UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
* * * * *
Quarterly Report Pursuant to Section 13 or 15(d)
of Securities Exchange Act of 1934
FOR QUARTER ENDED: March 31, 1996
COMMISSION FILE NUMBER: 0-15365
ORANGE NATIONAL BANCORP
Incorporated under the laws of California
I.R.S. Employer ID No. 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 March 31, 1996 is 1,937,646.
<PAGE>
<TABLE>
<CAPTION>
ORANGE NATIONAL BANCORP
CONSOLIDATED BALANCE SHEET
ASSETS 3/31/96 12/31/95
(Unaudited) (Note*)
<S> <C> <C>
Time Certificates of Deposit 0 0
Securities Held to Maturity 12,689,925 12,652,817
Securities Available for Sale 33,937,604 26,908,298
Fed Funds Sold 26,000,000 18,500,000
Loans 106,313,708 114,236,578
Less Allowance for Possible Credit Losses 1,485,835 1,512,544
____________ ____________
Total Interest Earning Assets $177,455,402 $170,785,149
Cash & Non-Interest Earning Assets 21,863,604 22,929,660
Bank Premises - At Cost
Building and Land 3,439,823 3,413,100
Leasehold Improvements 2,079,363 2,071,545
Furniture, Fixtures and Equipment 3,171,704 3,132,999
Less Accumulated Depreciation and Amortization
3,226,930 3,091,067
Accrued Interest Receivable 1,064,020 1,167,707
Other Assets 6,747,785 7,518,931
____________ _____________
TOTAL ASSETS $212,594,771 $207,928,024
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
Demand, Non-Interest Bearing 66,008,030 70,237,126
Money Market & Now 100,192,370 91,698,505
Savings 13,609,551 12,456,884
Time Deposits of $100,000 or More 6,483,906 6,632,038
Other Time Deposits 8,250,814 7,966,817
____________ ____________
Total Deposits $194,544,671 $188,991,370
Other Liabilities 850,093 1,674,757
____________ ____________
TOTAL LIABILITIES $195,394,764 $190,666,127
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock - No Par Value
Authorized: 20,000,000 Shares
Issued and Outstanding: 1,937,646 Shares in 1996
1,933,571 Shares in 1995
7,544,581 7,509,888
Retained Earnings 9,851,633 9,920,549
Unrealized Gain(Loss) on Securities
Available for Sale, Net (196,207) (168,540)
___________ ___________
TOTAL STOCKHOLDERS' EQUITY 17,200,007 17,261,897
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $212,594,771 $207,928,024
</TABLE>
*NOTE: THE BALANCE SHEET AT DECEMBER 31, 1995, HAS BEEN TAKEN FROM THE
AUDITED FINANCIAL STATEMENTS. SEE NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
ORANGE NATIONAL BANCORP
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
QTR ENDING QTR ENDING
3/31/96 3/31/95
<S> <C> <C>
Interest Income:
Loans $2,785,651 $2,954,699
Taxable Investment Securities 561,570 588,704
Fed Funds Sold 374,636 281,377
Total Interest Income 3,721,857 3,824,780
Interest Expense:
Time Deposits of $100,000 or more 81,111 44,912
Other Deposits 750,970 682,993
Total Interest Expense 832,081 727,905
NET INTEREST INCOME 2,889,776 3,096,875
Provision For Possible Credit Losses 70,000 105,000
Net Interest Income After Provision for
Possible Credit Losses 2,819,776 2,991,875
Other Income:
Service Charge on Deposit Accounts 276,944 250,444
Other 588,957 882,715
Total Other Income 865,901 1,133,159
Other Expense:
Salaries, Wages, Employee Benefits 1,536,641 1,603,199
Occupancy Expense of Bank Premises 267,331 278,269
Furniture & Equipment Expense 155,439 169,773
Other 1,101,771 1,117,453
Total Other Expense 3,061,182 3,168,694
Earnings Before Income Taxes 624,495 956,340
Applicable Income Taxes (Credits) 209,000 311,000
Net Earnings 415,495 645,340
Earnings Per Share $0.21 $0.35
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ORANGE NATIONAL BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
QTR ENDING QTR ENDING
3/31/96 3/31/95
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES 509,435 572,859
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment and leasehold improvements
(73,246) (180,348)
NET (INCREASE) DECREASE IN:
Fed Funds Sold (7,500,000) 1,770,000
Securities (7,135,552) (148,065)
Loans 8,029,754 (1,207,971)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
(6,679,074) 233,616
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds From Sale of Common Stock 34,693 0
Net Increase (decrease) in deposits 5,553,301 (80,239)
Dividends Paid (484,411) (180,348)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
5,103,583 (260,587)
INCREASE (DECREASE) IN CASH AND NON-INTEREST EARNING DEPOSITS
(1,066,056) 545,888
CASH AND NON-INTEREST EARNING DEPOSITS
Beginning 22,929,660 15,394,879
End of Period 21,863,604 15,940,767
</TABLE>
<PAGE>
Orange National Bancorp and Subsidiaries
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 March 31, 1996, and the
consolidated statements of earnings and statements of cash
flows for the three month periods ended March 31, 1996 and
1995, 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 March 31, 1996 and 1995, 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 31, 1995, annual report
to shareholders. The results of the operations for the
periods ended March 31, 1996 and 1995, 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 March 31, 1996,
and December 31, 1995, amounted to $1,946,743 and $1,533,373
respectively.
<PAGE>
3. INCOME TAX MATTERS
There are no net deferred income tax assets or liabilities
in the March 31, 1996 consolidated balance sheet. The gross
amounts of deferred tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
<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 March 31, 1996.
4. SECURITIES
The fair value of securities classified as held to maturity
as of March 31, 1996 is $12,143,490. The unrealized losses
of securities available for sale net of unrealized gains and
net of applicable income taxes as of March 31, 1996 is
$196,207.
5. ANALYSIS FOR CREDIT LOSS
An analysis of the change in the allowance for credit losses
follows:
<TABLE>
<CAPTION>
<S> <C>
Beginning January 1, 1996 1,512,544
Charge offs (106,766)
Recoveries 10,057
Provision for loan losses 70,000
Balance March 31, 1996 1,485,835
</TABLE>
At March 31, 1996, the Bank has classified $1,678,203 of its
loans as impaired with a specific loan loss reserve of
$408,127 and $215,869 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 March 31, 1996 was
$1,900,300. 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 March 31, 1996 on loans classified
as impaired was $21,530 which equals the amount of cash
payments received.
<PAGE>
ORANGE NATIONAL BANCORP AND SUBSIDIARIES
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>
<CAPTION>
03/31/96 Percent
<S> <C> <C>
a. Cash on Hand & Deposits with
Correspondent Banks $21,863,604 26.7%
b. Federal Funds Sold $26,000,000 31.8%
c. Marketable Securities (Available for Sale)
$33,937,604 41.5%
____________ _______
Total $81,801,208 100.0%
</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 March 31, 1996, was 54.6%
compared to 60.4% at December 31, 1995. 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
88.4% at March 31, 1996, compared to 67.5% at December 31,
1995.
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
equaled 13.39% at March 31, 1996, as compared to 12.8% as of
December 31, 1995. Primary capital to total loans was 16.2%
at March 31, 1996 as compared to 15.1% as of December 31,
1995.
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>
Results of Operations
First Quarter 1996 vs. First Quarter 1995
March 31, 1996 March 31, 1995
Total interest income for the three-month period and quarter
ending March 31, 1996, decreased $102,923, or 2.7%, over the
like period ending March 31, 1995. Interest and fees on
loans decreased $169,048, or 5.7%, due to a decrease in the
loan portfolio, plus a decrease in average loan interest
rates. The average loan totals for the three months ended
March 31, 1996 was $108,653,508, compared to $114,728,314
for the three month period of the prior year. Because of
the difference in loan interest rates between the two
periods, average yield decreased 17 basis points from 10.45%
to 10.28% as of March 31, 1996. Investment income
increased $66,125, or 7.6%, over the prior period. This
increase was caused by a 12.1% increase in the investment
accounts, plus a decrease in average yields. U.S.
Government Agencies and Securities represent 64.0% of the
Bank's investment portfolio. Because of a decrease in
longer term investments and short term interest rates
between the two periods, average yields decreased 29 basis
points from 5.66% to 5.37% as of March 31, 1996.
Total interest expense increased $104,176, or 14.3%, for the
subject period ended March 31, 1996, compared to the same
period ended March 31, 1995, as a result of the increase in
overall cost of funds. Average interest bearing accounts
increased $1,428,863, or 1.1%. The cost of funds averaged
28 basis points more during this current quarter than the
compared quarter in 1995.
Net interest income (total interest income less interest
expense) decreased $207,099, or 6.7%, during the first
quarter ended March 31, 1996, over the same period in 1995.
The loan loss provision decreased $35,000, or 33.3%, from
$105,000 as of March 31, 1995 to $70,000 as of March 31,
1996, based on the amount necessary to provide for estimated
losses. At March 31, 1996, the reserve level was at 1.40%
of total loans as compared to 1.30% at March 31, 1995.
Total charge-offs in the three month period ended March 31,
1996 were $106,766 and recoveries were $10,057 compared to
$96,499 in charge-offs and $14,495 in recoveries in the same
period in 1995. At March 31, 1996, nonperforming loans were
$3,102,639 compared to $3,055,000 at December 31, 1995.
Real Estate loans totaling $2,734,567 represent 88.1% of non
performing loans. Management believes, based upon loan
quality, that the current loan loss reserve of $1,485,835 is
adequate and is in conformance with established loan policy
and guidelines.
<PAGE>
Other income decreased $267,258, or 23.6%. No gains or
losses were realized on the sale of securities. Gains of
$203,593 were realized on the sale of loans during the
first quarter ending March 31, 1996, compared to $517,328 in
gains in the same period in 1995. No gains were realized on
the sale of equipment during the first quarter ending March
31, 1996. Gains of $4,000 were realized in the first
quarter ending March 31, 1995.
Other expense decreased $107,512, or 3.4%, from $3,168,694
in the first quarter of 1995, to $3,061,182 in the first
quarter of 1996. Salary and benefit costs decreased $66,558
due to a decrease in staff due to a reorganizational study
in the second half of 1994. Other expense decreased $15,682
or 1.4% as a result of a decrease in data processing expense
of $50,735 relating to a new data processing contract in the
second quarter of 1995.
Operating profits before taxes for the quarter ended March
31, 1996 decreased $331,845 from $956,340 as of March 31,
1995 to $624,495 as of March 31, 1996, due to a decrease in
average loan interest rates and a decrease in average
investment yields and an increase in the average cost of
funds.
Income Tax expense as a percentage of pre-tax income was
less in 1995 due to the utilization of alternative minimum
tax credit carry forwards.
Net after taxes income for the three month period and
quarter ended March 31, 1996, was $415,495 compared to
$645,340 for the three month period ending March 31, 1995.
<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
None to report
ITEM 5 OTHER INFORMATION
None to report
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
None to report
<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.
KENNETH J. COSGROVE APRIL 30, 1996
Kenneth J. Cosgrove Date
Chief Executive Officer
ROBERT W. CREIGHTON APRIL 30, 1996
R. W. Creighton Date
Secretary & Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 21864
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 26000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 33938
<INVESTMENTS-CARRYING> 12162
<INVESTMENTS-MARKET> 11833
<LOANS> 106314
<ALLOWANCE> 1486
<TOTAL-ASSETS> 212595
<DEPOSITS> 194545
<SHORT-TERM> 0
<LIABILITIES-OTHER> 850
<LONG-TERM> 0
0
0
<COMMON> 7545
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 212595
<INTEREST-LOAN> 2786
<INTEREST-INVEST> 936
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3722
<INTEREST-DEPOSIT> 832
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 2890
<LOAN-LOSSES> 70
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3061
<INCOME-PRETAX> 624
<INCOME-PRE-EXTRAORDINARY> 415
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 415
<EPS-PRIMARY> $0.21
<EPS-DILUTED> $0.21
<YIELD-ACTUAL> 7.82
<LOANS-NON> 3103
<LOANS-PAST> 22
<LOANS-TROUBLED> 697
<LOANS-PROBLEM> 1287
<ALLOWANCE-OPEN> 1513
<CHARGE-OFFS> 107
<RECOVERIES> 10
<ALLOWANCE-CLOSE> 1486
<ALLOWANCE-DOMESTIC> 1486
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
