<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1994
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File No. 0-15828
FIRST NATIONAL BANK CORP.
(Exact name of registrant as specified in its charter)
Delaware 38-2711692
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
18800 Hall Road, Clinton Township, MI 48038-1340
(Address of principal executive offices) (Zip Code)
(810) 465-2400
(Registrant's telephone number, including area code)
No change since last report
(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.
Yes X No
------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at July 29, 1994
----- ----------------------------
Common Stock, $3.125 Par Value 2,433,060 Shares
<PAGE> 2
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The financial statements of First National Bank Corp. (the Corporation) include
the consolidation of its two subsidiaries; First National Bank in Macomb County
(the Bank) and Bankers Fund Life Insurance Co. (the Insurance Company).
The unaudited financial statements of the Corporation for the three and six
month periods ended June 30, 1994 and 1993, reflect all adjustments, consisting
of normal recurring items, which are, in the opinion of management, necessary
to present a fair statement of the results for the interim periods. The
operating results for the quarter and six months are not necessarily indicative
of results of operations for the entire year. Reference should be made to the
consolidated financial statements included with the Corporation's annual report
on Form 10-K for the year ended December 31, 1993.
Following are the Corporation's Consolidated Balance Sheet as of June 30, 1994,
December 31, 1993, and June 30, 1993; Consolidated Statement of Income for the
three and six month periods ended June 30, 1994 and 1993; and Statements of
Changes in Stockholders' Equity and Cash Flow for the six month periods ended
June 30, 1994 and 1993:
2
<PAGE> 3
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
Assets 1994 1993 1993
- - ---------------------------------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C>
Cash and due from banks $29,150 $25,383 $25,276
Federal funds sold 6,400 22,900 500
- - ---------------------------------- --------- --------- ---------
Cash and Cash Equivalents 35,550 48,283 25,776
- - ---------------------------------- --------- --------- ---------
Securities available for sale (at fair value) (1) 7,017 7,506 5,084
Investment securities (at amortized cost) (2) 114,825 80,066 80,507
Loans
Residential real estate 62,851 60,362 67,140
Commercial 217,240 212,035 203,427
Installment 59,694 55,629 57,629
- - ---------------------------------- --------- --------- ---------
Total Loans 339,785 328,026 328,196
Allowance for loan losses (4,816) (4,598) (4,818)
- - ---------------------------------- --------- --------- ---------
Net Loans 334,969 323,428 323,378
- - ---------------------------------- --------- --------- ---------
Property and equipment (net of depreciation) 15,243 15,596 14,669
Accrued interest receivable 3,301 2,600 2,613
Other real estate 3,137 3,290 3,043
Other assets 3,609 3,564 3,864
- - ---------------------------------- --------- --------- ---------
Total Assets $517,651 $484,333 $458,934
================================ ========= ========= =========
</TABLE>
(1) Amortized cost of $7.2 million at June 30, 1994. Prior to 1994, these
securities were reported at the lower of amortized cost or fair value.
(2) Fair value of $113.7 million at June 30, 1994; $82.4 million at December
31, 1993; and $83.1 million at June 30, 1993. Investment securities of
$3.3 million were pledged at June 30, 1994, to secure public funds on
deposit, and for other purposes required by law.
(continued)
3
<PAGE> 4
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Consolidated Balance Sheet, continued
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31, June 30,
Liabilities and Stockholders' Equity 1994 1993 1993
- - ---------------------------------- --------- --------- ---------
(in thousands, except share data)
<S> <C> <C> <C>
Deposits
Demand
Noninterest bearing $93,824 $76,343 $73,861
Interest bearing 114,478 121,544 108,128
Savings 89,933 88,467 89,564
Time 173,329 153,698 143,656
- - ---------------------------------- --------- --------- ---------
Total Deposits 471,564 440,052 415,209
- - ---------------------------------- --------- --------- ---------
Short term borrowings 1,100 1,100 1,100
Other liabilities 6,104 5,909 6,258
Long term debt ---- ---- 3,515
- - ---------------------------------- --------- --------- ---------
Total Liabilities 478,768 447,061 426,082
- - ---------------------------------- --------- --------- ---------
Stockholders' Equity
Common stock -- $3.125 par value; 8,000,000 shares
authorized; 2,432,060 shares issued and outstanding
at 6/30/94; 2,315,671 shares outstanding at 12/31/93;
and 1,561,960 shares outstanding at 6/30/93. 7,600 7,236 4,945
Additional paid-in capital 17,958 15,659 15,646
Retained earnings 13,420 14,377 12,833
Unrealized loss on securities
available for sale, net of tax (95) ---- ----
Treasury Stock -- 20,308 shares at 6/30/93 ---- ---- (572)
- - ---------------------------------- --------- --------- ---------
Total Stockholders' Equity 38,883 37,272 32,852
- - ---------------------------------- --------- --------- ---------
Total Liabilities and Stockholders' Equity $517,651 $484,333 $458,934
================================ ========= ========= =========
</TABLE>
4
<PAGE> 5
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Consolidated Statement of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
- - ------------------------------ ------- ------- ------- -------
(in thousands)
<S> <C> <C> <C> <C>
Interest Income
Loans (including fees) $7,048 $6,826 $13,612 $13,586
Securities
Taxable 1,098 716 1,971 1,530
Tax-exempt 542 532 1,062 1,096
Federal funds sold 64 40 171 76
- - ------------------------------ ------- ------- ------- -------
Total Interest Income 8,752 8,114 16,816 16,288
- - ------------------------------ ------- ------- ------- -------
Interest Expense
Deposits 2,926 2,798 5,693 5,596
Short term borrowings 15 13 26 34
Long term debt ---- 63 ---- 238
- - ------------------------------ ------- ------- ------- -------
Total Interest Expense 2,941 2,874 5,719 5,868
- - ------------------------------ ------- ------- ------- -------
Net Interest Income 5,811 5,240 11,097 10,420
Provision for loan losses 200 225 350 450
- - ------------------------------ ------- ------- ------- -------
Net Interest Income after Provision
for Loan Losses 5,611 5,015 10,747 9,970
- - ------------------------------ ------- ------- ------- -------
Noninterest Income
Service charges on deposit accounts 657 719 1,320 1,350
Net realized security gains (losses) ---- 3 1 (1)
Other income 276 241 792 481
- - ------------------------------ ------- ------- ------- -------
Total Noninterest Income 933 963 2,113 1,830
- - ------------------------------ ------- ------- ------- -------
Noninterest Expense
Salaries, benefits, and payroll taxes 2,133 1,903 4,118 3,841
Occupancy and equipment 851 834 1,709 1,736
Other operating expense 1,758 1,849 3,694 3,567
- - ------------------------------ ------- ------- ------- -------
Total Noninterest Expense 4,742 4,586 9,521 9,144
- - ------------------------------ ------- ------- ------- -------
</TABLE>
(continued)
5
<PAGE> 6
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Consolidated Statement of Income, continued
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
- - ------------------------------ ------- ------- ------- -------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Income Before Taxes and Cumulative
Effect of Change in Accounting
Principle 1,802 1,392 3,339 2,656
Income tax expense 431 299 786 544
- - ------------------------------ ------- ------- ------- -------
Income Before Cumulative Effect
of Change in Accounting Principle 1,371 1,093 2,553 2,112
Cumulative effect of change
in accounting principle ---- ---- ---- (1,183)
- - ------------------------------ ------- ------- ------- -------
Net Income $1,371 $1,093 $2,553 $929
============================== ======= ======= ======= ========
Per share data:
Primary Income Before Cumulative
Effect of Change in Accounting
Principle $0.55 $0.52 $1.03 $1.03
Cumulative effect of change in
accounting principle ---- ---- ---- (0.58)
- - ------------------------------ ------- ------- ------- --------
Primary Net Income $0.55 $0.52 $1.03 $0.45
============================== ======= ======= ======= ========
Fully Diluted Income Before Cumulative
Effect of Change in Accounting
Principle 0.55 $0.47 $1.02 $0.93
Cumulative effect of change in
accounting principle ---- ---- ---- (0.48)
- - ------------------------------ ------- ------- ------- --------
Fully Diluted Net Income $0.55 $0.47 $1.02 $0.45
============================== ======= ======= ======= ========
Cash Dividends $0.19 $0.18 $0.37 $0.35
============================== ======= ======= ======= ========
</TABLE>
6
<PAGE> 7
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1994 1993
- - ------------------------------ ------- -------
(in thousands, except per share data)
<S> <C> <C>
Common Stock:
Balance, beginning of period $7,236 $4,074
Stock dividend (A)(B) 361 84
Exercise of stock options 3 1
Conversion of debentures ---- 361
Exercise of equity contracts ---- 425
- - ------------------------------ ------- -------
Balance, end of period 7,600 4,945
- - ------------------------------ ------- -------
Additional Paid-in Capital:
Balance, beginning of period 15,659 11,033
Stock dividend (A)(B) 2,278 646
Exercise of stock options 21 5
Conversion of debentures ---- 1,790
Exercise of equity contracts ---- 2,147
Bequest from estate ---- 25
- - ------------------------------ ------- -------
Balance, end of period 17,958 15,646
- - ------------------------------ ------- -------
Retained Earnings:
Balance, beginning of period 14,377 14,900
Net income 2,553 929
Cash dividends ($0.37 share in 1994,
$0.35 1993) (C) (902) (731)
Change in ESOP loan guarantee 44 (449)
Stock dividend (A)(B) (2,649) (1,810)
Exercise of stock options (3) (6)
- - ------------------------------ ------- -------
Balance, end of period 13,420 12,833
- - ------------------------------ ------- -------
Unrealized Security Gains (Losses):
Balance, beginning of period ---- ----
Change in unrealized gain or loss (95) ----
- - ------------------------------ ------- -------
Balance, end of period (95) ----
- - ------------------------------ ------- -------
Treasury Stock:
Balance, beginning of period ---- (598)
Repurchase of common stock ---- (1,042)
Stock dividend (B) ---- 1,068
- - ------------------------------ ------- -------
Balance, end of period ---- (572)
- - ------------------------------ ------- -------
Total Stockholders' Equity, End of Period $38,883 $32,852
============================ ======= =======
</TABLE>
See notes on following page.
7
<PAGE> 8
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Notes, from preceding page:
(A) On March 30, 1994, the Board of Directors of the Corporation declared a
5% stock dividend to stockholders of record on April 13, 1994, payable
May 4, 1994.
(B) On March 24, 1993, the Board of Directors of the Corporation declared a
5% stock dividend to stockholders of record on April 14, 1993, payable
May 5, 1993.
(C) Per share amounts of cash dividends have been adjusted to give effect to
the 5% stock dividends in 1994 and 1993, and the 4-for-3 stock split in
1993.
8
<PAGE> 9
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flow Six Months Ended
(Unaudited) June 30,
----------------------
1994 1993
- - --------------------------------------------- ---------- ----------
(in thousands)
<S> <C> <C>
Operating Activities:
Net income $2,553 $929
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 350 450
Depreciation expense 613 687
Net gain on sales of property and equipment (244) (30)
Net amortization of security premiums 866 527
Net realized security losses (gains) (1) 1
(Decrease) increase in interest receivable (701) 27
Decrease in interest payable (63) (102)
Decrease (increase) in other assets 167 (497)
Increase in other liabilities 302 1,927
- - --------------------------------------------- ---------- ----------
Net Cash Provided by Operating Activities 3,842 3,919
Investing Activities:
Proceeds from maturities and calls of securities
available for sale 3,579 2,000
Purchases of securities available for sale (3,339) (2,060)
Proceeds from maturities and calls of investment
securities 15,367 10,401
Purchases of investment securities (50,884) (13,454)
Net increase in residential real estate loans (2,489) (1,692)
Net increase in commercial loans (5,218) (8,347)
Net increase in installment loans (4,184) (1,158)
Purchases of property and equipment (991) (647)
Proceeds from sales of property and equipment 975 30
- - --------------------------------------------- ---------- ----------
Net Cash Used in Investing Activities (47,184) (14,927)
Financing Activities:
Net increase in noninterest bearing demand deposits 17,481 5,582
Net decrease in interest bearing demand deposits (7,066) (18,023)
Net increase in savings deposits 1,466 6,704
Net increase in time deposits 19,631 10,010
Net increase in short term borrowings ---- 155
Cash dividends paid (902) (731)
Repurchase of common stock ---- (1,042)
Payments for fractional shares (10) (12)
Proceeds from exercise of equity contracts and
stock options 9 150
Cash paid for equity contract redemption ---- (124)
Bequest from estate ---- 25
- - --------------------------------------------- ---------- ----------
Net Cash Provided by Financing Activities 30,609 2,694
- - --------------------------------------------- ---------- ----------
Decrease in Cash and Cash Equivalents (12,733) (8,314)
Cash and Cash Equivalents at the Beginning
of the Period 48,283 34,090
- - --------------------------------------------- ---------- ----------
Cash and Cash Equivalents at the End
of the Period $35,550 $25,776
============================================= ========== ==========
</TABLE>
9
<PAGE> 10
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(A) Analysis of Financial Condition
Total assets of the Corporation have increased by approximately 7%, or
$33.4 million, to $517.7 million at June 30, 1994, compared with $484.3 million
at December 31, 1993, and by 13%, or $58.7 million, over June 30, 1993.
During the first half of the year, total deposits rose by $31.5 million, while
loans increased by $11.8 million. Because of the tremendous deposit growth,
the Corporation purchased a large volume of securities during the period.
The following tables show the amortized cost and fair value of the
Corporation's security portfolios as of the dates indicated. On the balance
sheet, investment securities (i.e., those which the Corporation has the ability
and intent to hold to maturity) are stated at cost, adjusted for amortization
of premium and accretion of discount. Securities available for sale are
reported at fair value beginning January 1, 1994. Prior to that, securities
available had been carried at the lower of amortized cost or fair value.
<TABLE>
<CAPTION>
June 30, 1994
-------- -------- --------
Amortized Fair
Cost Value Variance
-------- -------- --------
(in thousands)
<S> <C> <C> <C> <C>
Securities available for sale:
United States Treasury $2,027 $2,009 ($18)
United States Government agencies 5,132 5,008 (124)
-------- -------- --------
Total securities available for
sale 7,159 7,017 (142)
-------- -------- --------
Investment securities:
United States Treasury 21,785 21,452 (333)
United States Government agencies 51,272 49,890 (1,382)
Municipal obligations 39,830 40,378 548
Other securities 1,938 1,938 ----
-------- -------- --------
Total investment securities 114,825 113,658 (1,167)
-------- -------- --------
Total Securities $121,984 $120,675 ($1,309)
======== ======== ========
</TABLE>
10
<PAGE> 11
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
<TABLE>
<CAPTION>
December 31, 1993
-------- -------- --------
Amortized Fair
Cost Value Variance
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Securities available for sale:
United States Treasury $5,047 $5,048 $1
United States Government agencies 2,459 2,460 1
-------- -------- --------
Total securities available for sale 7,506 7,508 2
-------- -------- --------
Investment securities:
United States Treasury 9,229 9,376 147
United States Government agencies 37,118 37,324 206
Municipal obligations 33,162 35,095 1,933
Other securities 557 560 3
-------- -------- --------
Total investment securities 80,066 82,355 2,289
-------- -------- --------
Total Securities $87,572 $89,863 $2,291
======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
June 30, 1993
-------- -------- --------
Amortized Fair
Cost Value Variance
-------- -------- --------
<S> <C> <C> <C>
Securities available for sale:
United States Treasury $5,084 $5,167 $83
-------- -------- --------
Total securities available for sale 5,084 5,167 83
-------- -------- --------
Investment securities:
United States Treasury 9,328 9,593 265
United States Government agencies 37,722 38,175 453
Municipal obligations 32,903 34,730 1,827
Other securities 554 557 3
-------- -------- --------
Total investment securities 80,507 83,055 2,548
-------- -------- --------
Total Securities $85,591 $88,222 $2,631
======= ======= =======
</TABLE>
11
<PAGE> 12
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Effective January 1, 1994, the Corporation adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." This statement requires the classification of debt and
equity securities into three categories; investment, trading, or available for
sale. As noted earlier, investment securities are carried at amortized cost,
and no gains or losses are recorded until realized. Securities available for
sale are carried at fair value. Unrealized gains and losses on securities
available are excluded from earnings, but are reported (net of tax) as a
separate component of stockholders equity. Securities that are bought and
held principally to sell them in the near term would be classified as trading
securities, and reported at fair value, with unrealized gains and losses
charged to earnings. Since the Corporation does not engage in the short term
buying and resale of securities, management has not placed any securities in
the trading category, and does not expect to do so in the future.
As of June 30, 1994 the Corporation has recorded an unrealized loss of $142,000
on securities available for sale. An after-tax reduction of $95,000 has been
recorded in the stockholders' equity section of the balance sheet.
During 1994, investment securities have increased by 43%, or $34.8 million, to
$114.8 million at June 30, 1994. The major increases during this period came
in the United States Treasury and Government agency categories, with increases
of $12.6 million and $14.2 million, respectively. These purchases were made
using uninvested funds from December 31, and as deposit growth outpaced loan
demand during the six month period. Investment securities have increased by
$34.3 million since the prior June 30.
Total loans increased by $11.8 million during the six months ended June 30,
1994, and increased by $11.6 million since June 30, 1993.
Residential real estate loans rose by $2.5 million during the first half of the
year, due to a pick up in home mortgage lending. During the twelve months
ended June 30, 1994, residential mortgage loans decreased by 6%, or $4.3
million. The overall decrease was due largely to prepayment and refinancing
activity in the second half of 1993.
Commercial loans have increased by $5.2 million during the six months, to
$217.2 million at June 30. Over the past year, commercial loans have increased
by 7%, or $13.8 million. For the six month period, the majority of the
increase came in fixed rate loans secured by commercial mortgages, and
tax-exempt fixed rate loans. For the year, the largest increase came from
variable rate commercial mortgages. Many of the commercial mortgage loans are
for working capital purposes, but for which the Bank has taken a mortgage as
security on the loan.
Installment loans increased by $4.1 million, or 7%, during the six months ended
June 30, 1994, to $59.7 million. The increases were primarily in auto and boat
lending, aided by the Bank s successful "Loans-By-Phone" campaign, launched in
the spring.
The following table shows the components of nonperforming loans as of the dates
indicated, as well as the ratios of such loans to the total loan portfolio:
<TABLE>
<CAPTION>
June 30, December 31, June 30,
1994 1993 1993
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Nonaccrual loans $1,501 $961 $2,008
Loans over 90 days past due,
but still accruing 2,627 2,626 2,008
-------- -------- --------
Total nonperforming loans $4,128 $3,587 $4,016
======= ======= =======
Nonperforming loans, as a percentage
of total loans at period end 1.21% 1.09% 1.22%
</TABLE>
12
<PAGE> 13
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Loans are placed in nonaccrual status when, in the opinion of management,
uncertainty exists as to the ultimate collection of principal and interest.
For the six months ended June 30, 1994, $62,000 would have been recorded in
interest income for loans in nonaccrual status at June 30, 1994, assuming they
had been current in accordance with the original terms of the loans. Interest
received on nonaccrual loans is credited directly to income. Interest income
of $5,000 was collected and included in net income for the six months ended
June 30, for loans in nonaccrual status at period end.
Nonaccrual loans at June 30, 1994, includes loans totalling $866,000 which are
secured by a commercial property which is in foreclosure. The borrowers have
also personally guaranteed the loans. The borrowers are in possession of the
property, and are attempting to bring the loan current within the redemption
period, which expires in December. The Bank has bid on the property, and
expects to take possession if the loan is not brought back to current status.
Because of the uncertainty, it is difficult to estimate the size of any
potential losses. The amount of loss in excess of amounts already provided for
in the alllowance, if any, is not expected to have a material effect on the
Corporation's operating results, liquidity, or capital resources.
In addition, management placed a commercial loan for $2.3 million in other real
estate on December 31, 1990, in accordance with accounting guidelines for
"in-substance" foreclosure loans. The loan is for a commercial construction
project on which the Bank holds a mortgage. The property is being carried at
the lower of the amount of the loan outstanding or net realizable value of the
property, which was $2.8 million at June 30, 1994. The Corporation charged
$200,000 to other real estate expense for this property during the first six
months of 1994. The property was sold by the borrower in 1991, and the new
owner is in the process of recruiting tenants and securing leases. The
construction is essentially complete, with specific improvements made as new
tenants move in. In accordance with accounting rules, the property will be
carried in other real estate and no interest income will be recognized until
the borrower has reached a cumulative investment in the property, which will be
10-20% of the sales value, depending on the borrower meeting certain
requirements.
In each quarter, or more frequently as necessary, management evaluates the
problems and potential losses in the loan portfolio. The results of this
evaluation are reflected in the allowance and periodic provision for loan
losses.
At June 30, 1994, there were no significant loans that are not disclosed above,
where known information about possible credit problems of borrowers causes
management to have serious doubts as to the ability of the borrower to comply
with present loan repayment terms and which, in management's judgment, may
result in disclosure of such loans in the discussion above. Furthermore,
management is not aware of any potential problem loans, except for those
described above, which could have a material effect on the Corporation's
operating results, liquidity, or capital resources.
The Bank grants loans to customers who live primarily in Macomb County and
metropolitan Detroit. Although the Bank has a diversified loan portfolio, a
substantial portion of its debtors' ability to honor their loan agreements is
dependent upon the automotive industry. Additionally, nearly all of the Bank's
residential real estate portfolio consists of loans for 1 to 4 family homes
located in Macomb County.
During the six months ended June 30, 1994, total deposits increased by 7%, or
$31.5 million, to $471.6 million. The increase was led by a $19.6 million
increase in time deposits, primarily from the new increasing rate certificates.
Noninterest bearing demand deposits increased by $17.5 million, primarily in
commercial accounts. For the twelve months ended June 30, 1994, total deposits
have increased by 14%, or $56.4 million. In this period, time deposits again
led the way with a $29.7 million increase, while total demand deposits
increased by $26.3 million. In time deposits, five year certificates had the
largest increase, rising by $25.0 million due to a special rate offering.
Total capital has increased over the previous June 30 by $6.0 million, while
long term debt decreased by $3.5 million. During this period, approximately
$3.4 million of new equity was created by the conversion of debentures. The
Corporation completed a redemption of its 9.0% Convertible Subordinated
Debentures as of July 15, 1993. The conversions were initiated by holders of
the debt prior to the redemption date.
13
<PAGE> 14
On March 30, 1994, the Corporation's Board of Directors declared a 5% stock
dividend. Additional shares were distributed beginning May 4, to stockholders
of record April 13. Cash was paid in lieu of issuing any fractional shares.
The transaction has no effect on the total amount of capital, and the par value
of common stock remains at $3.125 per share.
Following are selected capital ratios for the Corporation as of the dates
indicated, along with the minimum regulatory requirement for each item:
<TABLE>
<CAPTION>
June 30, December 31, June 30, Minimum
1994 1993 1993 Requirement
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Leverage ratio (Tier 1 capital to assets) 7.53% 7.68% 7.12% 3.00%
Tier 1 capital to risk-based assets 10.68% 10.55% 9.49% 4.00%
Total capital to risk-based assets 11.93% 11.80% 11.76% 8.00%
</TABLE>
14
<PAGE> 15
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
(B) Analysis of Results of Operations
ANALYSIS OF CHANGES IN NET INTEREST INCOME
The following tables, presented on a fully tax-equivalent (FTE) basis, show the
dollar amount of changes in net interest income for each major category of
interest earning asset and interest bearing liability, and the amount of change
attributable to changes in average balances (volume) or average rates.
Variances that are attributable to BOTH volume and rate changes have been
allocated to the volume component.
<TABLE>
<CAPTION>
Three Months Ended June 30,
1994 vs. 1993
--------------------------------------------
Increase (Decrease)
Due to Changes In
-----------------------
Total Volume Rate
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Earning Assets - Interest Income:
Federal funds sold $24 $13 $11
Securities
United States Treasury 105 139 (34)
United States Government agencies 258 236 22
Municipal obligations 13 69 (56)
Other securities 19 19 ----
Loans 236 63 173
------- ------- -------
Total 655 539 116
------- ------- -------
Deposits and Borrowed Funds - Interest Expense:
Deposits
Demand - interest bearing (30) 48 (78)
Savings (148) 10 (158)
Time 306 192 114
Short term borrowings 2 (2) 4
Long term debt (63) (63) ----
------- ------- -------
Total 67 185 (118)
------- ------- -------
Tax-Equivalent Net Interest Margin:
Interest income on earning assets
less interest cost of deposits
and borrowed funds $588 $354 $234
======= ======= =======
</TABLE>
15
<PAGE> 16
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1994 vs. 1993
-------------------------------------------
Increase (Decrease)
Due to Changes In
-----------------------
Total Volume Rate
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Earning Assets - Interest Income:
Federal funds sold $95 $87 $8
Securities
United States Treasury 159 224 (65)
United States Government agencies 258 406 (148)
Municipal obligations (53) 37 (90)
Other securities 24 26 (2)
Loans 40 91 (51)
------- ------- -------
Total 523 871 (348)
------- ------- -------
Deposits and Borrowed Funds - Interest Expense:
Deposits
Demand - interest bearing (82) 61 (143)
Savings (273) 32 (305)
Time 452 368 84
Short term borrowings (8) (17) 9
Long term debt (238) (238) ----
------- ------- -------
Total (149) 206 (355)
------- ------- -------
Tax-Equivalent Net Interest Margin:
Interest income on earning assets
less interest cost of deposits
and borrowed funds $672 $665 $7
====== ====== ======
</TABLE>
For the quarter ended June 30, 1994, net interest income, on a FTE basis
increased by 11%, or $588,000, over the same period one year ago. This was due
to a significant increase in the volume of interest earning assets, especially
in securities. On the liability side, an increase in deposit volumes was
partially offset by the absence of long term debt in the current year, and
sharply lower rates on deposits, especially savings. The larger asset volumes
were boosted somewhat by higher average rates on loans. The net interest
margin rose in the quarter, to 5.29%, compared with 5.21% for the same period
one year ago.
For the six months, FTE net interest income increased by $672,000, or 6%, over
the previous year-to-date. Once again, the main reason for the increase was a
large jump in the volume of earning assets. The largest increases were an $8.7
million increase in the average volume of Treasury securities, and a $15.7
million increase in average agency securities. Interest income from securities
rose significantly, in spite of lower average rates. As in the quarterly
comparison, net FTE interest was increased by the replacement of long term debt
with a less expensive financing source (deposits) in the current year.
16
<PAGE> 17
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
AVERAGE STATEMENTS OF CONDITION
The following tables, also presented on a FTE basis, show the Corporation's
consolidated average balances of assets, liabilities, and stockholders' equity;
the amount of interest income or interest expense and the average yield or rate
for each category of interest earning asset and interest bearing liability; the
net interest spread, and the net interest margin, for the three and six month
periods ended June 30, 1994 and 1993. Average balances for securities in the
"available for sale" category are calculated using amortized cost.
Nonperforming loans are included in average loans. Interest on loans includes
loan fees. The tax-equivalent calculation for tax-exempt income on securities
and loans assumes a 34% federal tax rate, and is adjusted for any interest
expense deduction that would be disallowed, according to current tax law.
<TABLE>
<CAPTION>
Three Months Ended June 30,
-------------------------------------------------------------------------
1994 1993
--------- --------- --------- --------- --------- ---------
Average Average
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
--------- --------- --------- --------- -------- ----------
(in thousands)
<S> <C> <C> <C>
Assets:
Federal funds sold $6,798 $64 3.77% $5,418 $40 2.95%
Securities
United States Treasury 23,838 304 5.10 12,917 199 6.16
United States Government agencies 58,541 767 5.24 40,539 509 5.02
Municipal obligations 36,724 791 8.62 33,515 778 9.29
Other securities 1,943 27 5.56 554 8 5.78
Loans 333,249 7,085 8.50 330,292 6,849 8.29
---------- -------- -------- ---------- ------- ---------
Total Earning Assets/Total Interest
Income 461,093 9,038 7.84% 423,235 8,383 7.92%
-------- -------- ------- --------
Cash and due from banks 26,272 24,693
All other assets 20,157 20,188
---------- ----------
Total Assets $507,522 $468,116
========== ==========
Liabilities and Stockholders' Equity:
Deposits
Demand-interest bearing $119,840 693 2.31% $111,493 723 2.59%
Savings 89,813 404 1.80 87,701 552 2.52
Time 169,027 1,829 4.33 151,278 1,523 4.03
Short term borrowings 1,220 15 4.92 1,401 13 3.71
Long term debt ---- ---- ---- 4,917 63 5.13
---------- -------- -------- ---------- -------- --------
Total Interest Bearing Liabilities/Total
Interest Expense 379,900 2,941 3.10% 356,790 2,874 3.22%
-------- -------- ------- --------
Noninterest bearing demand deposits 82,917 73,177
All other liabilities 6,162 6,118
Stockholders' equity 38,543 32,031
---------- ----------
Total Liabilities and Stockholders'
Equity $507,522 $468,116
========== ==========
FTE Interest Spread (Average Rate Earned
Minus Average Rate Paid) 4.74% 4.70%
======= =======
FTE Net Interest Income $6,097 $5,509
======= =======
FTE Net Interest Margin (Net Interest
Income/Total Earning Assets) 5.29% 5.21%
======= =======
</TABLE>
17
<PAGE> 18
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------------------------------------------------------
1994 1993
--------- --------- --------- -------- --------- ----------
Average Average
Interest Rate Interest Rate
Average Income/ Earned/ Average Income/ Earned/
Balance Expense Paid Balance Expense Paid
--------- --------- --------- --------- --------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Federal funds sold $10,293 $171 3.32% $5,050 $76 3.01%
Securities
United States Treasury 21,391 550 5.14 12,682 391 6.17
United States Government agencies 53,462 1,380 5.16 37,741 1,122 5.95
Municipal obligations 35,342 1,549 8.77 34,495 1,602 9.29
Other securities 1,529 41 5.36 556 17 6.12
Loans 330,065 13,672 8.28 327,878 13,632 8.32
---------- -------- -------- ---------- -------- --------
Total Earning Assets/Total Interest
Income 452,082 17,363 7.68% 418,402 16,840 8.05%
-------- -------- -------- --------
Cash and due from banks 25,865 25,107
All other assets 20,487 20,048
---------- ----------
Total Assets $498,434 $463,557
========= =========
Liabilities and Stockholders' Equity:
Deposits
Demand-interest bearing $121,839 1,434 2.35% $116,652 1,516 2.60%
Savings 89,073 798 1.79 85,446 1,071 2.51
Time 163,248 3,461 4.24 145,932 3,009 4.12
Short term borrowings 1,155 26 4.50 1,917 34 3.55
Long term debt ---- ---- ---- 6,326 238 7.52
---------- -------- -------- ---------- ------- ---------
Total Interest Bearing Liabilities/Total
Interest Expense 375,315 5,719 3.05% 356,273 5,868 3.29%
-------- -------- -------- --------
Noninterest bearing demand deposits 78,829 71,017
All other liabilities 6,109 5,048
Stockholders' equity 38,181 31,219
---------- ----------
Total Liabilities and Stockholders'
Equity $498,434 $463,557
========= =========
FTE Interest Spread (Average Rate Earned
Minus Average Rate Paid) 4.63% 4.76%
======= =======
FTE Net Interest Income $11,644 $10,972
======= =======
FTE Net Interest Margin (Net Interest
Income/Total Earning Assets) 5.15% 5.24%
======= =======
</TABLE>
18
<PAGE> 19
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
ANALYSIS OF INCOME STATEMENT ITEMS
Second quarter net interest income increased by 11% over the prior year, to
$5.8 million. Six month net interest income increased by more than 6%, to
$11.1 million in 1994. As discussed earlier, this was mostly due to larger
average balances of earning assets, and lower rates on interest bearing
liabilities. See the preceding analysis of changes in FTE net interest income
for more details.
The quarterly provision for loan losses decreased by $25,000 from 1993's second
quarter. This brought net interest income after the provision to $5.6 million
for the quarter, an increase of nearly 12% over the second quarter of 1993.
For the six months, the loan loss provision dropped by 22%, or $100,000. Year-
to-date net interest income after the provision increased by 8%, to $10.7
million.
Year-to-date noninterest income increased by $283,000 over the previous year,
primarily due to a $269,000 gain on the sale of a parcel of land.
Second quarter noninterest expense rose by 3%, to $4.7 million in 1994.
Noninterest expense for the six month period also rose modestly, by $377,000,
or 4%. The increases are mostly attributable to increased salaries and
benefits, common in a service-intensive industry.
For the quarter, income before taxes increased by nearly 30% over 1993's second
quarter. Net income was a record $1.4 million, a 25% increase over the
previous year. For the six months ended June 30, 1994, income before taxes and
the cumulative effect of an accounting change increased by almost 26%, or
$683,000, to $3.3 million. In early 1993, a one-time charge of $1.2 million
had been recorded for postretirement benefits, due to the implementation of
SFAS No. 106, "Employer's Accounting for Postretirement Benefits Other Than
Pensions." Income tax expense was $786,000 for the six months ended June 30,
1994, compared with $544,000 in 1993. These combined for a $1.6 million
increase in year-to-date net income, to a record $2.6 million.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
The liquidity of a bank allows it to provide funds to meet loan requests, to
accommodate possible outflows in deposits, and to take advantage of other
investment opportunities. Funding of loan requests, providing for liability
outflows, and managing interest rate margins require continuous analysis to
match the maturities of specific categories of loans and investments with
specific types of deposits and borrowings. Bank liquidity is thus normally
defined by the mix of the banking institution's potential sources and uses of
funds. For the Corporation, the major sources of liquidity have been federal
funds sold, and loans (including demand loans) and securities maturing within
one year. At June 30, 1994 and 1993, federal funds sold amounted to $6.4
million and $500,000, respectively. Loans (including demand loans) and
securities maturing within one year amounted to $116.9 million at June 30,
1994, and $107.9 million at June 30, 1993. Additional liquidity is provided by
two repurchase agreement lines of credit with other banks, totaling $15.0
million, and a $25.0 million line of credit with the Federal Home Loan Bank
(FHLB). These lines could be drawn upon for short term liquidity needs, if
necessary. The FHLB line of credit would be collateralized with securities, if
drawn upon. The Corporation has also identified certain securities as
"available for sale," which may be sold for liquidity or other purposes.
Management determines the adequacy of items so classified by considering normal
deposit fluctuations, expected loan demand, and the other liquidity sources and
needs discussed above. The Corporation's dependence on large deposits that
experience volatile rate changes is closely monitored. These deposits consist
mainly of time certificates of deposit of $100,000 and over, of which the
balance was $69.8 million and $71.7 million at June 30, 1994 and 1993,
respectively.
Managing rates on earning assets and interest bearing liabilities focuses on
maintaining stability in the net interest spread, an important factor in
earnings growth and stability. Emphasis is placed on maintaining a controlled
rate sensitivity position, to avoid wide swings in spreads and to minimize risk
due to changes in general interest rates.
19
<PAGE> 20
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
The following table shows the rate sensitivity of the Corporation's interest
earning assets and interest bearing liabilities as of June 30, 1994. This
table displays the interest rate sensitivity gap (i.e., interest rate sensitive
assets less interest rate sensitive liabilities), cumulative interest rate
sensitivity gap, the interest rate sensitivity gap ratio (i.e., interest rate
sensitive assets divided by interest rate sensitive liabilities), and
cumulative interest rate sensitivity gap ratio. For the purposes of this
table, an asset or liability is considered rate sensitive within a specified
period when it matures or could be repriced within such period, generally
according to its contractual terms.
<TABLE>
<CAPTION>
AFTER THREE AFTER SIX AFTER ONE
WITHIN MONTHS BUT MONTHS BUT YEAR BUT AFTER
THREE WITHIN SIX WITHIN ONE WITHIN FIVE
MONTHS MONTHS YEAR FIVE YEARS YEARS TOTAL
--------- ------------ ------------ ---------- ------- ----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Federal funds sold $6,400 ---- ---- ---- ---- $6,400
Securities (1) 6,786 $3,150 $21,054 $71,691 $19,303 121,984
Loans 203,812 4,917 11,925 73,508 45,623 339,785
-------- ------- ------- ------- ------- -------
Total 216,998 8,067 32,979 145,199 64,926 468,169
Interest bearing liabilities:
Interest bearing demand
deposits (2) 66,355 ---- ---- 48,123 ---- 114,478
Savings (2) ---- ---- ---- 89,933 ---- 89,933
Time > $100,000 57,064 3,615 3,276 5,309 500 69,764
Time < $100,000 23,349 18,686 11,136 45,247 5,147 103,565
Borrowed funds 1,100 ---- ---- ---- ---- 1,100
-------- ------- ------ ------- ------- -------
Total 147,868 22,301 14,412 188,612 5,647 378,840
-------- ------- ------ ------- ------- --------
Interest rate sensitivity
gap 69,130 (14,234) 18,567 (43,413) 59,279 $89,329
Cumulative interest rate
sensitivity gap $69,130 $54,896 $73,463 $30,050 $89,329
Interest rate sensitivity gap
ratio 1.47x 0.36x 2.29x 0.77x 11.50x 1.24x
Cumulative interest rate
sensitivity gap ratio 1.47x 1.32x 1.40x 1.08x 1.24x
</TABLE>
(1) Securities in the "available for sale" category are reported in
this table at amortized cost.
(2) Now account deposits of $48.1 million and savings deposits of
$89.9 million are included in the "one to five year" category,
due to the Corporation's experience that the interest rates on
(and balances of) these accounts are relatively insensitive to
interest rate changes.
The preceding table indicates the time periods in which interest earning assets
and interest bearing liabilities will mature or may be repriced, generally
according to their contractual terms. However, this table does not necessarily
indicate the impact that general interest rate movements would have on the
Corporation's net interest yield, because the repricing of various categories
of assets and liabilities is discretionary and is subject to competitive and
other pressures. As a result, various assets and liabilities indicated as
repricing within the same period may, in fact, price at different times and by
different increments.
At June 30, 1994, the Corporation is considered "asset sensitive" according to
the preceding table. In a rising rate environment, the Corporation might be
able to increase prices on earning assets faster than the increase in rates on
interest bearing liabilities.
20
<PAGE> 21
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
The Corporation also uses a computer model to simulate the effects of possible
interest rate changes. As a guideline, estimated negative exposure to changing
rates within the ensuing year is limited to 5% of net interest income. The
exposure estimate is based on a variety of assumptions built into the model,
and assumed interest rate changes of plus or minus 200 basis points. The
results of this analysis are reported to the Asset/Liability and Funds
Management Committee, to assist in the interest rate risk management process.
SUMMARY OF LOAN LOSS EXPERIENCE
The following table shows changes (by loan category) in the allowance for loan
losses arising from loans charged off and recoveries on loans previously
charged off; additions to the allowance that were charged to expense; and
selected ratios:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------
1994 1993
------- -------
(in thousands)
<S> <C> <C>
Allowance for loan losses at
beginning of period $4,598 $4,585
Loans charged off:
Commercial 96 348
Installment 185 109
------- -------
Total 281 457
Recoveries on loans previously charged off:
Residential real estate ---- 10
Commercial 83 145
Installment 66 85
------- -------
Total 149 240
------- -------
Net loans charged off 132 217
Provision charged to expense 350 450
------- -------
Allowance for loan losses at end of period $4,816 $4,818
======= =======
Annualized ratio of net charge-offs during
the period to average loans outstanding 0.08% 0.13%
Allowance for loan losses as a percentage
of loans and leases at period end 1.42% 1.47%
</TABLE>
21
<PAGE> 22
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
In each accounting period, the allowance for loan losses is adjusted by
management to the amount necessary to maintain the allowance at an adequate
level. Through its internal loan review department, management has attempted
to allocate specific portions of the allowance for loan losses based on
specifically identifiable problem loans. Management's evaluation of the
allowance is further based on consideration of actual loss experience, the
present and prospective financial condition of borrowers, adequacy of
collateral, industry concentrations within the portfolio, and general economic
conditions. Management believes that the present allowance is adequate, based
on the broad range of considerations listed above.
The primary risk element considered by management regarding each installment
and residential real estate loan is lack of timely payment. Management has a
reporting system that monitors past due loans and has adopted policies to
pursue its creditor's rights in order to preserve the Bank's position. The
primary risk elements concerning commercial loans are the financial condition
of the borrower, the sufficiency of collateral, and lack of timely payment.
Management has a policy of requesting and reviewing annual financial statements
from its commercial loan customers and periodically reviews existence of
collateral and its value.
Although management believes that the allowance for loan losses is adequate to
absorb losses as they arise, there can be no assurance that the Bank will not
sustain losses in any given period that could be substantial in relation to the
size of the allowance for loan losses.
Management is not aware of any factors that would cause future net loan
charge-offs, in total or by loan category, to significantly differ from those
experienced in the past.
22
<PAGE> 23
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
As a depository of funds, the Bank is occasionally named as a defendant in
lawsuits (such as garnishment proceedings) involving claims to the
ownership of funds in particular accounts. All such litigation is
incidental to the Bank's business.
The Corporation's management believes that no litigation is threatened or
pending in which the Corporation, or any of its subsidiaries, is likely to
experience loss or exposure that would materially affect the Corporation's
equity, results of operations, or liquidity as presented herein.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
The Corporation held its regular annual meeting of stockholders on April
27, 1994. At this meeting, an election was held for three directors, to
serve three year terms expiring in 1997. The voting results for each
nominee were as follows:
Total For:
Harold W. Allmacher 1,716,639.499
Arie Guldemond 1,580,464.907
Glen D. Schmidt 1,674,532.248
Total Withheld For:
Harold W. Allmacher 4,048.298
Arie Guldemond 140,222.890
Glen D. Schmidt 46,155.549
Abstentions: None
Broker Non-Votes: None
Item 5. Other Information.
Not applicable.
23
<PAGE> 24
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
(11) Statement of Computation of Per Share Earnings
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
24
<PAGE> 25
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
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 NATIONAL BANK CORP.
By: S/ HAROLD W. ALLMACHER
Harold W. Allmacher;
Vice Chairman, President and CEO
(Principle Executive Officer)
By: S/ RICHARD J. MILLER
Richard J. Miller;
Treasurer
(Principle Financial and
Accounting Officer)
DATE: August 3, 1994
25
<PAGE> 26
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
EXHIBIT INDEX
The following constitute the exhibits to the Corporation's Quarterly
Report on Form 10-Q for the period ended June 30, 1994:
EXHIBIT
NUMBER EXHIBIT
-------- -------
(11) Statement of Computation of
Per Share Earnings
26
<PAGE> 1
FIRST NATIONAL BANK CORP.
FORM 10-Q (continued)
EXHIBIT (11)
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
1994 1993 1994 1993
---- ---- ---- ----
PRIMARY EARNINGS PER SHARE: (in thousands, except per share data)
- - ---------------------------
<S> <C> <C> <C> <C>
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $1,371 $1,093 $2,553 $2,112
/ WEIGHTED AVERAGE SHARES 2,482 2,122 2,475 2,044
- - ---------------------------- ------- ------- ------- -------
PER SHARE $0.55 $0.52 $1.03 $1.03
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE ---- ---- ---- ($1,183)
/ WEIGHTED AVERAGE SHARES 2,482 2,122 2,475 2,044
- - ---------------------------- ------- ------- ------- -------
PER SHARE $0.00 $0.00 $0.00 ($0.58)
- - ---------------------------- ------- ------- ------- -------
PRIMARY NET INCOME PER SHARE $0.55 $0.52 $1.03 $0.45
======= ======= ======= =======
FULLY DILUTED EARNINGS PER SHARE:
- - ---------------------------------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE $1,371 $1,164 $2,553 $2,264
/ WEIGHTED AVERAGE SHARES 2,495 2,483 2,495 2,440
- - ---------------------------- ------- ------- ------- -------
PER SHARE $0.55 $0.47 $1.02 $0.93
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE ---- ---- ---- ($1,183)
/ WEIGHTED AVERAGE SHARES 2,495 2,483 2,495 2,440
- - ---------------------------- ------- ------- ------- -------
PER SHARE $0.00 $0.00 $0.00 ($0.48)
- - ---------------------------- ------- ------- ------- -------
FULLY DILUTED NET INCOME
PER SHARE $0.55 $0.47 $1.02 $0.45
======= ======= ======= =======
</TABLE>
Notes:
- Primary and fully diluted shares are adjusted for the potential dilutive
effects of equity contracts and stock options, where applicable. The
adjustments are made using the "treasury stock" method.
- Fully diluted earnings per share are adjusted for the potential dilutive
effects of convertible debt, where applicable, which includes elimination
of any related after-tax interest expense. The adjustments are made using
the "if converted" method.
- Number of shares in each category are adjusted to give effect to the 5%
stock dividends in 1994 and 1993, and the 4-for-3 stock split in 1993.
27
