Insurance Corporation.
<PAGE> 2
SELECTED FINANCIAL DATA
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
The Selected Financial Data which follows should be read in conjunction with the
consolidated financial statements (including the notes thereto) of the Company
and its subsidiaries appearing elsewhere herein.
<TABLE>
<S> <C> <C> <C> <C> <C>
Years ended December 31,
1996 1995 1994 1993 1992
(In thousands except per share amounts)
Summary of Income:
Interest income............ $6,454 6,015 5,160 5,235 5,460
Interest expense........... (2,428) (2,569) (1,801) (1,847) (2,299)
Provision for loan losses.. (511) (279) (90) (236) (128)
Non-interest income........ 1,111 1,016 1,030 837 795
Non-interest expense....... (3,300) (3,155) (3,206) (3,068) (2,735)
Income before income
taxes and cumulative effect
of change in accounting
principle.................. 1,326 1,028 1,093 921 1,093
Income tax expense......... (391) (253) (264) (266) (445)
Cumulative effect of change
in accounting principle.... - - - 116 -
Net income ................ $ 935 775 829 771 648
Per share data:
Income before cumulative
effect of change in accounting
principle.................. $ 0.21 0.15 0.17 0.10 0.10
Cumulative effect of change
in accounting principle.... - - 0.04 -
Net income ................ $ 0.21 0.15 0.17 0.14 0.10
Average outstanding common
shares..................... 2,532 2,532 2,616 2,644 2,644
Period end balances:
Cash and due from banks.... $ 3,070 2,584 2,440 1,907 3,270
Federal funds sold......... - 6,300 - 460 1,560
Investment securities...... 25,720 28,800 30,588 29,794 33,352
Loans, net of unearned discount
and allowance for loan losses 50,273 43,604 41,401 36,509 33,804
Total assets............... 84,051 86,071 79,720 74,564 78,556
Deposits................... 73,120 76,270 69,647 66,094 70,302
Long-term debt............. - - - 450 900
Stockholders' equity....... 8,823 7,823 6,949 6,289 5,518
</TABLE>
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis is designed to provide a
better understanding of the significant factors related to the
Company's results of operations, financial condition, liquidity
and capital resources (including its subsidiary bank, UB, and its
non-bank subsidiaries, UDCT and 4600 Corporation). Such discussion
and analysis should be read in conjunction with the Consolidated
Financial Statements (including the notes thereto) and Selected
Financial Data appearing elsewhere in this annual report.
RESULTS OF OPERATIONS
General. Net income totaled $.9 million in 1996, compared to $.8
million in 1995 and in 1994. Earnings per share were $.21 in
1996, compared to $.15 per share in 1995 and $.17 per share in
1994. Management is unaware of any trends, events or
uncertainties that will have or that are reasonably likely
to have a material effect on the operations.
Net Interest Income. Net interest income, the difference between
gross interest and fees on earning assets (primarily loans and
investments) and interest paid on deposits and borrowed funds
necessary to support such assets, is a major component of a
financial institution's earnings.
Net interest income aggregated $4,026,000 and $3,446,000 in 1996
and 1995, respectively, an increase of $580,000. Net interest
income increased $87,000 between 1995 and 1994.
From 1995 to 1996, the volume of average earning assets increased
$3.5 million, while average interest bearing liabilities decreased
$.4 million. The yield on average earning assets increased 20
basis points from 1995 to 1996, while the rate paid on average
interest bearing liabilities decreased 21 basis points during the
same time period resulting in a increase in the spread between the
yield on earning assets and rate paid on interest bearing
liabilities of 41 basis points. As a result of the increase in
the rate earned on interest earning assets and a
decrease in the rate paid on interest bearing liabilities, net
interest margin increased 53 basis points from 4.59% in 1995 to
5.12% in 1996.
From 1994 to 1995, the volume of average earning assets increased
$4.4 million, while average interest bearing liabilities increased
$2.2 million. The yield on average earning assets decreased 71
basis points from 1994 to 1995, while the rate paid on average
interest bearing liabilities increased 119 basis points during the
same time period resulting in a decrease in the spread between the
yield on earning assets and rate paid on interest bearing
liabilities of 48 basis points. As a result of the increase in the
rate earned on interest bearing assets and the increase in the
<PAGE> 4
rate paid on interest bearing liabilities, net interest margin
decreased 16 basis points from 4.75% in 1994 to 4.59% in 1995.
As management deems necessary and to the extent it has the
flexibility, it will alter the volume and mix of earning assets and
supporting liabilities so as to obtain optimal interest margins
while maintaining sufficient liquid resources.
The following table illustrates volume and yield/rate variances on an actual
basis (versus a taxable equivalent basis) for the years indicated. The change
in interest due to both rate and volume has been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amount of
the change in each.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, Year ended December 31,
1996 Compared to 1995 1995 Compared to 1994
Increase/Decrease Increase/Decrease
Due to Change in: Due to Change in:
Yield/ Yield/
Volume Rate Net Volume Rate Net
Earning assets:
Investment securities..$ (148) (23) (171) (87) 96 9
Federal funds sold..... (5) (16) (21) 72 44 116
Loans net of unearned
discounts............ 607 24 631 398 332 730
Total interest income 454 (15) 439 383 472 855
Interest bearing liabilities:
Interest bearing deposits (13) (124) (137) 75 698 773
Short-term borrowings.. (6) 2 (4) 1 - 1
Long-term debt......... - - - (3) (3) (6)
Total interest expense (19) (122) (141) 73 695 768
Net interest income......$ 473 107 580 310 (223) 87
</TABLE>
<PAGE> 5
Risk Elements of Earning Assets. Risk elements of the Company's
earning assets are evidenced, in part, by non-performing loans
consisting of loans contractually past due 90 days or more, loans
placed on non-accrual status and other real estate which has been
acquired in full or partial settlement of defaulted loans. Non-
performing assets are carried by the Company at estimated net
realizable value and known losses of principal have been charged
off.
At December 31, 1996, non-performing loans totaled $87,000. Non-
performing loans as a percentage of all loans outstanding were
.17% at December 31, 1996. The majority of non-performing loans
are secured. The following table sets forth such loans and other
real estate at the dates indicated:
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(Dollars in thousands)
Non-accrual loans.....................$ 87 184 178
Other real estate..................... 47 63 180
Total non-performing asset..........$ 134 247 358
Non-performing loans to total loans... .17% .42% .43%
</TABLE>
Under the Company's lending policies, all commercial loans are
reviewed and graded according to their perceived credit risk
(borrower's financial strength; value and type of collateral;
borrower's performance, etc.). Based on this
grading system, credits requiring special attention are placed on
special monitoring for the attention of management and the Board
of Directors. Management, through this special monitoring system,
in conjunction with past loan loss experience, current and
perceived future economic conditions and other factors, determines
the level at which the allowance for loan losses should be
maintained to adequately cover the loan portfolio risk.
Non-accrual status loans are identified through the special
monitoring system and periodic review of past due loans by
officers and management. When doubt exists as to the ultimate
collectibility of interest or principal, such loans are placed on
non-accrual status. When a loan is placed on non-accrual status,
interest previously accrued but uncollected on such loans is
reversed and charged against current income. Subsequent payments
collected on such loans are credited to loan principal if, in the
opinion of management, full collectibility of principal is
doubtful; otherwise, the payment is credited to income and
principal according to the loan terms.
Loans on which interest had ceased to be accrued approximated
$87,000, $184,000 and $178,000 at December 31, 1996, 1995 and
1994, respectively. No interest was recognized on these loans in 1996.
Approximately $6,000 was recognized on these loans in 1995 and in 1994.
<PAGE> 6
Had the accrual status of these loans been normal, approximately
$19,000, $21,000 and $47,000 of additional interest would have
been earned in 1996, 1995 and 1994, respectively. None of these
loans are restructured troubled debt.
Internally classified assets of UB, which approximate the same as
classifications by regulatory authorities and includes other real
estate, increased from $310,000 at December 31, 1995 to $1,015,000
at December 31, 1996, an increase of $705,000.
At December 31, 1996, the Company had approximately $849,000 of
loans for which payments were contractually past due less than 90
days, and the borrowers were experiencing financial difficulties.
These loans are included in the special monitoring loans which are
subject to management's attention and review.
Allowance and Provision for Loan Losses. The allowance for loan
losses totaled $908,000, $538,000 and $559,000 at December 31,
1996, 1995 and 1994, respectively. The provision charged to
expense amounted to $511,000 in 1996 compared to $279,000 and
$90,000 in 1995 and 1994, respectively. Net losses (recoveries)
on loans were approximately $141,000 in 1996, compared to
$300,000 in 1995 and $(32,000) in 1994. The amount of provision
charged to expense is based on the current level of net loan
losses, perceived economic conditions, changes in the size and
character of the loan portfolio, and management's assessment of
the loan portfolio's inherent risk in relation to the allowance
for loan losses (see Note 5 to Consolidated Financial Statements).
The allowance for loan losses as a percentage of total loans was
1.77%, 1.22% and 1.33% at December 31, 1996, 1995 and 1994,
respectively.
Non-interest Income.
<TABLE> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(In thousands)
Service charges on deposits............$ 815 790 748
Other service charges and fees, net.... 296 226 178
Securities gains....................... - - 104
Total................................$1,111 1,016 1,030
</TABLE>
Non-interest Expense. Non-interest expense amounted to $3.3
million in 1996, and 3.2 million in 1995 and in 1994.
Salaries and employee benefits continue to represent a large portion of
non-interest expense.
Net costs and write downs associated with other real estate owned
approximated $2,000, $(15,000) and $92,000 in 1996, 1995 and
1994, respectively, and represent amounts provided for decreases
in the market value of the properties, net gains and losses on
sales of the properties, and net expenses incurred for the
maintenance of the properties.
<PAGE> 7
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(In thousands)
Salaries and employee benefits........$ 2,065 1,911 1,739
Occupancy expense, net................ 256 250 271
Other real estate owned, net.......... 2 (15) 92
Other................................. 977 1,009 1,104
Total...............................$ 3,300 3,155 3,206
</TABLE>
LIQUIDITY
Liquidity is defined as a company's ability to meet maturing
obligations and existing commitments and withstand fluctuations in
funding needs, while also maintaining sufficient levels of highly
liquid assets. Liquidity ultimately depends on profitability,
asset quality and mix, asset and liability maturities and
repriceability, and borrowing ability.
The asset side of the balance sheet provides liquidity through
regular amortization and maturities of loans, maturities of
investment securities and money market instruments, maturities of
deposits in other banks, and other assets available for sale.
Deposit growth, diversification of liability products and access
to other funding sources provide liquidity from the liability
side. Management is unaware of any trends, events or
uncertainties that will have or that are reasonably likely to have
a material effect on the Company's liquidity.
INDEBTEDNESS
In 1991, the Company borrowed the sum of $1,400,000 from John E.
Kirkpatrick of Oklahoma City, Oklahoma, a preferred stockholder of
the Company at that time. The note was collateralized by 100% of the stock
of UB. The note was paid in full as of December 31, 1994.
PREFERRED STOCK
The Company has $4.4 million of preferred stock outstanding with
9% cumulative dividends in arrears since October 1, 1985.
Cumulative unpaid dividends in arrears at December 31, 1996
approximated $4,410,450.
RATE SENSITIVITY
Both liquidity and net interest margin are significantly affected
by the sensitivity that assets and liabilities have to changes in
market interest rates, levels of earning assets and funding mixes,
the direction of interest rate movements, the velocity at which
changes occur and the absolute level of interest rates. Interest
rate risk can arise when an investment's interest rate level
changes, or its cash flows occur, in time periods that are
different from those of supporting funding sources.
<PAGE> 8
The following table depicts the Company's rate sensitivity position,
based on next repricing date, at December 31, 1996.
<TABLE>
<S> <C> <C> <C> <C> <C>
Sensitivity Period
0-30 31-90 91-180 181-365 Over
Days Days Days Days 1 Year
(In thousands)
Rate sensitive assets:
Investment securities(1).... 7,319 40 395 4,196 13,759
Loans....................... 21,033 2,929 1,074 2,970 23,086
Total rate sensitive assets 28,352 2,969 1,469 7,166 36,845
Rate sensitive liabilities:
Savings and interest bearing
deposits................. 14,923 - - - 14,924
Time deposits............... 7,066 6,771 6,121 5,443 2,258
Total rate sensitive
liabilities............ 21,989 6,771 6,121 5,443 17,182
Period sensitivity gap........$ 6,363 (3,802) (4,652) 1,723 19,663
Cumulative sensitivity gap....$ 6,363 2,561 (2,091) (368) 19,295
(1) The amortized cost is used for investment securities.
</TABLE>
The Company includes only rate sensitive assets and liabilities in
its sensitivity analysis.
CAPITAL RESOURCES
Capital provides a base for expansion of the asset portion of the
balance sheet, which in turn provides the opportunity for
increased profitability. Capital adequacy depends on such factors
as quality and diversification of assets, current and historical
earnings and liquidity. Primary capital of the Company consists of
funds which are permanently committed to the Company, including:
common stock, preferred stock, additional paid-in capital,
retained earnings, and allowance for loan losses. For regulatory
purposes primary capital is reduced by amounts representing
intangible assets. Management is unaware of any trends, events or
uncertainties that will have or that are reasonably likely to have
a material effect on the Company's capital resources. Following
are the Company's and UB's primary and equity capital to assets
ratios for December 31, 1996 and 1995, respectively:
1996 1995
Company's primary capital to assets ratio 11.28% 10.13%
Company's equity capital to assets ratio 10.34 9.54
UB's primary capital to assets ratio 11.28% 10.07%
UB's equity capital to assets ratio 10.34 9.48
<PAGE> 9
During 1989, regulatory agencies approved regulations to implement
a risk-based capital framework that makes capital requirements
more sensitive to the risk profiles of individual banking
companies. These regulations define capital as either core
capital (Tier 1) or supplementary capital (Tier 2). Core capital
consists primarily of common stockholders' equity, while
supplementary capital is comprised of preferred stock, certain
debt instruments, and a portion of the allowance for loan losses.
The required core capital is 4.00% and total risk-based capital is
8.00%. Because the Company has assets of less than $150 million,
its capital requirements are computed on a bank-only basis. UB's
core and total risk-based capital exceed regulatory guidelines at
December 31, 1996 and 1995.
1996 1995
Tier 1 capital (core) 14.59% 14.29%
Tier 2 capital (total risk-based) 16.09 15.28
EFFECT OF INFLATION
The financial statements and related data presented in this report
have been prepared in accordance with generally accepted
accounting principles which require the measurement of financial
position and operating results in terms of historical dollars
without considering changes in the relative purchasing power of
money over time. Changing prices, particularly during periods of
high inflation rates, can have a significant impact on industries
and business enterprises taken as a whole. However, the impact of
inflation on financial institutions differs significantly from
that of industrial or commercial companies. This is due to the
fact that a major portion of a bank's balance sheet is comprised
of monetary assets and liabilities versus a basically non-monetary
balance sheet associated with industrial concerns. Even though
inflation doesn't generally have a material impact on banks it can
indirectly affect the interest rates and the underlying value of
assets collateralizing certain earning assets, as well as non-
interest income and expense categories. How well a bank is
positioned to respond to changing interest rates and collateral
values can only be assessed by an analysis of its asset and
liability structure. Therefore, attention is directed to the rate
sensitivity schedule, the maturity distribution of loans and
securities, the loan concentrations data and the rate and volume
variances analysis found elsewhere in this report.
<PAGE> 10
REGULATORY MATTERS
The Company was operating under a written agreement with the
Federal Reserve Bank until March, 1994, at which time the
agreement was terminated and the Company was released from the
restrictions under the agreement.
ACCOUNTING STANDARDS NOT YET ADOPTED
Statement of Financial Accounting Standards (SFAS) No. 125, "Accounting
for the Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities," was issued on June 28, 1996, and is
effective for transfers and servicing of financial assets and extinguishment
of liabilities occurring after December 31, 1996. This statement provides
accounting and reporting standards for transfers and servicing of financial
assts and extinguishments of liabilities based on consistent application of a
financial-components approach that focuses on control. It distinguishes
transfers of financial assets that are sales from transfers that are secured
borrowings. This statement requires that a liability not be recognized if and
only if either the debtor pays the creditor and is relieved of its obligation
for the liability or the debtor is legally released from being the primary
obligor under the liability either judicially or by the creditor. This
statement also requires that after the securitization of a mortgage loan held
for sale, the mortgage-backed security shall be classified as a trading
security. The impact of adopting this statement is reported prospectively and
is not expected to have a material impact on the consolidated financial
statements.
In December 1996, SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125" was issued. The statement delays for
one year the effective date for paragraph 15 of SFAS No. 125 for all transfers
of financial assets and for paragraphs 9 through 12 and 237 (b) for repurchase
agreements, dollar-rolls, securities lending, and similar transactions.
SFAS No. 128, "Earnings per share" was issued March 3, 1997. The statement
simplifies the current standards in the United States for computing earnings
per share (EPS) and makes them compatible with international standards. It
applies to entities with publicly held common stock or potential common stock
and is effective for financial statements issued for periods ending after
December 15, 1997.
SFAS No. 129, "Disclosures of Information about Capital Structure" was issued
March 3, 1997. The statement consolidates existing disclosure requirements for
ease of retrieval. The new statement contains no change in disclosure
requirements for companies that were subject to the previously existing
requirements. It applies to all entities and is effective for financial
statements issued for periods ending after December 15, 1997.
<PAGE> 11
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(In thousands except per share amounts)
Interest income:
Interest and fees on loans..............$ 4,732 4,101 3,371
Interest on federal funds sold.......... 155 176 60
Interest on investment securities
Taxable............................... 1,148 1,309 1,331
Nontaxable............................ 419 429 398
Total interest income............... 6,454 6,015 5,160
Interest expense:
Interest on deposits (Note 7)........... 2,427 2,564 1,791
Interest on short-term borrowings....... 1 5 4
Interest on long-term debt.............. - - 6
Total interest expense.............. 2,428 2,569 1,801
Net interest income................. 4,026 3,446 3,359
Provision for loan losses (Note 5)...... 511 279 90
Net interest income after provision
for loan losses................... 3,515 3,167 3,269
Non-interest income:
Service charges on deposits............. 815 790 748
Other service charges and fees, net..... 296 226 178
Securities gains........................ - - 104
Total non-interest income............. 1,111 1,016 1,030
Non-interest expense:
Salaries and employee benefits.......... 2,065 1,911 1,739
Occupancy expense, net.................. 256 250 271
Other real estate owned, net............ 2 (15) 92
Other (Note 8).......................... 977 1,009 1,104
Total non-interest expense............ 3,300 3,155 3,206
Income before income taxes ............. 1,326 1,028 1,093
Income tax expense (Note 9) .............. 391 253 264
Net income..........................$ 935 775 829
Earnings per share........................$ 0.21 0.15 0.17
Average outstanding common shares......... 2,532 2,532 2,616
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 12
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<S> <C> <C>
December 31,
1996 1995
(In thousands)
ASSETS
Cash and due from banks...............................$ 3,070 2,584
Federal funds sold.................................... - 6,300
Investment securities (Note 3)........................ 25,720 28,800
Loans (Notes 4 & 11).................................. 51,183 44,144
Unearned discounts.................................. (2) (2)
Allowance for loan losses (Note 5).................. (908) (538)
Loans, net........................................ 50,273 43,604
Property and equipment, net (Note 6).................. 4,077 3,880
Other real estate owned............................... 47 63
Accrued interest receivable........................... 594 589
Accounts receivable................................... 80 93
Other assets.......................................... 190 158
$ 84,051 86,071
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest bearing (Note 7)...........................$ 57,506 60,975
Non-interest bearing................................ 15,614 15,295
Total deposits................................... 73,120 76,270
Deferred income taxes (Note 9 )....................... 1,218 1,209
Other liabilities..................................... 890 769
Total liabilities................................ 75,228 78,248
Commitments and contingencies (Note 12 & 14).......... - -
Stockholders' equity (Note 14):
Preferred stock, 9% cumulative, nonvoting $30 par
value, redeemable at the Company's option at
par plus cumulative unpaid dividends. Cumulative
unpaid preferred dividends amount to $4,410,450
or $30.38 per share at December 31, 1996.
Authorized 150,000 shares; issued and outstanding
145,200 shares in 1996 and 1995. Liquidation
preference of $8,766,450 and $8,374,410,
respectively..................................... 4,356 4,356
Class B preferred stock, $1 par value. Authorized
500,000 shares; non issued or outstanding........ - -
Common stock, $1 par value. Authorized 10,000,000
shares; issued 2,805,385 shares in 1996 and 1995 2,805 2,805
Additional paid-in capital......................... 7,358 7,358
Accumulated deficit................................ (4,605) (5,540)
Net unrealized holding gain (loss) on investment securities
available-for-sale, net of deferred taxes........ 6 (59)
9,920 8,920
Less cost of common stock held in treasury (273,148
shares in 1996 and 1995)......................... (1,097) (1,097)
Net stockholders' equity....................... 8,823 7,823
$ 84,051 86,071
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 13
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(In thousands)
Preferred stock:
Balance at beginning and end of year........$ 4,356 4,356 4,356
Common stock:
Balance at beginning and end of year........ 2,805 2,805 2,805
Additional paid-in capital:
Balance at beginning and end of year........ 7,358 7,358 7,358
Accumulated deficit:
Balance at beginning of year................ (5,540) (6,315) (7,144)
Net income.................................. 935 775 829
Balance at end of year...................... (4,605) (5,540) (6,315)
Net unrealized holding gain (loss) on investment
securities available-for-sale: (Note 3)
Balance at beginning of year................ (59) (158) -
Implementation of change in accounting for
for investment securities, net of
deferred taxes............................ - - 170
Change in net unrealized holding gain (loss)
on investment securities available-for-sale,
net of deferred taxes..................... 65 99 (328)
Balance at end of year...................... 6 (59) (158)
Treasury stock:
Balance at beginning of year................ (1,097) (1,097) (1,086)
Purchase stock.............................. - - (11)
Balance at end of year...................... (1,097) (1,097) (1,097)
Net stockholders' equity................$ 8,823 7,823 6,949
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 14
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(In thousands)
Cash flows from operating activities:
Net income......................................$ 935 775 829
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation.................................. 434 416 378
Provision for loan losses..................... 511 279 90
Provision for market decline-other real estate
owned....................................... 2 9 85
Amortization of intangibles included in other
assets...................................... - 147 147
Amortization of premium, accretion of discounts,
net......................................... 85 83 113
Gain on sale of investment securities......... - - (104)
(Decrease) increase in interest payable....... (126) 310 29
(Increase) decrease in interest receivable.... (5) 23 (75)
(Increase) decrease in other real estate owned, accounts
receivable and other assets................. (5) 158 387
Decrease in deferred income taxes............. (35) (55) (15)
Increase (decrease) in other liabilities...... 247 34 (17)
Total adjustments............................ 1,108 1,404 1,018
Net cash provided by operating activities......... 2,043 2,179 1,847
Cash flows from investing activities:
Proceeds from sales of maturities of investment
securities.................................... 2,518 1,775 3,239
Proceeds from principal payments on mortgage-
backed securities............................. 2,170 1,789 3,192
Purchase of investment securities............... (1,584) (1,695) (7,496)
Net increase in loans........................... (7,180) (2,482) (4,982)
Capital expenditures............................ (631) (245) (319)
Net cash used in investing activities............. (4,707) (858) (6,366)
Cash flows from financing activities:
Net (decrease) increase in interest bearing and
non-interest bearing demand deposits, savings,
and certificates of deposit................... (3,150) 6,623 3,553
(Decrease) increase in securities sold under
repurchase agreement.......................... - (1,500) 1,500
Repayment of long-term debt..................... - - (450)
Purchase of treasury stock...................... - - (11)
Net cash (used in) provided by financing activities(3,150) 5,123 4,592
Net (decrease) increase in cash and cash
equivalents..................................... (5,814) 6,444 73
Cash and cash equivalents at beginning of year.... 8,884 2,440 2,367
Cash and cash equivalents at end of year..........$ 3,070 8,884 2,440
Supplemental disclosure of noncash investing activities:
Change in unrealized holding (loss)gain on investment
securities available-for-sale, net of deferred
taxes of $44,000 in 1996 and $65,000 in 1995 and
$(104,000) in 1994........................... $ (65) (99) 158
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 15
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
1. Summary of Significant Accounting Policies
United Oklahoma Bankshares, Inc. (the "Company") and its
subsidiaries provide a full range of banking services to
individual and corporate customers principally in eastern
Oklahoma county. The Company is subject to competition
from other financial service companies and financial
institutions. The Company is subject to regulations of
the Federal Reserve Bank. United Bank (UB) is subject to
regulations of the Federal Deposit Insurance Corporation
and the Oklahoma State Banking Department. The Company
and UB undergo periodic examinations by those regulatory
authorities.
Principles of Consolidation and Basis of Presentation
The consolidated financial statements have been prepared
in conformity with generally accepted accounting
principles. In preparing the consolidated financial
statements, management is required to make estimates and
assumptions that affect the reported amounts of assets
and liabilities and the reported amounts of revenue and
expense during the reporting period. Actual results
could differ from those estimates. Those estimates and
assumptions relate principally to the determination of
the allowance for loan losses and the valuation of assets
acquired in foreclosure. The accounting policies for
these items and other significant accounting policies are
presented below.
The consolidated financial statements include the
accounts of the Company and its subsidiaries, all wholly
owned, after elimination of all significant intercompany
accounts and transactions.
Cash and Short Term Investments
UB is required to maintain average reserve balances with
the Federal Reserve Bank. The average amount of those
reserve balances for the year ended December 31, l996,
was approximately $618,000.
In making short-term investment decisions, the Company
considers its board-approved policies, liquidity needs,
potential rate of return, and credit risk. For purposes
of evaluating credit risk, the stability of the financial
institutions and other entities conducting business with
the Company is periodically reviewed.
The Company had concentrations of credit risk with one
financial institution in the form of a correspondent bank
account and federal funds sold in the amount of
$1,399,000 and $1,912,000 at December 31, 1996 and 1995,
<PAGE> 16
respectively. If the financial institution failed to
completely perform under the terms of the financial
instruments, the exposure for credit loss would be the
amount of the financial instruments less the amount
covered by the Federal Deposit Insurance Corporation
(FDIC) of $100,000.
For the purposes of the Consolidated Statements of Cash Flows, the
Company considers overnight Federal funds sold to be cash
equivalents.
Cash paid for interest was approximately $2,554,000,
$2,259,000, and $1,772,000 in 1996, 1995, and 1994,
respectively.
Investment Securities
The Company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities," at January 1, 1994. Under SFAS No. 115, the
Company has classified its debt and marketable equity
securities in one of three categories: trading,
available-for -sale, or held-to-maturity. Trading
securities are bought and held principally for the
purpose of selling them in the near term. No investment
securities within the portfolio are considered trading.
Held-to-maturity securities are those securities for
which the Company has the ability and intent to hold
until maturity. All other securities not included in
held-to-maturity are classified as available-for-sale.
Available-for-sale securities are recorded at fair value.
Held-to-maturity securities are recorded at cost,
adjusted for the amortization or accretion of premiums or
discounts. Unrealized holding gains and losses, net of
related tax effect, on available-for-sale securities are
not included in earnings and are reported as a separate
component of stockholders' equity until realized.
A decline in the market value of any available-for-sale
or held-to-maturity security below cost that is deemed
other than temporary results in a charge to earnings and
the establishment of a new cost basis for the security.
Premiums and discounts are amortized or accreted over the
life of the related security as an adjustment to yield
using a method that approximates the interest method.
Dividend and interest income are recognized when earned.
Realized gains and losses for securities classified as
available-for-sale and held-to-maturity are included in
earnings and are derived using the specific
identification method for determining the cost of
securities sold.
Loans and Other Real Estate Owned
Loans are generally carried at amounts advanced less
payments received. Interest income is recorded on
discounted loans by use of a method which produces a
reasonable approximation of constant yield on the
outstanding principal. Interest income is accrued as
earned on non-discounted loans except for loans
designated as non-accrual.
<PAGE> 17
Loans on which the accrual of interest has been
discontinued are designated as non-accrual loans.
Accrual of interest on loans is discontinued either when
reasonable doubt exists as to the full, timely collection
of interest or principal, or when a loan becomes
contractually past due by ninety days or more with
respect to principal or interest. When a loan is placed
on non-accrual status, all interest previously accrued
but not collected is reversed against current period
income. Income on such loans is then recognized only to
the extent that cash is received and where the future
collection of principal is probable. Accruals are
resumed on loans only when they are brought fully current
with respect to interest and principal and when, in the
judgment of management, the loan is estimated to be fully
collectible as to both principal and interest.
The allowance for loan losses is maintained at levels
which management considers necessary to reflect the
credit risks of the loan portfolio. For financial
reporting purposes, the provision to be charged as an
operating expense is based on an assessment of specific
problem loans, local economic conditions, past due loan
loss experience, and such other factors which in
management's judgment deserve current recognition
necessary to maintain the allowance at an adequate level.
Effective January 1, 1995, the Company adopted the
provisions of Statement of Financial Accounting Standards
No. 114, "Accounting by Creditors for Impairment of a
Loan," and Statement of Financial Accounting Standards
No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures." The Company's
nonperforming loan policies which address non-accrual
loans, meet the definition set forth for "impaired loans"
in SFAS No. 114. The Company had no significant impaired
loans outstanding in 1995 under the guidelines of SFAS
No. 114.
Under these standards, the 1995 allowance for loan losses
related to loans that have been identified as impaired is
based on discounted cash flows using the loan's effective
interest rate, or the fair value of the collateral for
collateral-dependent loans, or observable market price of
the impaired loan. Loans are considered impaired when it
is probable that the Company will not collect all amounts
due in accordance with the contractual terms of the loan.
The Company recognizes interest income on impaired loans
using the same method as that used for non-accrual loans.
Real estate and other assets acquired through foreclosure
are recorded at fair value as of that date. Fair value
is based on independent appraisals and other relevant
factors. This value becomes the asset's new "cost."
After foreclosure, these assets are carried at the lower
of "cost" or fair value minus estimated costs to sell.
Any subsequent write-downs are charged against non-
interest expense. Operating expenses of such properties,
<PAGE> 18
net of related income, and gains and losses on their
disposition are included in non-interest income and
expense.
While management uses all available information to
recognize losses on loans and other real estate owned,
future losses may become necessary based on changes in
economic conditions, particularly in the local economies
in which the Company operates. In addition, various
regulatory agencies, as an integral part of their
examination process, periodically review the Company's
allowance for loan losses and carrying values of assets
acquired in foreclosure. Such agencies may require the
Company to recognize additional losses based on their
judgments about information available to them at the time
of their examination.
Property and Equipment
Property and equipment are stated at cost less
accumulated depreciation. Depreciation is charged to
operating expense and is computed by use of the straight-
line method over the estimated useful lives of the
depreciable assets. The estimated useful lives are 2 to
40 years for buildings and improvements, and 3 to 20
years for furniture, fixtures and equipment. Maintenance
and repairs are charged directly to expense as incurred
while improvements are capitalized. When assets are
retired or otherwise disposed of, the cost and applicable
accumulated depreciation are removed from the respective
accounts and the resulting gain or loss is reflected in
operations.
Income Taxes
The Company files a consolidated income tax return with
its subsidiaries. The Company's subsidiaries are charged
for income taxes attributable to their taxable income and
reimbursed for any tax benefit resulting from their tax
losses and tax credits utilized by the Company to reduce
consolidated taxable income.
Effective January 1, 1993, the Company adopted Statement
of Financial Accounting Standards No. 109, "Accounting
for Income Taxes," and reported the cumulative effect of
that change in the method of accounting for income taxes
in the 1993 consolidated statement of operations.
SFAS No. 109 requires a change from the deferred method
of accounting for income taxes to the asset and liability
method. Under the asset and liability method, deferred
tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the
financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and
operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in
<PAGE> 19
which those temporary differences are expected to be
recovered or settled. Under SFAS No. 109, the effect on
8deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes
the enactment date.
Computation of Earnings Per Share
Earnings per share are based on the weighted average
number of shares of common stock outstanding during the
year after considering cumulative preferred stock
dividends. Cumulative preferred stock dividends accrue
annually at approximately $392,000.
2. Fair Value of Financial Instruments
Fair value estimates, methods, and assumptions are set forth below
for the consolidated Company's financial instruments.
<TABLE>
<S> <C> <C> <C> <C>
December 31,
(In thousands)
1996 1995
Carrying Estimated Carrying Estimated
value fair value value fair value
Financial Assets
Cash and due from banks.........$ 3,070 3,070 2,584 2,584
Federal funds sold.............. - - 6,300 6,300
Investment securities........... 25,720 25,743 28,800 28,830
Loans........................... 50,273 49,656 43,604 43,520
Accrued interest receivable..... 594 594 589 589
Financial Liabilities
Non-interest-bearing deposits... 15,614 15,614 15,295 15,295
Interest-bearing deposits....... 57,506 57,415 60,975 61,107
Accrued interest payable........ 514 514 640 640
Off-balance Sheet financial instruments
Commitments to extend credit.... - - - -
Standby letters of credit....... - - - -
</TABLE>
Cash and Due From Banks, Federal Funds Sold, Accrued Interest Receivable
and Accrued Interest Payable
The carrying amounts of these financial instruments
approximate fair value due to the short maturity of these
financial instruments.
Investment Securities
The fair value of investment securities, except certain
obligations of states and municipalities, is estimated
based on bid prices published in financial newspapers or
bid quotations received from securities dealers. The
fair value of certain obligations of state and
municipalities are not readily available through market
sources other than dealer quotations, so fair value
estimates are based on quoted market prices of similar
instruments, adjusted for differences between the quoted
instruments and the instruments being valued.
<PAGE> 20
Loans
Fair values are estimated for portfolios of loans with
similar financial characteristics. Loans are segregated
by type such as commercial, real estate, installment and
credit card loans. Each loan category is further
segmented into fixed and adjustable rate interest terms.
The fair value of loans, except credit card loans, is
calculated by discounting scheduled cash flows through
the estimated maturity using rates of notes of similar
terms and type. The fair value of credit card loans are
assumed to be at carrying value.
Liabilities
Under SFAS No. 107, the fair value of deposits with no
stated maturity, such as demand deposits, savings, and
money market accounts is equal to the amount payable on
demand as of December 31, 1996. The fair value of
certificates of deposit is based on the discounted value
of contractual cash flows. The discount rate is
estimated using the rates currently offered of similar
remaining maturities.
The fair value estimates above do not include the benefit
that results from the low-cost funding provided by the
deposit liabilities compared to the cost of borrowing
funds in the market.
Commitments to Extend Credit and Standby Letters of
Credit
The fair value of commitments to extend credit and
standby letters of credit is considered to be equal to
carrying value.
Limitations
Fair value estimates are made at a specific point in
time, based on relevant market information and
information about the financial instrument. These
estimates do not reflect any premium or discount that
could result from offering for sale at one time the
Company's entire holdings of particular financial
instruments. Because no market exists for the Company's
financial instruments, fair value estimates are based on
judgments regarding future expected loss experience,
current economic conditions, risk characteristics of
various financial instruments, and other factors. These
estimates are subjective in nature and involve
uncertainties and matters of significant judgment and
therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-
balance sheet financial instruments without attempting to
estimate the value of anticipated future business and the
value of assets and liabilities that are not considered
<PAGE> 21
financial instruments. In addition, the tax
ramifications related to the realization of the
unrealized gains and losses can have a significant effect
on fair value estimates and have not been considered in
any of the estimates.
3. Investment Securities
As discussed in note 1, the Company adopted SFAS No. 115
as of January 1, 1994. The net effect of this change in
accounting principle of $170,063, net of deferred taxes,
was determined as of January 1, 1994, and is reported as
a separate component of stockholders' equity.
In December 1995, the Company transferred investments
held-to-maturity with a carrying value totaling
$21,128,000 to available-for-sale. The securities were
transferred at fair value of approximately $21,037,000,
resulting in an unrealized loss of $91,000. The transfer
occurred as allowed by the Financial Accounting Standards
Board's provision that allowed entities to reassess by
December 31, 1995, the appropriateness of the
classifications of all investment securities. Management
believes there has been no permanent impairment in the
value of the Company's investment securities.
Investment securities at December 31, 1996 and 1995,
consist of (in thousands):
<TABLE>
<S> <C> <C>
1996 1995
Available-for-sale, at fair value........$ 24,937 28,009
Held-to-maturity, at amortized cost...... 783 791
$ 25,720 28,800
</TABLE>
<PAGE> 22
The amortized cost, gross unrealized holding gains, gross
unrealized holding losses, and fair value for available-
for-sale and held-to-maturity securities by major
security type at December 31, 1996, were as follows (in
thousands):
<TABLE>
<C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Available-for-sale:
U. S. Treasury securities.......$ 1,093 - (1) 1,092
Securities of other U. S.
government agencies........... 748 1 (5) 744
States and municipals........... 8,567 44 (46) 8,565
10,408 45 (52) 10,401
Mortgage-backed securities...... 14,518 114 (96) 14,536
$24,926 159 (148) 24,937
Held-to-Maturity:
States and municipals...........$ 783 23 - 806
</TABLE>
The amortized cost, gross unrealized holding gains, gross
unrealized holding losses, and fair value for available-
for-sale and held-to-maturity securities by major
security type at December 31, 1995 were as follows (in
thousands):
<TABLE>
<S> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Available-for-sale:
U. S. Treasury securities......$ 2,094 20 - 2,114
Securities of other U. S.
government agencies......... 747 3 (7) 743
States and municipals.......... 9,074 43 (71) 9,046
11,915 66 (78) 11,903
Mortgage-backed securities..... 16,192 106 (192) 16,106
28,107 172 (270) 28,009
Held-to-maturity:
States and municipals.......... 791 30 - 821
</TABLE>
<PAGE> 23
The amortized cost and fair value of investment
securities at December 31, 1996, by contractual maturity,
in thousands, are shown below. Expected maturities will
differ from contractual maturities because issuers of
investment securities may have the right to call or
prepay obligations.
<TABLE>
<S> <C> <C>
Amortized
Cost Fair Value
Available-for-sale:
Due in one year or less...................$ 925 925
Due after one year through five years..... 7,985 7,995
Due after five years through ten years.... 1,391 1,374
Due after ten years....................... 107 107
10,408 10,401
Mortgage-backed securities................ 14,518 14,536
$ 24,926 24,937
Held-to-maturity:
Due after one year through five years......$ 489 503
Due after five years through ten years..... 294 303
$ 783 806
</TABLE>
There were no sales of investment securities in 1996 or
1995. Proceeds from sales of available-for-sale
securities during 1994 were approximately $3,239,000 and
the gross realized gains were approximately $104,000.
None of the investment securities were sold for losses.
Investment securities having a carrying value of
approximately $9,339,000 and $12,104,000 at December 31,
1996 and 1995, respectively, were pledged to secure
public funds on deposit and for other purposes required
by law.
4. Loans
A summary of the Company's loans is as follows:
<TABLE>
<S> <C> <C>
1996 1995
(In thousands)
Commercial, financial and agricultural....$ 14,874 11,450
Real estate-construction.................. 2,467 2,785
Real estate-mortgage...................... 23,440 19,662
Credit card receivables................... - 522
Installment............................... 10,402 9,725
Total loans.........................$ 51,183 44,144
</TABLE>
<PAGE> 24
At December 31, 1996 and 1995, loans on which interest
had ceased to be accrued approximated $87,000 and
$184,000, respectively. Had the accrual status of these
been normal, approximately $19,000 and $21,000 of
additional interest would have been earned in l996 and
l995, respectively. At December 31, 1996 and 1995, there
were no commitments to lend additional funds to borrowers
with loans on which the accrual of interest has been
discontinued.
At December 31, l996 and l995, loans to executive
officers, directors, their immediate families and
companies in which they own a significant interest
aggregated approximately $215,000 and $80,000,
respectively. During 1996 approximately $343,000 of loan
advances were made, and repayments totaled $208,000. In
management's opinion, such transactions were made on the
same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions
with other persons and did not involve more than normal
risk.
The Company grants commercial, real estate, and consumer
loans to customers principally in the state of Oklahoma.
Although the Company has a diversified loan portfolio,
the majority of its customers consist of individual and
corporate borrowers in eastern Oklahoma county.
Contractual maturity and rate sensitivity distribution of
loans at December 31, 1996, is as follows:
<TABLE>
<S> <C> <C> <C> <C>
One year One to Over five
or less five years years Total
(In thousands)
Commercial, financial and
agricultural............$ 7,851 5,369 1,654 14,874
Real estate-construction.. 1,472 527 468 2,467
Real estate-mortgage...... 5,115 14,039 4,286 23,440
Installment............... 1,599 8,741 62 10,402
Total................$ 16,037 28,676 6,470 51,183
Interest sensitivity of loans by contractual maturity:
Predetermined rate......$ 6,426 21,525 1,235 29,186
Variable rate........... 9,611 7,151 5,235 21,997
Total...............$ 16,037 28,676 6,470 51,183
</TABLE>
<PAGE> 25
5. Allowance for Loan Losses
A summary of transactions in the allowance for loan
losses is as follows:
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(In thousands)
Balance at beginning of year........$ 538 559 437
Provisions charged to expense....... 511 279 90
Recoveries.......................... 146 50 123
Loans charged off................... (287) (350) (91)
Balance at end of year..............$ 908 538 559
</TABLE>
6. Property and Equipment
Property and equipment is summarized as follows:
<TABLE>
<S> <C> <C>
1996 1995
(In thousands)
Land.........................................$ 751 751
Bank buildings and equipment................. 5,711 5,681
Furniture and equipment...................... 1,456 861
7,981 7,293
Less accumulated depreciation................ 3,841 3,413
$ 4,077 3,880
</TABLE>
7. Deposits
Included in interest bearing deposits are certificates of
deposit in amounts of $100,000 or more. These
certificates and their remaining maturities at December
31, 1996 and 1995 are as follows:
<TABLE>
<S> <C> <C>
1996 1995
(In thousands)
3 months or less...............................$ 3,430 5,418
Over 3 months through 6 months................. 956 1,294
Over 6 months through 12 months................ 1,056 750
Over 12 months................................. 212 100
$ 5,654 7,562
</TABLE>
The interest expense on these deposits approximated
$303,000 and $530,000 for the years ended December 31,
1996 and 1995, respectively.
<PAGE> 26
At December 31, 1996, the schedule maturities of certificates of deposit
are as follows:
1997............$25,401
1998............ 2,095
1999............ 163
$27,659
8. Other Non-interest Expense
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(In thousands)
Outside service expenses...............$ 171 157 181
Advertising and business development... 151 153 156
Postage................................ 74 73 65
Stationery, printing and supplies...... 88 96 83
Collection expense..................... 22 30 56
Data processing expense................ 295 113 112
Other.................................. 176 387 451
$ 977 1,009 1,104
</TABLE>
9.Income taxes
The components of income taxes are as follows:
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(In thousands)
Current:
Federal..............................$ 342 225 228
State................................ 84 54 -
426 279 228
Deferred:
Federal.............................. (21) (22) (14)
State................................ (14) (4) 50
(35) (26) 36
Income tax expense.....................$ 391 253 264
</TABLE>
(PAGE> 27
The Company's tax provision on income before provision
for income taxes differs from a normal 34% tax rate as
shown below:
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(In thousands)
Income before income taxes multiplied
by 34% in 1996, 1995 and 1994............$ 451 350 372
Tax exempt interest...................... (124) (132) (158)
State income taxes....................... 46 33 33
Other, net............................... 18 2 17
$ 391 253 264
</TABLE>
Cash paid for income taxes was approximately $337,000,
$212,000 and $291,000 in 1996, 1995 and 1994,
respectively.
The tax effects of temporary differences that give rise
to significant portions of the deferred tax assets and
deferred tax liabilities at December 31, 1996 and 1995,
are presented below:
<TABLE>
<S> <C> <C>
1996 1995
(In thousands)
Deferred tax assets:
Other real estate, principally due to charge-offs.......$ 7 6
Alternative minimum tax credit carryforward............. - 100
Other................................................... 30 22
Total deferred tax assets ............................. 37 128
Deferred tax liabilities:
Property and equipment, principally due to difference
in depreciation........................................ 554 540
Loans, principally due to allowance for loan losses..... 696 836
Total deferred tax liabilities.......................... 1,250 1,376
Net deferred tax liability before net unrealized
holding gain (loss) on securities available-for-sale.. 1,213 1,248
Net unrealized holding gain (loss) on securities
available-for-sale.................................... 5 (39)
Net deferred tax liability.............................. 1,218 1,209
</TABLE>
A valuation allowance for deferred tax assets was not
required as of December 31, 1996, 1995, or 1994 due to
management's expectation of the future reversal of
deferred tax liabilities.
<PAGE> 28
10.Employee Benefit Plans
The Company sponsors a defined contribution 401(k) plan
covering substantially all employees under which
employees' contributions may be partially matched by the
Company. The Company's contributions in 1996, 1995, and
1994 were $50,000, $53,000, and $50,000, respectively.
11.Relationships with Certain Stockholders and
Affiliates
The Company and its subsidiaries, through common owners
and/or directors, are considered to be related parties
for financial reporting purposes with one other bank
holding company and its bank.
UB sold loan participations to these banks totaling $1,653,000
and $97,000 at December 31, 1996 and 1995, respectively. UB purchased
loan participations from these banks totaling $1,496,000 during 1996.
There is a proposed merger between the Company and Ameribank Corporation
(Ameribank) (the majority shareholder of the Company) subject to
approval by regulatory authorities. The Merger Agreement provides that,
subject to the approval of the Merger Agreement by the Shareholders of the
Company and satisfaction of other conditions, the Company will be merged
into Ameribank, with Ameribank being the surviving corporation.
12.Financial Instruments With Off-Balance Sheet Credit Risk
The Company is a party to financial instruments with off-
balance sheet credit risk in the normal course of
business to meet the financing needs of its customers.
These financial instruments include commitments to extend
credit and standby letters of credit. These instruments
involve, to varying degrees, elements of credit risk in
excess of the amount recognized in the consolidated
balance sheets. The contract amounts of those
instruments reflect the extent of involvement the Company
has in particular classes of financial instruments.
The Company's exposure to credit loss in the event of
nonperformance by one of the other parties to the
financial instruments for commitments to extend credit
and standby letters of credit is represented by the
contractual amounts of those instruments. The Company
uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet
instruments. Financial instruments whose contract
amounts represent credit risk at December 31 are as
follows:
1996 1995
Committments to extend credit....$4,962,000 6,496,000
Standby letters of credit........ 86,000 588,000
Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any
condition established in the contract. Commitments have
fixed expiration dates or other termination clauses and
may require payment of a fee. Since some of the
commitments may expire without being drawn upon, the
<PAGE> 29
total commitment amounts do not necessarily represent
future cash requirements. The Company evaluates each
customer's creditworthiness on a case-by-case basis. The
amount of the collateral obtained if deemed necessary by
the Company upon extension of credit is based on
management's credit evaluation of the customer.
Collateral held varies but may include certificates of
deposit, accounts receivable, inventory, property and
equipment, real estate, livestock, and income producing
properties.
Standby letters of credit are conditional commitments
issued by the Company to guarantee the performance of a
customer to a third party. Those guarantees are
primarily issued to support private borrowing
arrangements. All of the standby letters of credit at
December 31, 1996, are short-term guarantees; they expire
prior to December 31, 1997. The credit risk involved in
issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers. When
deemed necessary, the Company may hold a variety of
collateral to support these commitments similar to the
types of collateral held for commitments to extend
credit.
13.Operating Lease Income
The Company, through its United Del City Tower
subsidiary, leases excess office space. Future minimum
rentals for non-cancelable office leases, with initial or
remaining terms of one year or more consisted of the
following at December 31, 1996:
1997..............................$ 417,000
1998.............................. 191,000
1999.............................. 95,000
2000.............................. 26,000
2001.............................. 12,000
14. Regulatory Capital Requirements
UB is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory actions by regulators that, if undertaken
could have a direct material effect on the consolidated financial
statements. Under capital adequacy guidelines that involve quantitative
measures of UB's assets, liabilities, and certain off-balance-sheet items
as calculated under regulatory accounting practices. UB's capital amounts
and classification are also subject to qualitative judgments by the
regulators about components, risk weightings, and other factors.
<PAGE> 30
Quantitative measures established by regulation to ensure capital adequacy
require UB to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to risk-
weighted assets (as defined), and of Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1996, that UB
meets all capital adequacy requirements to which it is subject.
As of December 31, 1996 and 1995, the most recent notification from the FDIC
categorized UB as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized UB must maintain
minimum total risk-based, Tier I risk-based and Tier I leverage ratios as
set forth in the table. There are no conditions or events since that
notification that management believes have changed UB's category.
UB's actual capital amounts (in thousands) and ratios are also presented in
the following table:
<TABLE>
<S>
<C> <C> <C> <C> <C> <C>
Capitalized under
For capital prompt corrective
Actual Adequacy purposes action provision
Amount Ratio Amount Ratio Amount Ratio
As of December 31, 1996:
Total capital $ 9,720 16.09% $ 4,833 8.00% $ 6,041 10.00%
(to risk weighted assets)
Tier I Capital 8,812 14.59% 2,416 4.00% 3,625 6.00%
(to risk weighted assets)
Tier I Capital 8,812 10.34% 3,413 4.00% 4,267 5.00%
(to average assets)
As of December 31, 1995:
Total Capital 8,309 15.28% 4,351 8.00% 5,438 10.00%
(to risk weighted assets)
Tier I Capital 7,770 14.29% 2,175 4.00% 3,263 6.00%
(to risk weighted assets)
Tier I Capital 7,770 9.48% 3,281 4.00% 4,101 5.00%
(to average assets)
</TABLE>
According to current regulations, the capital requirements of a bank holding
company are applied on a bank only basis if the bank holding company has
consolidated assets of less than $150 million. Since the Company's consolidated
assets at December 31, 1996 and 1995, were less than $150 million, a separate
calculation of capital requirements was not required.
The payment of dividends by UB is restricted by regulatory capital requirements
to current year earnings plus undistributed earnings from the two previous
years.
15. Parent Company Financial Statements
Following are the condensed financial statements for United Oklahoma
Bankshares, Inc. (Parent Company only):
Statement of Operations
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(In thousands)
Income:
Dividend from UB............................$ - - 275
Interest.................................... 4 40 8
Total..................................... 4 40 283
Expenses:
Interest.................................... - - 6
Other....................................... 78 20 20
Total..................................... 78 20 26
Income (loss) before income taxes and undistributed income
of subsidiaries............................. (74) 20 257
Income tax (expense) benefit.................. 32 (8) 7
Income (loss) before undistributed income of
subsidiaries................................ (42) 12 264
Equity in undistributed income of subsidiaries 977 763 565
Net income..............................$ 935 775 829
</TABLE>
<PAGE> 31
Balance Sheets
December 31,
1996 1995
(In thousands)
<TABLE>
<S> <C> <C>
Assets
Cash and cash equivalents............................$ 79 163
Investment in UB at equity........................... 8,812 7,770
Other assets......................................... 60 61
$ 8,951 7,994
Liabilities and Stockholders' Equity
Accrued expenses and other liabilities, principally
deferred income taxes..............................$ 128 171
Total liabilities.............................. 128 171
Preferred stock...................................... 4,356 4,356
Common stock......................................... 2,805 2,805
Additional paid-in capital........................... 7,358 7,358
Accumulated deficit.................................. (4,605) (5,540)
Net unrealized holding gain (loss) on investment securities
available-for-sale held by UB, net of deferred taxes 6 (59)
9,920 8,920
Less cost of common stock held in treasury........... (1,097) (1,097)
Net stockholders' equity........................ 8,823 7,823
$ 8,951 7,994
</TABLE>
<PAGE> 32
Statements of Cash Flows
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
(In thousands)
Cash flows from operating activities:
Net income.................................$ 935 775 829
Adjustments to reconcile net income to
net cash (used in) provided by operating activities:
Equity in undistributed income of
subsidiaries............................ (977) (763) (565)
Decrease (increase) in other assets...... 1 (1) -
(Decrease) increase in other liabilities. (43) 84 (94)
Total adjustments...................(1,019) (680) (659)
Net cash (used in)provided by operating activ (84) 95 170
Cash flows from financing activities:
Purchase of treasury stock................. - - (11)
Repayment of long-term debt................ - - (450)
Net cash used in financing................... - - (461)
Net (decrease) increase in cash and cash equiv (84) 95 (291)
Cash and cash equivalents at beginning of year 163 68 359
Cash and cash equivalents at end of year.....$ 79 163 68
</TABLE>
<PAGE> 33
INDEPENDENT AUDITORS' REPORT
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
The Board of Directors and Stockholders
United Oklahoma Bankshares, Inc.:
We have audited the accompanying consolidated balance sheets of
United Oklahoma Bankshares, Inc. and subsidiaries (the Company) as
of December 31, l996 and l995, and the related consolidated
statements of operations, changes in stockholders' equity, and cash
flows for each of the years in the three-year period ended December
31, l996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of United Oklahoma Bankshares, Inc. and subsidiaries as of
December 31, 1996 and 1995, and the results of their operations and
their cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Oklahoma City, Oklahoma
March 18, 1997
<PAGE> 34
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONDENSED AVERAGE BALANCE SHEETS
<TABLE>
<S> <C> <C> <C> <C>
Years ended December 31,
1996 1995
(In thousands)
Average Assets:
Cash and due from banks.................$ 2,873 3.37% $ 2,630 3.21%
Federal funds sold...................... 2,928 3.43 3,022 3.68
Investment securities................... 27,900 32.70 30,437 37.11
Loans................................... 47,542 55.72 41,444 50.53
Less: Allowance for loans losses....... (736) (0.86) (568) (0.69)
Property and equipment, net............. 3,892 4.55 3,966 4.84
Accrued interest and other assets....... 930 1.09 1,093 1.32
$85,329 100.00% $ 82,024 100.00%
Average Liabilites and Stockholders' Equity:
Deposits:
Demand:
Individuals, partnerships and
corporations.....................$17,118 20.06 $ 14,287 17.42
Money market checking................. 9,747 11.43 9,129 11.13
Savings and money market savings...... 20,735 24.30 17,424 21.24
Time.................................. 27,627 32.38 31,864 38.85
Total deposits...................... 75,227 88.17 72,704 88.64
Short-term borrowings................... 11 0.01 89 0.11
Accrued interest and other liabilites... 1,864 2.18 1,846 2.25
Total liabilites.................... 77,102 90.36 74,639 91.00
Stockholders' equity:
Preferred stock....................... 4,356 5.10 4,356 5.31
Common stock.......................... 2,805 3.29 2,805 3.42
Additional paid-in capital............ 7,358 8.62 7,358 8.97
Accumulated deficit................... (5,037) (5.90) (5,926) (7.22)
Net unrealized holding loss on
investment securities available-for-
sale, net of deferred taxes......... (158) (0.18) (111) (0.14)
9,324 10.93 8,482 10.34
Less cost of common stock held in
treasury............................ (1,097) (1.29) (1,097) (1.34)
Net stockholders' equity.......... 8,227 9.64 7,385 9.00
$85,329 100.00% $ 82,024 100.00%
</TABLE>
<PAGE> 35
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF NET INTEREST INCOME
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Years ended December 31,
1996 1995
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Earning assets:
Investment securities(1):
Taxable..................$ 18,403 1,148 6.24% $ 20,587 1,309 6.36%
Nontaxable............... 9,761 419 4.29 10,036 429 4.27
28,164 1,567 5.56 30,623 1,738 5.68
Federal funds sold......... 2,928 155 5.29 3,022 176 5.82
Loans, net of unearned
discount(2).............. 47,542 4,732 9.95 41,444 4,101 9.90
Total earning assets/
total interest income..$ 78,634 6,454 8.21 75,089 6,015 8.01%
Interest bearing liabilities:
Interest bearing deposits..$ 58,109 2,427 4.18 58,417 2,564 4.39%
Short-term borrowings...... 11 1 9.09 89 5 5.62
Total interest bearing
liabilites/total
interest expense......$ 58,120 2,428 4.18 58,506 2,569 4.39%
Differentials/net interest
income...................$ 20,514 4,026 4.03 16,583 3,446 3.62%
Net interest income as
reported/interest
earning assets 5.12% 4.59%
(1) The amortized cost is used in the average balance calculation.
(2) Loans classified as non-accruing are included in the average balance
calculation.
</TABLE>
<PAGE> 36
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
LOAN CONCENTRATIONS
<TABLE>
<S> <C> <C>
December 31, 1996
Percent
Amount of total
(In thousands)
Commercial, financial and agricultural..............$ 14,874 29.06%
Real estate-construction............................ 2,467 4.82
Real estate-mortgage................................ 23,440 45.80
Installment......................................... 10,402 20.32
Total loans....................................$ 51,183 100.00%
Participations purchased amounting to $3,988,000 at December 31, 1996
are included in commercial. In addition, it should be noted that
certain commercial loans may be secured by real estate.
</TABLE>
<PAGE> 37
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<S> <C> <C>
Years ended December 31,
1996 1995
(In thousands)
Balance at beginning of year......................$ 538 559
Charge-offs:
Commercial, financial and agricultural.......... (206) (176)
Installment..................................... (81) (174)
Total charge-offs..................... (287) (350)
Recoveries:
Commercial, financial and agricultural.......... 139 42
Installment..................................... 7 8
Total recoveries...................... 146 50
Net (charge-offs) recoveries...................... (141) (300)
Additions charged to operating expense............ 511 279
Balance at end of year............................$ 908 538
Total average loans, net of unearned discount.....$ 47,542 41,444
Ratio of net charge-offs (recoveries) to total
average loans, net of unearned discount......... 0.30% 0.72%
Total loans, net of unearned discount.............$ 51,183 44,142
Ratio of allowance for loan losses to total loans,
net of unearned discount........................ 1.77% 1.22%
</TABLE>
<PAGE> 38
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<S> <C> <C> <C> <C>
Years ended December 31,
1996 1995
% of Loans % of Loans
in each in each
Amount category Amount category
(In thousands)
Commercial, financial and agricultural $ 408 29.06% $ 187 25.94%
Real estate-construction.............. - 4.82 - 6.31
Real estate-mortgage.................. 68 45.80 5 44.54
Credit card receivables and installment - 20.32 - 23.21
Total.............................. 476 100.00% 192 100.00%
Unallocated........................... 432 346
Total allowance.................... $ 908 $ 538
</TABLE>
The basis of allocation of the allowance for loan losses is a review of
individual loans, based on the bank's credit review and grading system,
for possible exposure to loss, excet for installment loans whose allocation
is based primarily on historical net charge-off experience. The unallocated
portion of the allowance provides for unforeseen credit risk exposure. The
specific allocation of the allowance, therefore, represents only a numerical
evaluation of identified risks in the portfolio at a point in time and does
not necessarily represent anticipated charge-offs.
<PAGE> 39
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
MATURITY DISTRIBUTION OF INVESTMENT SECURITIES
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Within After 1 year After 5 years
1 year but within but within After
5 years 10 years 10 years Total
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
December 31, 1996 (1) (In thousands)
U. S.
Treasury....$ - - $ 1,093 5.50% $- - % $ - -% $ 1,093 5.50%
Other U. S.
government
agencies.... - - 748 5.75 - - - - 748 5.75
Mortgage-
backed...... - - - - - - - - 14,518 6.97
State &
municipals.. 925 3.36 6,633 4.87 1,685 4.82 107 4.25 9,350 4.70
Total amount
/yield......$ 925 3.36% $ 8,474 5.03% $1,685 4.82% $107 4.25% $25,709 5.70%
Average maturity (in years)* 13.75
December 31, 1995 (1)
U. S.
Treasury.. $1,003 6.70 % $ 1,091 5.50% $ - - % $ - - % $ 2,094 6.08%
Other U. S.
government
agencies.... - - 747 5.75 - - - - 747 5.75
Mortgage-
backed...... - - - - - - - - 16,192 6.50
State &
municipals.. 492 3.46 5,828 4.23 3,324 4.58 221 4.13 9,865 4.31
Total amount
/yield $1,495 5.63% $ 7,666 4.56% $3,324 4.58% $ 221 4.13%$28,898 5.70%
Average maturity (in years)* 14.70
</TABLE>
*Includes contractual maturities of mortgage-backed securities which may vary
significantly from actual cash flows due to prepayments.
(1) The amortized cost of investment securities are represented in this table.
DISTRIBUTION OF AVERAGE DEPOSITS
<TABLE>
<S> <C> <C> <C> <C>
Years ended December 31,
1996 1995
Average Average
Amount Rate Amount Rate
(In thousands)
Demand:
Individuals, partnerships and corporations.$ 17,118 - % $ 14,287 - %
NOW and money market checking................ 9,747 2.45 9,129 2.57
Savings and money market savings............. 20,735 3.44 17,424 3.03
Time of less than $100,000................... 21,880 5.36 22,213 5.72
Time of $100,000 or more..................... 5,747 5.29 9,651 5.49
TOTAL...................................$ 75,227 3.23% $ 72,704 3.53%
</TABLE>
<PAGE> 40
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
The following table summarizes information with respect to certain short-term
borrowings for the years indicated.
<TABLE>
<S> <C> <C> <C> <C> <C>
Amount Outstanding Maximum Average Amount
End of Year Amount Outstanding
Average Outstanding Average
Interest at any Interest
Amount Rate Month End Amount Rate
(In thousands)
1996
Federal funds purchased and
securities sold..........$ - - $ - $ 11 5.54%
1995
Federal funds purchased and
securities sold..........$ - - % $ - $ 89 5.58%
1994
Federal funds purchased and
securities sold..........$ 1,500 6.13% $ 1,500 $ 79 4.26%
</TABLE>
RETURN ON EQUITY AND ASSETS
<TABLE>
<S> <C> <C> <C>
Years ended December 31,
1996 1995 1994
Ratio of net income to:
Average earning assets....................... 1.19% 1.03% 1.18%
Average total assets......................... 1.10 0.94 1.06
Average stockholders' equity.................11.37 10.49 12.46
Ratio of average stockholders' equity to:
Average total assets......................... 9.64 9.00 8.51
Average total loans..........................17.30 17.82 17.86
Dividend payment ratio......................... N/A N/A N/A
</TABLE>
<PAGE> 41
DIRECTORS AND EXECUTIVE OFFICERS
UNITED OKLAHOMA BANKSHARES, INC.
George N. Cook, 51. Chairman of the Board. Mr. Cook also serves
as President and Chief Executive Officer of American National
Bank and Director of Ameribank Corporation. Mr. Cook is also a
director of United Bank and its subsidiaries and the First
National Bank of Medicine Lodge, Kansas.
D. Wesley Schubert, 44. President of the Company. Mr. Schubert is
a Certified Public Accountant. Mr. Schubert has been the Vice
Chairman of American National Bank and Vice President of
Ameribank Corporation since 1991. Mr. Schubert also serves as a
director of United Bank and director of First National Bank of
Medicine Lodge, Kansas.
J. Michael Adcock, 48. Secretary of the Company. Mr. Adcock also
serves as a member of the Board of Directors of Grant
Geophysical Inc., Ameribank Corporation, American National Bank,
First National Bank of Medicine Lodge, Kansas, and United Bank
and its subsidiaries. Mr. Adcock is in the private practice of
law.
June A. O'Steen, 60. Executive Vice President of UB, and Principal
Accountant for the Company since June, 1989. Prior to that time
Ms. O'Steen was Senior Vice President and General Auditor of UB,
since 1984, and the Company, since 1980.
David Nichols, 66. Director of the Company. Mr. Nichols currently
serves as Director, Loan Committee member and Chairman of the Board
of First State Bank, Kansas City, Kansas. Mr. Nichols also serves as
director of Concorde Career Colleges, Inc. of Kansas City, Missouri
(a NASDAQ company).
Claude Rappaport, 44. Director of the Company and of UB. Mr Rappaport
is President of L & S Bearing Company.
<PAGE> 42
EXECUTIVE COMPENSATION
Directors. Non-management directors of UB received $400 for Board meetings
held during the year. In 1996, management UB Directors received $300 for
every Board meeting attended. Company directors received $200 for each meeting
attended. Company special committee Directors received $1,000 for each
meeting attended.
Executive Officers. There were no officers whose compensation exceeded $100,000
during 1996. However, the total cash compensation paid to the Company's
Chairman of the Board and Chief Executive Officer and to each of the Company's
and its subsidiaries' most highly compensated executive officers whose cash
compensation exceeded $100,000 for services rendered in all capacities to
the Company and its subsidiaries in the two preceeding years ended December
31, 1995 and 1994 is as follows.
The Company qualifies as a Small Business Issuer as defined under applicable
regulations of the Securities and Exchange Commission. Therefore, only that
information as to executive compensation required of Small Business Issuers
is presented.
Annual Compensation
Name and Principal position Year Salary $ Bonus $ All other $
William P Dowling, 1995 109,500 300 62,827
President/CEO of the Bank 1994 106,600 300 4,797
<PAGE> 43
SECURITY OWNERSHIP BY MANAGEMENT
The following table sets forth the beneficial ownership by
management of the Company's common and 9% preferred stock,
which are the only classes of capital stock of the Company
outstanding, as of December 31, 1996, together with the
percentage of the outstanding shares of each class so owned
by each director, and by all officers and directors of the
Company and its subsidiaries as a group. Unless otherwise
indicated, each person has sole voting and investment power
with respect to the indicated shares. The preferred stock
does not carry voting rights.
Name of Beneficial Ownership Percent of Class
Beneficial Owner Common 9% Preferred Common 9% Preferred
George N. Cook, Jr. Right to acquire* Right to acquire*
254,666 21,068 10.06% 14.51%
D. Wesley Schubert Right to acquire* Right to acquire*
254,666 21,068 10.06% 14.51%
All officers and directors
as a group 792,521 51,927 30.18% 43.53%
________________________
*Ameribank Corporation and Messrs. George N. Cook, D.
Wesley Schubert and J. Michael Adcock have entered into a
Stock Purchase Agreement, dated November 3, 1995, which
provides that Ameribank will sell to each of Messrs. Cook,
Schubert and Adcock 16.33% of the total number of shares of
Common Stock and 9% Cumulative Non-Voting Preferred Stock
which Ameribank owns or acquires in future purchases. The
terms provide that the purchase price for such stock shall be
the price at which Ameribank acquired the shares plus
interest, accrued from the date of acquisition of such stock
to the closing of the purchase contemplated by the agreement,
at a rate equal to the base rate of interest of Chase
Manhattan Bank, N.A. from time to time. The consummation of
the transactions are subject to (1) approval from the Board
of Governors of the Federal Reserve System; (2) the entering
into by the parties of a Shareholders' Agreement restricting
the future transfer of the stock by Messrs. Adcock, Schubert
and Cook; and (3) the entering into by the parties of a
Voting Trust Agreement appointing Ameribank as trustee to
vote the shares of Common Stock. On November 27, 1996, Mr. Adcock
entered into an agreement with his wife Mrs. Adcock, transferring
to her his rights to purchase shares of the Company under the
Stock Purchase Agreement. Mrs. Adcock is the daughter of Mr. Bodard,
the sole shareholder of Ameribank. Messrs. Cook and Shubert and
Mrs. Adcock have entered into an Addendum to the Stock Purchase
Agreement with Ameribank dated January 27, 1997, whereby Ameribank
agrees that if the Merger is consummated, Ameribank will sell to each of
Messrs. Cook and Schubert and Mrs. Adcock 16.33% of the total number of
shares of common stock outstanding of United at a price per share equal
to the total consideration, plus costs and interest paid by Ameribank
for the Stock, divided by the total number of outstanding shares of common
stock of United, and on the same terms and subject to the same conditions
as previously agreed.
<PAGE> 44
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table shows the name and address of each
shareholder who beneficially owns more than 5% of the
Company's common stock, the number of shares beneficially
owned by each, and the percentage of outstanding common stock
so owned as of December 31, 1996. Unless otherwise
indicated, each person has sole voting and investment power
with respect to the shares beneficially owned.
Title Amount and Nature of Percent
of Class Name and Address Beneficial Ownership of Class(1)
Common Ameribank Corporation 1,559,498 61.58%
201 N Broadway
Shawnee, OK 74801
Common Dona B. Adcock Right to acquire*
201 N. Broadway 254,666 10.06%
Shawnee, OK 74801
Common Robert B. Krumme 238,492** 9.4%
P. O. Box 1020
Bristow, OK 74010
Preferred Ameribank Corporation 129,016 88.85%
201 N. Broadway
Shawnee, Ok 74801
Preferred Dona B. Adcock Right to acquire*
201 N. Broadway 21,068 14.51%
Shawnee, OK 74801
________________________
(1)All percentages were calculated after excluding shares
held in treasury stock.
* See note at page 44
** The number of shares of Common Stock includes 106,796 shares held by
Sooner Southwest Bankshares and 121,696 shares held by Illinois Refining
Company, of which Mr. Krumme claims beneficial ownership.
<PAGE> 45
CERTAIN TRANSACTIONS
In the ordinary course of business, UB has had banking
transactions with some of the directors, executive officers
and controlling shareholders of the Company. All such loans
are and have been made in compliance with applicable laws, in
the ordinary course of business and on substantially the same
terms (including interest rates and collateral) as those
prevailing at the time for comparable transactions with
unaffiliated persons. In the opinion of management, none of
such loans involved more than the normal risk of
collectibility or presented any other unfavorable features.
interest in the transaction or loan.
All transactions entered into between the Company or UB
and any officer, director or controlling shareholder of the
Company are made on terms no less favorable to the Company or
the Bank than could be obtained from unaffiliated parties.
It is the policy of the Company that transactions with and
loans to officers and directors be approved by a majority of
the directors of the Company other than those with an
interest in the transaction or loan.
<PAGE> 46
SIGNATURES
Pursuant to the requirements of Section 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.
UNITED OKLAHOMA BANKSHARES, INC.
By:/s/ George N. Cook, Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ George N. Cook Chairman of the Board )
/s/ June A. O'Steen Principal Accountant )March 24, 1997
/s/ D. Wesley Schubert President
/s/ J. Michael Adcock Secretary
2
*By: /s/ George N. Cook
* As attorney-in-fact pursuant to Power
of attorney filed as exhibit 25
<PAGE> 47
FORM 10-K CROSS REFERENCE SECTION
Page
Part I Item 1 Business..............................................2
Item 2 Properties............................................2
Item 3 Legal Proceedings.....................................2
Item 4 Submission of Matters to a Vote of Security Holders
(during the fourth quarter of 1996) *
Part II Item 5 Market for the Company's Common Stock and Related
Stockholders Matters...........................2
Item 6 Selected Financial Data...............................3
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations............4-11
Item 8 Financial Statements and Supplementary Data...........12-41
Item 9 Disagreements on Accounting and Financial Disclosure.. *
Part III Item 10 Directors and Executive Officers and Corporations.....42
Item 11 Executive Compensation................................43
Item 12 Security Ownership of Certain Beneficial Owners and
Management....................................44
Item 13 Certain Relationships and Related Transactions........45
Part IV Item 14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
(a) (1) Financial Statements:
o Independent Auditors' Report...............34
o Consolidated Statements of Operations-
years ended December 31, 1996, 1995, 1994..12
o Consolidated Balance Sheets
December 31, 1996 and 1995.................13
o Consolidated Statements of Changes in
Stockholders' Equity-years ended December
31, 1996, 1995, and 1994...................14
o Consolidated Statements of Cash Flows-years
ended December 31, 1996, 1995 and 1994.....15
o Notes to Consolidated Financial Statements-
years ended December 31, 1996, 1995, 1994..16-33
(2) Financial Statement Schedules:
o All schedules normally required by Form 10-K
are omitted since they are either not
applicable or the required information is
shown in the consolidated financial
statements or the notes thereto.
<PAGE> 48
Part IV Item 14 Exhibit: (continued)
(a) (3) Exhibits:
Exhibit No.
PAGE
3 Articles of incorporation and bylaws (filed as **
Exhibit 3(a) and 3(b) to Company's registration
Statement No. 2-85935, "Registration Statement")
4 Instruments defining the rights of security
holders, including indentures (filed as Exhibit
3(a) to Company's registration Statement) **
10 Material Contracts:
(a) United Oklahoma Bankshares, Inc. Incentive **
Stock Option Plan of 1982 (filed as Exhibit
10(a) to Company's Registration Statement)
(b) Forms of United Oklahoma Bankshares, Inc. **
Incentive Stock Option Agreements (filed
as Exhibit 10(b) to Company's registration
Statement)
(c) United Oklahoma Bankshares, Inc. Employee **
Stock Ownership Plan and Trust of 1982
(filed as Exhibit 10(c) to Company's
Registration Statement)
(d) Stockholders' resolutions establising United
Oklahoma Bankshares Employees' Stock Purchase
Plan of 1983 (filed as Exhibit 10(d) to
Company's registration Statement)
(e) Form of agreements relating to stock purchased
under the United Oklahoma Bankshares **
Employees' Stock Purchase Plan of 1983 (filed
as Exhibit 10(e) to Company's Registration
Statement)
(f) Letter Agreement, dated April 26, 1982,
between United Oklahoma Bankshares, Inc.
and Fort Worth National Bank, as amended
(filed as Exhibit 10(1) to Company's
Registration Statement)
(g) Promissory Note and Security Agreement **
dated April 29, 1982, between United
Oklahoma Bankshares, Inc. Employee Stock
Ownership Plan and Trust of 1982 and The
Fort Worth National Bank (filed as Exhibit
10 (m) to Company's Registration Statement)
<PAGE> 49
Part IV Item 14 Exhibits: (continued)
(a) (3) Exhibits:
Exhibit No.
10 Material contracts:
(h) Deposit Insurance Transfers and **
Asset Purchase Agreement, dated
May 11, 1984, between United
Oklahoma Bankshares, Inc., as agent
for United Del City Bank, and the
Federal Deposit Insurance Corporation
(filed as Exhibit to Form 8-K dated
May 25, 1984)
(i) Stock Purchase Agreement between
United Del City Bank and United
Oklahoma Bank (filed as Exhibit 10 **
to Form 10-K dated December 31, 1986)
(j) Accounts Receivable Purchase Agreement
between United Del City Bank and
United Oklahoma Bank (filed as Exhibit
to Form 10-K dated December 31, 1986) **
27 Financial Data Schedule **
22 Subsidiaries of Company 51
25 Power of Attorney 52,53
(b) Reports on Form 8-K 54
* Not Applicable
** Included in previous filings
<PAGE> 50
SUBSIDIARIES
The Company has two wholly owned subsidiaries, United Bank and United Loan and
Thrift Company, Inc. The following corporations are wholly owned subsidiaries
of United Bank:
United Del City Tower Inc.
4600 Corporation
<PAGE> 51
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That each of the undersigned do hereby constitute and
appoint George N. Cook his true and lawful attorney-in-fact
and agent with full power of substitution, for him and in
his name, place and stead, and in any and all capacities to
execute and sign Annual Report on Form 10-K for the 1995
fiscal year of United Oklahoma Bankshares, Inc. and to file
the same, with all exhibits thereto, and other documents in
connection therewith with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent
full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent may
lawfully do or cause to be done by virtue hereof.
DATED THIS 24th day of March, 1997.
/s/ George N. Cook, Director
/s/ D. Wesley Schubert, Director
/s/ J. Michael Adcock, Director
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA)
The foregoing instrument was acknowledged before me this
24th day of March, 1997, by George N. Cook.
/s/Kathleen A. Rudd
My commission expires: 6-6-98 Notary Public
<PAGE> 52
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA)
The foregoing instrument was acknowledged before me this
24th day of March, 1997, by D. Wesley Schubert.
/s/Kathleen A. Rudd
My commission expires: 6-6-98 Notary Public
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA)
The foregoing instrument was acknowledged before me this
24th day of March, 1997, by J. Michael Adcock.
/s/Kathleen A. Rudd
My commission expires: 6-6-98 Notary Public
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA)
<PAGE> 53
REPORTS ON FORM 8-K
The Company filed a report on Form 8-K during the fourth quarter of
1996.
<PAGE> 54
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
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0
4,356
<OTHER-SE> 1,662
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<ALLOWANCE-OPEN> 538
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