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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
January 26, 1998
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Date of Report (Date of Earliest Event Reported)
ONBANCorp. Inc.
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(Exact Name of Registrant As Specified In Its Charter)
Delaware
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(State Or Other Jurisdiction Of Incorporation)
000-18011 16-1345830
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(Commission File Number) (IRS Employer Identification No.)
101 South Salina Street
Syracuse, New York 13202
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(Address Of Principal Executive Offices) (Zip Code)
(315) 424-4400
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(Registrant's Telephone Number, including Area Code)
NOT APPLICABLE
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(Former Name Or Former Address, If Changed Since Last Report)
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Item 5. Other Events
On January 26, 1998, ONBANCorp., Inc. (the "Company") announced its
earnings for the fourth quarter and full year 1997. Attached is the press
release issued by the "Company" on January 26, 1998.
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FOR IMMEDIATE RELEASE
Issued: January 26, 1998
ANALYST CONTACT: PRESS CONTACT:
Robert J. Berger, Senior VP Thomas Delduchetto
Treasurer and CFO Senior Vice President
315-424-4575 315-424-4409
ONBANCorp Reports 1997 Operating Earnings Per Share Increase of 20%
Syracuse, New York - ONBANCorp, Inc. (NASDAQ: ONBK) reported earnings of
$3.88 per common share (EPS) or $51.2 million for 1997, a 20% increase compared
to $3.22 per common share for 1996 which was adjusted to exclude the effect of
$5.1 million of significant one time items related primarily to government
mandated deposit insurance and expenses associated with the thrift industry
bailout last year. The stated earnings per common share for 1996 were $2.88. By
eliminating the effects of these prior year significant one time items, the net
income and associated rates of return as discussed on an adjusted basis reflect
more relevant and consistent historical operating comparisons. Net Income for
1997 of $51.2 million compares to $43.0 million for 1996 or $48.1 million
excluding one time charges in the prior year. Return on Average Equity (ROE) and
Return on Average Assets (ROA) for 1997 were 15.3% and .94% compared to 12.8%
and .90%, respectively, for 1996. Fourth quarter 1997 EPS of $1.10 were 25%
greater than $.88 in the prior year period. Comparative ROA's and ROE's were
1.01% and 16.9% for fourth quarter 1997 compared to .92% and 13.7% for the prior
year period. The above earnings per share amounts reflect diluted EPS pursuant
to Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share". A dividend of $.34 common share ($1.36 annual rate) was paid on January
2, 1998 to shareholders of record as of December 19, 1997.
Solid annual performance improvements were seen in the fundamentals of
commercial and municipal banking, trust services, consumer banking,
electronically assisted banking and fee income. Capital and asset quality levels
remained sound. The Company's Tier I leverage capital ratio was 7.2% at December
31, 1997 which significantly exceeds the regulatory requirement for well
capitalized institutions.
Highlights of ONBANCorp's 1997 performance compared to 1996 follow:
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Commercial Banking - Commercial loans increased 28% or $189 million. At $857
million they represent 30% of the total loan portfolio. ONBANCorp continued
its emergence as a market share leader for loans to small and mid-sized
businesses in the Syracuse/Central New York region in the recent five
years, and is experiencing significant business loan growth in both the
Rochester and Wilkes-Barre/Scranton regions.
Trust Services - The market value of trust assets has increased to $1.1 billion,
up 24% from the $876 million at December 31, 1997. Trust fee revenue
increased by 14% to more than $3.6 million for 1997. Largest trust gains
continue from trusteeships for employee benefit plans, administration of
trusts under agreement, and estate and investment management.
Consumer Banking - Consumer loans and leases increased 27% to $924 million, and
consumer banking fees increased by 16% for 1997. Key consumer banking fee
revenue increases continue from electronic banking services including
MasterMoney banking cards, the 24-hour ATM network, merchant credit card
servicing and deposit agent fees.
Residential Lending - Mortgages held in portfolio increased $50 million at
December 30, 1997 from December 30, 1996 and now total $1.1 billion.
Softness in the local mortgage market has been partially offset through the
purchase of approximately $206 million of adjustable rate mortgages.
Another $1.03 billion off-balance sheet mortgage loans are processed and
serviced for other investors. Residential loans represent 38% of the loan
mix, and the New York bank maintained its first-place market share of
residential mortgages originated in its core headquarters county.
Loan Quality - Very strong asset and loan quality prevails. Net charge-offs were
0.22% of average loans outstanding for 1997. The coverage ratio of
allowance for loan losses to nonperforming loans was 130%. Nonperforming
assets to total assets were 0.71%.
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Net Interest Margin - Net interest margin was of 3.03% for both 1997 and 1996.
The current flat yield curve coupled with very competitive loan pricing has
tempered improvement in the margin.
Expense Efficiency - Controllable non-interest expenses, excluding the 1997
capital trust securities expense of $5.1 million and the 1996 one-time
government mandated deposit insurance assessment of $7.3 million, increased
$.9 million or less than 1% in 1997 compared 1996. Our efficiency ratio of
55.9% continues better than the current banking benchmark of 60%.
As announced in October 1997, ONBANCorp, Inc. entered into a definitive
agreement with First Empire State Corporation headquartered in Buffalo, New York
for a merger between the two companies. The merger is subject to the approval of
stockholders of both companies, as well as various regulatory agencies, and is
expected to be completed in the first quarter of 1998.
ONBANCorp Inc. is a $5.3 billion asset multi-bank holding company
headquartered in Syracuse, New York and operates two wholly owned subsidiaries:
OnBank & Trust Co. in New York State and Franklin First Savings Bank in
Wilkes-Barre, PA. Financial services are offered through 86 banking locations in
Upstate New York and Northeastern Pennsylvania including 7 specialized lending
offices, plus a network of 131 stand alone on-line cash machines at various
convenience stores and thruway locations. Bank subsidiaries provide trust and
investment services.
# # #
Financials Attached
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PRESS RELEASE
ONBANCORP, INC. FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31, ENDED DECEMBER 31,
-------------------- --------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
--------- --------- --------- ---------
INCOME STATEMENT ($ in thousands, except per share data)
Interest income............................................................ $ 98,424 95,736 385,690 374,845
Interest expense........................................................... 59,073 56,656 229,591 222,098
--------- --------- --------- ---------
Net interest income...................................................... 39,351 39,080 156,099 152,747
Provision for loan losses.................................................. 1,782 1,963 7,168 7,813
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Net interest income after provision for loan losses...................... 37,569 37,117 148,931 144,934
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Banking fees............................................................... 5,512 5,080 21,191 18,807
Mortgage banking........................................................... 760 1,617 3,371 4,287
Net gains on securities transactions....................................... 3,753 285 10,360 6,018
Trust fees and other income................................................ 1,560 1,399 5,712 7,150
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Total other income and fees.............................................. 11,585 8,381 40,634 36,262
--------- --------- --------- ---------
Salaries and employee benefits............................................. 10,122 9,819 41,027 41,507
Building, occupancy and equipment.......................................... 4,651 4,544 18,440 18,268
Deposit insurance premiums................................................. 276 3 1,058 9,343(1)
Contracted data processing................................................. 2,873 2,772 11,285 10,828
Capital trust securities................................................... 1,400 -- 5,084 --
Other...................................................................... 8,194 8,441 32,451 30,668
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Total other operating expense............................................ 27,516 25,579 109,345 110,614
--------- --------- --------- ---------
Income before income taxes............................................. 21,638 19,919 80,220 70,582
Income taxes............................................................... 7,529 7,472 29,042 27,618
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Net income after certain one-time items................................ $ 14,109 12,447 51,178 42,964
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--------- --------- --------- ---------
Net income before certain one-time items............................... $ 14,109 12,447 51,178 48,087(2)
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Return on equity after certain one-time items.............................. 16.9% 13.7% 15.3% 11.4%
Return on equity before certain one-time items............................. 16.9% 13.7% 15.3% 12.8%(2)
Return on assets after certain one-time items.............................. 1.01% .92% .94% .81%
Return on assets before certain one-time items............................. 1.01% .92% .94% .90%(2)
Net interest margin........................................................ 3.00% 3.09% 3.03% 3.03%
Net income per common share:
Basic after certain one-time items....................................... $ 1.11 .94 3.93 3.02
Basic before certain one-time items...................................... 1.11 .94 3.93 3.42(2)
Diluted after certain one-time items..................................... 1.10 .88 3.88 2.88
Diluted before certain one-time items.................................... 1.10 .88 3.88 3.22(2)
Cash dividends declared per common share................................... .34 .34 1.36 1.24
</TABLE>
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(1) Includes one-time deposit insurance assessment of $7.282 million before tax.
(2) Adjusted to exclude the after tax effect of $4.515 million for the deposit
insurance assessment and the net incremental tax liability of $1.900 million
associated with the government mandated bad debt recapture, partially offset
by September 1996 gains on securities transactions of $1.292 million after
tax. By eliminating the effects of these significant one-time items, the net
income and associated rates of return as shown on an adjusted basis more
reasonably represent the Company's earnings performance. The resultant net
income before certain one-time items should allow more relevant and
consistent historical comparisons.
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PRESS RELEASE (CONTINUED)
ONBANCORP, INC. FINANCIAL HIGHLIGHTS (UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31,
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<S> <C> <C>
1997 1996
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BALANCE SHEET DATA ($ in thousands, except per share data)
Cash & due from banks..................................................................... $ 128,647 169,740
Money-market assets....................................................................... 10,044 12,253
Securities:
Trading................................................................................. 1,178 1,727
Available for sale...................................................................... 840,469 925,340
Held to maturity........................................................................ 1,176,164 1,683,908
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Total securities at carrying value.................................................... 2,017,811 2,610,975
Total securities at fair value........................................................ 2,039,368 2,629,269
Loan portfolio:
Residential mortgages................................................................... 1,104,580 1,054,241
Commercial.............................................................................. 856,796 667,395
Consumer................................................................................ 923,649 728,061
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Gross loan portfolio.................................................................. 2,885,025 2,449,697
Net deferred fees, discounts and premiums............................................. (17,769) (1,223)
Allowance for loan losses............................................................. (39,064) (37,840)
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Net loan portfolio.................................................................. 2,828,192 2,410,634
Loans available for sale.................................................................. 130,412 38,759
Premises and equipment, net............................................................... 65,450 62,557
Other assets.............................................................................. 139,014 112,959
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Total assets...................................................................... $5,319,570 5,417,877
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Deposits.................................................................................. $4,023,106 3,821,906
Borrowings................................................................................ 823,050 1,129,388
Due to brokers............................................................................ -- 40,724
Other liabilities......................................................................... 78,217 65,808
Capital trust securities.................................................................. 60,000 --
Shareholders' equity...................................................................... 335,197 360,051
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Total liabilities and shareholders' equity........................................ $5,319,570 5,417,877
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Common shares outstanding................................................................. 12,721,689 12,145,332
Preferred shares outstanding.............................................................. -- 2,342,052
Average basic shares outstanding.......................................................... 13,023,988 12,855,072
Average diluted shares outstanding........................................................ 13,181,323 14,913,507
Book value per common share............................................................... $ 26.35 24.82
Tier I leverage capital ratio............................................................. 7.2% 6.8%
Nonperforming assets to total assets...................................................... .71% .59%
Allowance for loan losses to nonperforming loans.......................................... 130% 140%
Net charge-offs to average loans outstanding.............................................. .22% .19%
</TABLE>
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PRESS RELEASE (CONTINUED)
ONBANCORP, INC. FINANCIAL HIGHLIGHTS (UNAUDITED)
This table sets forth for the three months and year ended December 31, 1997,
the average daily balances of the Company's major asset and liability items and
the interest earned or paid thereon expressed in dollars and weighted average
rates:
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, 1997 YEAR ENDED DECEMBER
31, 1997
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<S> <C> <C> <C> <C> <C> <C>
AVERAGE AVERAGE
($ IN THOUSANDS) BALANCE INTEREST YIELD\RATE BALANCE INTEREST YIELD\RATE
- -------------------------------------------------------- --------- ----------- ------------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Interest earning assets:(1)
Loans................................................. $2,926,344 60,678 8.23% 2,690,969 224,900 8.36%
Mortgage-backed securities............................ 1,872,040 31,459 6.67% 2,033,905 135,102 6.64%
Other securities...................................... 376,004 5,848 6.17% 400,275 24,260 6.06%
Money market assets................................... 29,912 439 5.82% 24,534 1,428 5.82%
--------- ----------- --- --------- ----------- ----
Total interest earning assets....................... 5,204,300 98,424 7.50% 5,149,683 385,690 7.49%
Non-interest earning assets........................... 323,033 304,481
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Total assets........................................ $5,527,333 5,454,164
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Interest bearing liabilities:
Savings deposits...................................... 629,963 3,726 2.35% 659,759 16,153 2.45%
Time deposits......................................... 2,562,833 37,053 5.74% 2,466,226 139,471 5.66%
Money market accounts, NOW accounts, and escrow
deposits............................................ 586,281 4,262 2.88% 551,451 15,213 2.76%
--------- ----------- --- --------- ----------- ----
Total deposits...................................... 3,779,077 45,041 4.73% 3,677,436 170,837 4.65%
Repurchase agreements................................. 244,561 3,590 5.82% 301,698 17,988 5.96%
Other borrowings...................................... 667,990 10,442 6.20% 659,139 40,766 6.18%
--------- ----------- --- --------- ----------- ----
Total interest bearing liabilities.................. 4,691,628 59,073 5.00% 4,638,273 229,591 4.95%
Non-interest bearing deposits......................... 367,756 353,989
Non-interest bearing liabilities...................... 75,793 72,155
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Total liabilities................................... 5,135,177 5,064,417
Capital trust securities.............................. 60,000 54,411
Shareholders' equity.................................. 332,156 335,336
--------- ----------- --- --------- ----------- ----
Total liabilities and shareholders' equity.......... 5,527,333 5,454,164
Net interest income................................. $ 39,351 156,099
--------- ----------- --- --------- ----------- ----
--------- ----------- --- --------- ----------- ----
Interest rate spread................................ 2.50% 2.54%
Net interest margin(2).............................. 3.00% 3.03%
Total interest earning assets to total interest
bearing liabilities................................. 1.11X 1.11X
Average equity to average assets...................... 6.01% 6.15%
</TABLE>
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(1) Nonaccruing loans, which are immaterial, have been included in interest
earning assets.
(2) Computed by dividing net interest income by total interest earning assets.
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SIGNATURE
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 hereunder duly authorized.
Dated: February 5, 1998
ONBANCORP, INC.
By: /s/ Robert J. Berger
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Name: Robert J. Berger
Title: Senior Vice President,
Treasurer and Chief
Financial Officer
