SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996, or
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _______ to ___________
Commission File Number 0-12216
OLD KENT FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-1986608
(State of Incorporation) (I.R.S. Employer Identification Number)
One Vandenberg Center
Grand Rapids, Michigan 49503
(Address of principal executive (Zip Code)
Registrant's telephone number, including a(616) 771-5000
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
The number of shares outstanding of the registrant's Common stock, par value
$1, as of July 31, 1996 was 45,961,165 shares.
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INDEX
OLD KENT FINANCIAL CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995
Consolidated Statements of Income for the three
and six months ended June 30, 1996 and 1995
Consolidated Statements of Cash Flows for the
six months ended June 30, 1996 and 1995
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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<TABLE>
OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)_____________________________________________
<CAPTION>
June 30, December 31,
(dollars in thousands) 1996 1995
<S> <C> <C>
ASSETS:
Cash and due from banks.................................... $ 518,337 $ 527,611
Federal funds sold and resale agreements................... 130,525 49,445
Total cash and cash equivalents............................ 648,862 577,056
Interest-earning deposits.................................. 1,175 175,413
Trading account securities................................. 8,952 11,699
Mortgages held-for-sale.................................... 334,251 270,126
Securities available-for-sale:
Collateralized mortgage obligations and other mortgage-
backed securities................................... 800,127 874,291
Other securities........................................ 1,214,503 1,371,408
Total securities available-for-sale (amortized cost of
$2,056,503, and $2,240,517, respectively)............. 2,014,630 2,245,699
Securities held-to-maturity:
Collateralized mortgage obligations and other mortgage-
backed securities................................... 809,692 680,330
Other securities........................................ 160,694 190,612
Total securities held-to-maturity (market values of
$960,929 and $876,291, respectively).................. 970,386 870,942
Loans...................................................... 7,835,636 7,430,552
Allowance for credit losses................................ (172,487) (174,248)
Net loans.................................................. 7,663,149 7,256,304
Premises and equipment..................................... 167,836 173,903
Other assets............................................... 426,562 421,942
Total Assets............................................... $12,235,803 $12,003,084
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing.................................... $ 1,452,403 $ 1,506,149
Interest-bearing........................................ 8,354,080 7,769,672
Foreign deposits -- interest-bearing.................... 16,666 81,545
Total deposits........................................ 9,823,149 9,357,366
Other borrowed funds....................................... 1,096,771 1,307,617
Subordinated debt.......................................... 100,000 100,000
Other liabilities.......................................... 209,414 222,165
Total Liabilities.......................................... $11,229,334 $10,987,148
Shareholders' Equity:
Preferred stock: 25,000,000 shares authorized and unissued. -- --
Common stock, $1 par value: 150,000,000 shares authorized;
46,908,977 and 45,383,122 shares issued and outstanding . $ 46,909 $ 45,383
Capital surplus............................................ 255,895 200,101
Retained earnings.......................................... 730,882 767,085
Valuation adjustment of securities available-for-sale...... (27,217) 3,367
Total Shareholders' Equity................................. 1,006,469 1,015,936
Total Liabilities and Shareholders' Equity................ $12,235,803 $12,003,084
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)___________________________________________________
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
(in thousands, except per share data) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans............................$177,821 $169,452 $347,612 $325,793
Interest on mortgages held-for-sale................... 6,951 4,110 12,949 6,797
Interest on securities available-for-sale............. 32,621 16,271 68,463 39,104
Interest on securities held-to-maturity:
Taxable............................................. 14,305 29,108 28,281 59,658
Tax-exempt.......................................... 2,331 3,250 4,891 6,522
Interest on deposits.................................. 31 216 287 422
Interest on federal funds sold and resale agreements.. 1,455 6,236 2,095 8,934
Interest on trading account securities................ 130 620 218 948
Total interest income................................. 235,645 229,263 464,796 448,178
Interest Expense:
Interest on domestic deposits......................... 93,857 87,396 185,181 167,092
Interest on foreign deposits.......................... 668 4,905 1,908 10,050
Interest on other borrowed funds...................... 14,449 17,986 31,158 34,218
Interest on subordinated debt......................... 1,694 27 3,406 55
Total interest expense................................ 110,668 110,314 221,653 211,415
Net Interest Income..................................... 124,977 118,949 243,143 236,763
Provision for credit losses............................. 9,723 5,991 15,975 10,558
Net interest income after provision
for credit losses................................... 115,254 112,958 227,168 226,205
Other Income:
Mortgage banking revenue (net)........................ 12,005 6,685 22,825 12,857
Service charges on deposit accounts................... 11,277 10,144 22,001 19,292
Trust income.......................................... 11,260 10,638 22,328 20,964
Credit card transaction revenue - net................. 2,337 2,362 4,104 4,845
Securities gains/(losses)............................. 335 (30) 1,189 (167)
Nonrecurring and other real estate owned income....... 1,332 2,153 3,829 2,202
Other................................................. 12,473 7,819 23,788 15,579
Total other income.................................... 51,019 39,771 100,064 75,572
Other Expenses:
Salaries and employee benefits........................ 50,507 45,617 101,701 92,636
Advertising and promotion............................. 12,646 2,950 16,894 5,214
Occupancy expense..................................... 7,540 6,569 15,000 13,795
Equipment expense..................................... 6,202 6,043 11,949 12,039
FDIC Insurance........................................ 306 5,150 487 10,299
Restructuring charges................................. -- 1,275 -- 1,275
Nonrecurring and other real estate owned expense...... 296 102 587 102
Other expenses........................................ 32,477 28,398 64,702 58,079
Total other expenses.................................. 109,974 96,104 211,320 193,439
Income Before Income Taxes.............................. 56,299 56,625 115,912 108,338
Income taxes.......................................... 18,738 19,232 39,117 36,242
Net Income..............................................$ 37,561 $ 37,393 $76,795 $72,096
Per Common Share:
Net income............................................ $0.79 $0.78 $1.61 $1.50
Dividends............................................. $0.305 $0.281 $0.610 $0.562
Number of Common Shares Used to Calculate
Net Income Per Share (in thousands)................... 47,563 47,791 47,737 47,904
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
<CAPTION>
Six months ended June 30 (in thousands) 1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..............................................................$ 76,795 $ 72,096
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for credit losses..................................... 15,975 10,558
Depreciation, amortization and accretion........................ 29,512 19,506
Net gains on sales of assets.................................... (20,035) (4,617)
Net decrease in trading account securities...................... 3,972 8,657
Originations and acquisitions of mortgages held-for-sale........ (1,577,958) (878,124)
Proceeds from sales and prepayments of mortgages held-for-sale.. 1,528,492 746,231
Net change in other assets...................................... (12,474) (32,367)
Net change in other liabilities................................. 8,562 72,755
Net cash provided by operating activities............................... 52,841 14,695
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities and prepayments of securities available-for-sale............. 261,036 212,718
Proceeds from sales of securities available-for-sale.................... 1,399,539 997,940
Purchases of securities available-for-sale.............................. (1,526,434) (492,054)
Proceeds from maturities and prepayments of securities held-to-maturity. 63,118 183,800
Proceeds from sales of securities held-to-maturity...................... 860 -
Purchases of securities held-to-maturity................................ (167,644) (22,910)
Net change in interest-earning deposits................................. 174,238 4,355
Net increase in loans................................................... (457,023) (639,475)
Purchases of leasehold improvements, premises and equipment, net........ (6,708) (12,778)
Sale of subsidiary (net of cash sold)................................... 7,123 -
Net cash (used for) provided by investing activities.................... (251,895) 231,596
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in time deposits............................................... 687,895 316,376
Change in demand and savings deposits................................... (139,410) (320,168)
(Decrease) increase in other borrowed funds............................. (207,298) 290,854
Repurchases of common stock............................................. (46,023) (8,305)
Proceeds from common stock issuances.................................... 4,681 2,483
Dividends paid to shareholders.......................................... (28,985) (26,766)
Net cash provided by financing activities............................... 270,860 254,474
Net change in cash and cash equivalents................................. 71,806 500,765
Cash and cash equivalents at beginning of year.......................... 577,056 515,008
Cash and cash equivalents at June 30....................................$ 648,862 $ 1,015,773
Supplemental disclosures of cash flow information:
Interest paid on deposits, other borrowed funds and
subordinate debt....................................................$ 225,283 $ 190,389
Federal income taxes paid............................................. 41,775 40,603
Significant non-cash transactions:
Stock Dividends Issued.................................................. 84,013 -
Stock issued to acquire business........................................ 8,431 35,559
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 1996
NOTE A: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six month
periods ended June 30, 1996, are not necessarily indicative of the results that
may be expected for the year ending December 31, 1996. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Corporation's annual report on Form 10-K for the year ended December 31,
1995.
Certain reclassifications have been made to prior periods' financial statements
to place them on a basis comparable with the current periods' financial
statements.
NOTE B: LOANS AND NONPERFORMING ASSETS
The following summarizes loans and nonperforming assets at the
dates indicated (dollars in thousands):
June 30, December 31,
Loans: 1996 1995
Commercial.................................... $2,248,710 $2,008,582
Real estate - Commercial..................... 1,625,787 1,627,154
Real estate - Construction................... 339,851 267,363
Real estate - Residential mortgages.......... 805,832 832,214
Real estate - Consumer home equity .......... 675,808 623,659
Consumer...................................... 1,579,260 1,551,828
Credit card loans............................. 356,349 323,592
Lease financing............................... 204,039 196,160
Total Loans................................... $7,835,636 $7,430,552
June 30, December 31,
Nonperforming assets: 1996 1995
Nonaccrual loans ............................. $39,748 $40,173
Restructured loans............................ 2,706 3,075
Impaired loans.............................. 42,454 43,248
Other real estate owned....................... 6,242 11,287
Total nonperforming assets.................... $48,696 $54,535
<PAGE>
OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued (Unaudited)
June 30, 1996
NOTE C: ALLOWANCE FOR CREDIT LOSSES AND NET CHARGE-OFFS
The following summarizes the changes in the allowance for credit losses, and
net charge-offs (in thousands of dollars):
For the Six Months
ended June 30,
Allowance for Credit Losses 1996 1995
Balance at January 1,.............................. $174,248 $167,253
Changes in allowance due to (sold) purchased loans.. (1,140) 199
Provision for credit losses......................... 15,975 10,558
Gross loans charged-off............................. (22,759) (9,520)
Gross recoveries of loans previously charged-off.... 6,163 6,861
Balance at end of period,........................... $172,487 $175,351
For the Six Months
ended June 30,
Net Loan Charge-Offs 1996 1995
Commercial Loans & Commercial Real Estate........... ($2,406) ($1,978)
Consumer............................................ 5,006 2,917
Credit Card......................................... 7,971 1,178
Residential Mortgages............................... 57 203
Leases.............................................. 5,968 339
Total Net Charge-Offs............................... $16,596 $2,659
NOTE D: SECURITIES AVAILABLE-FOR-SALE
The following summarizes amortized costs and estimated market values of
securities available-for-sale at the dates indicated (in thousands of
dollars):
<TABLE>
<CAPTION>
Carrying
Gross Gross Value
Amortized Unrealized Unrealized at Market
June 30, 1996: Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury and federal agency securities.. $1,181,894 $ 2,226 $28,774 $1,155,346
Collateralized mortgage obligations and
other mortgage-backed securities........... 815,452 158 15,483 800,127
Other securities............................. 59,157 0 0 59,157
Total securities available-for-sale.......... $2,056,503 $ 2,384 $44,257 $2,014,630
December 31, 1995:
U.S. Treasury and federal agency securities.. $1,304,855 $10,503 $ 2,930 $1,312,428
Collateralized mortgage obligations and
other mortgage-backed securities........... 877,288 6,990 9,987 874,291
Other securities............................. 58,374 606 0 58,980
Total securities available-for-sale.......... $2,240,517 $18,099 $12,917 $2,245,699
</TABLE>
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OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued (Unaudited)
June 30, 1996
<TABLE>
<CAPTION>
NOTE E: SECURITIES HELD-TO-MATURITY
The following summarizes amortized costs and estimated market values of
securities held-to-maturity at the dates indicated (in thousands of dollars):
Gross Gross
Amortized Unrealized Unrealized Market
June 30, 1996: Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Treasury and federal agencies........... $ 4,003 $ 0 $ 46 $ 3,957
Collateralized mortgage obligations and
other mortgage-backed securities........... 809,692 1,367 13,590 797,469
State and political subdivision securities... 156,691 4,113 1,301 159,503
Total securities held-to-maturity............ $970,386 $ 5,480 $14,937 $960,929
December 31, 1995:
Collateralized mortgage obligations and
other mortgage-backed securities........... $680,330 $ 6,129 $ 5,932 $680,527
State and political subdivision securities... 190,612 6,031 879 195,764
Total securities held-to-maturity............ $870,942 $12,160 $ 6,811 $876,291
</TABLE>
As reflected in the consolidated statements of cash flows, during the first
quarter of 1996, the Registrant sold $860 thousand of securities
held-to-maturity. The decision to sell these securities was based on
deterioration in the quality of the asset.
NOTE F: BUSINESS COMBINATIONS
On January 22, 1996, Old Kent acquired Republic Mortgage Corp. ("Republic"),
headquartered in Salt Lake City, Utah, with 19 other offices. The acquisition
was treated as a purchase for accounting purposes and, accordingly, results of
operations of Republic are included in Old Kent's consolidated results of
operations from the date of acquisition. Republic's shareholders were issued
Old Kent common stock in exchange for all the outstanding shares of Republic.
At December 31, 1995, Republic had assets of $39 million and serviced
$127 million of residential mortgages for third parties.
On February 2, 1996, Old Kent sold its wholly owned subsidiary First National
Bank of Lockport to Heritage Financial Services, Inc. The cash sale price was
$16,750,000. At the time of the sale, the bank had total assets of
$102 million, total deposits of $81 million, and operated from one office in
Lockport, Illinois. First National Bank of Lockport was among a group of banks
acquired by Old Kent in its 1994 acquisition of EdgeMark Financial Corporation.
The sale was consistent with Old Kent's strategic focus on business development
and retail banking in the metropolitan Chicago area.
On June 4, 1996, Old Kent signed a letter of intent to acquire Seaway Financial
Corporation, a bank holding company with assets of approximately $350 million
headquartered in Saint Clair, Michigan. Seaway Financial is the parent company
of The Commercial and Savings Bank of Saint Clair County, and The Algonac
Savings Bank. Seaway provides banking services through fourteen offices in
Saint Clair County. The merger is subject to execution of a definitive
agreement and shareholder and regulatory approval and is expected to be
completed during the fourth quarter of 1996, or the first quarter of 1997.
On August 1, 1996, Old Kent acquired National Pacific Mortgage Corporation
("NPMC"), a mortgage company headquartered in Anaheim, California, with 17
branch offices in California and Oregon, for cash and other consideration.
At June 30, 1996, NPMC had assets of approximately $100 million and a
servicing portfolio of $1.6 billion.
<PAGE>
OLD KENT FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- Continued (Unaudited)
June 30, 1996
NOTE G: SHAREHOLDERS' EQUITY
On June 17, 1996, the Board of Directors of Old Kent Financial Corporation
declared a 5% stock dividend, payable on July 25, 1996, to shareholders of
record on June 25, 1996. All per share amounts included in this report have
been retroactively adjusted to reflect this dividend.
At the same meeting, the Board of Directors authorized the repurchase of up to
2.5 million shares of Old Kent Common Stock which would be reserved for later
reissue in connection with future stock dividends, employee benefit plans and
other corporate purposes. The directors also authorized the purchase of
Old Kent Common Stock intended for use in the acquisition of Seaway Financial
Corporation. Based on recent market values, approximately two million shares
could be purchased under this authorization. As of July 30, 1996, approximately
325,000 shares of Old Kent Common Stock had been purchased under these
authorizations.
<TABLE>
<CAPTION>
NOTE H: MORTGAGE BANKING REVENUE (NET)
The following summarizes net mortgage banking revenues:
For the Six Months
ended June 30,
Net Mortgage Banking Revenue: 1996 1995
<S> <C> <C>
Gross mortgage servicing revenue ..................................... $10,779 $ 6,622
Less: amortization of mortgage servicing rights & direct costs...... (7,986) (2,337)
Net servicing revenue................................................. 2,793 4,285
Mortgage banking gains (net).......................................... 13,174 5,891
Mortgage originations and processing fees (net of direct cost)........ 6,858 2,681
Total net mortgage banking revenue.................................. $22,825 $12,857
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Registrant's financial condition and results
of operations during the periods covered by the consolidated financial
statements included in this filing. The Registrant's form 10-Q for the
quarterly period ended March 31, 1996, is herein incorporated by reference.
RESULTS OF OPERATIONS
The Registrant's net income was $37,561,000 for the second quarter of 1996
compared to $37,393,000 for the same period in 1995. Second quarter net income
per share for 1996 was $.79, a 1.3% increase over last year's $.78. For the
six month period ended June 30, 1996, net income was $76,795,000 compared to
$72,096,000 a year ago and earnings per share was $1.61, a 7.3% increase over
last year's $1.50.
Total assets were $12.2 billion at quarter-end compared to total assets of
$11.9 billion at June 30, 1995. Return on average equity for the second
quarter of 1996 was 14.91% compared to 15.77% for the second quarter of 1995.
Return on assets was 1.24% for the second quarter of 1996 compared to 1.28%
for the second quarter of 1995.
The Registrant's net interest income for the second quarter of 1996 was
$125.0 million, a 5.1% increase over the $118.9 million recorded in the same
period of 1995. The increase was primarily the result of a higher net interest
margin of 4.48% for the second quarter of 1996 compared to 4.43% for the second
quarter of 1995. The improved net interest margin primarily reflects a
decrease in the Registrant's borrowing costs. Also, loans, which tend to yield
higher interest, represented a greater portion of total interest-earning assets
in 1996.
The provision for credit losses was $9.7 million for the second quarter of 1996
and $6.0 million for the second quarter of 1995. The allowance for credit
losses as a percent of loans and leases outstanding was 2.20% at June 30, 1996,
and 2.34% at June 30, 1995. Impaired loans as a percent of total loans was
.54% at June 30, 1996, and .58% at June 30, 1995. Net credit losses were
$10.7 million or .55% of average loans for the second quarter of 1996 compared
to $1.8 million or .10% of average loans for the same period a year ago. The
increase credit loss provision was related to higher loss experience within the
Registrant's credit card and lease portfolios.
Total other operating income, excluding security transactions and nonrecurring
items, increased 31.1% to $49.4 million during the second quarter of 1996 over
the same period a year ago. Mortgage banking revenue increased $5.3 million or
79.6% during the second quarter of 1996 over the same period a year ago. This
increase includes the effect of Republic Mortgage Corp., which was acquired in
January, 1996. Service charges on deposits increased 11.2% or $1.1 million,
trust income increased 5.8% and all other income increased $4.7 million or
59.5% over the year ago quarter. The increase in other income includes
insurance commissions of $2.3 million associated with Guyot, Hicks, Anderson
and Associates, an insurance agency acquired in December 1995.
Non-recurring income of $1.3 million in the second quarter of 1996 was
attributable to gains on sale of other real estate owned. The second quarter
of 1995 included non-recurring income from gains on sale of other real estate
owned of approximately $0.9 million, and other recoveries of approximately
$1.2 million.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Total net securities gains for the second quarter of 1996 were $335,000
compared to net losses of $30,000 for the same period of 1995.
Total operating expenses for the second quarter of 1996 increased 14.4% over
the same period of 1995. Salaries, wages and employee benefits increased
10.7% for the second quarter of 1996 over the second quarter of 1995. The
increase was primarily the result of business acquisitions. The number of
full-time equivalent employees increased by 67 over a year-ago to 5,310 at
June 30, 1996. During the second quarter, advertising and promotion expenses
increased $9.7 million compared to the same period a year ago. Of this
increase, $7.1 million was attributable to an enhanced allowance for the
redemption reserve associated with the Registrant's widely accepted "Cardmiles"
program, a credit card product enhancement. During the second quarter of 1996,
compared to the same period a year ago, occupancy expense increased 14.8% and
equipment expense increased 2.5%. FDIC expenses decreased 94.1%, due to a
decrease in the rate assessment by the FDIC. Other operating expenses
increased 14.4%. The increase in operating expenses includes the increases
resulting from the recent acquisitions of Republic Mortgage Company in January
1996, and Guyot, Hicks, Anderson and Associates, an insurance agency, in
December of 1995.
BALANCE SHEET CHANGES
For the first half of 1996, total loans grew at an annualized rate of 10.9% or
$405 million, and commercial loans grew at an annualized rate of 15.6% or $319
million. The growth in commercial loans is primarily a result of increased
efforts in the Registrant's eastern Michigan, and Illinois markets. Total
securities (at amortized cost) decreased $84 million since year-end 1995. This
decrease reflected the use of liquidity in the securities portfolio to fund
loan growth. Mortgages held-for-sale increased 23.7% or $64 million and other
interest earning assets decreased 40.5% or $96 million, since year end 1995.
Total interest-earning assets (at amortized cost) increased 2.6% or $289
million from December 31, 1995. Total deposits increased $466 million or 5.0%
from year-end 1995. Non-interest bearing deposits decreased 3.6% or $54
million and interest-bearing deposits increased 6.6% or $520 million. Short-
term borrowed funds decreased 16.1% or $211 million from December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The maintenance of an adequate level of liquidity is necessary to ensure that
sufficient funds are available to meet customers' loan demand and deposit
withdrawals. The banking subsidiaries' liquidity sources consist of securities
available-for-sale, maturing loans and securities held-to-maturity, and other
short-term investments. Liquidity has also been obtained through liabilities
such as customer-related core deposits, funds borrowed, certificates of deposit
and public funds deposits.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
At June 30, 1996, shareholders' equity was $1,006 million, compared to $974
million at June 30, 1995, an increase of $32 million, or 3.4%. Total equity
at June 30, 1996, was reduced by an after-tax unrealized loss of $27 million
on securities available-for-sale. Shareholders' equity as a percentage of
total assets as of June 30, 1996, was 8.23%. The following table represents
the Registrant's consolidated regulatory capital position as of June 30, 1996.
Regulatory capital at June 30, 1996
(in millions)
Tier 1 Total
Leverage Risk-Based Risk-Based
Ratio Capital Capital
Actual capital $947.5 $939.9 $1,153.2
Required regulatory minimum capital 364.4 360.0 720.2
Capital in excess of requirements $583.1 $579.9 $ 433.0
Actual ratio 7.77% 10.44% 12.81%
Regulatory Minimum Ratio 3.00% 4.00% 8.00%
Ratio considered "well capitalized"
by regulatory agencies 5.00% 6.00% 10.00%
The changes in total shareholders' equity and book value per common
share are shown in the table below.
Total Share-
holders' Equity Book Value Per
(in millions) Common Share
Balance, December 31, 1995 $1,015.9 $21.32
Net income for the six months
ended June 30, 1996 76.8 1.61
Dividends paid (29.0) (.61)
Net change in valuation
adjustment of securities
available-for-sale (30.6) (.64)
Stock repurchases (net of stock issued) (30.2) (.30)
Other changes 3.6 .08
Balance, June 30, 1996 $1,006.5 $21.46
<PAGE>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a.) The following exhibits are filed as part of this report:
Exhibit 11 - Statement Re: Computation of Earnings Per Share
Exhibit 27 - Financial Data Schedules
b.) No reports on Form 8-K were filed during the quarter for
which this report is filed.
<PAGE>
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.
OLD KENT FINANCIAL CORPORATION
Date: August 14, 1996 David J. Wagner
Chairman of the Board, President and
Chief Executive Officer
Date: August 14, 1996 B. P. Sherwood, III
Vice Chairman and Treasurer
<PAGE>
EXHIBIT INDEX
Exhibit Page Number
11 Statement of Earnings per 15
27 Financial Data Schedule 16
<PAGE>
<TABLE>
EXHIBIT 11
OLD KENT FINANCIAL CORPORATION
PRIMARY EARNINGS PER SHARE CALCULATION
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
1 9 9 6 1 9 9 5 1 9 9 6 1 9 9 5
<S> <C> <C> <C> <C>
NET INCOME.......................... $37,561,000 $37,393,000 $76,795,000 $72,096,000
Less: Preferred stock dividends..... - 0 - - 0 - - 0 - - 0 -
INCOME FOR PRIMARY
E.P.S. CALCULATION................. $37,561,000 $37,393,000 $76,795,000 $72,096,000
Avg common shares outstandiing 47,215,555 47,464,681 47,380,929 47,485,233
Common stock equivalents............ 347,065 326,106 356,468 419,106
SHARES FOR PRIMARY
E.P.S. CALCULATION................. 47,562,620 47,790,787 47,737,397 47,904,339
PRIMARY E.P.S....................... $0.79 $0.78 $1.61 $1.50
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND> This schedule contains summary financial information extracted from
SEC Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<PERIOD-END> JUN-30-1996
<FISCAL-YEAR-END> DEC-31-1996
<CASH> 518,337
<INT-BEARING-DEPOSITS> 1,175
<FED-FUNDS-SOLD> 130,525
<TRADING-ASSETS> 8,952
<INVESTMENTS-HELD-FOR-SALE> 2,014,630
<INVESTMENTS-CARRYING> 970,386
<INVESTMENTS-MARKET> 960,929
<LOANS> 8,169,887
<ALLOWANCE> 172,487
<TOTAL-ASSETS> 12,235,803
<DEPOSITS> 9,823,149
<SHORT-TERM> 985,801
<LIABILITIES-OTHER> 209,414
<LONG-TERM> 210,970
<COMMON> 46,909
0
0
<OTHER-SE> 959,560
<TOTAL-LIABILITIES-AND-EQUITY> 12,235,803
<INTEREST-LOAN> 360,561
<INTEREST-INVEST> 101,635
<INTEREST-OTHER> 2,600
<INTEREST-TOTAL> 464,796
<INTEREST-DEPOSIT> 187,089
<INTEREST-EXPENSE> 221,653
<INTEREST-INCOME-NET> 243,143
<LOAN-LOSSES> 15,975
<SECURITIES-GAINS> 1,189
<EXPENSE-OTHER> 211,320
<INCOME-PRETAX> 115,912
<INCOME-PRE-EXTRAORDINARY> 115,912
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76,795
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.61
<YIELD-ACTUAL> 4.42
<LOANS-NON> 39,748
<LOANS-PAST> 35,758
<LOANS-TROUBLED> 2,706
<LOANS-PROBLEM> 78,212
<ALLOWANCE-OPEN> 174,248
<CHARGE-OFFS> 22,759
<RECOVERIES> 6,163
<ALLOWANCE-CLOSE> 172,487
<ALLOWANCE-DOMESTIC> 172,487
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
