SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1997 Commission file number 0-14280
FIRST FINANCIAL BANCORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
IOWA 42-1259867
---- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
204 East Washington Street, Iowa City, Iowa 52240
- --------------------------------------------------------------------------------
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code 319-356-9000
NOT APPLICABLE
- --------------------------------------------------------------------------------
(Former name, former address and
former fiscal year, if
changed 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 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. (1) Yes X . No . (2) Yes X . No. .
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
SHARES OUTSTANDING
CLASS AT APRIL 30, 1997
----- -------------------
Common stock, $1.25 par value 2,337,444
1
<PAGE>
FIRST FINANCIAL BANCORPORATION
Index to Form 10-Q
Page
PART I - Financial Information Number
Item 1. Financial statements
Consolidated balance sheets 3
Unaudited consolidated statements of income 4
Unaudited consolidated statements of cash flows 5 - 6
Consolidated statement of stockholders' equity 7
Note to consolidated financial statements 8 - 9
Item 2. Management's discussion and analysis of financial 10 - 12
condition and results of operations
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K 13 - 20
Signatures 21
2
<PAGE>
<TABLE>
<CAPTION>
FIRST FINANCIAL BANCORPORATION
AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
<S> <C> <C>
March 31, December 31,
1997 1996
---------- -----------
ASSETS
Cash and due from banks $ 15,233 $ 20,949
Investment securities:
Available for sale (cost 1997 $102,458 December 31, 1996 $97,431) 102,694 97,802
Federal funds sold 31,500 - -
Loans, net of unearned income $ 325,096 $ 330,739
Less: allowance for loan losses (3,896) (3,788)
---------- -----------
Net loans $ 321,200 $ 326,951
---------- -----------
Bank premises and equipment, net 11,915 12,082
Accrued interest receivable 3,391 3,179
Intangible assets 586 624
Prepaid pension cost 3,331 3,240
Other assets 2,522 2,898
---------- -----------
$ 492,372 $ 467,725
========== ===========
LIABILITIES
Noninterest-bearing deposits $ 45,780 $ 47,603
Interest-bearing deposits 373,385 347,804
---------- -----------
Total deposits $ 419,165 $ 395,407
Federal funds purchased and securities sold
under agreement to repurchase 1,085 3,146
Federal Home Loan advances 13,938 12,355
Accrued interest payable 1,485 1,516
Income tax payable 579 87
Deferred income taxes 85 135
Accounts payable and other accrued expenses 2,450 2,503
---------- -----------
$ 438,787 $ 415,149
---------- -----------
STOCKHOLDERS' EQUITY
Capital stock, common $1.25 par value; authorized 5,000,000
shares; issued 1997, 2,336,894 shares; 1996, 2,331,412 shares (Note 5) $ 2,921 $ 2,914
Additional paid-in capital 2,658 2,606
Retained earnings 47,857 46,824
Unrealized gains on debt securities, net 149 232
---------- ----------
$ 53,585 $ 52,576
---------- ----------
$ 492,372 $ 467,725
========== ==========
*Condensed from audited financial statements.
See Notes to Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
FIRST FINANCIAL BANCORPORATION
AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1997 and 1996
(Amounts in Thousands, Except per Share Data)
<S> <C> <C>
1997 1996
------- -------
Interest income:
Interest and fees on loans $ 6,738 $ 6,196
Interest on investment securities
Taxable 1,030 1,450
Nontaxable 383 363
Interest on federal funds sold 212 142
------- -------
Total interest income $ 8,363 $ 8,151
------- -------
Interest expense:
Interest on deposits $ 3,919 $ 3,804
Interest on federal funds purchased and
securities sold under agreements to repurchase 15 1
Interest on Federal Home Loan Bank advances 188 262
------- -------
Total interest expense $ 4,122 $ 4,067
------- -------
Net interest income $ 4,241 $ 4,084
Provision for loan losses 177 72
------- -------
Net interest income after provision
for loan losses $ 4,064 $ 4,012
------- -------
Noninterest income:
Trust fees $ 832 $ 757
Service charges and fees on deposit accounts 445 395
Other service charges, commissions and fees 528 554
Investment gains, net 44 - -
------- -------
$ 1,849 $ 1,706
------- -------
Noninterest expenses:
Salaries and employee benefits $ 1,801 $ 1,729
Occupancy, furniture and equipment 655 675
Data processing 327 269
Office supplies and postage 254 273
Other expenses 665 737
------- -------
$ 3,702 $ 3,683
------- -------
Income before income taxes $ 2,211 $ 2,035
Federal and state income taxes 664 605
------- -------
Net Income $ 1,547 $ 1,430
======= =======
Average common stock and common equivalent shares 2,346,613 2,391,540
========= =========
Earnings per common and
common equivalent share (Note 5) $ .66 $ .60
======== ========
Dividends per common share $ .22 $ .195
======== ========
See Note to Consolidated Financial Statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
FIRST FINANCIAL BANCORPORATION
AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED
STATEMENTS OF CASH FLOWS
Three Months Ended
March 31, 1997 and 1996
(Amounts in Thousands)
<S> <C> <C>
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,547 $ 1,430
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 267 281
Amortization 38 40
Provision for loan losses 177 72
Amortization of investment security discount 35 34
(Increase) decrease in accrued interest receivable (212) (285)
(Increase)in prepaid pension costs ( 91) (121)
(Increase) in other assets 376 (254)
Increase (decrease) in accrued interest and other
liabilities ( 84) (399)
Change in accrued income taxes 492 513
--------- ---------
Net cash provided by operating activities $ 2,545 $ 1,311
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Available for sale securities:
Maturities $ 2,767 $ 5,532
Purchases ( 7,827) (4,079)
Fed funds sold, net (31,500) (11,125)
Net (increase) decrease in loan balances outstanding 5,574 821
Purchases of bank premises and equipment ( 100) (267)
--------- ---------
Net cash (used in) investing activities $(31,086) $ (9,118)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposit balances $ 23,758 $ 10,743
Federal funds purchased and securities sold under agreement
to repurchase ( 2,061) - -
Repayment of other borrowings - - (67)
Federal Home Loan Bank advances 1,583 (315)
Dividends paid (514) (463)
Stock options exercised 361 434
Common stock redeemed (158) (290)
Common stock purchased (144) (646)
--------- ---------
Net cash provided by financing activities $ 31,086 $ 9,396
--------- ---------
Increase in cash and due from banks $( 5,716) $ 1,589
CASH AND DUE FROM BANKS
Beginning balance 20,949 16,443
--------- ---------
Ending balance $ 15,233 $ 18,032
========= ========
See Notes to Financial Statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
FIRST FINANCIAL BANCORPORATION
AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS
OF CASH FLOWS Three Months
Ended March 31, 1997 and 1996
(Amounts in Thousands)
<S> <C> <C>
1997 1996
-------- --------
SUPPLEMENTAL DISCLOSURES
Cash payments for:
Interest paid to depositors, on note payable,
on federal funds purchased and securities
sold under agreements to repurchase $ 4,153 $ 4,162
Noncash transactions:
Net unrealized gains (losses) on debt securities 237 (609)
Deferred income taxes on unrealized gains (losses)
on debt securities 88 (227)
Other real estate owned property
received in satisfaction of debt 91 157
See Notes to Financial Statements.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
FIRST FINANCIAL BANCORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three months ended Unrealized
March 31, 1997 and year ended Common Stock Additional gains (losses)
December 31, 1996 (In Thousands $1.25 Par Value Paid-In Retained on debt
of Dollars, Except Per Share Data) Number Amount Capital Earnings securities, net Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995 2,383 $ 2,979 $ 4,095 $ 42,854 $ 279 $ 50,207
Net Income - - - - - - 5,916 - - 5,916
Cash dividends ($.83 per share) - - - - - - (1,946) - - (1,946)
Stock options exercised for
21,200 shares 21 26 345 - - - - 371
Redemption of 73,029 shares of
common stock (73) (91) (1,834) - - - - (1,925)
Unrealized gains on debt securities,
net of deferred tax effect - - - - - - - - (47) (47)
- ---------------------------------------------------------------------------------------------------------------------------
Balance, December 31,1996 2,331 $ 2,914 $ 2,606 $ 46,824 $ 232 $ 52,576
Net income - - - - - - 1,547 - - 1,547
Cash dividends ($.22 per share) - - - - - - ( 514) - - ( 514)
Stock options exercised for 15,300 shares 15 19 275 - - - - 294
Redemption of 9,818 shares of common stock ( 9) ( 12) ( 223) - - - - ( 235)
Unrealized (losses) on debt securities,
net of deferred tax effect - - - - - - - - ( 83) ( 83)
- ---------------------------------------------------------------------------------------------------------------------------
Balance March 31, 1997 2,337 $ 2,921 $ 2,658 $ 47,857 $ 149 $ 53,585
======== ======== ======== ======== ========= =========
See Notes to Financial Statements.
7
</TABLE>
<PAGE>
FIRST FINANCIAL BANCORPORATION
AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
March 31, 1997 and 1996
Note 1. Interim Financial Statements
Interim consolidated financial statements have not been examined by
independent public accountants, but include all adjustments
(consisting only of normal recurring accruals) which in the opinion of
management are necessary for a fair presentation of the results for
those periods. The results of operation for the interim periods are
not necessarily indicative of the results for a full year.
Note 2. Principles of consolidation:
The accompanying consolidated financial statements include the
accounts of the Company and its subsidiary, First National Bank Iowa
which is wholly-owned. All material intercompany accounts and
transactions have been eliminated in consolidation.
Note 3. Presentation of cash flows:
For purposes of reporting cash flows, cash and due from banks includes
cash on hand and amounts due from banks. Cash flows from deposits,
federal funds purchased, federal funds sold and loan balances are
treated as net increases or decreases.
Note 4. Deferred income taxes:
Deferred income taxes are provided under the liability method whereby
deferred tax assets are recognized for deductible temporary
differences and net operating loss and tax credit carryforwards and
deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax basis.
Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities adjusted for the effects of changes in tax laws and rates
on the date of enactment.
Note 5. Earnings per common and common equivalent share:
For 1997 and 1996, earnings per common and common equivalent share are
determined by dividing net income by the weighted average number of
common and common equivalent shares outstanding during the year.
Dilutive common stock equivalents related to the stock option plan
were determined using the treasury stock method. Earnings per share
and common equivalent share assuming full dilution are the same as
earnings per common and common equivalent share. In the first quarter
of 1997, the Company purchased 4,710 shares of its common stock under
a repurchase plan which authorizes up to 120,000 shares to be
repurchased through July 31, 1997.
Note 6. Accounting by creditors for impairment of a loan
A loan is considered impaired, based on current information and
events, if it is probable that the Company will be unable to collect
the schedule payments of principal or interest when due according to
the contractual terms of the loan agreement.
Impaired loans include all nonaccrual loans. The measurement of
impaired loans is generally based on the present value of expected
future cash flows discounted at the historical effective rate, except
that all collateral dependent loans are measured for impairment based
on the fair value of the collateral.
8
<PAGE>
SFAS 114 does not apply to large groups of smaller balance homogeneous
loans that are collectively evaluated for impairment, except for those
loans restructured under trouble debt restructuring. Loans
collectively evaluated for impairment include certain smaller balance
commercial loans, consumer loans, residential real estate loans, and
credit card loans, and are not included in the data that follows.
The following table summarizes (In Thousands)
impaired loan information. 1997 1996
- --------------------------------------------------------------------------------
Impaired loans $550 $142
Impaired loans with related reserve for
loan losses calculated under SFAS 114 550 142
Amount of reserve for loan losses allocated
to the impaired loan balance 88 25
The adoption of SFAS 114 did not result in additional provisions for
loan losses primarily because the majority of impaired loan valuations
continue to be based on the fair value of collateral and because the
existing provision evaluations methods had included impaired loans as
defined by SFAS 114. Impairment losses are included in the provision
for loan and lease losses.
(In Thousands)
Three Months Ended March 31,
1997 1996
- --------------------------------------------------------------------------------
Average impaired loans $ 505 $227
Cash basis interest
income recognized on
impaired loans - - 18
Interest income that
would have been recorded
during the period on non-
accrual loans 13 5
- --------------------------------------------------------------------------------
Interest payments on impaired loans are typically applied to principal
unless future collectability of the recorded loan balance is expected,
in which case interest income is recognized on a cash basis.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS:
EARNINGS PERFORMANCE
Net income increased $117,000 or 8.2% to $1,547,000 for the quarter ended March
31, 1997 when compared to net income of $1,430,000 for the first quarter of
1996. Earnings per share increased from $.60 in the first quarter of 1996 to
$.66 in the first quarter of 1997, an increase of 10%.
DIVIDEND INFORMATION
In the first quarter of 1997, the Company paid cash dividends of $.22 per out-
standing share of common stock which totaled $514,000, compared to $.195 per
share and $463,000 in total for the same period in 1996. This represented an
increase of $.025 or 12.8% per outstanding share of common stock and $51,000 or
11% in total cash dividends paid. The ability of the Company to pay dividends to
its shareholders is dependent on the profitability of the Iowa City Bank and to
what prudent and sound banking principles will permit. The payment of the
dividends (i) is not permitted without the approval of the Comptroller of the
Currency (OCC) except to the extent of net profits of the current fiscal year
and retained net profits of the two preceding fiscal years, and (ii) is not
permitted if the payment of a dividend would reduce the capital of a bank below
required levels. Given the Bank's capital position, the OCC minimum capital
criteria will not be restrictive.
NET INTEREST INCOME
Net interest income after provision for loan losses increased $52,000 or 1.3% to
$4,064,000 at the end of the first quarter of 1997 when compared to 1996 period
totals. The primary factor contributing to this increase in net interest income
was loan growth. The provision for loan losses increased $105,000 or 145.8% to
$177,000 when compared to the 1996 provision of $72,000.
Net interest income, on a fully tax-equivalent basis, for the first quarter of
1997 totaled $4,500,000, which is up $147,000 or 3.4% over the $4,353,000
reported for the same period in 1996. The increase in fully taxable-equivalent
net interest income is also attributed to loan growth. The consolidated net
interest spreads and margins are presented in Table 2 for the first quarter of
1997 and 1996.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
As of March 31, 1997, the allowance for possible loan losses was 1.20% of total
outstanding loans compared to 1.15% as of December 31, 1996 and 1.23% as of
March 31, 1996. During the first quarter of 1997, the company recorded net
charged-off loans totaling $69,000 compared to $63,000 for the first quarter of
1996. The dollar amount of nonaccrual loans increased from $142,000 as of March
31, 1996 to $550,000 as of March 31, 1997. Year-to-date provision increased
$105,000 or 145.8% to $177,000 as of March 31, 1997 when compared to March 31,
1995. The provision was increased primarily due to the increase in loan
balances, in part to increased loan losses and nonaccrual loan balances. There
are no trends or uncertainties which management expects to materially impact the
adequacy of the allowance for loan losses or provision expense in the
foreseeable future.
NONINTEREST INCOME
Noninterest income for the quarter ending March 31, 1997, totaled $1,849,000,
which is an increase of $143,000 or 8.4% when compared to the $1,706,000 of
noninterest income which was reported for the quarter ending March 31, 1996.
Trust fees increased $75,000 or 9.9% to $832,000 during the first quarter of
1997 when compared to the same period during 1996. Service charges and fees on
deposit accounts increased $50,000 or 12.7% to $445,000 in the first quarter of
1997, compared to total fees of $395,000 as of March 31, 1996. Investment
security gains are included in noninterest income; during the first quarter of
1997, the company booked $44,000 in net gains.
10
<PAGE>
NONINTEREST EXPENSES
Noninterest expenses totaled $3,702,000 as of March 31,1997. This represents an
increase of $19,000 or .5% over the $3,683,000 in noninterest expenses as of
March 31, 1996. The majority of this increase is attributable to salaries and
employee benefits which increased as a result of normal salary adjustments.
FINANCIAL POSITION
TOTAL ASSETS
As of March 31, 1997, company assets totaled $492,372,000 representing a
$24,647,000 or 5.3% increase over December 31, 1996 assets of $467,725,000. This
asset growth was funded primarily by increased deposit balances which increased
$23,758,000 or 6% and stockholders' equity which increased $1,009,000 or 1.9%.
Included in these deposit balances are approximately $10,000,000 of short-term
seasonal deposits which are anticipated to be withdraw within one month. The
majority of these funds were invested in short-term investments to be utilized
subsequently to fund anticipated loan growth, purchase of investment securities
or deposit withdrawals. Average total assets for the first quarter of 1997 were
$473,882,000 compared to $460,827,000 for 1996, an increase of $13,055,000 or
2.8%. Average deposit balances, primarily interest-bearing, provided $13,951,000
of additional funding, an increase of 3.6%.
TOTAL LOAN BALANCES
Total loan balances decreased by $5,643,000 or 1.7% to $325,096,000 as of March
31, 1997 when compared to loan balances of $330,739,000 as of December 31, 1996.
The majority of this decrease was in the commercial and consumer loan
categories. Average loan balances for first quarter of 1997 increased
$32,583,000 or 11.1% to $326,361,000 when compared to the $293,778,000 in
average loan balances reported for the first quarter of 1996. The majority of
this increase was in real estate loan balances.
TOTAL DEPOSITS
Since December 31, 1996, total deposits increased $23,758,000 or 6% to
$419,165,000 as of March 31, 1997. The majority of this increase was in
short-term interest-bearing deposit balances. It is anticipated that
approximately $10,000,000 of this increase is comprised of seasonal deposits
which will be withdrawn within one month. Average total deposits for the first
quarter of 1997 were $402,566,000, an increase of $13,951,000 or 3.6%, over
first quarter 1996 average deposits of $388,615,000. Primarily, increased
savings product balances accounted for this increase in total deposits.
CAPITAL POSITION
The strength and soundness of a company is reflected in the adequacy of its
capital position. Total capital as of March 31, 1997 was $53,585,000 which is up
to $1,009,000 or 1.9% from total capital of $52,576,000 as of December 31, 1996.
The ratio of total capital to total assets as of March 31, 1997 is 11.6%, which
is down .4% from the December 31, 1996 ratio of 12%. Stockholders' equity
increased 1.9% compared to asset growth of 5.3%, resulting in the lower total
capital-to-total asset ratio. This ratio is substantially higher than the
current Federal, Reserve guideline of 6.0%.
As of quarter-end March 31, 1997, the company's Tier I capital ratio was 17.71%
and its total risk adjusted capital ratio (Tier I plus Tier II) was 18.96%
compared to 17.50% and 18.75%, respectively, as of December 31, 1996. Both of
these ratios exceed the regulatory minimums of 4.0 percent for Tier I and 8.0
percent for total risk adjusted capital. The company's leverage capital was
11.97% as of March 31, 1997, compared to 11.73% at December 31, 1996,
substantially higher than the 4% regulatory floor.
CAPITAL EXPENDITURES
Through March 31, 1997, the company recorded year-to-date capital expenditures
totaling approximately $100,000, relating to standard expenditures necessary to
conduct its banking business. It is anticipated, with the planned opening of a
new office in the Cedar Rapids market, within the next six months, that
year-to-date capital expenditutres will increase by approximately $500,000. The
opening of this office is projected to have a $200,000 after tax negative impact
on 1997 earnings. Cash flow provided by maturing investment securities will fund
these capital outlays.
11
<PAGE>
INTEREST RATE SENSITIVITY AND LIQUIDITY
ANALYSIS
Net interest income is the principal source of earnings for the company. As
such, the profitability of the company is dependent upon the ability of the
Company to properly manage its rate sensitive assets and liabilities to achieve
optimum earnings potential. This is accomplished by maintaining an appropriate
balance between interest-earning assets and interest-paying liabilities while
maintaining sufficient liquidity to meet the cash flow requirements of
customers. Marketable investments, maturing loans, Federal Funds Purchased in
conjunction with Federal Home Loan Bank advances offer a secondary source of
liquidity to the company should a mismatch occur between demands for and sources
of funds. Over the past several years the company has maintained sufficient
liquidity as a result of the maturity schedule of its investment portfolio and
stability of its core deposits. Management continually monitors its liquidity
position and interest rate sensitivity and makes appropriate adjustments as
needed to reduce the adverse effects of changes in market interest rates. Table
1 summarizes various repricing periods of the company's interest-earnings assets
and interest-paying liabilities as of March 31, 1997. This table indicates that
the company is slightly liability sensitive over the next twelve-month
timeframe. Should interest rates increase in the next year, net interest income
may decrease. If rates would decrease, net interest income may increase. To
offset the effects of decreasing market rates and reduce the exposure of the
positive gap, management could shorten the maturities of investment securities
and could lengthen the maturities of deposits in conjunction with increasing the
interest rates paid on long-term time deposits.
EFFECT OF INFLATION
Inflation is a significant factor when considering the consolidated balance
sheet and the consolidated income statement. Inflation can directly affect the
level of asset growth during the year as well as the various components of the
income statement. While it is difficult to measure the effect of the inflation
directly, it is the practice of the company to minimize the impact of inflation
in the future through its asset and liability management program, effective cost
controls and responsive service charge pricing. The ability of the company to
position itself to minimize the effect of inflation can more readily be seen by
reference to the discussion herein of the Liquidity, Net Interest Income, and
Noninterest Income and Noninterest Expense sections.
12
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit
See Exhibit Index on Page 13
(b) Reports on Form 8-K
The Registrant did not file a Form 8-K in the last three calendar
months.
13
<PAGE>
EXHIBIT INDEX
The following exhibits are filed herewith or incorporated by reference.
(Documents indicated by an * are incorporated hereby by reference.)
Page No. Of
Exhibit No. Description of Exhibits Form 10-Q
- --------------------------------------------------------------------------------
4 Instruments defining the rights of security holders,
including indentures. See "Description of the
Common Stock of the Holding Company" at *
page 30 of * Amendment No. 1 to the
Registration Statement Form S-4 filed
under Registration Number 33-893 dated
November 12, 1985.
11 Statement re computation of earnings per 15
common and common equivalent share
27 Financial Data Schedule as of March 31, 1997 **
28 Additional Exhibits:
Table 1 - Interest Rate Sensitivity and Liquidity Analysis 16
Table 2 - Analysis of Interest Rate Spread and Margin 17
Table 3 - Non accrual, Past Due and Restructured Loans 18
Table 4 - Summary of Loan Loss Experience 19
Table 5 - Allocation of the Allowance for Loan Losses 20
** Filed herewith.
14
<PAGE>
<TABLE>
<CAPTION>
FIRST FINANCIAL BANCORPORATION
AND SUBSIDIARY
(FIRST NATIONAL BANK, IOWA CITY, IOWA)
(FIRST NATIONAL BANK, CEDAR RAPIDS, IOWA)
EXHIBIT 11
STATEMENT RE COMPUTATION OF EARNINGS PER COMMON SHARE
AND COMMON EQUIVALENT SHARE
Three Months Ended
March 31,
------------------------
<S> <C> <C>
1997 1996
--------- ---------
Shares of common stock, beginning (Note 5) 2,331,412 2,383,241
========= =========
Shares of common stock, ending 2,336,894 2,368,766
========= =========
Computation of weighted average number of common and common equivalent shares:
Common shares outstanding at the
beginning of the year 2,331,412 2,383,241
Weighted average number of
shares issued 10,200 14,211
Weighted average of the
common shares redeemed (Note 5) ( 6,545) (11,762)
Weighted average of the common equivalent shares
attributable to stock options granted, computed
under the treasury stock method 11,546 5,850
--------- ---------
Weighted average number of common and
common equivalent shares (Note 5) 2,346,613 2,391,540
========= =========
Earnings and earnings per common and common equivalent share: (Note 5)
Net income (in thousands) $1,547,000 $1,430,000
========== ==========
Earnings per common and
common equivalent share $ .66 $ .60
========== ==========
Dividends $ .22 $ .195
========== ==========
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
TABLE 1
INTEREST RATE SENSITIVITY AND LIQUIDITY ANALYSIS
March 31, 1997
-------------------------------------------------------------
MONTHS
-----------------------
After Three After One
Within Through Through Non-
(Dollars in Thousands) Three Twelve Five Years sensitive Total
------------------------------------------- ------------ ------------ ----------- ------------ --------
Interest earning assets:
<S> <C> <C> <C> <C> <C>
Federal funds sold $ 31,500 $ - - $ - - $ - - $ 31,500
Investment securities 14,698 16,841 36,067 35,088 102,694
Loans 47,138 74,201 184,027 19,730 325,096(2)
Total interest earning assets 93,336 91,042 220,094 54,818 459,290
Interest paying liabilities:
Securities sold under agreement to repurchase 1,085 - - - - - - 1,085
Deposits 98,765(1) 78,226 71,310 125,084 373,385(3)
Long-term debt 450 6,850 6,638 - - 13,938
Total interest paying liabilities 100,300 85,076 77,948 125,084 388,408
Net noninterest paying liabilities
Noninterest paying deposits net
of cash and due from banks - - - - - - 30,547 30,547
Other assets, liabilities and equity net - - - - - - 40,335 40,335
Total noninterest rate sensitive assets
and liabilities - - - - - - 70,882 70,882
INTEREST SENSITIVE GAP ( 6,964) 5,966 142,146 (141,148) - -
CUMULATIVE GAP ( 6,964) ( 998) 141,148 - - - -
CUMULATIVE % OF SENSITIVE 93% 99% 154% - - - -
ASSETS TO LIABILITIES
<FN>
(1) Based on an historical analysis of NOW, SuperNow, Savings and Money Market account balances, a percentage of these deposit
balances has been determined to be sensitive to changes in interest rates. Respectively, approximately 30%, 50%, 30% and 25%
of these deposit balances were determined to be interest rate sensitive. As such, these percentages of interest rate
sensitive deposit balances were classified in the first column titled "Within three months." The remainder of the balances
were classified as noninterest rate sensitive deposit balances and placed in the last column titled "non-sensitive."
(2) Of the $325,096,000 of total loans, $170,055,000 have fixed rates, while $155,041,000 have variable rates.
(3) Certificates of deposit comprise $195,262,000 of total deposits, while interest-paying demand deposits and savings deposit
balances accounted for $178,123,000 of this total.
</FN>
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
TABLE 2
ANALYSIS OF INTEREST RATE SPREAD AND MARGIN
THREE MONTHS ENDED
----------------------------------------------------------------
MARCH 31, 1997 MARCH 31, 1996
---------------------------- --------------------------
(Fully taxable-equivalent basis) Average Average Average Average
(Dollars In Thousands) Balance Rates Balance Rates
------------ ----------- ------------ ---------
<S> <C> <C> <C> <C>
Interest earning assets $ 440,549 7.85% $ 427,628 7.89%
Interest paying liabilities 370,764 4.51 362,128 4.52
Net interest spread 3.34 3.37
Net interest margin 4.06 4.06
</TABLE>
17
<PAGE>
TABLE 3
NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
The following table summarizes the Registrant's nonaccrual, past due 90 days or
more and restructured loans as to interest or principal payments as of March 31,
1997 and March 31, 1996.
(In Thousands)
-----------------------------------
March 31, 1997 March 31, 1996
-------------- --------------
Nonaccrual loans $ 550 $ 142
Accruing loans
past due 90
days or more $ 735 $ 810
Restructured
loans $ 18 $ - -
As of March 31, 1997 and March 31, 1996 total nonaccrual loans were comprised
primarily of loans collateralized by real estate. Non-accrual of interest may
occur on any loan whenever one or more of the following criteria is evident: (a)
there is substantial deterioration in the financial position of the borrower;
(b) the full payment of interest and principal can no longer be reasonably
expected; (c) the principal or interest on the loan has been in default for a
period of 90 days. In all cases, loans must be placed on nonaccural or charged
off at an earlier date if collection of principal or interest is considered
doubtful. All interest accrued but not collected for loans that are placed on
nonaccrual or charged off is reversed to interest income. The interest on these
loans is accounted for on the cash basis or cost recovery method, until
qualifying for return to accrual. Loans are returned to accrual status when all
the principal and interest amounts contractually due are reasonably assured of
repayment within a reasonable time frame and when the borrower has demonstrated
payment performance of cash or cash equivalents. Given the number of nonaccrual
loans and related underlying collateral, management does not anticipate any
significant impact to earnings.
The Registrant does not have a significant amount of loans which are past due
less than 90 days on which there are serious doubts as to the ability of the
borrowers to comply with the loan repayment terms.
The Registrant has no individual borrower or borrowers engaged in the same or
similar industry exceeding 10% of total loans. The Registrant has no other
interest-bearing assets, other than loans, that meet the nonaccrual, past due,
restructured or potential problem loan criteria. The Registrant has no foreign
loans outstanding.
A loan is considered restructured when the company allows certain concessions to
financially troubled debtor that would not normally be considered. There were no
trouble debt restructuring loans for the reporting periods.
18
<PAGE>
<TABLE>
<CAPTION>
TABLE 4
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes the Registrant's loan loss experience for the
three and nine month periods ended March 31, 1997 and March 31, 1996:
(In Thousands)
------------------------------
Three Months Ended
March 31,
1997 1996
------------ ------------
<S> <C> <C>
Balance of loan loss
allowance at
beginning of period $ 3,788 $ 3,602
------------ ------------
Charge-offs:
Commercial, financial
and agricultural $ 3 $ - -
Real estate, mortgage 35 26
Loans to individuals 87 47
------------ ------------
$ 125 $ 73
------------ ------------
Recoveries:
Commercial,financial
and agricultural $ 6 $ 2
Real estate, mortgage 26 - -
Loans to individuals 24 8
------------ ------------
$ 56 $ 10
------------ ------------
Net charge-offs $ 69 $ 63
------------ ------------
Provision for
loan losses (1) $ 177 $ 72
------------ ------------
Balance of loan
loss allowance
at end of period $ 3,896 $ 3,611
============ ============
Percentage of net charge-
offs during period
to average net loans
outstanding .02% .02%
============ ============
<FN>
1) For financial reporting purposes, management regularly reviews the loan
portfolio and determines a provision for loan losses based upon the
impact of economic conditions on the borrower's ability to repay, past
collection experience, the risk characteristics of the loan portfolio
and such other factors which deserve current recognition.
</FN>
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
TABLE 5
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
The March 31, 1997 and March 31, 1996 allowance for loan losses have been
allocated as follows:
(In Thousands, Except for Percentages)
March 31, 1997 March 31, 1996
------------------------------------- -----------------------------------
Allocation Allocation
of Percentage of Percentage
Allowance of Loans Allowance of Loans
Amount by in Amount by in
Category Category Category Category
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance applicable to:
Allocated:
Commercial, financial
and agricultural $ 849 9% $ 3,205 11%
Real Estate 2,648 76 118 74
Installment loans to individuals 399 14 191 14
Unallocated: - - 1 97 1
---------- ---------- ---------- ----------
$ 3,896 100% $ 3,611 100%
========== ========== ========== ==========
</TABLE>
Management regularly reviews the loan portfolio and does not expect any unusual
material amount to be charged off in the future which would be significantly
different than the above historical experience.
20
<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.
FIRST FINANCIAL BANCORPORATION
(Registrant)
May 1, 1997 //s//A. Russell Schmeiser
------------------------- --------------------------------------
DATE A. Russell Schmeiser
Executive Vice President & COO
(Duly authorized officer of the
registrant and principal financial
officer)
21
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 15,233
<INT-BEARING-DEPOSITS> 373,385
<FED-FUNDS-SOLD> 31,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 102,694
<INVESTMENTS-MARKET> 102,694
<LOANS> 325,096
<ALLOWANCE> 3,896
<TOTAL-ASSETS> 492,372
<DEPOSITS> 419,165
<SHORT-TERM> 1,085
<LIABILITIES-OTHER> 4,599
<LONG-TERM> 13,938
0
0
<COMMON> 2,921
<OTHER-SE> 50,664
<TOTAL-LIABILITIES-AND-EQUITY> 492,372
<INTEREST-LOAN> 6,738
<INTEREST-INVEST> 1,413
<INTEREST-OTHER> 212
<INTEREST-TOTAL> 8,363
<INTEREST-DEPOSIT> 3,919
<INTEREST-EXPENSE> 4,122
<INTEREST-INCOME-NET> 4,241
<LOAN-LOSSES> 177
<SECURITIES-GAINS> 44
<EXPENSE-OTHER> 3,702
<INCOME-PRETAX> 2,211
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,547
<EPS-PRIMARY> .66
<EPS-DILUTED> .66
<YIELD-ACTUAL> 7.85
<LOANS-NON> 550
<LOANS-PAST> 785
<LOANS-TROUBLED> 18
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,738
<CHARGE-OFFS> 125
<RECOVERIES> 56
<ALLOWANCE-CLOSE> 3,896
<ALLOWANCE-DOMESTIC> 3,896
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
