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: March 31, 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 May 15, 1994
----- -----------------------------------
Common Stock 9,483,470
LIBERTY BANCORP, INC.
FIRST QUARTER REPORT 1994
Contents
--------
Financial Highlights
Financial Review
Selected Statistical Information
Consolidated Financial Statements
Notes to Consolidated Financial
Statements
Other Information
Signatures
Financial Highlights Liberty Bancorp, Inc.
- -------------------------------------------------------------------------------
(In thousands, except per share data) 1994 1993
- -------------------------------------------------------------------------------
For the First Quarter
Total Revenues $ 47,265 $ 45,842
Net Interest Income 19,236 18,219
Provision for Loan Losses _ (4,917)
Trust Fees 4,160 3,972
Mortgage Banking Income 1,765 1,678
Other Noninterest Income 8,882 8,101
Noninterest Expense 28,225 28,393
Cumulative Effect of Change in Accounting Principle _ 14,255
Net Income 4,952 21,698
Per Share Data _ Primary and Fully-diluted
Income Before Cumulative Effect of Change in
Accounting Principle .51 .77
Net Income .51 2.25
Cash Dividends Declared .15 _
- -------------------------------------------------------------------------------
At March 31
Loans $ 979,300 $ 735,673
Earning Assets 2,230,206 1,926,031
Assets 2,740,134 2,417,820
Deposits 2,201,625 1,974,020
Total Shareholders' Investment 225,065 208,551
Book Value per Common Share 23.75 22.02
- -------------------------------------------------------------------------------
Average Year-to-Date Balances
Earning Assets $2,202,297 $2,012,640
Assets 2,598,036 2,383,330
Deposits 2,116,371 1,915,072
Total Shareholders' Investment 229,016 188,592
- -------------------------------------------------------------------------------
Ratios
Capital Ratios
Leverage 7.88% 8.64%
Risk-based 15.15 21.16
Average Shareholders' Investment as a % of
Average Total Assets 8.81 7.91
Average Earning Assets as a % of Average
Total Assets 84.77 84.45
Rate of Return, Before Cumulative Effect of
Change in Accounting Principle, on
Average Earning Assets .91 1.50
Average Total Assets .77 1.27
Average Total Shareholders' Investment 8.77 16.01
Rate of Return on
Average Earning Assets .91 4.37
Average Total Assets .77 3.69
Average Total Shareholders' Investment 8.77 46.66
Dividend Payout Ratio 29.41 _
Operating Efficiency Ratio 82.32 86.99
Provision for Loan Losses as %
of Average Loans _ (.67)
FINANCIAL REVIEW Liberty Bancorp, Inc.
- ------------------------------------------------------------------------------
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 Three Months of 1994 Compared to First Three Months of 1993
For the first three months of 1994, Liberty reported net income of $5.0
million or $.51 per common share. This compares to net income of $21.7
million or $2.25 per common share for the first three months of 1993. Net
income for the first three months of 1993 included the cumulative effect of a
change in accounting for income taxes of $14.3 million. The first three
months of 1993 also included a negative provision for loan losses of $4.9
million which was partially offset by provisions for losses on mortgage
receivables in process of foreclosure and corporate risk reserves of $2.4
million. No comparable provisions were made during the first quarter of 1994.
Excluding the effects of the change in accounting for income taxes and the net
negative provisions, net income for the first quarter of 1993 was $4.9
million.
Liberty's nonperforming loans at March 31, 1994, which are primarily
nonaccrual loans, totaled $13.1 million compared to $13.5 million at December
31, 1993 and $13.7 million at March 31, 1993. Other real estate and assets
owned ("OREO"), net of reserves, decreased to $8.9 million at
March 31, 1994, compared to $10.8 million at December 31, 1993, and $14.3
million at March 31, 1993. The continuing decrease in OREO is primarily due
to real estate sales.
No provisions for loan losses or losses on OREO were made during the
first three months of 1994. This compares to negative provisions of $4.9
million for the same period in 1993. These provisions are discussed further
in "Reserve for Loan Losses" and "Reserve for Other Real Estate and Assets
Owned."
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. Since Midwest National Bancshares, Inc. and Tulbancorp,
Inc. were acquired during the fourth quarter of 1993, the statements of
condition and operations have been restated for all of that year.
Net Interest Income
On a tax-equivalent basis, net interest income for the first three months
of 1994 increased $1.0 million or 5.6% to $19.9 million from $18.8 million for
the first three months of 1993. The tax equivalent net interest margin was
3.7% for the first three months of 1994 compared to 3.8% for the same period
in 1993. The decrease in net interest margin is the result of continued
declines in yields. While interest rates have generally increased during the
first quarter of 1994, only federal funds, due to their short-term nature,
reflect this increase.
Tax-equivalent interest income amounted to $33.1 million for the first
three months of 1994 compared to $32.7 million in the same period of 1993.
Total average earning assets increased 9.4%, while the average yield on
earning assets declined to 6.1% from 6.6%. Yields have decreased in all areas
except federal funds sold, with the yield on securities decreasing from 6.3%
to 5.2% as a result of purchases in a low rate environment and paydowns in
1994 of approximately $47.7 million in higher yielding mortgage-backed
securities resulting in a net interest income reduction of $337 thousand.
Total interest expense amounted to $13.2 million for the first three
months of 1994 compared to $13.9 million for the first three months of 1993.
The cost of funds declined to 3.2% for the first three months of 1994 compared
to 3.6% for the same period in 1993. The decreased level of interest expense
is primarily due to lower interest rates as significant levels of bank
certificate of deposit maturities have moved into savings and money market ac-
counts or shorter-term and lower-rate certificates.
Noninterest Income
Noninterest income for the first three months of 1994 increased $1.1
million or 7.7% from the first three months of 1993. Service charges on
deposits increased $827 thousand or 27.2%. Of this increase, $273 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 $277 thousand or 19.2%.
Net securities gains totaled $388 thousand compared to net losses of $66
thousand in 1993. Other noninterest income decreased $407 thousand or 12.4%
due in part to recoveries in the first quarter of 1993 on certain assets
written down in prior periods.
Noninterest Expense
Noninterest expense (excluding net income from the operation of OREO,
which is discussed separately below in "Reserve for Other Real Estate and
Assets Owned") decreased $296 thousand or 1.0% to $29.0 million for the first
three months of 1994 compared to $29.3 million for the same period one year
ago. A significant decrease was in other noninterest expense which decreased
$2.1 million or 40.5%, primarily as a result of provisions in 1993 for losses
on mortgage receivables in process of foreclosure and other corporate risk
reserves. Decreases in expenses, in most categories, is offset by $1.0
million of costs attributable to acquired banks and affects several expense
categories.
Salaries and employee benefits increased $1.1 million or 8.4% from the
first three months of 1993. Other than base salary increases, 1994 includes
$438 million in salary and benefits for employees of new banking center
locations. Equipment expense increased $406 thousand or 22.8% primarily due
to increased depreciation on new data processing and other equipment.
Income Taxes
Liberty recorded $866 thousand in income tax expense for the first three
months of 1994 compared with $1.1 million during the same period of 1993.
Liberty also 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 tax 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 net deferred asset and related benefit of $14.3 million or $1.48
per share on January 1, 1993. This change is reflected on the income
statement as a cumulative effect of change in accounting principle.
Credit Risk Management
Nonperforming assets include nonperforming loans and other real estate
and assets owned net of reserves. Total nonperforming assets have decreased
$2.2 million or 9.1% since year-end 1993. The level at March 31, 1994 of
$22.1 million is $5.9 million or 21.1% less than the $28.0 million of
nonperforming assets one year ago. The decreasing level of nonperforming
assets is shown for the previous five quarters in the following table:
- ------------------------------------------------------------------------------
Nonperforming Assets
- ------------------------------------------------------------------------------
3/31/94 12/31/93 9/30/93 6/30/93 3/31/93
- ------------------------------------------------------------------------------
Nonperforming loans and other
real estate and assets owned,
gross, as a % of
Total loans and other real
estate and assets owned 2.43% 2.82% 3.29% 3.94% 4.38%
Total assets .88% 1.01% 1.06% 1.26% 1.37%
The following sections provide additional information concerning loan
concentrations, 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
- ------------------------------------------------------------------------------
3/31/94 12/31/93 9/30/93 6/30/93 3/31/93
- ------------------------------------------------------------------------------
Commercial 39.6 % 40.8 % 41.9 % 42.3 % 40.7 %
Energy 5.8 6.1 7.4 7.9 7.8
Real estate - construction 9.4 9.1 10.7 10.1 10.2
Real estate - mortgage 21.9 21.3 20.6 21.2 22.1
Correspondent and regional 1.9 1.8 2.4 2.6 2.2
Personal 21.4 20.9 17.0 15.9 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 March 31, 1994, these loans, primiarily residential real estate mortgage
loans, totaled $25.5 million compared to $26.5 million at December 31, 1993
and $14.3 million at March 31, 1993.
Nonperforming Loans
Nonperforming loans decreased by $304 thousand or 2.3% since December 31,
1993 and decreased by $513 thousand or 3.8% from one year earlier. Of the
nonperforming loans at March 31, 1994, 62.2% were real estate-related.
Nonperforming loans for the past five quarters are shown in the following
table:
- ------------------------------------------------------------------------------
Nonperforming Loans
- ------------------------------------------------------------------------------
(In thousands) 3/31/94 12/31/93 9/30/93 6/30/93 3/31/93
- ------------------------------------------------------------------------------
Nonaccrual $11,173 $10,138 $11,685 $12,743 $13,027
Restructured _ _ _ _ -
Past due 90 days or more 1,974 3,313 1,300 2,936 633
- ------------------------------------------------------------------------------
Total nonperforming loans $13,147 $13,451 $12,985 $15,679 $13,660
==============================================================================
Nonperforming loans as a %
of total loans 1.34% 1.44% 1.57% 1.97% 1.86%
==============================================================================
- ------------------------------------------------------------------------------
Analysis of Nonperforming Loans by Type
- ------------------------------------------------------------------------------
(In thousands) 3/31/94 12/31/93 9/30/93 6/30/93 3/31/93
- ------------------------------------------------------------------------------
Commercial and other $3,313 $3,604 $3,180 $4,349 $1,894
Energy 449 632 543 846 725
Real estate 2,938 3,236 2,290 2,483 2,810
Real estate - mortgage 5,244 5,135 6,176 7,303 7,627
Correspondent and regional _ _ _ _ _
Personal 1,203 844 796 698 604
- ------------------------------------------------------------------------------
Total nonperforming loans $13,147 $13,451 $12,985 $15,679 $13,660
==============================================================================
The following table reflects the levels of performance of nonaccrual
loans as of March 31, 1994:
- --------------------------------------------------------------------------
Contractual Carrying
(In thousands) Balance Balance
- --------------------------------------------------------------------------
Contractually current $8,080 $6,244
Contractually past due -
with substantial performance 811 526
with limited performance 661 557
with no performance 3,957 3,846
- --------------------------------------------------------------------------
Total nonaccrual loans $13,509 $11,173
==========================================================================
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 $332 thousand and $300 thousand for the three
months ended March 31, 1994 and 1993, respectively. Payments received on a
particular nonaccrual loan are generally applied to any principal balance be-
fore interest income is recorded. The amount of interest from these nonaccrual
and restructured loans included in interest income was approximately $37
thousand and $13 thousand for the first three months of 1994 and 1993,
respectively.
"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 March 31, 1994, these loans totaled $15.5 million, compared to
$17.0 million at December 31, 1993 and $5.0 million at March 31, 1993. Of
these amounts, approximately $99 thousand, $98 thousand and $356 thousand
represented letters of credit and unfunded loan commitments at March 31, 1994,
December 31, 1993, and March 31, 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 three months of
1994. Provisions during the first quarter of 1993 amounted to a negative $4.9
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 three months of 1994 and 1993:
- --------------------------------------------------------------
Reserve for Loan Losses
- --------------------------------------------------------------
(In thousands) 1994 1993
- --------------------------------------------------------------
Balance at January 1 $19,986 $25,581
Additions
Recoveries 400 418
Provisions _ (4,917)
Reserves of acquired banks _ 1,241
Less _ Charge-offs (290) (1,080)
- --------------------------------------------------------------
Balance at March 31 $20,096 $21,243
==============================================================
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) 3/31/94 12/31/93 9/30/93 6/30/93 3/31/93
- ------------------------------------------------------------------------------
Total nonperforming loans $13,147 $13,451 $12,985 $15,679 $13,660
Reserve for loan losses 20,096 19,986 19,362 18,644 21,243
Reserve for loan losses as a
% of nonperforming loans 152.86% 148.58% 149.11% 118.91% 155.51%
- ------------------------------------------------------------------------------
Total loans 2.05% 2.14% 2.34% 2.34% 2.89%
==============================================================================
Other Real Estate and Assets Owned
Net OREO decreased $1.9 million or 17.5% since year-end 1993 and $5.4
million or 37.6% from March 31, 1993. These reductions have primarily been the
result of sales. These levels are illustrated in the following five-quarter
table:
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Other Real Estate and Assets Owned by Type
- ------------------------------------------------------------------------------
(In thousands) 3/31/94 12/31/93 9/30/93 6/30/93 3/31/93
- ------------------------------------------------------------------------------
Land $7,347 $8,791 $10,015 $11,884 $13,975
Commercial-office buildings
and motels 2,166 2,487 2,703 2,621 3,576
Commercial-shopping centers 2 200 200 2 2
Residential-single family 1,256 1,631 1,787 1,848 1,580
Residential-multi-family _ _ _ _ 57
Oil and gas properties _ _ _ _ 177
Other 163 256 36 17 11
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Total Other Real Estate and
Assets Owned 10,934 13,365 14,741 16,372 19,378
Less Reserve for Losses on
Other Real Estate and Assets
Owned (1,986) (2,521) (3,468) (4,816) (5,048)
- ------------------------------------------------------------------------------
Other Real Estate and Assets
Owned, Net $8,948 $10,844 $11,273 $11,556 $14,330
==============================================================================
Net income from the operation of OREO, exclusive of the provision for
losses, amounted to $751 thousand and $722 thousand for the first three 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. Included in income from the
operation of OREO for the three months ended March 31, 1994 are $799 thousand
in gains from the sale of OREO and $921 thousand of gross income on OREO
properties.
Reserve for Other Real Estate and Assets Owned
No provisions were made to the reserve for OREO during the first three
months of 1994. This compares to $25 thousand provided during the first three
months of 1993. Total OREO reserves amounted to $2.0 million (18.2% of gross
OREO carrying values) at March 31, 1994, compared to $2.5 million (18.9% of
gross OREO carrying values) at December 31, 1993 and $5.0 million (28.2% of
gross OREO carrying values) at March 31, 1993. OREO charge-offs (which include
losses on sales and market value write-downs) for the first three months of
1994 amounted to $535 thousand compared to $220 thousand one year ago. The
following table illustrates the changes in the reserve for the first three
months of 1994 and 1993:
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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 _ 25
Charge-offs (535) (220)
Reserves of acquired bank _ 242
- ----------------------------------------------------------------------------
Balance at March 31 $1,986 $5,048
============================================================================
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 and marketable investment
securities, Liberty was a net purchaser of federal funds, including net
repurchase agreements, averaging $90.6 million for the first three months of
1994 compared to a seller of funds averaging $77.2 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.
The net interest margin of Liberty has been impacted by a decline in inter-
est rates, as experienced in the past year, in two ways. First, because Liberty
is liability sensitive, its liabilities reprice at the lower rates sooner than
its assets. As such, the net interest margin is widened as liabilities are
repriced or mature. However, the decline in liability rates, particularly in a
lower rate environment, may not decrease as much as asset rates because there
is a perceived level below which deposit rates likely will not fall. Liberty
monitors its interest-sensitivity posture on a continuing basis to ensure that
interest rate changes do not create a material adverse impact. Liberty also
adjusts its asset and liability structures, to the extent possible, to allow
for projected rate changes.
Capital Funds
Equity capital as a percentage of total assets amounted to 8.2% at March
31, 1994 compared to 8.5% at December 31, 1993 and 8.6% at March 31, 1993.
Capital adequacy is currently measured by banking regulators using
various capital criteria and ratios under the heading of risk-based capital.
Tier 1 capital for bank holding companies includes 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 preferred 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 7.88% on Tier 1 capital of $203.0
million at March 31, 1994 compared to 7.87% on $197.8 million at December 31,
1993 and 8.64% on $196.8 million at March 31, 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
March 31, 1994 of 15.15%. This compares to 15.37% at December 31, 1993 and
21.16% at March 31, 1993. Liberty Oklahoma City and Liberty Tulsa had risk-
based capital ratios at March 31, 1994 of 13.38% and 16.54%, respectively.
Parent Company Funding Sources and Dividends
At March 31, 1994, the parent company had cash and interest-bearing
deposits of $3.0 million compared to $6.2 million at year-end 1993 and $4.9
million at March 31, 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 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. As of March 31, 1994 the ability of
Liberty Oklahoma City and Liberty Tulsa to pay dividends without regulatory
approval was limited to $32.4 million and $18.5 million, respectively.
On February 18, 1994, Liberty paid a cash dividend of $.15 per share to
shareholders of record as of February 4, 1994. This dividend totaled $1.4
million. No dividends were paid in the first quarter of 1993. It is expected
that such cash dividends will continue if justified by Liberty's earnings 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.
Selected Statistical Information Liberty Bancorp, Inc.
- --------------------------------------------------------------------------------
Consolidated Summary of Quarterly Financial Information
- --------------------------------------------------------------------------------
(In thousands, except per share data)
- --------------------------------------------------------------------------------
For quarter ended 3/31/94 12/31/93 9/30/93 6/30/93 3/31/93
- --------------------------------------------------------------------------------
Interest income $32,458 $34,015 $31,143 $31,152 $32,091
Interest income (tax equivalent) 33,088 34,603 31,702 31,722 32,694
Net interest income 19,236 20,562 17,977 17,810 18,219
Provisions for loan losses _ 206 85 (2,737) (4,917)
Trust fees 4,160 3,715 3,975 3,846 3,972
Mortgage banking income 1,765 1,913 1,871 1,987 1,678
Other noninterest income 8,882 10,178 7,560 7,920 8,101
Noninterest expense 28,225 36,410 26,828 27,097 28,393
Cumulative effect of change in
accounting principle _ _ _ _ 14,255
Net income 4,952 6,262 3,428 5,144 21,698
Income per share
Income before cumulative effect
of change in accounting principle $.51 $.64 $.35 $.53 $ .77
Net income .51 .64 .35 .53 2.25
Common stock price range
High $28.25 $34.00 $35.50 $34.25 $33.75
Low 27.00 28.00 32.50 28.75 31.25
Close 27.75 28.00 35.50 32.75 33.75
At Quarter End
Shares of Common Stock, net of treasury stock
Outstanding 9,478 9,478 9,478 9,477 9,470
Fully-diluted 9,780 9,775 9,782 9,774 9,760
<TABLE>
Average Balances/Net Interest Margin/Rates (1)
<CAPTION>
- ----------------------------------------------------------------------------------------------------
First three 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) $ 949,684 $17,248 7.37% $ 732,985 $14,329 7.93%
Investment securities (3)
Taxable 1,157,164 14,261 5.00 1,023,023 15,672 6.21
Nontaxable 53,431 1,214 9.21 53,900 1,134 8.53
Trading account securities 3,820 55 5.84 4,025 62 6.25
- ------------------------------------------- ----------- -------- -------- ----------- ------- ------
Total securities 1,214,415 15,530 5.19 1,080,948 16,868 6.33
Federal funds sold and securities
purchased under agreements to
resell and other 38,198 310 3.29 198,707 1,497 3.06
- ------------------------------------------- ----------- -------- -------- ----------- ------- ------
Total earning assets 2,202,297 33,088 6.09 2,012,640 32,694 6.59
Cash and due from banks-
noninterest-bearing 261,599 267,747
Reserve for possible loan losses (19,947) (26,369)
Other assets 154,087 129,312
---------- ----------
Total assets $2,598,036 $2,383,330
========== ==========
Liabilities and Shareholders' Investment
Interest-bearing deposits
Savings and money market accounts $ 695,347 $4,205 2.45% $ 583,571 $ 3,891 2.70%
Other time deposits 756,534 7,214 3.87 738,092 7,974 4.38
- ------------------------------------------- ----------- -------- -------- ----------- ------- ------
Total Interest-bearing Deposits 1,451,881 11,419 3.19 1,321,663 11,865 3.64
Federal funds purchased and securities
securities sold under agreements
to repurchase 128,785 989 3.11 121,461 856 2.86
Other borrowings 98,553 814 3.35 124,384 974 3.18
Long-term debt _ _ _ 9,077 177 7.91
- ------------------------------------------- ----------- -------- -------- ----------- ------- ------
Total interest bearing liabilities 1,679,219 13,222 3.19 1,576,585 13,872 3.57
Demand deposits 664,490 593,409
Other liabilities 25,311 24,744
Shareholders' investment 229,016 188,592
---------- ----------
Total liabilities and shareholders'
investment $2,598,036 $2,383,330
========== ==========
Interest income/earning assets $33,088 6.09% $32,694 6.59%
Interest expense/earning assets 13,222 2.43 13,872 2.80
------- ----- ------- -----
Net interest margin $19,866 3.66% $18,822 3.79%
======= ===== ======= =====
<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>
- -------------------------------------------------------------------------------------------
March 31, December 31, March 31,
(In thousands, except share data) 1994 1993 1993
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Cash and due from banks
Noninterest-bearing $ 343,846 $ 310,127 $ 350,070
Interest-bearing 1,830 2,587 5,338
Federal funds sold and securities purchased
under agreements to resell 77,270 24,565 20,592
Investment securities
Trading 708 1,891 2,511
Available for sale 712,094 766,827 77,604
Held to maturity 440,218 463,084 1,069,785
Equity 18,786 18,628 14,528
- ----------------------------------------------------- ----------- ------------ ------------
Total securities 1,171,806 1,250,430 1,164,428
- ----------------------------------------------------- ----------- ------------ ------------
Loans 979,300 936,000 735,673
Less: Reserve for loan losses (20,096) (19,986) (21,243)
- ----------------------------------------------------- ----------- ------------ ------------
Loans, net 959,204 916,014 714,430
- ----------------------------------------------------- ----------- ------------ ------------
Other real estate and assets owned, net 8,948 10,844 14,330
Property and equipment, net 66,618 64,152 53,800
Accrued income receivable 23,787 23,675 19,937
Accounts receivable 41,780 17,639 32,676
Deferred tax asset, net 16,296 13,584 14,255
Other assets 28,749 26,159 27,964
- ----------------------------------------------------- ----------- ------------ ------------
Total assets $2,740,134 $2,659,776 2,417,820
===================================================== =========== ============ ============
Liabilities and Shareholders' Investment
Deposits
Noninterest-bearing $ 727,695 $ 689,227 $ 628,733
Interest-bearing 1,473,930 1,435,917 1,345,287
- ----------------------------------------------------- ----------- ------------ ------------
Total deposits 2,201,625 2,125,144 1,974,020
Other borrowings
Federal funds purchased and securities
sold under agreements to repurchase 106,459 116,486 108,402
Other 155,965 161,626 67,971
Accrued interest, expenses and taxes 15,358 15,503 19,042
Accounts payable 31,462 11,621 30,834
Long-term notes _ _ 7,386
Other liabilities 4,200 2,151 1,614
- ----------------------------------------------------- ----------- ------------ ------------
Total liabilities 2,515,069 2,432,531 2,209,269
- ----------------------------------------------------- ----------- ------------ ------------
Shareholders' Investment
Common stock ($.01 par value; 50,000,000
shares authorized) 95 95 94
- ----------------------------------------------------
March 31, December 31, March 31,
1994 1993 1993
- ----------------------------------------------------
Shares issued 9,478,177 9,477,870 9,470,375
Shares outstanding 9,478,177 9,477,819 9,470,324
Capital surplus 211,703 211,708 211,536
Retained earnings (accumulated deficit) 15,316 11,785 (347)
Treasury stock, at cost _ 51 common shares at
December 31, 1993 and March 31, 1993. There
were no shares at March 31, 1994. _ (1) (1)
Unrealized security gains, net of tax 402 6,184 _
Deferred compensation (2,451) (2,526) (2,731)
- ----------------------------------------------------- ----------- ------------ ------------
Total shareholders' investment 225,065 227,245 208,551
- ----------------------------------------------------- ----------- ------------ ------------
Total liabilities and shareholders' investment $2,740,134 $2,659,776 $2,417,820
===================================================== =========== ============ ============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
Consolidated Statement of Income Liberty Bancorp, Inc.
- -------------------------------------------------------------------------------
First three months (In thousands, except per share data)
1994 1993
- -------------------------------------------------------------------------------
Interest Income
Loans $17,041 $14,135
Investments
Taxable 14,261 15,672
Nontaxable 797 734
Trading 49 53
Federal funds sold and other 310 1,497
- -------------------------------------------------------------------------------
Total interest income 32,458 32,091
- -------------------------------------------------------------------------------
Interest Expense
Deposits 11,419 11,865
Other borrowings 1,803 1,830
Long-term notes _ 177
- -------------------------------------------------------------------------------
Total interest expense 13,222 13,872
- -------------------------------------------------------------------------------
Net Interest Income 19,236 18,219
Provision for loan losses _ (4,917)
- -------------------------------------------------------------------------------
Net Interest Income After Provision for Loan Losses 19,236 23,136
- -------------------------------------------------------------------------------
Noninterest Income
Trust fees 4,160 3,972
Service charges on deposits 3,869 3,042
Mortgage banking income 1,765 1,678
Trading account profits and commissions 1,168 1,445
Loan fees 577 393
Net securities gains (losses) 388 (66)
Other 2,880 3,287
- -------------------------------------------------------------------------------
Total noninterest income 14,807 13,751
- -------------------------------------------------------------------------------
Noninterest Expense
Salaries 11,243 10,449
Employee benefits 2,671 2,386
Equipment 2,185 1,779
Professional and other services 2,172 2,229
Occupancy, net 2,132 1,972
Data processing 1,542 1,497
Printing, postage and supplies 1,425 1,279
Deposit insurance assessments 1,077 1,121
Advertising and business development 835 698
Amortization of intangibles, including
purchased mortgage servicing rights 655 757
Net income from operation of other real estate
and assets owned (751) (722)
Other 3,039 4,948
- -------------------------------------------------------------------------------
Total noninterest expense 28,225 28,393
- -------------------------------------------------------------------------------
Income Before Provision for Income Taxes 5,818 8,494
Provision for income taxes 866 1,051
- -------------------------------------------------------------------------------
Income Before Cumulative Effect of Change in
Accounting Principle and Extraordinary Item 4,952 7,443
Cumulative effect of change in accounting principle _ 14,255
- -------------------------------------------------------------------------------
Net Income $ 4,952 $21,698
===============================================================================
Income Per Share (Primary and Fully-Diluted)
Income before cumulative effect of change in
accounting principle $.51 $ .77
Cumulative effect of change in accounting principle _ 1.48
- -------------------------------------------------------------------------------
Net Income - Primary and Fully-Diluted $.51 $2.25
===============================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
<TABLE>
Consolidated Statement of Shareholders' Investment Liberty Bancorp, Inc.
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Retained
Earnings Unrealized Total
Common Capital (Accumulated Treasury Security Deferred Shareholders'
(Dollars in thousands) Stock Surplus Deficit) Stock Gains, 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 _ _ 21,698 _ _ _ 21,698
Amortization of deferred compensation _ _ _ _ _ 93 93
Common stock issued to employee
benefit plans (17,613 common shares) _ 521 _ _ _ _ 521
- -------------------------------------------- ------- ---------- ------------ ---------- ------------ ---------------- -------------
Balance March 31, 1993 $94 $211,536 ($347) ($ 1) _ ($2,731) $208,551
============================================ ======= ========== ============ ========== ============ ================ =============
Balance January 1, 1994 $95 $211,708 $11,785 ($ 1) $6,184 ($2,526) $227,245
Net income _ _ 4,952 _ _ _ 4,952
Dividends paid ($.15 per share) _ _ (1,421) _ _ _ (1,421)
Amortization of deferred compensation _ _ _ _ _ 75 75
Unrealized losses on available for
sale securities, net of tax _ _ _ _ (5,782) _ (5,782)
Purchase of treasury stock (12,880 shares) _ _ _ (356) _ _ (356)
Common and treasury stock issued
to employee benefit plans (317 common
shares and 12,931 treasury shares) _ (5) _ 357 _ _ 352
- -------------------------------------------- ------- ---------- ------------ ---------- ------------ ---------------- -------------
Balance March 31, 1994 $95 $211,703 $15,316 $ _ $402 ($2,451) $225,065
============================================ ======= ========== ============ ========== ============ ================ =============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
- ------------------------------------------------------------------------------
Consolidated Statement of Cash Flows Liberty Bancorp, Inc.
- ------------------------------------------------------------------------------
First three months (In thousands) 1994 1993
- ------------------------------------------------------------------------------
Cash provided (absorbed) by operating activities
Net income $ 4,952 $21,698
Adjustments to reconcile net income to net cash
provided by provided by operating activities:
Provisions for losses _ (1,160)
Cumulative effect of change in accounting principle _ (14,255)
Provision for income taxes 866 1,051
Depreciation and amortization 2,059 2,159
Net amortization of securities 3,142 1,679
Gain on sale of assets (2,449) (1,862)
Change in trading account securities 3,457 (2,432)
Loans made for purposes of resale (44,772) (20,442)
Proceeds from sale of loans held for resale 31,315 24,044
Change in accrued income and accounts receivable (3,390) (7,024)
Change in accrued interest, expenses and taxes,
accounts payable and other liabilities (1,836) (2,603)
Change in other assets 581 3,793
- ------------------------------------------------------------------------------
Net cash provided (absorbed) by
operating activities (6,075) 4,646
- ------------------------------------------------------------------------------
Cash provided (absorbed) by investing activities
Maturities and paydowns on securities 71,346 83,043
Sales of securities 228,971 49,643
Purchases of securities (237,812) (253,233)
Change in net loans made by bank subsidiaries (27,230) 13,031
Principal payments received on loans made by parent
company and nonbank subsidiaries 1,015 688
Loans made to customers by nonbank subsidiaries (2,515) _
Expenditures for property and equipment (4,025) (2,846)
Proceeds from sale of property and equipment 12 23
Sale proceeds and collections from other real estate
and assets acquired in settlement of loans 2,694 2,064
Cash and cash-equivalents received in financial
institution acquisitons, net of consideration _ 9,814
Purchases of mortgage servicing contracts (82) (35)
- ------------------------------------------------------------------------------
Net cash provided (absorbed) by
investing activities 32,374 (97,808)
- ------------------------------------------------------------------------------
Cash provided (absorbed) by financing activities
Change in savings and demand deposits 27,045 (58,091)
Change in time deposits 49,436 1,454
Change in short-term borrowings (15,688) (110,316)
Payment on long-term notes _ (159)
Proceeds from issuance of common stock to
employees' and shareholders' plans 352 521
Purchase of treasury stock (356) -
Dividends paid on common stock (1,421) _
- ------------------------------------------------------------------------------
Net cash provided (absorbed) by financing
activities 59,368 (166,591)
- ------------------------------------------------------------------------------
Net change in cash and cash-equivalents 85,667 (259,753)
Cash and cash equivalents at December 31 337,279 635,753
- ------------------------------------------------------------------------------
Cash and cash equivalents at March 31 $422,946 $376,000
==============================================================================
Interest paid during the first three months of 1994 and 1993 totaled
$14,365,000 and $15,910,000, respectively.
No income taxes were paid in the first three months of 1994 or 1993.
Net transfers of loans to other real estate owned during the three months of
1994 and 1993 totaled approximately ($96,000) and $378,000, respectively.
Loans by Liberty to finance sales of other real estate and assets owned in the
first three months of 1994 totaled $120,000. No such loans were made in 1993.
The accompanying notes are an integral part of these consolidated financial
statements.
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 re-
classifications 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.
- ------------------------------------------------------------------------
Three Months
Ended
- ------------------------------------------------------------------------
March 31 (In thousands) 1994 1993
Weighted average shares outstanding
Primary 9,775 9,650
Fully-diluted 9,775 9,658
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 statement 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.
Poolings-of-Interests _ The following table presents the business combinations
occurring during 1993 which have been 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.
- --------------------------------------------------------
Assets
(In thousands) 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 three months of 1993.
- ------------------------------------------------------------------------------
Pooled
(In thousands) Liberty Banks Combined
- ------------------------------------------------------------------------------
Interest income $30,167 $1,924 $32,091
Net interest income 16,972 1,247 18,219
Cumulative effect of change in
accounting principle 14,412 (157) 14,255
Net income 21,365 333 21,698
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.
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: May 16, 1994
