UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
********
Quarterly Report Under 13 or 15(d)
of Securities Exchange Act of 1934
FOR QUARTER ENDED: June 30, 1995
COMMISSION FILE NUMBER: 0-15365
ORANGE NATIONAL BANCORP
Incorporated under the laws I.R.S. Employer ID No.
of California 33-0190684
1201 East Katella Avenue
Orange, California 92667
(714) 771-4000
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 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 .
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed documents and reports
required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by
a court. YES NO .
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of Orange National Bancorp as of June 30, 1995
is 1,839,116.
<PAGE>
ORANGE NATIONAL BANCORP
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
06/30/95 12/31/94
ASSETS (UNAUDITED) (NOTE*)
<S> <C> <C>
TIME CERTIFICATES OF DEPOSIT $0 $0
SECURITIES
SECURITIES HELD TO MATURITY $19,975,250 $21,903,980
SECURITIES AVAILABLE FOR SALE $25,815,370 $19,247,771
FEDERAL FUNDS SOLD $13,650,000 $28,215,000
LOANS $114,282,716 $114,168,283
LESS ALLOWANCE FOR POSSIBLE LOAN LOSSES $634,120) ($1,465,000)
TOTAL EARNINGS ASSETS $172,089,216 $182,070,034
CASH AND NON-INTEREST EARNING DEPOSITS $20,481,360 $15,394,879
BANK PREMISES - AT COST
BUILDING & LAND $3,367,315 $3,367,315
LEASEHOLD IMPROVEMENTS $1,981,873 $1,887,935
FURNITURE, FIXTURES & EQUIPMENT $2,922,688 $2,729,040
LESS ACCUMULATED DEPRECIATION AND AMORTIZATION
($2,800,077) ($2,597,611)
ACCRUED INTEREST RECEIVABLE $1,197,655 $1,068,744
OTHER ASSETS $3,852,485 $2,590,114
$203,092,515 $206,510,450
LIABILITIES & STOCKHOLDERS' EQUITY
DEPOSITS
DEMAND, NON-INTEREST BEARING $61,007,991 $68,358,671
MONEY MARKET AND NOW $98,250,588 $95,972,857
SAVINGS $13,259,276 $13,875,405
TIME DEPOSITS OF $100,000 OR MORE $5,286,951 $5,162,248
OTHER TIME $7,705,679 $7,036,672
TOTAL DEPOSITS $185,510,485 $190,405,853
OTHER LIABILITIES $1,359,976 $1,322,395
TOTAL LIABILITIES $186,870,461 $191,728,248
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS EQUITY
COMMON STOCK - NO PAR VALUE
AUTHORIZED: 20,000,000 SHARES
ISSUE AND OUTSTANDING : 1,839,116
SHARES IN 1995 AND IN 1994 $6,848,120 $6,848,120
RETAINED EARNINGS $9,768,002 $8,513,693
UNREALIZED (LOSS) ON SECURITIES
AVAILABLE FOR SALE, NET ($394,068) ($579,611)
TOTAL STOCKHOLDERS' EQUITY $16,222,054 $14,782,202
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
$203,092,515 $206,510,450
</TABLE>
*NOTE: THE BALANCE SHEET AT DECEMBER 31, 1994, HAS BEEN TAKEN FROM THE AUDITED
FINANCIAL STATEMENTS. SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.<PAGE>
<PAGE>
ORANGE NATIONAL BANCORP
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QTR END QTR END YTD YTD
06/30/95 06/30/94 06/30/95 06/30/94
<S> <C> <C> <C> <C>
INTEREST INCOME:
LOANS $3,223,573 $2,851,373 $6,178,272 $5,340,123
TAXABLE INVESTMENT SECURITIES $636,642 $386,982 $1,225,346 $760,739
NON TAXABLE INVESTMENT SECURITIES $0 $0 $0 $0
FED FUNDS SOLD & TIME CERT OF DEPOSIT
$244,197 $145,522 $525,574 $259,380
TOTAL $4,104,412 $3,383,877 $7,929,192 $6,360,242
INTEREST EXPENSE ON DEPOSITS:
TIME DEPOSITS OF $100,000 OR MORE $47,300 $33,596 $92,212 $65,532
OTHER $723,882 $549,397 $1,406,875 $1,093,390
TOTAL $771,182 $582,993 $1,499,087 $1,158,922
NET INTEREST INCOME $3,333,230 $2,800,884 $6,430,105 $5,201,320
PROVISION FOR POSSIBLE CREDIT LOSSES$125,000 $85,000 $230,000 $135,000
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE CREDIT LOSSES $3,208,230 $2,715,884 $6,200,105 $5,066,320
OTHER INCOME:
SERVICE CHARGE ON DEPOSIT ACCOUNTS
$281,085 $243,214 $531,529 $470,556
OTHER $550,025 $606,934 $1,432,740 $1,470,571
TOTAL $831,110 $850,148 $1,964,269 $1,941,127
OTHER EXPENSE:
SALARIES, WAGES, EMPLOYEE BENEFITS
$1,476,021 $1,677,826 $3,079,220 $3,383,716
OCCUPANCY EXPENSE OF BANK PREMISES
$289,405 $280,430 $567,674 $561,394
FURNITURE AND EQUIPMENT EXPENSE
$178,879 $165,229 $348,652 $308,365
OTHER $1,186,986 $1,241,978 $2,304,439 $2,562,139
TOTAL $3,131,291 $3,365,463 $6,299,985 $6,815,614
EARNINGS BEFORE INCOME TAXES $908,049 $200,569 $1,864,389 $191,833
APPLICABLE INCOME TAXES (CREDITS $277,000 $78,918 $588,000 $68,848
NET EARNINGS $631,049 $121,651 $1,276,389 $122,985
EARNINGS PER SHARE $0.34 $0.07 $0.69 $0.07<PAGE>
ORANGE NATIONAL BANCORP
</TABLE>
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR TO DATE YEAR TO DATE
06/30/95 06/30/94
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $1,776,371 ($418,809)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment and leasehold improvements
($287,586) ($192,103)
NET (INCREASE) DECREASE IN:
Time certificates of deposits $0 $198,000
Federal funds sold $14,565,000 $12,850,000
Securities ($4,666,144) ($4,452,810)
Loans ($1,225,444) ($3,249,740)
NET CASH PROVIDED BY INVESTING ACTIVITIES $8,385,826 $5,153,347
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase/(decrease) in deposits ($4,895,368) ($3,036,176)
Dividends Paid ($180,348) $0
Net Cash (Used In) Financing Activities ($5,075,716) ($3,036,176)
Increase in cash and non-interest earning deposits
$5,086,481 $1,698,362
CASH AND NONINTEREST EARNING DEPOSITS
Beginning $15,394,879 $13,385,346
End of period $20,481,360 $15,083,708<PAGE>
</TABLE>
<PAGE>
Orange National Bancorp & Subsidiary
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet of Orange National Bancorp and its wholly-owned
subsidiaries, Orange National Bank and ONB Mortgage Corporation, as of
June 30, 1995, and the consolidated statements of earnings and statements of
cash flows for the three month and six month periods ended June 30, 1995 and
1994, have been prepared without audit pursuant to the rules and regulations
of the Securities and Exchange Commission. In the opinion of management,
all adjustments (which include normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows
at June 30, 1995, and 1994, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Management believes that the
disclosures presented are adequate to make the information not misleading.
It is suggested that these condensed consolidated financial statements be
read in conjunction with the consolidated financial statements and notes
thereto included in the Company's December, 1994, annual report to
shareholders. The results of the operations for the periods ended June 30, 1995
and 1994, are not necessarily indicative of the operating results for the full
years.
2.COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Company enters into commitments to fund
loans and extend credit to its customers. These commitments are not
reflected in the accompanying condensed consolidated financial statements and
management does not expect any loss to result from such commitments. Standby
letters of credit at June 30, 1995, and December 31, 1994, amounted to
$1,264,108 and $477,000 respectively.
3.INCOME TAX MATTERS
There are no net deferred income tax assets or liabilities in the June 30, 1995
consolidated balance sheet. The gross amounts of deferred tax assets and
liabilities are as follows:
<TABLE>
<S> <C>
Deferred tax assets $1,288,000
Deferred tax liability (640,000)
Valuation allowance for deferred tax asset (648,000)
Net deferred tax asset 0
</TABLE>
Management believes the valuation allowance is adequate. There has been no
change in the allowance during the quarter ending June 30, 1995.<PAGE>
<PAGE>
4.SECURITIES
The fair value of securities classified as held to maturity as of June 30, 1995
is $19,492,701. The unrealized losses of securities available for sale net of
unrealized gains as of June 30, 1995 is $394,068.
5.SEGMENT INFORMATION
In 1994, the Company terminated its mortgage banking operations. The results
of operations in 1994 were not significant. Accordingly there are no mortgage
loans held for sale as of June 30, 1995.
6. ANAYLYSIS FOR CREDIT LOSSES
An analysis of the change in the allowance for credit losses follows:
<TABLE>
<S> <C>
Beginning January 1, 1995 1,465,000
Charge offs (133,745)
Recoveries 72,866
Provision for loan losses 230,000
Balance June 30, 1995 1,634,121
</TABLE>
At June 30, 1995, the Bank has classified $2,757,437 of its loans as impaired
with a specific loan loss reserve of $528,814 and none of its loans as
impaired with no related loss reserve as determined in accordance with this
Statement. The average recorded investment in impaired loans during the quarter
ended June 30, 1995 was 2,117,400. The Bank recognizes interest income on
impaired loans using both the cost-recovery method and cash-basis method,
depending in the economic substance of each impaired loan, which applies cash
payments to principal or interest as received. The amount of interest income
recognized during the quarter ended June 30, 1995 on loans classified as
impaired was $20,125 which equals the amount of cash payments received.<PAGE>
<PAGE>
ORANGE NATIONAL BANCORP & SUBSIDIARY
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity
The Company maintains substantial liquid and other short-term assets to meet
increases in loan demand, deposit withdrawals and maturities. These assets
include:
<TABLE>
<S> <C> <C>
06/30/95 Percent
a. Cash on Hand & Deposits with
Correspondent Banks $20,481,360 34.1%
b. Federal Funds Sold $13,650,000 22.8%
c. Marketable Securities
(Available for Sale) $25,815,370 43.1%
Total $59,946,730 100.0%
</TABLE>
All of the Bank's installment loans require monthly payments, which provide a
steady return of cash funds. Liquidity needs can also be met through federal
funds purchased from correspondent banks and/or direct borrowing from the
Federal Reserve Bank. As of this date the Bank has never needed to use these
facilities.
The loan-to-deposit ratio at June 30, 1995, was 61.6%, compared to 60.0% at
December 31, 1994. The ratio of liquid assets (cash and due from banks, time
deposits with other banks, fed funds sold and investments with maturities of
one year or less) to non interest bearing demand deposits was 75.5% at
June 30, 1995, compared to 74.0% at December 31, 1994.
Capital Management
Capital management requires that sufficient capital be maintained for
anticipated growth and to provide depositors assurance that their funds are
on deposit with a solvent institution. The ratio of total capital
(Shareholders' equity plus reserve for loan losses) to risk adjusted assets
equalled 13.78% at June 30, 1995, as compared to 11.9% as of
December 31, 1994. Primary capital to total loans was 14.2% at June 30, 1995,
as compared to 12.9% as of December 31, 1994.
Management believes that the Company and its subsidiary Bank are properly and
adequately capitalized, as evidenced by these two ratios and the strong
liquidity position.<PAGE>
<PAGE>
Results of Operations
2nd Quarter 1995 Vs. 2nd Quarter 1994
June 30, 1995 June 30, 1994
Total interest income for the three-month period and quarter ending
June 30, 1995, increased $720,535 or 21.3%, over the like period ending
June 30, 1994. Interest and fees on loans increased $372,200 or 13.1%, due to a
increased loan portfolio, plus an increase in average loan interest rates. The
average loan totals for the three-months ended June 30, 1995 was $116,077,693,
compared to $111,756,193 for the three-month period of the prior year.
Because of the difference in loan interest rates between the two periods,
average yield increased 90 basis points from 10.21% to 11.11% as of
June 30, 1995. Investment income increased $348,335 or 65.4% over the prior
period. This increase was caused by a 24.5% increase in investment accounts,
plus a increase in average yields. U.S.Government Agencies and Securities
represent 71.9% of the Bank's investment portfolio. Because of an increase
in longer term investments and short term interest rates between the two
periods, average yield increased 144 basis points from 4.37% to 5.81% as of
June 30, 1995.
Total interest expense increased $188,189 or 32.3% for the subject period ended
June 30, 1995, compared to the same period ended June 30, 1994, as a result of
an increase in overall cost of funds. Average interest bearing accounts
increased $11,332,256 or 9.9%. The cost of funds averaged 41 basis points move
during this current quarter than the compared quarter in 1994.
Net interest income (total interest income less total interest expense)
increased $532,346 or 19.0%, during the quarter ended June 30, 1995, over the
same period in 1994.
The loan loss provision increased $40,000 or 47.1%, from $85,000 to $125,000 as
of June 30, 1995, due to the adequacy of the loan loss reserve. At
June 30, 1995, the reserve level was at 1.43% of total loans and leases as
compared to 1.35% at June 30, 1994. Total charge-offs in the three month
period ended June 30, 1995 were $37,246 and recoveries were $58,371 compared
to $62,820 in charge-offs and $49,091 in recoveries in the same period in
1994. At June 30, 1995, non performing loans were $2,923,676 compared to
$3,215,000 at December 31, 1994. Real Estate loans totalling $2,549,156
represent 79.3% of non performing loans. Management believes, based upon
loan quality, that the current loan loss reserve of $1,634,120 is adequate and
is in conformance with established loan policy and guidelines.
Other income decreased $19,038 or 2.2%. No gains or losses were realized on
the sale of securities. Gains of $140,726 were realized on the sale of Small
Business Administration Loans during the quarter ending June 30,1995,
compared to $67,248 in gains in the same period in 1994. No gains were
realized on the sale of equipment during the quarter ending June 30, 1995. No
gains were realized in the quarter ending June 30, 1994. No mortgage
brokerage fees were realized in the quarter ending June 30, 1995. Mortgage
brokerage fees of $97,518 were realized in the quarter ending June 30, 1994.<PAGE>
<PAGE>
Other expense decreased $234,172 or 7.0% from $3,365,463 in the second
quarter of 1994, to $3,131,291 in the second quarter of 1995. This decrease
was partially caused by a $201,805 or 12.0%, decrease in salary and benefit
costs due to closure of the Mortgage Banking Division on June 1, 1994 and a
decrease in staff due to a reorganizational study in the second half of 1994.
Other expense decreased $54,992 or 4.4% as a result of the Mortgage Banking
Division on June 1, 1994.
Operating profits before taxes for the quarter ended June 30, 1995 increased
$707,508 or 352.9% over the like period in 1994. This increase in before tax
profits occurred partially as the result of an increase in average loan
interest rates and an increase in average investment yields and an decrease in
other expense.
Net after taxes income for the three month period and quarter ended
June 30, 1995, was $631,049 compared to $121,651) for the three month period
ending June 30, 1994.<PAGE>
<PAGE>
Results of Operations
First Half 1995 Vs. First Half 1994
June 30, 1995 June 30, 1994
Total interest income for the six months ended June 30, 1995, increased
$1,568,950 or 24.7%, over the like period ending June 30, 1994. Interest and
fees on loans increased $838,149 or 15.7%, due to an increased loan
portfolio, plus an increase in average loan interest rates. The average loan
totals for the six-months ended June 30, 1995 was $115,561,456, compared to
$112,866,715 for the six month period of the prior year. Because of the
difference in loan interest rates between the two periods, average yield
increased 123 basis points from 9.46% to 10.69% as of June 30, 1995.
Investment income increased $730,801 or 71.6% over the prior period. This
increase was caused by a 26.1% increase in the investment accounts, plus an
increase in average yields. U.S. Government Agencies and Securities
represent 67.7% of the Bank's investment portfolio. Because of an increase
in longer-term investments between the two periods, average yield increased 150
basis points from 4.17% to 5.67% as of June 30, 1995.
Total interest expense increased $340,165 or 29.4% for the subject period ended
June 30, 1995, compared to the same period ended June 30, 1994, as a result
of an increase in overall cost of funds. Average interest bearing accounts
increased $10,061,694 or 8.73%. The cost of funds averaged 38 basis points
more during the six month period ending June 30, 1995, over the same period
in 1994.
Net interest income (total interest income less total interest expense)
increased $1,228,785 or 23.6%, during the six months ended June 30, 1995,
over the same period in 1994.
The loan loss provision increased $95,000, or 70.4%, from $135,000 as of
June 30, 1994 to $230,000 as of June 30, 1995, based on the amount necessary
to provide for estimated losses. Management believes that the level of
reserve is adequate as of June 30, 1995, and it is within the guidelines of the
loan loss reserve policy as approved by the Board of Directors.
Other income increased $23,142 or 1.2%. No gains or losses were realized on the
sale of securities. Gains of $658,054 were realized on the sale of Small
Business Administration Loans during the six months ending June 30, 1995.
Gains of $454,694 were realized in the six months ending June 30, 1994. Gains
of $6,768 were realized on the sale of equipment during the six months ending
June 30, 1995. No gains were realized on the sale of equipment in the six
months ending June 30, 1994. No mortgage brokerage fees were realized in the
six months ending June 30, 1995. Mortgage brokerage fees of $190,528 were
realized in the six months ending June 30, 1994.
Other expense decreased $515,629, or 7.6% from $6,815,614 in the first half of
1994, to $6,299,985 in the first half of 1995. This decrease was partially
caused by a $304,496, or 9.0% decrease in salary and benefit costs due to the
closure of the Mortgage Banking Division on June 1, 1994 and a decrease in
staff due to a reorganizational study in the second half of 1994.<PAGE>
<PAGE>
Other expense decreased $257,700 or 10.1% as a result of decreases in legal
fees of $85,155, decreases in promotion expense of $46,999, increases in
other real estate owned expense of $62,788, decreases in Broker Premium
expense of $98,237, all relating to the growth of the bank and the closure of
the Mortgage Banking Division on June 1, 1994.
Operating profits before taxes for the first half of 1995, increased
$1,672,556, or 871.9%, over the same period in 1994. This increase in before
tax profits occurred partially as a result of an increase in average loan
interest rates and an increase in average investment yields and a decrease in
other expense.
Net after taxes income for the six-month period ending June 30, 1995, was
$1,276,389 compared to $122,985 for the six month period ending June 30, 1994.<PAGE>
<PAGE>
PART II OTHER INFORMATION
ITEM 1. Legal proceedings
No change since 10-K.
ITEM 2. Changes in securities.
None to report.
ITEM 3. Defaults upon senior securities.
Not applicable.
ITEM 4. Submission of matters for vote of securities holders.
A. Annual meeting held at Orange National Bank May 22, 1995.
B. Meeting resulted in the election of the below-listed Directors
for one-year term:
William Frantz Charles R. Foulger
Michael W. Abdalla Gerald R. Holte
Fred Barrera James E. Mahoney
Michael J. Christianson Wayne F. Miller
Kenneth J. Cosgrove Harlan Smith
Robert W. Creighton San E. Vacarro
Armand Durante
All votes by proxy, resulting in total management nominees
elected. Secondly, there was no solicitation in opposition
to management's nominees.
C. Meeting resulted in the ratification of the appointment of
McGladrey & Pullen as independent public accountant for
Bancorp and its subsidiaries, Orange National Bank and ONB
Mortgage Corporation for the year 1995 by a vote of 1,043,542 for
and 0 against the ratification.
ITEM 5. Other information.
None to report.
ITEM 6. Exhibits and reports on Form 8-K.
A. Exhibits: Proxy Report, which is incorporated
herein by reference filed on 4/19/95.<PAGE>
<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.
Wayne F. Miller August 11, 1995
Wayne F. Miller Date
Chief Executive Officer
Robert W. Creighton August 11, 1995
R.W. Creighton Date
Secretary & Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 20481360
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 13650000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 25815370
<INVESTMENTS-CARRYING> 19975250
<INVESTMENTS-MARKET> 19539000
<LOANS> 114282716
<ALLOWANCE> 1634120
<TOTAL-ASSETS> 203092515
<DEPOSITS> 185510485
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1359976
<LONG-TERM> 0
<COMMON> 6848120
0
0
<OTHER-SE> 1359976
<TOTAL-LIABILITIES-AND-EQUITY> 203092515
<INTEREST-LOAN> 6178272
<INTEREST-INVEST> 1225346
<INTEREST-OTHER> 525574
<INTEREST-TOTAL> 7929192
<INTEREST-DEPOSIT> 1499087
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 6430105
<LOAN-LOSSES> 230000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6299985
<INCOME-PRETAX> 1864389
<INCOME-PRE-EXTRAORDINARY> 1276389
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1276389
<EPS-PRIMARY> $0.69
<EPS-DILUTED> $0.69
<YIELD-ACTUAL> 9.21
<LOANS-NON> 2757437
<LOANS-PAST> 4000
<LOANS-TROUBLED> 732000
<LOANS-PROBLEM> 2257437
<ALLOWANCE-OPEN> 1465000
<CHARGE-OFFS> 133745
<RECOVERIES> 72866
<ALLOWANCE-CLOSE> 1634121
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
