SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1994
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file Number 0-12709
LIBERTY BANCORP, INC.
(Exact Name of Registrant as specified in its charter)
Oklahoma 73-1218204
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 North Broadway
Oklahoma City, OK 73102
(Address of principal executive offices)
(Zip Code)
(405) 231-6000
(Registrant's telephone number, including area code)
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.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of November 14, 1994
----- -----------------------------------
Common Stock 9,488,182
LIBERTY BANCORP, INC.
THIRD QUARTER REPORT 1994
Contents
--------
Financial Highlights
Financial Review
Selected Statistical Information
Consolidated Financial Statements
Notes to Consolidated Financial
Statements
Other Information
Signatures
<TABLE>
FINANCIAL HIGHLIGHTS Liberty Bancorp, Inc.
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
September 30 Nine Months Ended Three Months Ended
(In thousands, except per share data) 1994 1993 1994 1993
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
For the Third Quarter
Total Revenues $ 145,411 $ 135,296 $ 49,064 $ 44,549
Net Interest Income 57,886 54,006 19,540 17,977
Provision for Loan Losses _ (7,569) _ 85
Trust Fees 11,941 11,793 3,771 3,975
Mortgage Banking Income 4,824 5,536 1,434 1,871
Other Noninterest Income 26,102 23,581 7,902 7,560
Noninterest Expense 83,559 82,318 27,330 26,828
Provision for income taxes (3,523) 4,152 (5,291) 1,042
Cumulative Effect of Change in Accounting
Principle _ 14,255 _ _
Net Income 20,717 30,270 10,608 3,428
Per Share Data _ Primary and Fully-diluted
Income Before Cumulative Effect of Change in
Accounting Principle 2.11 1.65 1.08 .35
Net Income 2.11 3.11 1.08 .35
Cash Dividends Declared .45 .20 .15 .10
- ----------------------------------------------------- ------------- ------------- ------------- ----------------
At September 30
Loans $1,118,414 $ 827,238 $1,118,414 $ 827,238
Earning Assets 2,163,284 2,231,541 2,163,284 2,231,541
Assets 2,575,883 2,625,724 2,575,883 2,625,724
Deposits 2,110,046 2,035,595 2,110,046 2,035,595
Total Shareholders' Investment 233,655 215,564 233,655 215,564
Book Value per Common Share 24.64 22.74 24.64 22.74
- ----------------------------------------------------- ------------- ------------- ------------- ----------------
Average Year-to-Date Balances
Earning Assets $2,180,306 $2,019,929 $2,150,545 $2,052,440
Assets 2,567,099 2,394,454 2,528,330 2,425,601
Deposits 2,087,349 1,915,830 2,049,881 1,938,802
Total Shareholders' Investment 227,379 205,604 227,960 216,492
- ----------------------------------------------------- ------------- ------------- ------------- ----------------
Ratios
Capital Ratios
Leverage 8.68 % 8.38 % 8.68 % 8.38 %
Risk-based 15.41 17.04 15.41 17.04
Average Shareholders' Investment as a % of
Average Total Assets 8.86 8.59 9.02 8.93
Average Earning Assets as a % of Average
Total Assets 84.93 84.36 85.06 84.62
Rate of Return, Before Cumulative Effect of
Change in Accounting Principle, on
Average Earning Assets 1.27 1.06 1.96 .66
Average Total Assets 1.08 .89 1.66 .56
Average Total Shareholders' Investment 12.18 10.41 18.46 6.28
Rate of Return on
Average Earning Assets 1.27 2.00 1.96 .66
Average Total Assets 1.08 1.69 1.66 .56
Average Total Shareholders' Investment 12.18 19.68 18.46 6.28
Dividend Payout Ratio 21.33 6.43 13.89 28.57
Operating Efficiency Ratio 81.88 85.36 82.24 84.40
Provision for Loan Losses as %
of Average Loans _ (1.33) _ .04
</TABLE>
Financial Review
Liberty Bancorp, Inc. and its subsidiaries ("Liberty") provide a broad
range of banking and financial services to meet the diverse needs of individual
and corporate customers in the Oklahoma City and Tulsa metropolitan areas,
Oklahoma and the Mid-America region. Liberty Bank and Trust Company of
Oklahoma City, N.A. ("Liberty Oklahoma City") and Liberty Bank and Trust
Company of Tulsa, N.A. ("Liberty Tulsa") are Liberty's principal subsidiaries.
Liberty Mortgage Company, a subsidiary of Liberty Oklahoma City, engages in
mortgage banking activities.
Liberty has twenty eight full-service banking locations in Oklahoma from
which it provides its financial services. These locations are in Oklahoma
City, Tulsa, Edmond, Norman, Choctaw, Jenks, Harrah and Midwest City. In
addition, it has three limited service detached drive-in facilities in Oklahoma
City, Tulsa and Norman. Liberty Mortgage Company ("LMC") conducts residential
mortgage operations from the main Liberty Oklahoma City location and two
Liberty banking centers including one location in Oklahoma City and one in
Tulsa. Commercial mortgage operations are available at the main bank location
of Liberty Oklahoma City and an LMC branch in Tulsa.
This Financial Review should be read in conjunction with the consolidated
financial statements, notes to the consolidated financial statements and the
supplemental statistical and financial data presented elsewhere in this report.
General Conditions and Performance Summary:
First Nine Months of 1994 Compared to First Nine Months of 1993
For the first nine months of 1994, Liberty reported net income of $20.7
million or $2.11 per common share. This compares to net income of $30.3
million or $3.11 per common share for the first nine months of 1993. Net
income for the first nine months of 1993 included the cumulative effect of a
change in accounting for income taxes of $14.3 million. For the first nine
months of 1994 Liberty recorded a tax benefit of $3.5 million. This benefit is
discussed further in "Income Taxes." The first nine months of 1993 also
included a negative provision for loan losses of $7.6 million and a negative
provision for other real estate and assets owned ("OREO") of $1.1 million
offset by provisions for losses on mortgage receivables in process of
foreclosure and corporate risk reserves of $1.8 million. No comparable
provisions were made during the first nine months of 1994.
During 1993 Liberty acquired Midwest National Bancshares, Inc.,
Tulbancorp, Inc. and The First National Bank of Jenks. These banking companies
had respective assets of $38.6 million, $62.8 million and $33.4 million at the
date of acquisition. These acquisitions were treated as poolings-of-interest
and, accordingly, the 1993 results of operations have been restated for the
entire year to reflect the results of the acquired companies. Liberty also
acquired First Oklahoma Bank and Trust Co. of Edmond and The First National
Bank of Edmond. These two banks had total assets of $142.2 million and were
acquired as purchases and are included in results of operations from that
date.
Net Interest Income
On a tax-equivalent basis, net interest income for the first nine months
of 1994 increased $3.8 million or 6.8% to $59.5 million from $55.7 million for
the first nine months of 1993. The tax equivalent net interest margin was
3.65% for the first nine months of 1994 compared to 3.69% for the same period
in 1993.
Tax-equivalent interest income increased $8.1 million to $104.2 million
for the first nine months of 1994 compared to $96.1 million in the same period
of 1993 due predominately to the increase in loan volumes. Average loans
increased $255.6 million (approximately $38.0 million from non-pooled bank
acquisitions) and loan interest income increased $13.7 million. Loan yields
decreased from 7.8% to 7.7% due primarily to fixed-rate real estate loans and
consumer loans refinancing and repricing at lower rates. Decreases occurred in
both securities' balances ($32.5 million) and yield (38 basis points) as a
result of significant sales, maturities and early pay downs reinvested in a
lower rate environment. These yield and volume mix changes resulted in the
same earning asset yield of 6.4% for the comparative periods.
Total interest expense increased to $44.7 million for the first nine
months of 1994 compared to $40.4 million for the first nine months of 1993.
This increase was attributable to the $152.2 million (approximately $98 million
from non-pooled bank acquisitions) higher average interest-bearing deposit
level. Liberty's cost of funds rate increased in 1994 to 3.5% equaling the
same rate in 1993 which had declined for several quarters during a low rate
environment. Market rates in general reversed direction in the first quarter
of 1994 when the Federal Reserve Bank raised the bank borrowing discount rate
for the first time since the middle of 1992. During the second and third
quarters of 1994, the bank borrowing discount rate was increased three more
times. Liberty's lowest cost of funds rate for the first nine months of 1994
was the first quarter's 3.2%. Average consumer deposit rates paid were primar-
ily lower in 1994 due to significant maturities of certificates of deposit
which were reinvested into savings and money market accounts or shorter-term,
lower-rate certificates. However, offsetting this decline were increases in
rates on large deposit liabilities and other borrowings.
Noninterest Income
Noninterest income for the first nine months of 1994 increased $2.0
million or 4.8% from the first nine months of 1993. Service charges on
deposits increased $1.2 million or 12.4%. Of this increase, $698 thousand is
attributable to service charges on deposits of banks acquired, accounted for as
a purchase, during the last nine months of 1993. As a result of poor market
conditions, trading account profits decreased $801 thousand or 20.1%. Net
securities gains totaled $360 thousand compared to $215 thousand in 1993.
Other noninterest income increased $1.8 million or 20.6% which included gains
on the sale of mortgage servicing totaling $1.1 million and increased income
from ATM fees and foreign exchange.
Noninterest Expense
Noninterest expense (excluding net income from the operation of OREO,
which is discussed separately below in "Other Real Estate and Assets Owned")
decreased $212 thousand or .3% to $85.0 million for the first nine months of
1994 compared to $85.2 million for the same period one year ago. Decreases in
noninterest expenses, in many categories, are offset by $2.6 million of costs
attributable to acquired banks which affected several expense categories. A
significant decrease was in other noninterest expense which decreased $1.9
million or 18.7%, primarily as a result of provisions in 1993 for losses on
mortgage receivables in process of foreclosure and other corporate risk
reserves.
Salaries and employee benefits increased $2.1 million or 5.4% from the
first nine months of 1993. Other than base salary increases, 1994 includes
$1.1 million in salary and benefits for employees of new banking center
locations. Equipment expense increased $989 thousand or 17.1% primarily due to
increased depreciation on new data processing and other equipment.
The amortization of intangibles decreased $1.5 million or 44.5% as a
result of accelerated write-offs in 1993 of the intangibles associated with
purchased mortgage servicing rights due to refinancings. The amortization on
these rights have decreased $2.1 million as compared to the first nine months
of 1993. This decrease is partially offset by the amortization of bank
acquisition premiums which increased $568 thousand.
The operating efficiency ratio is defined as noninterest expense as a
percent of net interest income on a tax equivalent basis plus noninterest
income less security gains or losses. Liberty's efficiency ratio for the first
nine months of 1994 was 81.9% compared to 85.4% for the same period in 1993.
Liberty with the assistance of an outside consultant has completed review of
its operations and is implementing plans to achieve increased revenues and
greater operational efficiencies in 1994 and beyond.
Income Taxes
Liberty recorded a net income tax benefit of $3.5 million for the first
nine months of 1994 compared with net income tax expense of $4.2 million during
the same period of 1993. The net income tax benefit in 1994 resulted from
Liberty's determination that it would generate sufficient taxable income in
future periods to use a significant portion of its net operating loss
carryforwards which had been impaired in 1993. The benefit realized through
the nine months ended September 30, 1994 from net operating loss carryforwards
expected to be utilized in future periods was approximately $8.8 million.
Liberty adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") in the first quarter of 1993.
This standard required, among other things, recognition of future tax benefits,
measured by enacted tax rates, attributable to deductible temporary differences
between financial statement and income tax bases of assets and liabilities and
to the future tax benefit of net operating loss carryforwards, to the extent
that realization of such benefits is more likely than not. Similarly, future
tax liabilities were also required to be recognized. The adoption of SFAS No.
109 resulted in a deferred asset, net of valuation allowances and related
benefit of $14.3 million or $1.46 per share on January 1, 1993. This change is
reflected on the income statement as a cumulative effect of change in
accounting principle.
Performance Summary: Third Quarter of 1994
Compared to Third Quarter 1993
During the third quarter of 1994, the Company reported net income of $10.6
million or $1.08 per common share, compared to net income of $3.4 million or
$.35 per share, for the third quarter of 1993. The third quarter of 1994
included an income tax benefit of $5.3 million compared to an income tax
expense of $1.0 million for the same period in 1993. As a result, income
before the provision for income taxes for the third quarters of 1994 and 1993
was $5.3 million and $4.5 million, respectively.
Net Interest Income
On a tax-equivalent basis, net interest income for the third quarter of
1994 increased $1.5 million or 7.9% to $20.0 million from $18.5 million in the
third quarter of 1993, due primarily to the increase in earning assets. The
tax-equivalent net interest margin was 3.7% for the third quarter of 1994
compared to 3.6% for the same period one year ago.
Tax-equivalent interest income increased $4.7 million to $36.4 million for
the third quarter of 1994 compared to $31.7 million in the same period of 1993
due primarily to the increase in loan volumes of $291.8 million (approximately
$26 million from non-pooled acquisitions) and rates. The yield on average
loans increased to 7.9% from 7.6% but was partially offset by fixed-rate real
estate and consumer loans refinancing and repricing at lower rates. Funding
for the increased loan levels was provided by pay downs and maturities of
investment securities and increased deposit levels.
Total interest expense amounted to $16.4 million for the third quarter of
1994 compared to $13.2 million in the same period of 1993, primarily reflecting
higher levels of interest-bearing liabilities and higher interest rates.
Interest-bearing deposits increased by $153.9 million (approximately $81
million from non-pooled acquisitions). Higher rates occurred in the large
deposit liabilities and other borrowings where some maturities have been
extended.
Noninterest Income
Noninterest income decreased $299 thousand or 2.2% in the third quarter of
1994 compared to the third quarter of 1993. The most significant decrease was
in mortgage banking income which
decreased $437 thousand or 23.4% as a result of a smaller servicing portfolio
due to sales in previous periods.
Noninterest Expense
Noninterest expense (excluding net income from the operation of OREO)
decreased $493 thousand or 1.8%. The level of salaries and other expenses is
beginning to show the effects of management's expense reduction efforts but are
partially offset by increases in several expense categories attributable to
acquired banks of $610 thousand. The largest decrease was in the amortization
of intangibles which decreased $506 thousand as a result of accelerated write-
offs in 1993 of the intangibles associated with purchased mortgage servicing
rights due to refinancings.
The operation of OREO in the third quarter of 1994 produced income of $409
thousand compared to $1.4 million in the third quarter of 1993. The decrease
is primarily due to sales of income-producing properties. Income from gains on
sales increased to $488 thousand from $353 thousand.
Credit Risk Management
Nonperforming assets include nonperforming loans and other real estate and
assets owned net of reserves. Total nonperforming assets have decreased $6.8
million or 28.2% to $17.5 million since year-end 1993 and one year ago. The
decreasing level of nonperforming assets is shown for the previous five
quarters in the following table:
- -------------------------------------------------------------------------------
Nonperforming Assets
- -------------------------------------------------------------------------------
9/30/94 6/30/94 3/31/94 12/31/93 9/30/93
- -------------------------------------------------------------------------------
Nonperforming loans and other
real estate and assets owned,
gross, as a % of
Total loans and other real
estate and assets owned 1.68% 1.79% 2.43% 2.82% 3.29%
Total assets .74% .73% .88% 1.01% 1.06%
The following sections provide additional information concerning loan con-
centrations, nonperforming loans, reserve for loan losses, other real estate
and assets owned and the reserve for other real estate and assets owned.
Loan Concentrations
Loan concentrations are an important factor in the assessment of risk in
the loan portfolio. The percentage composition of the loan portfolio for the
last five quarters is reflected in the following table:
- -------------------------------------------------------------------------------
Loan Portfolio
- -------------------------------------------------------------------------------
9/30/94 6/30/94 3/31/94 12/31/93 9/30/93
- -------------------------------------------------------------------------------
Commercial 41.7% 40.1% 39.6% 40.8% 41.9%
Energy 6.1 6.6 5.8 6.1 7.4
Real estate - construction 8.8 9.0 9.4 9.1 10.7
Real estate - mortgage 21.6 21.8 21.9 21.3 20.6
Correspondent and regional 1.6 1.7 1.9 1.8 2.4
Personal 20.2 20.8 21.4 20.9 17.0
Loans not expected or intended to be held until maturity are termed "held
for sale." These loans are carried at the lower of cost or estimated market
value and any adjustments are reflected as a reduction of noninterest income.
At September 30, 1994, these loans, primarily residential real estate mortgage
loans, totaled $15.5 million compared to $26.5 million at December 31, 1993 and
$17.3 million at September 30, 1993.
Nonperforming Loans
Nonperforming loans decreased by $3.0 million or 22.6% since December 31,
1993 and decreased by $2.6 million or 19.8% from one year earlier. Of the
nonperforming loans at September 30, 1994, 63.0% were real estate-related.
Nonperforming loans for the past five quarters are shown in the following
table:
- -------------------------------------------------------------------------------
Nonperforming Loans
- -------------------------------------------------------------------------------
(In thousands) 9/30/94 6/30/94 3/31/94 12/31/93 9/30/93
- -------------------------------------------------------------------------------
Nonaccrual $8,350 $9,228 $11,173 $10,138 $11,685
Restructured _ _ _ _ _
Past due 90 days or more 2,066 1,621 1,974 3,313 1,300
- -------------------------------------------------------------------------------
Total nonperforming loans $10,416 $10,849 $13,147 $13,451 $12,985
===============================================================================
Nonperforming loans as a % of
total loans 0.93% 1.01% 1.34% 1.44% 1.57%
- -------------------------------------------------------------------------------
Analysis of Nonperforming Loans by Type
- -------------------------------------------------------------------------------
(In thousands) 9/30/94 6/30/94 3/31/94 12/31/93 9/30/93
- -------------------------------------------------------------------------------
Commercial and other $ 1,621 $ 1,985 $ 3,313 $ 3,604 $ 3,180
Energy 512 432 449 632 543
Real estate - construction 2,522 2,691 2,938 3,236 2,290
Real estate - mortgage 4,037 4,522 5,244 5,135 6,176
Correspondent and regional _ _ _ _ _
Personal 1,724 1,219 1,203 844 796
- -------------------------------------------------------------------------------
Total nonperforming loans $10,416 $10,849 $13,147 $13,451 $12,985
===============================================================================
The following table reflects the levels of performance of nonaccrual loans
as of September 30, 1994:
- -------------------------------------------------------------------------------
Contractual Carrying
(In thousands) Balance Balance
- -------------------------------------------------------------------------------
Contractually current $8,631 $5,875
Contractually past due -
with substantial performance 1,106 811
with limited performance 5,469 2,815
with no performance 2,779 2,184
- -------------------------------------------------------------------------------
Total nonaccrual loans $17,985 $11,685
===============================================================================
In the above table, substantial performance is defined as loans that have
met at least 85% of contractual payments during the past twelve months.
Limited performance includes those loans on which any payments have been made
during the year. The gross interest income from nonaccrual and restructured
loans _ had they been performing in accordance with their original terms _
would have been approximately $727 thousand for the nine months ended September
30, 1994. Payments received on a particular nonaccrual loan are generally
applied to any principal balance before interest income is recorded. The amount
of interest from these nonaccrual and restructured loans included in interest
income was approximately $70 thousand for the first nine months of 1994.
"Potential problem loans" are those loans which, although currently
performing, have credit weaknesses such that management has serious doubts as
to the borrowers' future ability to comply with present terms, and thus may
result in a change to nonperforming status. Management has identified,
through internal credit ratings, certain performing loans which demonstrate
some deterioration in credit quality and, accordingly, are monitored more
carefully. At September 30, 1994, these loans totaled $14.3 million, compared
to $17.0 million at December 31, 1993 and $3.4 million at September 30, 1993.
Of these amounts, approximately $97 thousand, $98 thousand and $138 thousand
represented letters of credit and unfunded loan commitments at September 30,
1994, December 31, 1993, and September 30, 1993, respectively. Exposure to loss
of principal on such loans and commitments has been considered in the
establishment of the reserve for loan losses.
Reserve for Loan Losses
No provisions for loan losses were made during the first nine months of
1994. Provisions during the first nine months of 1993 amounted to a negative
$7.6 million. The negative provisions were made following discussions with
regulators and an assessment to reduce the reserves to a level deemed
appropriate for the anticipated inherent losses in the current loan portfolio.
The following table summarizes the reserve for loan loss activity for the first
nine months of 1994 and 1993:
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Reserve for Loan Losses
- -------------------------------------------------------------------------------
(In thousands) 1994 1993
- -------------------------------------------------------------------------------
Balance at January 1 $19,986 $25,581
Additions
Recoveries 1,053 1,997
Provisions _ (7,569)
Reserves of acquired banks _ 1,241
Less _ Charge-offs (1,422) (1,888)
- -------------------------------------------------------------------------------
Balance at September 30 $19,617 $19,362
===============================================================================
The level of the reserve for loan losses as compared to nonperforming
loans and total loans is shown for the previous five quarters in the following
table:
- -------------------------------------------------------------------------------
(Dollars in thousands) 9/30/94 6/30/94 3/31/94 12/31/93 9/30/93
- -------------------------------------------------------------------------------
Total nonperforming loans 10,416 10,849 $13,147 $13,451 $12,985
Reserve for loan losses 19,617 19,817 20,096 19,986 19,362
Reserve for loan losses as
a % of
Nonperforming loans 188.34% 182.66% 152.86% 148.58% 149.11%
===============================================================================
Total loans 1.75% 1.84% 2.05% 2.14% 2.34%
===============================================================================
Other Real Estate and Assets Owned
Net OREO decreased $3.8 million or 35.1% since year-end 1993 and $4.2
million or 37.6% from September 30, 1993. These reductions have primarily been
the result of sales. A five quarter historical analysis of OREO follows:
- -------------------------------------------------------------------------------
Other Real Estate and Assets Owned by Type
- -------------------------------------------------------------------------------
(In thousands) 9/30/93 6/30/93 3/31/93 12/31/94 9/30/92
- -------------------------------------------------------------------------------
Land $6,198 $6,561 $7,347 $8,791 $10,015
Commercial-office buildings
and motels 801 827 2,166 2,487 2,703
Commercial-shopping centers 2 2 2 200 200
Residential-single family 1,501 1,047 1,256 1,631 1,787
Other 40 103 163 256 36
- -------------------------------------------------------------------------------
Total Other Real Estate and
Assets Owned 8,542 8,540 10,934 13,365 14,741
- -------------------------------------------------------------------------------
Less Reserve for Losses on
Other Real Estate and Assets
Owned (1,507) (1,578) (1,986) (2,521) (3,468)
- -------------------------------------------------------------------------------
Other Real Estate and Assets
Owned, Net $7,035 $6,962 $8,948 $10,844 $11,273
===============================================================================
Net income from the operation of OREO, exclusive of the provision for
losses, amounted to $1.5 million and $1.8 million for the first nine months of
1994 and 1993, respectively. The results of the operation of OREO include
operating income generated and gains from the sale of OREO properties, reduced
by expenses related to the operation of OREO. Gross income from the operation
of OREO for the nine months ended September 30, 1994 totaled $1.9 million.
This income included $1.7 million in gains from the sale of OREO.
Reserve for Other Real Estate and Assets Owned
No provisions were made to the reserve for OREO during the first nine
months of 1994. This compares to net negative provisions of $1.1 million
provided during the first nine months of 1993. Total OREO reserves amounted to
$1.5 million (17.6% of gross OREO carrying values) at September 30, 1994,
compared to $2.5 million (18.9% of gross OREO carrying values) at December 31,
1993 and $3.5 million (23.5% of gross OREO carrying values) at September 30,
1993. OREO charge-offs (which include losses on sales and market value write-
downs) for the first nine months of 1994 amounted to $1.0 million compared to
$675 thousand one year ago. The following table illustrates the changes in the
reserve for the first nine months of 1994 and 1993:
- -------------------------------------------------------------------------------
Reserve for Losses on Other Real Estate and Assets Owned
- -------------------------------------------------------------------------------
(In thousands) 1994 1993
- -------------------------------------------------------------------------------
Balance at January 1 $2,521 $5,001
Provisions for losses _ (1,100)
Charge-offs (1,014) (675)
Reserves of acquired bank _ 242
- -------------------------------------------------------------------------------
Balance at September 30 $1,507 $3,468
===============================================================================
Asset and Liability Management
A senior management committee, the Investment/Asset/Liability Committee,
has the responsibility for monitoring and coordinating the asset and liability
positions, interest rate sensitivity, liquidity and other resource planning
strategies of Liberty on an ongoing basis. This committee monitors the
anticipated effects of interest rate changes on both earnings and market value
of capital of interest rate moves from 50 to 400 basis points. In addition,
the committee has recommended policies, which the Board of Directors has
adopted, setting limits within which the asset/liability risk positions are to
be maintained.
As a result of increased holdings of loans, Liberty was a net purchaser of
federal funds averaging $84.3 million for the first nine months of 1994
compared to $1.6 million for the same period in 1993.
Liquidity is the ability to meet financial obligations for the payment of
funds. Some of the sources of funds to provide liquidity include core
deposits, large certificates of deposit, federal funds purchased from both
upstream and downstream banks, sale of securities under agreements to
repurchase, Treasury Tax and Loan accounts, investment securities held in the
available for sale account which can be sold or pledged for borrowing at the
Federal Reserve discount window or the Federal Home Loan Bank and the
availability of loans and investment securities held in the held-to-maturity
account which can be pledged for borrowings at the Federal Reserve discount
window or the Federal Home Loan Bank.
Liberty's long-standing policy is to maintain as balanced a position in
interest-sensitive assets and liabilities as possible with a goal to achieve
consistent interest margins in all interest rate environments. Liberty is
liability sensitive largely due to the short-term nature of its deposits,
especially savings and money market accounts, and short-term borrowings. Be-
cause of this liability sensitivity, Liberty's net interest margin may be
vulnerable to upward trends in interest rates. In the current quarter this
position has been improved with some lengthening of deposit and other borrowing
maturities. The net interest margin of Liberty has not been significantly
impacted by this year's increase in interest rates because loan volume has
increased and the rates on short-term deposits have not been proportionately
increased. Liberty monitors its interest-sensitivity posture on a continuing
basis to ensure that interest rate changes do not create a material adverse im-
pact. Liberty also adjusts its asset and liability structures, to the extent
possible, to allow for projected rate changes.
Capital Funds
Shareholders' investment at September 30, 1994 was $233.7 million or 9.1%
of total assets compared to 8.5% at December 31, 1993 and 8.2% at September 30,
1993. With the adoption of Statement of Financial Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No.
115"), capital levels are subject to significant fluctuations from unrealized
gains and losses due to changing market rates in available for sale investment
securities.
Capital adequacy is measured by banking regulators using the following
capital criteria and ratios. Tier 1 capital for bank holding companies in-
cludes common equity and perpetual preferred stock (subject to certain
limitations) minus intangible assets. Tier 2 capital includes supplementary
elements such as limited amounts of reserve for loan losses, perpetual pre-
ferred stock (in excess of Tier 1 limits), subordinated debt and other items.
The leverage ratio, defined as Tier 1 capital divided by average adjusted total
assets, limits the amount of leverage a bank can undertake because of the
ratio's emphasis on equity or core capital. Liberty's leverage ratio was 8.68%
on Tier 1 capital of $218.0 million at September 30, 1994 compared to 7.87% on
$197.8 million at December 31, 1993 and 8.38% on $193.2 million at September
30, 1993. All but the most highly-rated banks are required to carry a minimum
leverage ratio of 3% plus a cushion of 1 to 2%.
The risk-based capital ratio, defined as total capital (Tier 1 plus Tier
2) divided by risk-weighted assets, is the regulators' other primary de-
terminant of capital adequacy and was designed principally as a measure of
credit risk. Banking organizations have been given a risk-based capital ra-
tio requirement of 8%. The Federal Deposit Insurance Corporation assesses
insurance premiums based in part on the level of capital with banks which are
"well capitalized" paying assessments at lower rates. Liberty's and its
subsidiary banks' capital ratios are significantly higher than the current
guidelines and the subsidiary banks are "well capitalized" for deposit
insurance assessment purposes. Liberty had a risk-based capital ratio at
September 30, 1994 of 15.41%. This compares to 15.37% at December 31, 1993 and
17.04% at September 30, 1993. Liberty Oklahoma City and Liberty Tulsa had risk-
based capital ratios at September 30, 1994 of 13.60% and 15.68%, respectively.
Parent Company Funding Sources and Dividends
At September 30, 1994, the parent company had cash and interest-bearing
deposits of $4.2 million compared to $6.2 million at year-end 1993 and $4.0
million at September 30, 1993. The primary changes in the funding position of
the parent company since year-end 1993 were due to the repayment of
intercompany accounts payable recorded at year-end, the payment of dividends to
shareholders and advances to subsidiaries offset by dividends received from
subsidiary banks. The parent company's ability to fund various operating
expenses and dividends is generally dependent on parent-only earning power,
cash reserves and funds derived from its subsidiaries, principally Liberty
Oklahoma City and Liberty Tulsa. These funds historically have been provided
primarily by intercompany dividends and management fees. Management fees are
generally limited to reimbursement of actual expenses. It is anticipated that
the parent company's recurring cash sources will continue to include management
fees from subsidiaries, proceeds from the sale of other assets (principally
other real estate and assets owned) and retained rights to any gains from the
sales of mortgage servicing and other assets. Dividends are paid by the
subsidiary banks from time to time to support the parent company's activities.
Liberty Oklahoma City and Liberty Tulsa are limited in their ability to pay
dividends based on applicable provisions of the National Banking Act pertaining
to earnings and undivided profits. As of September 30, 1994 the ability of
Liberty Oklahoma City and Liberty Tulsa to pay dividends without regulatory
approval was limited to $38.2 million and $19.5 million, respectively.
Liberty paid three quarterly cash dividends of $.15 per common share in
the first nine months of 1994, totaling $4.3 million. During the same period
in 1993, Liberty paid two quarterly cash dividends of $.10 per common share,
totaling $1.8 million. It is expected that cash dividends will continue if
justified by Liberty's earnings, capital adequacy and financial condition.
In management's opinion, the parent company's current liquidity and cash
sources are anticipated to be adequate to meet its obligations in the near
term.
<TABLE>
SELECTED STATISTICAL INFORMATION Liberty Bancorp, Inc.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Consolidated Summary of Quarterly Financial Information
(In thousands, except per share data)
- ------------------------------------------------------------------------------------------------------------------------
For the quarter ended 9/30/94 6/30/94 3/31/94 12/31/93 9/30/93
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest income $35,957 $34,129 $32,458 $34,015 $31,143
Interest income (tax equivalent) 36,412 34,703 33,088 34,603 31,702
Interest expense 16,417 15,019 13,222 13,453 13,166
Net interest income 19,540 19,110 19,236 20,562 17,977
Provisions for loan losses _ _ _ 206 85
Trust fees 3,771 4,010 4,160 3,715 3,975
Mortgage banking income 1,434 1,625 1,765 1,913 1,871
Other noninterest income 7,902 9,318 8,882 10,178 7,560
Noninterest expense 27,330 28,004 28,225 36,410 26,828
Net income 10,608 5,157 4,952 6,262 3,428
Net income per share 1.08 .53 .51 .64 .35
Common stock price range
High $33.50 $33.50 $28.25 $34.00 $35.50
Low 30.75 27.25 26.50 28.00 32.50
Close 33.50 31.50 27.75 28.00 34.00
At Quarter End
Shares of Common Stock, net of treasury stock
Outstanding 9,484 9,484 9,478 9,478 9,478
Fully-diluted 9,836 9,825 9,780 9,775 9,782
</TABLE>
<TABLE>
Average Balances/Net Interest Margin/Rates (1)
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
First nine months 1994 1993
Average Average Average Average
(In thousands) Balance Interest Rate Balance Interest Rate
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------ ------------- -------------- ----------- ---------------- -------------- ---------
Assets
Loans (2) $1,019,185 $ 58,321 7.65 % $ 763,574 $44,652 7.82 %
Investment securities (3)
Taxable 1,050,005 40,738 5.19 1,082,703 45,379 5.60
Nontaxable 52,363 3,294 8.41 51,723 3,170 8.19
Trading account securities 3,770 171 6.06 4,232 192 6.07
- ------------------------------------ ------------- -------------- ----------- ---------------- -------------- ---------
Total securities 1,106,138 44,203 5.34 1,138,658 48,741 5.72
Federal funds sold and securities
purchased under agreements to
resell and other 54,983 1,679 4.08 117,697 2,725 3.10
- ------------------------------------ ------------- -------------- ----------- ---------------- -------------- ---------
Total earning assets 2,180,306 104,203 6.39 2,019,929 96,118 6.36
Cash and due from banks-
noninterest-bearing 254,023 257,031
Reserve for loan losses (19,924) (22,306)
Other assets 152,694 139,800
---------- ----------
Total assets $2,567,099 $2,394,454
========== ==========
Liabilities and Shareholders'
Investment
Interest-bearing deposits
Savings and money market
accounts $ 705,812 $ 13,778 2.61 % $ 602,405 $12,029 2.67 %
Other time deposits 762,074 24,266 4.26 713,244 22,529 4.22
Total interest-bearing deposits 1,467,886 38,044 3.47 1,315,649 34,558 3.51
Federal funds purchased and
securities sold under agreements
to repurchase 137,091 3,903 3.81 113,201 2,421 2.86
Other borrowings 90,203 2,711 4.02 124,513 2,880 3.09
Long-term debt _ _ _ 8,884 521 7.84
- ------------------------------------ ------------- -------------- ----------- ---------------- -------------- ---------
Total interest-bearing
liabilities 1,695,180 44,658 3.52 1,562,247 40,380 3.46
Demand deposits 619,463 600,181
Other liabilities 25,077 26,422
Shareholders' investment 227,379 205,604
---------- ----------
Total liabilities and
shareholders' investment $2,567,099 $2,394,454
========== ==========
Interest income/earning assets $104,203 6.39 % $96,118 6.36 %
Interest expense/earning assets 44,658 2.74 40,380 2.67
-------- ------ ------- ------
Net interest margin $ 59,545 3.65 % $55,738 3.69 %
======== ====== ======= =======
<FN>
(1) Income and rates shown on a tax-equivalent basis have been computed based on the statutory rate of 35%.
(2) Includes nonaccrual loans.
(3) Includes available for sale securities at amortized cost for all years presented.
</TABLE>
<TABLE>
Average Balances/Net Interest Margin/Rates (1)
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Three months ended September 30, 1994 June 30, 1994
Average Average Average Average
(In thousands) Balance Interest Rate Balance Interest Rate
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------- --------------- ------------- ------------ --------------- ----------- ----------
Assets
Loans (2) $1,093,446 $21,791 7.91 % $1,012,846 $19,282 7.64 %
Investment securities (3)
Taxable 947,142 12,923 5.41 1,048,016 13,554 5.19
Nontaxable 51,208 999 7.74 52,476 1,081 8.26
Trading account securities 3,761 54 5.70 3,730 62 6.67
- ------------------------------------- --------------- ------------- ------------ --------------- ----------- ----------
Total securities 1,002,111 13,976 5.53 1,104,222 14,697 5.34
Federal funds sold and securities
purchased under agreements to
resell and other 54,988 645 4.65 71,577 724 4.06
- ------------------------------------- --------------- ------------- ------------ --------------- ----------- ----------
Total earning assets 2,150,545 36,412 6.72 2,188,645 34,703 6.36
Cash and due from banks-
noninterest-bearing 247,218 253,410
Reserve for loan losses (19,755) (20,071)
Other assets 150,322 153,711
---------- ----------
Total assets $2,528,330 $2,575,695
========== ==========
Liabilities and Shareholders'
Investment
Interest-bearing deposits
Savings and money market
accounts $ 712,532 $ 4,968 2.77 % $ 709,365 $ 4,605 2.60 %
Other time deposits 757,631 8,885 4.65 772,047 8,167 4.24
- ------------------------------------- --------------- ------------- ------------ --------------- ----------- ----------
Total interest-bearing deposits 1,470,163 13,853 3.74 1,481,412 12,772 3.46
Federal funds purchased and
securities sold under agreements
to repurchase 139,733 1,532 4.35 142,633 1,382 3.89
Other borrowings 86,290 1,032 4.74 85,899 865 4.04
Long-term debt _ _ _ _ _ _
- ------------------------------------- --------------- ------------- ------------ --------------- ----------- ----------
Total interest-bearing
liabilities 1,696,186 16,417 3.84 1,709,944 15,019 3.52
Demand deposits 579,718 615,113
Other liabilities 24,466 25,466
Shareholders' investment 227,960 225,172
---------- ----------
Total liabilities and
shareholders' investment $2,528,330 $2,575,695
========== ==========
Interest income/earning assets $36,412 6.72 % $34,703 6.36 %
Interest expense/earning assets 16,417 3.03 15,019 2.75
------- ------ ------- -----
Net interest margin $19,995 3.69 % $19,684 3.61 %
======= ====== ======= ======
<FN>
(1) Income and rates shown on a tax-equivalent basis have been computed based on the statutory rate of 35%.
(2) Includes nonaccrual loans.
(3) Includes available for sale securities at amortized cost for all years presented.
</TABLE>
<TABLE>
Average Balances/Net Interest Margin/Rates (1)
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Three months ended March 31, 1994 December 31, 1993 September 30, 1993
Average Average Average Average Average Average
(In thousands) Balance Interest Rate Balance Interest Rate Balance Interest Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------- ------------ -------- --------- ------------- ---------- ------- ------------- ---------- -----
Assets
Loans (2) $ 949,684 $17,248 7.37% $ 882,358 $18,205 8.19% $ 801,665 $15,465 7.65%
Investment securities (3)
Taxable 1,157,164 14,261 5.00 1,162,816 14,882 5.08 1,129,398 14,632 5.14
Nontaxable 53,431 1,214 9.21 54,586 1,119 8.13 50,203 1,006 7.95
Trading account securities 3,820 55 5.84 2,651 39 5.84 4,560 66 5.74
- ----------------------------------- ------------ -------- --------- ------------- ---------- ------- ------------- ---------- -----
Total securities 1,214,415 15,530 5.19 1,220,053 16,040 5.22 1,184,161 15,704 5.26
Federal funds sold and securities
purchased under agreements to
resell and other 38,198 310 3.29 43,935 358 3.23 66,614 533 3.17
- ----------------------------------- ------------ -------- --------- ------------- ---------- ------- ------------- ---------- -----
Total earning assets 2,202,297 33,088 6.09 2,146,346 34,603 6.40 2,052,440 31,702 6.13
Cash and due from banks-
noninterest-bearing 261,599 267,252 247,928
Reserve for loan losses (19,947) (19,839) (19,124)
Other assets 154,087 150,722 144,357
---------- ---------- ----------
Total assets $2,598,036 $2,544,481 $2,425,601
========== ========== ==========
Liabilities and Shareholders'
Investment
Interest-bearing deposits
Savings and money market
accounts $ 695,347 $ 4,205 2.45% $ 686,680 $ 4,374 2.53% $ 629,150 $ 4,149 2.62%
Other time deposits 756,534 7,214 3.87 730,186 7,230 3.93 687,090 7,077 4.09
- ----------------------------------- ------------ -------- --------- ------------- ---------- ------- ------------- ---------- -----
Total interest-bearing deposits 1,451,881 11,419 3.19 1,416,866 11,604 3.25 1,316,240 11,226 3.38
Federal funds purchased and
securities sold under agreements
to repurchase 128,785 989 3.11 148,516 1,093 2.92 92,998 667 2.85
Other borrowings 98,553 814 3.35 70,295 685 3.87 144,234 1,102 3.03
Long-term debt _ _ _ 2,958 71 9.52 8,698 171 7.80
- ----------------------------------- ------------ -------- --------- ------------- ---------- ------- ------------- ---------- -----
Total interest-bearing
liabilities 1,679,219 13,222 3.19 1,638,635 13,453 3.26 1,562,170 13,166 3.34
Demand deposits 664,490 661,200 622,562
Other liabilities 25,311 25,045 24,377
Shareholders' investment 229,016 219,601 216,492
---------- ---------- ----------
Total liabilities and
shareholders' investment $2,598,036 $2,544,481 $2,425,601
========== ========== ==========
Interest income/earning assets $33,088 6.09% $34,603 6.40% $31,702 6.13%
Interest expense/earning assets 13,222 2.43 13,453 2.49 13,166 2.55
------- ---- ------- ---- ------- ----
Net interest margin $19,866 3.66% $21,150 3.91% $18,536 3.58%
======= ==== ======= ==== ======= ====
<FN>
(1) Income and rates shown on a tax-equivalent basis have been computed based on the statutory rate of 35%.
(2) Includes nonaccrual loans.
(3) Includes available for sale securities at amortized cost for all years presented.
</TABLE>
<TABLE>
CONSOLIDATED BALANCE SHEET Liberty Bancorp, Inc.
<CAPTION
- -------------------------------------------------------------------------------------------------------------
September 30, December 31, September 30,
(In thousands, except share data) 1994 1993 1993
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and due from banks
Noninterest-bearing $ 272,436 $ 310,127 $ 251,839
Interest-bearing 1,164 2,587 2,219
Federal funds sold and securities
purchased under agreements to resell 57,590 24,565 250,498
Investment securities
Trading 1,061 1,891 879
Available for sale 546,820 766,827 37,681
Held to maturity 418,513 463,084 1,099,560
Equity 19,722 18,628 13,466
- --------------------------------------------------------------- ---------------- --------------- ------------
Total securities 986,116 1,250,430 1,151,586
- --------------------------------------------------------------- ---------------- --------------- ------------
Loans 1,118,414 936,000 827,238
Less: Reserve for loan losses (19,617) (19,986) (19,362)
- --------------------------------------------------------------- ---------------- --------------- ------------
Loans, net 1,098,797 916,014 807,876
- --------------------------------------------------------------- ---------------- --------------- ------------
Property and equipment, net 67,734 64,152 59,320
Accrued income receivable 24,271 23,675 23,097
Accounts receivable 14,729 17,639 31,779
Deferred tax asset, net 23,619 13,584 16,138
Other real estate and assets owned, net 7,035 10,844 11,273
Other assets 22,392 26,159 20,099
- --------------------------------------------------------------- ---------------- --------------- ------------
Total assets $2,575,883 $2,659,776 $2,625,724
=============================================================== ================ =============== ============
Liabilities and Shareholders' Investment
Deposits
Noninterest-bearing $ 639,513 $ 689,227 $ 681,832
Interest-bearing 1,470,533 1,435,917 1,353,763
- --------------------------------------------------------------- ---------------- --------------- ------------
Total deposits 2,110,046 2,125,144 2,035,595
Other borrowings
Federal funds purchased and securities
sold under agreements to repurchase 74,702 116,486 99,089
Other 130,718 161,626 236,687
Accrued interest, expenses and taxes 16,372 15,503 14,592
Accounts payable 9,373 11,621 15,433
Long-term notes _ _ 7,057
Other liabilities 1,017 2,151 1,707
- --------------------------------------------------------------- ---------------- --------------- ------------
Total liabilities 2,342,228 2,432,531 2,410,160
- --------------------------------------------------------------- ---------------- --------------- ------------
Shareholders' Investment
Common stock ($.01 par value; 50,000,000
shares authorized) 95 95 94
- --------------------------------------------------------------
September 30, December 31, September 30,
1994 1993 1993
- --------------------------------------------------------------
Shares issued 9,483,593 9,477,870 9,477,870
Shares outstanding 9,483,593 9,477,819 9,477,819
Capital surplus 211,752 211,708 211,732
Retained earnings 28,235 11,785 6,436
Treasury stock, at cost _ 51 common shares at December 31, 1993
and September 30, 1993. _ (1) (1)
Unrealized security gains (losses), net of tax (4,150) 6,184 _
Deferred compensation (2,277) (2,526) (2,697)
- --------------------------------------------------------------- ---------------- --------------- ------------
Total shareholders' investment 233,655 227,245 215,564
- --------------------------------------------------------------- ---------------- --------------- ------------
Total liabilities and shareholders' investment $2,575,883 $2,659,776 $2,625,724
=============================================================== ================ =============== ============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF INCOME Liberty Bancorp, Inc .
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
September 30 Nine Months Ended Three Months Ended
(In thousands, except per share data) 1994 1993 1994 1993
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest Income
Loans $ 57,849 $44,082 $21,682 $15,277
Investments
Taxable 40,738 45,379 12,923 14,632
Nontaxable 2,127 2,036 658 643
Trading 151 164 49 58
Federal funds sold and other 1,679 2,725 645 533
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Total interest income 102,544 94,386 35,957 31,143
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Interest Expense
Deposits 38,044 34,558 13,853 11,226
Other borrowings 6,614 5,301 2,564 1,769
Long-term notes _ 521 _ 171
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Total interest expense 44,658 40,380 16,417 13,166
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Net Interest Income 57,886 54,006 19,540 17,977
Provision for loan losses _ (7,569) _ 85
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Net Interest Income After Provision for Loan Losses 57,886 61,575 19,540 17,892
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Noninterest Income
Trust fees 11,941 11,793 3,771 3,975
Service charges on deposits 10,635 9,462 3,430 3,159
Mortgage banking income 4,824 5,536 1,434 1,871
Trading account profits and commissions 3,180 3,981 902 1,178
Loan fees 1,653 1,401 384 480
Net securities gains (losses) 360 215 (129) 156
Other 10,274 8,522 3,315 2,587
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Total noninterest income 42,867 40,910 13,107 13,406
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Noninterest Expense
Salaries 33,003 31,847 10,663 10,831
Employee benefits 7,519 6,615 2,397 2,213
Equipment 6,791 5,802 2,324 2,025
Professional and other services 6,307 6,827 2,081 2,200
Occupancy, net 6,656 6,363 2,429 2,346
Data processing 4,891 4,410 1,586 1,457
Printing, postage and supplies 3,949 4,003 1,238 1,400
Deposit insurance assessments 3,271 3,378 1,116 1,125
Advertising and business development 2,608 2,597 827 943
Amortization of intangibles, including purchased mortgage
servicing rights 1,850 3,332 566 1,072
Net income from operation of other real estate
and assets owned (1,455) (2,908) (409) (1,404)
Other 8,169 10,052 2,512 2,620
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Total noninterest expense 83,559 82,318 27,330 26,828
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Income Before Provision for Income Taxes 17,194 20,167 5,317 4,470
Provision for income taxes (3,523) 4,152 (5,291) 1,042
Income Before Cumulative Effect of Change in Accounting
Principle and Extraordinary Item 20,717 16,015 10,608 3,428
Cumulative effect of change in accounting principle _ 14,255 _ _
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Net Income $20,717 $30,270 $10,608 $3,428
============================================================= ============ =============== ============ =========
Income Per Share (Primary and Fully-Diluted)
Income before cumulative effect of change in
accounting principle $2.11 $1.65 $1.08 $ .35
Cumulative effect of change in accounting principle _ 1.46 _ _
- ------------------------------------------------------------- ------------ --------------- ------------ ---------
Net Income - Primary and Fully-Diluted $2.11 $3.11 $1.08 $ .35
============================================================= ============ =============== ============ =========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' INVESTMENT Liberty Bancorp, Inc
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Retained Unrealized
Earnings Security Total
Common Capital (Accumulated Treasury Gains Deferred Shareholders'
(Dollars in thousands) Stock Surplus Deficit) Stock (Losses), Net Compensation Investment
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance January 1, 1993 $88 $204,165 ($22,587) ($1) $ _ ($2,824) $178,841
Common stock issued in
acquisitions (637,312 shares) 6 6,850 542 _ _ _ 7,398
Net income _ _ 30,270 _ _ _ 30,270
Dividends paid ($.20 per share) _ _ (1,789) _ _ _ (1,789)
Amortization of deferred compensation _ _ _ _ _ 127 127
Common stock issued to employee
benefit plans (25,108 common shares) _ 717 _ _ _ _ 717
- --------------------------------------------- ------- ---------- ------------- ---------- --------------- -------------- ----------
Balance September 30, 1993 $94 $211,732 $6,436 ($1) $ _ ($2,697) $215,564
============================================= ======= ========== ============= ========== =============== ============== ==========
Balance January 1, 1994 $95 $211,708 $11,785 ($1) $6,184 ($2,526) $227,245
Net income _ _ 20,717 _ _ _ 20,717
Dividends paid ($.45 per share) _ _ (4,267) _ _ _ (4,267)
Amortization of deferred compensation _ _ _ _ _ 359 359
Change in unrealized gains (losses) on
available for sale securities, net of tax _ _ _ _ (10,334) _ (10,334)
Purchase of treasury stock (24,261 shares) _ _ _ (704) _ _ (704)
Common and treasury stock issued
to employee benefit plans (5,723 common
shares and 24,312 treasury shares) _ 44 _ 705 _ (110) 639
- --------------------------------------------- ------- ---------- ------------- ---------- --------------- -------------- ----------
Balance September 30, 1994 $95 $211,752 $28,235 _ ($4,150) ($2,277) $233,655
============================================= ======= ========== ============= ========== =============== ============== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS Liberty Bancorp, Inc.
<CAPTION>
- --------------------------------------------------------------------------------------------------------
First nine months (In thousands) 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash provided (absorbed) by operating activities
Net income $ 20,717 $ 30,270
Adjustments to reconcile net income to net cash provided by
operating activities:
Provisions for losses _ (6,855)
Cumulative effect of change in accounting principle _ (14,255)
Provision for income taxes (3,523) 4,152
Depreciation and amortization 6,873 7,240
Net amortization of securities 10,155 8,398
Gain on sale of assets (6,295) (5,794)
Change in trading account securities 4,491 6,343
Loans made for purposes of resale (110,983) (96,974)
Proceeds from sale of loans held for resale 64,565 91,770
Change in accrued income and accounts receivable 817 (24,842)
Change in accrued interest, expenses and taxes, accounts payable
and other liabilities (3,250) (319)
Change in other assets 1,718 2,384
- ------------------------------------------------------------------------- ------------------- ----------
Net cash provided (absorbed) by operating activities (14,715) 1,518
- ------------------------------------------------------------------------- ------------------- ----------
Cash provided (absorbed) by investing activities
Maturities and paydowns on securities 153,272 306,196
Sales of securities 701,993 174,235
Purchases of securities (617,001) (576,084)
Change in net loans made by bank subsidiaries (133,336) (54,494)
Principal payments received on loans made by parent
company and nonbank subsidiaries 3,721 1,313
Loans made to customers by nonbank subsidiaries (4,970) (162)
Expenditures for property and equipment (8,596) (10,817)
Proceeds from sale of property and equipment 40 470
Sale proceeds and collections from other real estate and
assets acquired in settlement of loans 5,543 8,591
Cash and cash-equivalents received in financial institution
acquisitons, net of consideration _ 8,611
Sales of mortgage servicing contracts 287 _
Purchases of mortgage servicing contracts (205) (152)
- ------------------------------------------------------------------------- ------------------- ----------
Net cash provided (absorbed) by investing activities 100,748 (142,293)
- ------------------------------------------------------------------------- ------------------- ----------
Cash provided (absorbed) by financing activities
Change in savings and demand deposits (70,176) 11,871
Change in time deposits 55,078 (49,877)
Change in short-term borrowings (72,692) 49,144
Payment on long-term notes _ (488)
Proceeds from issuance of common stock to
employee benefit plans 639 717
Purchase of treasury stock (704) _
Dividends paid on common stock (4,267) (1,789)
- ------------------------------------------------------------------------- ------------------- ----------
Net cash provided (absorbed) by financing activities (92,122) 9,578
- ------------------------------------------------------------------------- ------------------- ----------
Net change in cash and cash equivalents (6,089) (131,197)
Cash and cash equivalents at December 31 337,279 635,753
- ------------------------------------------------------------------------- ------------------- ----------
Cash and cash equivalents at September 30 $331,190 $504,556
========================================================================= =================== ==========
<FN>
Interest paid during the first nine months of 1994 and 1993 totaled $43,921,000 and $42,105,000, respectively.
Income taxes paid during the first nine months of 1994 and 1993 totaled $2,067,000 and $150,000, respectively.
Net transfers of loans to (from) other real estate owned during the first nine months of 1994 and 1993 totaled
approximately (278,000) and $877,000, respectively.
Loans made to finance sales of other real estate and assets owned totaled approximately $980,000 and $630,000
in the first nine months of 1994 and 1993, respectively.
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Liberty
Bancorp, Inc.
Note 1 Accounting Policies
The condensed financial statements included herein have been prepared by
Liberty Bancorp, Inc. ("Liberty") without audit, and include all adjustments
which, in the opinion of management, are of a normal recurring nature and are
necessary to present fairly the results of the interim periods, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures, normally included in financial statements
prepared in accordance with generally accepted accounting principles, have been
condensed or omitted pursuant to such rules and regulations. Certain
reclassifications have been made to provide consistent financial statement
classifications in the periods presented herein. Such reclassifications had no
effect on net income or total assets.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto included in
Liberty's 1993 annual report on Form 10-K.
Note 2 Earnings Per Share
Earnings per share are calculated using Liberty's weighted average common
and common-equivalent shares (primarily stock options) outstanding during the
periods. The weighted average number of shares used to compute primary and
fully-diluted earnings per share are presented below.
- -------------------------------------------------------------------------------
Nine months ended Three months ended
- -------------------------------------------------------------------------------
September 30 (In thousands) 1994 1993 1994 1993
- -------------------------------------------------------------------------------
Weighted average shares outstanding
Primary 9,806 9,736 9,825 9,780
Fully-diluted 9,831 9,744 9,835 9,782
Note 3 Acquisitions
Purchase Transactions _ On August 1, and October 1, 1993, Liberty acquired the
First Oklahoma Bank and Trust Co. of Edmond and The First National Bank of
Edmond, respectively, for a total cash purchase price of $20,148,000. The
transactions were accounted for as purchases. Total assets acquired amounted
to approximately $142,155,000. For each of these acquisitions, the
consolidated statements of income includes only the income and expense of the
acquired banks since acquisition. The purchase price was allocated to the net
assets acquired based on their estimated fair values with the excess allocated
to cost in excess of net assets acquired. The effect on Liberty's results of
operations for 1993, had these transactions occurred at the beginning of the
year, was not significant. There were no acquisitions during 1994.
Poolings-of-Interests _ The following table presents the business combinations
occurring during 1993 which were accounted for as poolings-of-interests. A
total of 637,312 shares of common stock were issued in connection with these
business combinations. Adjustments to conform the acquired banks' accounting
policies to those of Liberty were not material.
- -------------------------------------------------------------------------------
(In thousands) Assets
Acquired
- -------------------------------------------------------------------------------
First National Bank of Jenks $ 33,408
Midwest National Bank 38,581
Bank of Tulsa 62,820
- -------------------------------------------------------------------------------
Total $134,809
===============================================================================
The following table shows the effect of the three banks' prior results of
operations for the first nine months of 1993.
- -------------------------------------------------------------------------------
(In thousands) Pooled
Liberty Banks Combined
- -------------------------------------------------------------------------------
Interest income $88,668 $5,718 $94,386
Net interest income 50,374 3,632 54,006
Cumulative effect of change in accounting
principle 14,412 (157) 14,255
Net income 29,655 615 30,270
Note 4 Change in Accounting Principle _ Accounting for Income Taxes
On January 1, 1993, Liberty adopted Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes ("SFAS No. 109"). In accordance
with this statement, Liberty recognized a net deferred tax asset reflecting the
benefit expected to be realized from net deductible temporary differences of
approximately $14.3 million which was accounted for as a cumulative effect of
change in accounting principle.
Net deferred tax assets at September 30, 1994 totaled $23.6 million. For
the nine months ended September 30, 1994, Liberty recorded an income tax
benefit of $3.5 million. Included in this benefit is the removal of valuation
allowances of $8.8 million related to Liberty's determination that it would
generate sufficient taxable income in future periods to use a significant
portion of its net operating loss carryforwards which had been impaired in
1993.
Liberty Bancorp, Inc.
Signatures
Pursuant to the requirements 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.
LIBERTY BANCORP, INC.
/S/ Mischa Gorkuscha
Mischa Gorkuscha
Senior Vice-President and
Chief Financial Officer
(Principal Financial Officer)
Dated: November 14, 1994
EXHIBIT 27
[ARTICLE] 9
[LEGEND]
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET OF LIBERTY BANCORP, INC. AS OF SEPTEMBER 30, 1994 AND THE STATEMENT OF
INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
[/LEGEND]
<TABLE>
<S> <C> <C>
[PERIOD-TYPE] 9-MOS QTR-3
[FISCAL-YEAR-END] DEC-31-1994 DEC-31-1994
[PERIOD-END] SEP-30-1994 SEP-30-1994
[CASH] 272,436,000 272,436,000
[INT-BEARING-DEPOSITS] 1,164,000 1,164,000
[FED-FUNDS-SOLD] 57,590,000 57,590,000
[TRADING-ASSETS] 1,061,000 1,061,000
[INVESTMENTS-HELD-FOR-SALE] 564,820,000 564,820,000
[INVESTMENTS-CARRYING] 985,055,000 985,055,000
[INVESTMENTS-MARKET] 977,193,000 977,193,000
[LOANS] 1,118,414,000 1,118,414,000
[ALLOWANCE] 19,617,000 19,617,000
[TOTAL-ASSETS] 2,575,883,000 2,575,883,000
[DEPOSITS] 2,110,046,000 2,110,046,000
[SHORT-TERM] 205,420,000 205,420,000
[LIABILITIES-OTHER] 26,762,000 26,762,000
[LONG-TERM] 0 0
[COMMON] 95,000 95,000
[PREFERRED-MANDATORY] 0 0
[PREFERRED] 0 0
[OTHER-SE] 233,560,000 233,560,000
[TOTAL-LIABILITIES-AND-EQUITY] 2,575,883,000 2,575,883,000
[INTEREST-LOAN] 57,849,000 21,682,000
[INTEREST-INVEST] 42,865,000 13,581,000
[INTEREST-OTHER] 1,830,000 694,000
[INTEREST-TOTAL] 102,544,000 35,957,000
[INTEREST-DEPOSIT] 38,044,000 13,853,000
[INTEREST-EXPENSE] 44,658,000 16,417,000
[INTEREST-INCOME-NET] 57,886,000 19,540,000
[LOAN-LOSSES] 0 0
[SECURITIES-GAINS] 360,000 (129,000)
[EXPENSE-OTHER] 83,559,000 27,330,000
[INCOME-PRETAX] 17,194,000 5,317,000
[INCOME-PRE-EXTRAORDINARY] 20,717,000 10,608,000
[EXTRAORDINARY] 0 0
[CHANGES] 0 0
[NET-INCOME] 20,717,000 10,608,000
[EPS-PRIMARY] 2.11 1.08
[EPS-DILUTED] 2.11 1.08
[YIELD-ACTUAL] 6.39 6.72
[LOANS-NON] 8,350,000 8,350,000
[LOANS-PAST] 2,066,000 2,066,000
[LOANS-TROUBLED] 0 0
[LOANS-PROBLEM] 14,312,000 14,312,000
[ALLOWANCE-OPEN] 19,986,000 19,817,000
[CHARGE-OFFS] 1,422,000 509,000
[RECOVERIES] 1,053,000 309,000
[ALLOWANCE-CLOSE] 19,617,000 19,617,000
[ALLOWANCE-DOMESTIC] 19,617,000 19,617,000
[ALLOWANCE-FOREIGN] 0 0
[ALLOWANCE-UNALLOCATED] 0 0
</TABLE>
.
