<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended March 31, 1996
Commission file number 0-13343
Illini Corporation
(Exact name of small business issuer as specified in its charter)
Illinois 37-1135429
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
120 South Chatham Road, Springfield, Illinois 62704
(Address of principal executive offices)
(217) 787-1651
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No
----- -----
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 448,456 shares of $10 par
value common stock as of May 1, 1996.
<PAGE>
ILLINI CORPORATION
INDEX TO FORM 10-QSB
March 31, 1996
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets 3
March 31, 1996 and December 31, 1995
Consolidated Statements of Income 4
Three Months Ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows 5
Three Months Ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis 7
PART II. OTHER INFORMATION 14
SIGNATURE PAGE 15
2
<PAGE>
ILLINI CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
March 31, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 4,772,383 $ 8,079,146
Federal funds sold 815,000 0
-------------- --------------
Cash and cash equivalents 5,587,383 8,079,146
Investment in debt and marketable equity securities:
Available for sale, at market value 42,450,311 34,967,265
Loans 95,719,849 100,999,481
Less:
Unearned discount and loan fees 111,356 128,976
Allowance for loan losses 1,096,184 1,246,480
-------------- --------------
Loans, net 94,512,309 99,624,025
-------------- --------------
Premises and equipment 4,860,201 4,870,132
Accrued interest receivable 1,642,212 1,541,427
Other assets 1,385,729 1,287,201
-------------- --------------
$ 150,438,145 $ 150,369,196
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Noninterest-bearing demand deposits 18,787,964 20,513,688
Interest-bearing deposits:
NOW and money market accounts 28,206,520 27,223,687
Savings deposits 20,474,810 20,318,381
Time deposits, $100,000 and over 15,946,228 14,750,120
Other time deposits 50,733,507 50,481,132
-------------- --------------
Total deposits 134,149,029 133,287,008
Securities sold under agreements to repurchase 250,000 675,064
Accrued interest payable 854,869 880,006
Other liabilities 769,943 920,763
-------------- --------------
Total liabilities 136,023,841 135,762,841
-------------- --------------
Shareholders' equity:
Common stock-authorized 800,000 shares of $10
par value; 448,456 shares issued and outstanding 4,484,560 4,484,560
Capital surplus 1,885,913 1,885,913
Retained earnings 8,206,703 8,209,528
Unrealized holding gains (losses on
investments in debt and marketable equity
securities available for sale (162,872) 26,354
-------------- --------------
Total shareholders' equity 14,414,304 14,606,355
-------------- --------------
$ 150,438,145 $ 150,369,196
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to interim consolidated financial statements.
3
<PAGE>
ILLINI CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 2,259,581 $ 2,188,274
Interest on investment in debt and marketable
equity securities:
Taxable 320,749 462,670
Exempt from Federal income taxes 180,603 126,530
Interest on short term investments 31,629 5,556
-------------- --------------
Total interest income 2,792,562 2,783,030
-------------- --------------
Interest expense:
Interest on deposits 1,264,971 1,137,111
Interest on Federal funds purchased - 21,864
Interest on securities sold under
agreements to repurchase 4,436 10,822
Interest on note payable - 8,296
-------------- --------------
Total interest expense 1,269,407 1,178,093
-------------- --------------
Net interest income 1,523,155 1,604,937
Provision for loan losses 140,000 30,000
-------------- --------------
Net interest income after provision
for loan losses 1,383,155 1,574,937
Noninterest income 357,536 389,419
Noninterest expense 1,635,923 1,642,153
-------------- --------------
Income before income taxes 104,768 322,203
Applicable income tax expense 6,691 70,100
-------------- --------------
Net income $ 98,077 $ 252,103
-------------- --------------
-------------- --------------
Income per common share (based on
weighted average common shares
outstanding of 448,456 for 1996 and
1995): $ 0.22 $ 0.56
-------------- --------------
-------------- --------------
Dividends per share $ 0.225 $ 0.225
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to interim consolidated financial statements.
4
<PAGE>
ILLINI CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 98,077 $ 252,103
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 143,863 122,375
Provision for loan losses 140,000 30,000
Securities gains, net (1,250) -
Increase in accrued interest receivable (100,785) (26,686)
Increase (decrease) in accrued interest payable (25,137) 36,918
Other, net (150,442) (238,278)
Origination of secondary market mortgage loans (3,953,354) (1,148,715)
Proceeds from the sale of secondary market mortgage loans 3,719,354 866,668
-------------- --------------
Net cash used in operating activities (129,674) (105,615)
-------------- --------------
Cash flows from investing activities:
Proceeds from sales of debt and marketable equity securities
available for sale 1,714,729 -
Proceeds from maturities and paydowns of debt securities
available for sale 2,684,852 515,805
Proceeds from maturities and paydowns of debt securities
held to maturity - 220,000
Purchases of debt and marketable equity securities
available for sale (12,207,836) (287,573)
Net (increase) decrease in loans 5,205,716 (1,606,378)
Purchases of premises and equipment (95,601) (85,714)
Proceeds from sales of other real estate - 79,921
-------------- --------------
Net cash used in investing activities (2,698,140) (1,163,939)
-------------- --------------
Cash flows from financing activities:
Net decrease in noninterest-bearing deposit accounts (1,750,788) (3,032,293)
Net increase (decrease) in savings, NOW and money market accounts 1,139,262 (2,146,095)
Net increase (decrease) in time deposits $100,000 and over 1,196,108 (659,432)
Net increase in other time deposits 252,375 6,332,501
Net decrease in Federal funds purchased - (665,000)
Net decrease in securities sold under agreements
to repurchase (400,000) (248,705)
Principal payments on note payable - (350,000)
Cash dividends paid (100,903) (100,903)
-------------- --------------
Net cash provided by used in financing activities 336,054 (869,927)
-------------- --------------
Net decrease in cash and cash equivalents (2,491,760) (2,139,481)
Cash and cash equivalents at beginning of period 8,079,146 7,762,207
-------------- --------------
Cash and cash equivalents at end of period $ 5,587,386 $ 5,622,726
-------------- --------------
-------------- --------------
Supplemental Information:
Income taxes paid $ 145,000 $ 100,000
Interest paid $ 1,294,544 $ 1,141,175
Other non-cash investing activities:
Transfer of loans to other real estate $ - $ 31,495
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to interim consolidated financial statements.
5
<PAGE>
ILLINI CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1996
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to Form 10-QSB
and, therefore, do not include all of the information and notes required
by generally accepted accounting principles for complete consolidated
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. For further information, refer to
the consolidated financial statements and footnotes included in the
Company's Annual Report on Form 10-KSB for the year ended December 31,
1995.
Results for the three months ended March 31, 1996 may not be indicative
of the companies annual performance.
6
<PAGE>
ILLINI CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
MARCH 31, 1996
This discussion should be read in conjunction with the financial statements,
notes and tables included elsewhere in this report and in the 1995 Illini
Corporation Annual Report on
Form 10-KSB.
SUMMARY
<TABLE>
<CAPTION>
Three months ended
March 31, Percent
EARNINGS $(thousands, except per share data) 1996 1995 Change
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
Total revenue. . . . . . . . . . . . . . . . . . . $1,978 $2,064 -4.15%
Net income . . . . . . . . . . . . . . . . . . . . 98 252 -61.04%
Net income per share . . . . . . . . . . . . . . . $0.22 $0.56 -61.04%
KEY RATIOS
- - --------------------------------------------------------------------------------
Return on average assets . . . . . . . . . . . . . 0.26% 0.65% -0.39%
Return on average equity . . . . . . . . . . . . . 2.67% 7.85% -5.18%
Average equity to assets . . . . . . . . . . . . . 9.79% 8.33% 1.46%
Tangible equity to net assets. . . . . . . . . . . 9.45% 8.20% 1.24%
Tier I leverage ratio. . . . . . . . . . . . . . . 9.64% 8.72% 0.92%
Total risk adjusted capital ratio. . . . . . . . . 15.41% 14.17% 1.24%
Dividend payout ratio. . . . . . . . . . . . . . . 102.80% 40.05% 62.75%
Net interest margin. . . . . . . . . . . . . . . . 4.73% 4.82% -0.09%
Net funds function . . . . . . . . . . . . . . . . 4.31% 4.66% -0.36%
Efficiency ratio . . . . . . . . . . . . . . . . . 82.65% 79.61% 3.04%
</TABLE>
Net income for the first quarter of 1996 was $98,000, or .22 cents per share.
Net income for the first quarter of 1995 was $252,000, or .56 cents per share.
The primary reasons for the decline in income in 1996 are a reduction in net
interest margin due to an increase in the cost of retail certificates of deposit
and an increase in the provision for loan losses.
Non-performing assets were $2,489,000 at March 31, 1996, an increase of
$1,177,000 from a year ago. Net charge-offs increased to $290,000 in the first
quarter of 1996 from $86,000 in the first quarter of 1995.
7
<PAGE>
RESULTS OF OPERATION
NET INTEREST INCOME/NET INTEREST MARGIN
Net interest income on a taxable equivalent basis was $1,622,000 in the first
quarter of 1996, a decline of 3% compared with $1,674,000 in the first quarter
of 1995. Net interest margin was 4.73% for the first quarter of 1996, compared
with 4.82% for the first quarter of 1995. The decrease was substantially due to
an increase in the cost of time deposits to 5.79% in the first quarter of 1996
from 4.97% in the first quarter of 1995.
Net interest income is also affected by the growth, pricing, mix and maturity of
interest earning assets and interest bearing liabilities, as well as other
factors including loan quality. Individual components of net interest income
and net interest margin are percented in the consolidated average balances,
interest income/expense and yield/rate table on page 9 and a net interest income
rate/volume variance analysis is presented on page 10.
Total loans declined $5,262,000 since December 31, 1995, comprised of a decrease
of $2,967,000 in real estate loans and a $2,050,000 drop in commercial loans.
The proceeds from the loan paydowns along with a $896,000 increase in deposits
were used to fund purchases resulting in a net increase of $7,483,000 since
December 31, 1995. The securities purchased were primarily intermediate term
United States Agency securities and mortgage backed securities.
8
<PAGE>
CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND YIELD/RATES
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------------------------------------------------------------------------
1996 1995
----------------------------------------------- -----------------------------------------------
(DOLLARS IN THOUSANDS)
Percent Interest Average Percent Interest Average
Average of Total Income/ Yield/ Average of Total Income/ Yield/
Balance Assets Expense Rate Balance Assets Expense Rate
------- ------ ------- ---- ------- ------ ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Federal funds sold $ 2,370 1.6 % $ 32 5.34 % $ 416 0.3 % $ 6 5.77 %
Investment securities
Taxable 22,355 14.9 321 5.68 33,333 21.6 463 5.56
Nontaxable (1) 15,271 10.2 274 7.10 10,450 6.8 192 7.35
Loans
Commercial 15,801 10.5 347 8.81 13,995 9.1 302 8.75
Agriculture 4,831 3.2 93 7.72 4,363 2.8 96 8.92
Real estate
Commercial 29,682 19.7 682 9.22 28,184 18.3 630 9.07
Agriculture 2,976 2.0 67 9.03 3,657 2.4 78 8.65
Residential 26,937 17.9 626 9.32 32,092 20.8 712 9.00
Consumer, net 18,037 12.0 431 9.58 16,013 10.4 371 9.40
Credit card 609 0.4 18 11.86 18 0.0 2 45.06
-------- ------ -------- -------
Total loans 98,873 65.7 2,264 9.18 98,322 63.8 2,191 9.04
Loan reserve (1,283) (0.9) (1,537) (1.0)
-------- ------ -------- -------
Net loans(1)(2) 97,590 64.9 2,264 9.31 96,785 62.8 2,191 9.18
-------- ------ ------ -------- ------ -------
Total interest earning assets 137,586 91.5 2,891 8.43 140,984 91.5 2,852 8.20
-------- ------ -------- ------ -------
Non-interest-earning assets:
Cash and due from banks 5,243 3.5 5,381 3.5
Premises and equipment 4,873 3.2 4,351 2.8
Other assets 2,687 1.8 3,445 2.2
-------- ------ -------- ------
Total assets $ 150,389 100.0 154,161 100.0 %
-------- ------ -------- ------
-------- ------ -------- ------
LIABILITIES
Interest-bearing liabilities:
Interest-bearing deposits:
Savings and NOW accounts $ 48,659 32.4 % $ 312 2.57 % $ 52,076 33.8 % $ 330 2.57 %
Time deposits 66,012 43.9 953 5.79 65,869 42.7 807 4.97
Federal funds purchased 10 0.0 0 0.00 1,432 0.9 22 6.23
Securities sold under
agreements to repurchase 288 0.2 4 5.57 791 0.5 11 5.64
Note payable ---- ---- ---- ---- 374 0.2 8 8.67
-------- ------ ------ -------- ------ -------
Total interest-bearing
liabilities 114,969 76.4 1,269 4.43 120,542 78.2 1,178 3.96
Non-interest-bearing deposits 18,754 12.5 19,213 12.5
Other liabilities 1,940 1.3 1,561 1.0
Total liabilities 135,663 90.2 141,316 91.7
SHAREHOLDERS' EQUITY 14,726 9.8 12,845 8.3
Total liabilities and
shareholders' equity $ 150,389 100.0 % $ 154,161 100.0 %
-------- ------ -------- ------
-------- ------ -------- ------
Net yield on interest earning
assets $ 1,622 4.73 % $ 1,674 4.82 %
------- ----- ------ -----
------- ----- ------ -----
</TABLE>
(1) Fully taxable equivalent basis using the federal statutory rate of 34%.
(2) Nonaccrual loans are included in the loan balances. Interest income
includes related fee income of $59,000 in 1996 and $56,000 in 1995.
9
<PAGE>
NET INTEREST INCOME - RATE/VOLUME VARIANCE ANALYSIS
<TABLE>
<CAPTION>
1996-1995
---------------------------------------------------
CHANGES IN VOLUME RATE
INCOME/EXPENSE EFFECT EFFECT
-------------- ------ ------
(DOLLARS IN THOUSANDS)
<C> <C> <C>
<S>
FEDERAL FUNDS SOLD $ 26 $ 25 $ 1
INVESTMENT SECURITIES:
TAXABLE (142) (152) 10
NONTAXABLE 82 89 (7)
NET LOANS 73 28 45
------- ------- -------
TOTAL INTEREST INCOME 39 (10) 49
------- ------- -------
SAVINGS AND NOW ACCOUNTS (18) (19) 1
TIME DEPOSITS 146 2 144
FEDERAL FUNDS PURCHASED (22) (11) (11)
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS (7) (7) 0
NOTE PAYABLE (8) (4) (4)
------- ------- -------
TOTAL INTEREST EXPENSE 91 (39) 130
------- ------- -------
NET INTEREST INCOME $ (52) $ 29 $ (81)
------- ------- -------
------- ------- -------
</TABLE>
NONINTEREST INCOME
<TABLE>
<CAPTION>
Three months ended Percent
March 31, Change
------------------------- -----------
1996 1995 1996/1995
----------- ----------- -----------
<S> <C> <C> <C>
Service charges on deposit accounts. . . . . . . $240,108 $267,186 (10.1)%
Securities gains, net . . . . . . . . . . . .. . 1,250 ---- -----
Mortgage loan servicing fees . . . . . . . . . . 44,054 38,528 14.3
Gain on sale of mortgage loans . . . . . . . . . 26,897 9,296 189.3
Other income . . . . . . . . . . . . . . . . . . 45,227 74,408 (39.2)
--------- --------
$357,536 $389,418 (8.2)
--------- --------- -----
--------- --------- -----
</TABLE>
The decrease in service charges on deposit accounts for the three months ended
March 31, 1996 as compared to 1995 resulted from a decrease of $13,000 and
$11,000, respectively, in overdraft fees and services charges on regular
checking accounts.
The increase in mortgage loan service fees and the gain on sale of mortgage
loans is due to an increase in the origination of mortgage loans for sale in the
secondary market to $3,953,000 for the first quarter of 1996 as compared to
$1,149,000 for the first quarter of 1995.
10
<PAGE>
The decrease in other noninterest income for the three months ended March 31,
1996 is primarily due to a $31,000 gain on the sale of other real estate that
was recorded during the quarter ended March 31, 1995.
NONINTEREST EXPENSE
<TABLE>
<CAPTION>
Three months ended Percent
March 31, Change
------------------------- -----------
1996 1995 1996/1995
----------- ---------- -----------
<S> <C> <C> <C>
Salaries . . . . . . . . . . . . . . . . . . . . $667,080 $631,168 5.7 %
Benefits . . . . . . . . . . . . . . . . . . . . 152,587 142,132 7.4
Occupancy expense. . . . . . . . . . . . . . . . 164,380 135,180 21.6
Equipment expense. . . . . . . . . . . . . . . . 106,146 115,136 (7.8)
Data processing. . . . . . . . . . . . . . . . . 96,836 95,323 1.6
Insurance. . . . . . . . . . . . . . . . . . . . 7,091 12,286 (42.3)
Directors' fees. . . . . . . . . . . . . . . . . 35,638 31,600 12.8
Audit fees.. . . . . . . . . . . . . . . . . . . 19,000 23,076 (17.7)
Legal fees . . . . . . . . . . . . . . . . . . . 60,011 25,154 138.6
Consulting fees. . . . . . . . . . . . . . . . . 11,793 12,854 (8.3)
Regulatory fees. . . . . . . . . . . . . . . . . 5,721 82,814 (93.1)
Supplies . . . . . . . . . . . . . . . . . . . . 33,669 46,096 (27.0)
Postage. . . . . . . . . . . . . . . . . . . . . 29,704 33,631 (11.7)
Amortization . . . . . . . . . . . . . . . . . . 13,477 22,810 (40.9)
Marketing and advertising. . . . . . . . . . . . 65,622 54,450 20.5
Other real estate expenses . . . . . . . . . . . 273 2,020 (86.5)
Other expense. . . . . . . . . . . . . . . . . . 166,895 176,422 (5.4)
---------- ----------
$1,635,923 $1,642,152 (0.4)
---------- ---------- -------
---------- ---------- -------
</TABLE>
Salaries and benefits increased for the three months ended March 31, 1996,
primarily due to headcount added for the production of agricultural and
residential mortgage loans.
Occupancy expense increased for the three months ended March 31, 1996, primarily
due to cost of $35,000 associated with moving leasehold improvements out of a
building in which the lease had expired.
Legal fees increased substantially in the first quarter of 1996 due to
non-recurring regulatory matters pursued by the bank.
Regulatory fees decreased for the three months ended March 31, 1996, as a result
of the Federal Deposit Insurance Corporation decision to lower deposit insurance
premiums from .23 cents per $100 in bank insurance fund deposits to the
regulatory minimum of $500 per quarter for well capitalized and well managed
banks, resulting in a decline of $77,000 in FDIC insurance premiums.
11
<PAGE>
INCOME TAXES
The provision for income taxes was 7% of pre-tax income for the three months
ended March 31, 1996, as compared to 22% of pre-tax income for the same period
in 1995.
CREDIT QUALITY
The provision for loan losses increased to $140,000 for the three months ended
March 31, 1996, as compared to $30,000 for the comparable period in the prior
year. Net charge-offs increased to $290,000 for the three months ended March
31, 1996, as compared to $86,000 for the three months ended March 31, 1995. A
problem agricultural credit was responsible for $200,000 of the net charge-offs
in the first quarter of 1996. Management expects to charge-off $200,000
additionally on this credit in the second quarter of 1996.
Non-performing assets increased to $2,489,000 at March 31, 1996, an increase of
$1,312,000 at March 31, 1995.
<TABLE>
<CAPTION>
CREDIT QUALITY (DOLLARS IN THOUSANDS) 1996 1995
- - ------------------------------------------------------------------------------
<S> <C> <C>
Ending reserve for loan losses . . . . . . . . $1,096 $1,491
-------- --------
Nonperforming assets . . . . . . . . . . . . .
Nonaccrual . . . . . . . . . . . . . . . . . 2,011 737
OREO . . . . . . . . . . . . . . . . . . . . 478 575
-------- --------
Total nonperforming assets . . . . . . . . . $2,489 $1,312
-------- --------
-------- --------
Loans delinquent over 90 days. . . . . . . . . $13 $30
-------- --------
Gross charge-offs. . . . . . . . . . . . . . . 319 99
Less: recoveries . . . . . . . . . . . . . . . 29 13
-------- --------
Net charge-offs. . . . . . . . . . . . . . . $290 $86
-------- --------
-------- --------
KEY RATIOS
Reserve to ending loans. . . . . . . . . . . 1.15% 1.48%
Allowance to nonperforming loans . . . . . . 0.55% 1.62%
Nonperforming assets to ending loans . . . . 2.60% 1.30%
90 days delinquent to ending loans . . . . . 0.01% 0.03%
Net charge-offs to average loan. . . . . . . 1.17% 0.35%
</TABLE>
INTEREST RATE SENSITIVITY
Interest rate sensitivity is a function of the repricing characteristics of
Illini Corporation's portfolio of assets and liabilities. These repricing
characteristics are the time frame within which the interest bearing assets and
liabilities are subject to change in interest rates either at replacement,
repricing or maturity during the life of the instruments. Interest rate
sensitivity management focuses on repricing relationships of assets and
liabilities during periods of changes in market interest rates. Effective
interest rate sensitivity management seeks to ensure that both assets and
liabilities respond to changes in interest rates within an acceptable time
frame, thereby minimizing the effect of interest rate movements on net interest
income. Interest rate sensitivity is measured as the
12
<PAGE>
difference between the volumes of assets and liabilities in Illini Corporation's
current portfolio that are subject to repricing at various time horizons: up to
3 months, 4-12 months, 1-5 years, and over 5 years. These differences are known
as interest sensitivity gaps. The following table shows interest sensitivity
gaps for these different intervals as of March 31, 1996.
In the following table, mortgage-backed securities and collateralized mortgage
obligations are presented based on market median prepayment speeds for the
weighted average coupon of the underlying collateral pools as of March 31, 1996.
For all other interest earning assets and interest bearing liabilities, variable
rate assets are reflected in the time interval of the assets or liabilities have
been allocated to various time intervals based on contractual repayment and/or
maturity.
<TABLE>
<CAPTION>
Contractual Repayment Schedule if Fixed Rate;
Earliest Possible Repricing Interval if Floating Rate
-----------------------------------------------------
up to 4 to 1 to Over 5
3 months 12 months 5 years years
-------- --------- ------- -----
<S> <C> <C> <C> <C>
Interest-earning Assets
Loans $ 21,858 $ 22,514 $ 47,584 $ 3,764
Investments in debt and
marketable equity securities 6,297 6,470 15,190 14,493
Other interest-earning assets 815 -- -- --
------ ------- ------- -------
Total Interest-earning Assets $ 28,970 $ 28,984 $ 62,774 $ 18,257
------ ------- ------- -------
------ ------- ------- -------
Interest-bearing Liabilities
Savings, NOW, and money
market accounts $ 48,681 -- -- --
Time Deposits 25,227 29,853 11,585 15
Federal funds purchased -- -- -- --
Securities sold under
agreements to repurchase 150 -- 100 --
------ ------ ------ -------
Total Interest-bearing Liabilities $ 74,058 $ 29,853 $ 11,685 $ 15
------ ------ ------ -------
------ ------ ------ -------
Gap by Period $(45,088) $ ( 869) $ 51,089 $ 18,242
------ ------ ------ -------
------ ------ ------ -------
Cumulative Gap $(45,088) $ (45,957) $ 5,132 $ 23,374
------ ------ ------ -------
------ ------ ------ -------
</TABLE>
The schedule indicates that Illini is liability sensitive in time intervals of
less than 1 year. That means that interest bearing liabilities could reprice
faster than earning assets. This would indicate that the net interest would
improve when interest rates decline and the margin would be likely to decline
when interest rates increase. Although this table provides an indication of the
direction of risk for a change in interest rates, it does not fully depict the
effect of option like characteristics contained in loans, investments and
deposits. For these reasons, Illini also evaluates its interest rate risk
position using simulation models and other valuation tools to monitor its
balance sheet and related earnings potential. Management believes Illini is
appropriately positioned for future interest rate movements within the
guidelines of the Asset Liability Management Committee Policy approved by the
Board of Directors.
13
<PAGE>
PART II. OTHER INFORMATION
ILLINI CORPORATION AND SUBSIDIARY
March 31, 1996
Item 1 LEGAL PROCEEDINGS
Various legal claims have arisen in the normal course of business,
which, in the opinion of Illini management and legal counsel, will
not result in any material liability to Illini.
Item 2 CHANGES IN SECURITIES - none
Item 3 DEFAULTS UPON SENIOR SECURITIES - none
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - none
Item 5 OTHER INFORMATION - none
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(A) Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended March
31, 1996.
14
<PAGE>
ILLINI CORPORATION AND SUBSIDIARY
March 31, 1996
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Illini Corporation by
/s/ Burnard K. McHone 5/10/96
- - -------------------------------- -------------
Burnard K. McHone Date signed
President
/s/ Mark R. Edmiston 5/10/96
- - -------------------------------- -------------
Mark R. Edmiston Date signed
Chief Financial Officer
15
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<PAGE>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
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<FED-FUNDS-SOLD> 815,000
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