SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report under Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the Quarter ended June 30, 1995 Commission File No. 0-14277
First Commerce Bancshares, Inc.
Nebraska 47-0683029
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1248 O Street, Lincoln, Nebraska 68508-1424
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (402) 434-4110
None
Former name, former address, and former fiscal year, if changes since
last report.
"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 and
Exchange Act of 1934 during the preceding twelve 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
Common stock, $.20 par value; outstanding at June 30, 1995
Class A Common 2,606,336 shares.
Class B Common 10,965,348 shares.
<PAGE>
<TABLE>
FIRST COMMERCE BANCSHARES, INC. & SUBSIDIARIES
Consolidated Condensed Balance Sheets
(In Thousands)
<CAPTION>
(Unaudited)
June 30,December 31,
1995 1994
-------- --------
<S> <C> <C>
Cash and due from banks $ 71,064 $ 89,305
Federal funds sold 90,424 79,000
Cash and cash equivalents 161,488 168,305
Mortgages held for sale 19,698 4,803
Securities available for sale
(cost of $329,842,000 and $275,171,000) 338,796 270,213
Securities held to maturity (fair
value of $238,803,000 and $259,249,000) 239,789 267,584
Loans 915,954 850,292
Less allowance for loan losses 18,631 17,190
------- -------
Net Loans 897,323 833,102
Premises and equipment 45,888 44,451
Other assets 39,304 35,680
--------- ---------
$1,742,286 $1,624,138
========= =========
Deposits:
Non-interest bearing $ 244,517 $ 288,306
Interest bearing 1,180,809 1,067,659
--------- ---------
1,425,326 1,355,965
Securities sold under agreement
to repurchase 85,559 73,132
Federal funds purchased 5,700 -
Accrued expenses and other liabilities 15,450 12,687
Long-term debt 41,000 33,000
--------- --------
Total liabilities 1,573,035 1,474,784
Stockholders' equity:
Common stock:
Class A voting, $.20 par value;
authorized 10,000,000 shares;
issued 2,606,473 shares; 521 521
Class B non-voting, $.20 par value;
authorized 40,000,000 shares;
issued 11,060,029 and 10,750,763 shares 2,212 2,150
Paid in capital 21,819 18,012
Retained earnings 140,024 132,908
Net unrealized gains/(losses) on
securities available for sale (net of tax) 5,820 (3,149)
--------- ---------
170,396 150,442
Less cost of 137 Class A and 94,681
Class B shares of treasury stock 1,145 1,088
Total stockholders' equity 169,251 149,354
--------- ---------
$1,742,286 $1,624,138
========= =========
See notes to consolidated condensed financial statements.
<PAGE>
FIRST COMMERCE BANCSHARES, INC. & SUBSIDIARIES
Consolidated Condensed Statements of Income
(Unaudited)
(In Thousands Except Per Share Data)
<CAPTION>
Three months ended Six Months ended
June 30, June 30,
1995 1994 1995 1994
Interest income: ------- ------- ------ ------
<S> <C> <C> <C> <C>
Loans, including fees $21,329 $16,658 $40,672 $32,690
Investment securities:
Taxable 8,014 7,211 15,753 14,052
Non-taxable 365 386 721 756
Dividends 247 162 304 230
Mortgages held for sale 228 264 319 537
Short-term investments 1,103 571 1,648 1,012
------ ------ ------ ------
Total interest income 31,286 25,252 59,417 49,277
Interest expense:
Deposits 14,310 9,077 26,155 17,982
Short-term borrowings 1,148 832 2,180 1,385
Long-term debt 715 485 1,352 990
------ ------ ------ ------
Total interest expense 16,173 10,394 29,687 20,357
------ ------ ------ ------
Net interest income 15,113 14,858 29,730 28,920
Provision for loan losses 686 81 1,382 152
------ ------ ------ ------
Net interest income after
provision for loan losses 14,427 14,777 28,348 28,768
Noninterest income:
Service charges and fees
to customers 7,074 6,918 13,914 13,718
Trust services 1,710 1,749 2,970 2,972
Gains/(losses) on
securities sales 153 288 337 211
Other income 179 (29) 242 105
------ ------ ------ ------
Total noninterest income 9,116 8,926 17,463 17,006
Noninterest expense:
Salaries and employee benefits 8,258 7,450 16,188 14,625
Fees and insurance 3,309 2,922 6,244 5,967
Other expenses 5,025 4,901 10,228 10,042
------ ------ ------ ------
Total noninterest expense 16,592 15,273 32,660 30,634
------ ------ ------ ------
Income before income taxes 6,951 8,430 13,151 15,140
Income tax provision 2,484 2,960 4,586 5,270
------ ------ ------ ------
Net income $ 4,467 $ 5,470 $ 8,565 $ 9,870
====== ====== ====== ======
Weighted average shares outstanding 13,576 13,001 13,423 13,016
Net income per share $ .33 $.42 $.64 $.76
See notes to consolidated condensed financial statements.
<PAGE>
FIRST COMMERCE BANCSHARES, INC.
Consolidated Condensed Statements of Cash Flows
(Unaudited) (In Thousands)
<CAPTION>
Six Months Ended
June 30,
1995 1994
------ ------
<S> <C> <C>
Net cash from operating activities $(4,130) $28,209
Cash flows from investing activities:
Proceeds from maturities of held to
maturity securities 39,587 82,197
Proceeds from sales of held to
maturity securities - 16,714
Purchase of held to maturity securities (11,584) (107,571)
Proceeds from maturities of available
for sale securities 56,032 15,003
Proceeds from sales of available for
sale securities 12,102 58,368
Purchase of available for sale securities (116,147) (81,561)
Net increase in loans (36,934) (8,373)
Capital expenditures (3,457) (1,587)
Proceeds from (purchases) sale of assets (389) 177
Cash and cash equivalents from bank acquisition,
net of cash expenses and cash paid 1,775 -
------- -------
Net cash from investing activities (59,015) (26,633)
Cash flows from financing activities:
Increase/(decrease) in deposits 31,671 (94,296)
Increase in other short term borrowings 12,427 12,388
Net increase in federal funds purchased 5,700 24,515
Cash dividends paid (1,449) (1,408)
Proceeds from long term debt 10,000 -
Repayment of long term debt (2,000) (2,000)
Other (21) (816)
------ -------
Net cash from financing activities 56,328 (61,617)
------ ------
Net decrease in cash and cash equivalents (6,817) (60,041)
Cash and cash equivalents at January 1 168,305 190,913
------- -------
Cash and cash equivalents at June 30 $161,488 $130,872
======= =======
See notes to consolidated condensed financial statements.
<PAGE>
FIRST COMMERCE BANCSHARES, INC. & SUBSIDIARIES
Consolidated Condensed Statements of Stockholders' Equity (Unaudited)
<CAPTION>
1995 1994
------ -----
(Amounts in Thousands)
<S> <C> <C>
Balance, January 1 $149,354 $137,293
Issue Class B common stock in bank acquisition,
net of cost of $35,000 3,869 -
Increase/(decrease) in net unrealized gains on
securities available for sale 8,969 (4,090)
Purchase 5,140 and 61,610 shares of treasury
stock, respectively (57) (774)
Cash dividends declared ($.108 per share) (1,449) (1,408)
Net income 8,565 9,870
------- -------
Balance, June 30 $169,251 $140,891
======= =======
<CAPTION>
Notes To Consolidated Condensed Financial Statements
A. GENERAL
The accompanying unaudited consolidated condensed financial statements
and notes thereto contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial
position of the Company and its subsidiaries as of June 30, 1995 and the
results of their operations. The consolidated condensed financial
statements should be read in conjunction with the annual consolidated
financial statements and the notes thereto included in the Company's
1994 annual report and Form 10-K. The results of operations for the
unaudited six month period ended June 30, 1995, are not necessarily
indicative of the results which may be expected for the entire calendar
year 1995.
B: ALLOWANCE FOR LOAN LOSSES
Transactions in the allowance for the loan losses are summarized as
follows:
<CAPTION>
1995 1994
------ ------
(Amounts in Thousands)
<S> <C> <C>
Balance, January 1 $17,190 $18,461
Provision for loan losses 1,382 152
Increase from acquisition 843 -
Net charge-offs (784) (689)
------ ------
Balance, June 30 $18,631 $17,924
====== ======
C. INVESTMENT SECURITIES
During the first six months of 1995 and 1994, the Company realized
$337,000 and $172,000, respectively, in profits/(losses) on the sale of
securities available for sale. During the first six months of 1994, the
Company realized $39,000 in profits on the sale or early call of
securities held to maturity. Any held to maturity securities sold in
1994 were within 90 days of the maturity date on those securities.
D. ACQUISITION
As of the close of business March 31, 1995, the Company acquired Western
Banshares, Inc. (Western) in Alliance and Bridgeport, Nebraska.
Western's subsidiary bank was immediately merged into the North Platte
National Bank with the two facilities being operated as branches
starting April 1, 1995. The name of North Platte National Bank was
changed to Western Nebraska National Bank. The Company issued 309,266
shares of First Commerce Bancshares Class B common stock (fair value of
$3,904,483) and paid $1,989,317 in cash and cash in lieu of fractional
shares, for all the outstanding common stock of Western. The
transaction has been accounted for as a purchase with resulting goodwill
being amortized over 15 years. As of the close of business on March 31,
1995, Western had total assets of $41 million.
<PAGE>
E. CONTINGENT LIABILITIES
The Company and certain subsidiaries have been engaged in prolonged
litigation concerning the failure of an unrelated Nebraska industrial
loan and investment company. The same plaintiffs brought all of these
cases, and all of them have been dismissed by the courts. In all
instances except one the dismissals have been affirmed by the appellate
courts and the cases have been finally concluded. The remaining case,
filed in 1988, alleges that the Company's subsidiaries and other
defendants violated the Racketeer Influenced and Corrupt Organizations
(RICO) Act. Damages sought by the plaintiffs are $58 million, which
could be trebled under the provisions of RICO. The case is similar to a
previous RICO suit that has already been finally dismissed, except that
the plaintiffs claim that the defects in the prior case have been
corrected by an assignment of claims they received from the receiver of
the failed financial institution. The case was stayed for several years
pending the resolution in defendants' favor of the related suits brought
by the plaintiffs. When the stay was lifted, the Company and other
defendants moved to dismiss this final action. Defendants' motion was
granted by the United States District Court on January 5, 1995, on the
basis that the statute of limitations had expired before the plaintiffs
filed their action. The plaintiffs have appealed this decision to the
United States Court of Appeals. Since the case was dismissed before it
progressed past the preliminary stage, and because of the complex issues
involved, the Company's ultimate liability, if any, cannot presently be
determined. Due to the size of the damages sought, an unfavorable
outcome could have a significant effect on the Company's financial
position. At this point in the proceedings, however, the action has
been won by the Company. Although that ruling could be reversed, legal
counsel and management do not believe that an unfavorable outcome is
probable.
<PAGE>
FINANCIAL REVIEW
Six months ended June 30, 1995
Results of Operations
Net income for the three months ended June 30, 1995, was $4,467,000 or
$.33 per share as compared to $5,470,000 or $.42 per share for the same
period one year ago. For the six months ended June 30, 1995, net income
was $8,565,000 or $.64 per share, as compared to $9,870,000 or $.76 per
share a year ago.
Net interest income (interest income less interest expense) was
$15,113,000 for the second quarter of 1995, compared to $14,858,000 for
the second quarter of 1994, and $14,617,000 for the first quarter of
1995. On a year-to-date basis, the net interest income was $29,730,000
versus $28,920,000 a year ago. The increase in net interest income can
be primarily attributed to an increase in earnings assets. Loans were
$916 million at the end of June 1995, as compared to $785 million at the
same time a year ago. Investments were $579 million as compared to $531
million at June 30, 1994.
The provision for loan losses was $1,382,000 for the six months ended
June 30, 1995, compared to $152,000 for the same period a year ago. Net
charge-offs were $784,000 as compared to $689,000 a year ago.
Nonaccrual loans were approximately $1.4 million at the end of June 30,
1995, as compared to $1.2 million at December 31, 1994. As a percentage
of loans outstanding, the loan loss reserve was 2.0% as of those
respective dates. There has not been a significant change in the
quality or status of the loan portfolio since December 31, 1994. The
increase in the provision for the first six months of 1995 is primarily
due to the significant growth in loans and management's desire to
maintain the reserve at adequate levels.
Noninterest income for the first six months was $17,463,000 as compared
to $17,006,000 for the first six months of 1994, an increase of
$457,000. Losses on the sale of mortgages decreased $114,000. Profits
on the sale of investment securities increased $125,000. These profits
were primarily from the sale of equity securities in the Company's
Global Fund. The equity securities were sold because management felt
the securities had reached their potential for appreciation in value.
Service charges and other fees increased $196,000 primarily due to
increased activity.
Noninterest expenses increased $2,026,000 or 6.6% from a year ago.
Salaries and employee benefits increased $1,563,000 or 10.7% due to
increases in the levels of pay and an increase in the number of
employees. Business development expenses decreased $263,000 or 1.9% due
to a decrease in bank card advertising expenditures. Fees and insurance
increased $277,000 due primarily to an increase in bank card processing
fees due to increased activity. Equipment expenses decreased $285,000
due to a decrease in depreciation expense.
Financial Condition at June 30, 1995
The loan to deposit ratio was 64.3% at June 30, 1995, compared to 62.4%
at December 31, 1994. The increase in this ratio is due to an increase
in loans by 7.7% since year end while deposits only increased 5.1%. The
increase in long term debt is due to additional borrowings from the
Federal Home Loan Bank by the National Bank of Commerce.
Stockholders' equity to assets was 9.4% as of June 30, 1995, as compared
to 9.4% as of December 31, 1994. Due to the decrease in interest rates
during 1995, the net unrealized gains on available for sale securities
increased $9.0 million from December 31, 1994.
<PAGE>
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits - none
(b)Report on Form 8-K
A report on Form 8-K was filed March 31, 1995, covering Item 5
other events.First Commerce announced that it had completed its
merger with Western Banshares, 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.
FIRST COMMERCE BANCSHARES, INC.
Date: August 1, 1995 By: James Stuart, Jr.
James Stuart, Jr., Chairman and CEO
Date: August 1, 1995 By: Donald Kinley
Donald Kinley, Vice President and
Treasurer (Chief Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000768532
<NAME> FIRST COMMERCE BANCSHARES, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 71,064
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 90,424
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 338,796
<INVESTMENTS-CARRYING> 239,789
<INVESTMENTS-MARKET> 238,803
<LOANS> 915,954
<ALLOWANCE> 18,631
<TOTAL-ASSETS> 1,742,286
<DEPOSITS> 1,425,326
<SHORT-TERM> 91,259
<LIABILITIES-OTHER> 15,450
<LONG-TERM> 41,000
<COMMON> 2,733
0
0
<OTHER-SE> 166,518
<TOTAL-LIABILITIES-AND-EQUITY> 1,742,286
<INTEREST-LOAN> 40,672
<INTEREST-INVEST> 16,778
<INTEREST-OTHER> 1,967
<INTEREST-TOTAL> 59,417
<INTEREST-DEPOSIT> 26,155
<INTEREST-EXPENSE> 29,687
<INTEREST-INCOME-NET> 29,730
<LOAN-LOSSES> 1,382
<SECURITIES-GAINS> 337
<EXPENSE-OTHER> 32,660
<INCOME-PRETAX> 13,151
<INCOME-PRE-EXTRAORDINARY> 8,565
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,565
<EPS-PRIMARY> .64
<EPS-DILUTED> .64
<YIELD-ACTUAL> 0
<LOANS-NON> 1,400
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 17,190
<CHARGE-OFFS> 784
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 18,631
<ALLOWANCE-DOMESTIC> 18,631
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
