<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
------------------------
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 number 0-19368
---------
COMMUNITY FIRST BANKSHARES, INC.
----------------------------------
(Exact name of registrant as specified in its charter)
Delaware 46-0391436
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
520 Main Avenue
Fargo, ND 58124
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(701) 298-5600
---------------------------------
(Registrant's telephone number, including area code)
Indicated 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
----- -----
At May 7, 1998, 44,128,318 shares of Common Stock were outstanding, as
adjusted to reflect a two-for-one stock split effective May 15, 1998 to
stockholders of record as of May 1, 1998.
1
<PAGE>
COMMUNITY FIRST BANKSHARES, INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 1998
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION:
Item 1. Condensed Consolidated Financial Statements
and Notes. . . . . . . . . . . . . . . . . . . . . . . 3-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . 11-15
Item 3. Quantitative and Qualitative Disclosure
About Market Risk. . . . . . . . . . . . . . . . . . . 16
PART II - OTHER INFORMATION:
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . 17
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . 17
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . 17
Item 4. Submission of Matters to a Vote of Security Holders. . 17
Item 5. Other Information. . . . . . . . . . . . . . . . . . . 17
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 17
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
2
<PAGE>
COMMUNITY FIRST BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, December 31,
(Dollars in thousands) 1998 1997
- ---------------------- ---- ----
(unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks . . . . . . . . . . . . . . . . $ 178,625 $ 222,088
Federal funds sold and securities purchased under
agreements to resell . . . . . . . . . . . . . . . . 14,970 12,690
Interest-bearing deposits . . . . . . . . . . . . . . . 3,058 1,287
Available-for-sale securities . . . . . . . . . . . . . 1,809,899 1,498,877
Held-to-maturity securities (fair value: 3/31/98 -
$64,898, 12/31/97 - $182,335). . . . . . . . . . . . 64,898 180,512
Loans . . . . . . . . . . . . . . . . . . . . . . . . 2,713,565 2,637,057
Less: Allowance for loan losses. . . . . . . . . . (36,155) (36,194)
- -------------------------------------------------------------------------------------------
Net loans. . . . . . . . . . . . . . . . . . . . . . 2,677,410 2,600,863
Bank premises and equipment, net. . . . . . . . . . . . 108,844 101,820
Accrued interest receivable . . . . . . . . . . . . . . 42,664 40,105
Intangible assets . . . . . . . . . . . . . . . . . . . 139,204 97,307
Other assets. . . . . . . . . . . . . . . . . . . . . . 118,473 99,977
- -------------------------------------------------------------------------------------------
Total assets . . . . . . . . . . . . . . . . . $5,158,045 $4,855,526
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing. . . . . . . . . . . . . . . . . $ 686,120 $ 597,333
Interest-bearing . . . . . . . . . . . . . . . . . 3,568,596 3,022,001
- -------------------------------------------------------------------------------------------
Total deposits . . . . . . . . . . . . . . . . . . . 4,254,716 3,619,334
Federal funds purchased and securities sold under
agreements to repurchase . . . . . . . . . . . . . . 86,616 43,002
Other short-term borrowings . . . . . . . . . . . . . . 184,493 230,571
Long-term debt. . . . . . . . . . . . . . . . . . . . . 119,529 116,476
Capital lease obligations . . . . . . . . . . . . . . . 5,004 5,209
Accrued interest payable. . . . . . . . . . . . . . . . 23,733 20,842
Other liabilities . . . . . . . . . . . . . . . . . . . 18,578 360,798
- -------------------------------------------------------------------------------------------
Total liabilities. . . . . . . . . . . . . . . . . . 4,692,669 4,396,232
Company-obligated mandatorily redeemable
preferred securities of CFB Capital I & II . . . . 120,000 120,000
Shareholders' equity:
Common stock . . . . . . . . . . . . . . . . . . . . 407 204
Capital surplus. . . . . . . . . . . . . . . . . . . 156,934 157,138
Retained earnings. . . . . . . . . . . . . . . . . . 189,375 183,335
Less cost of common stock in treasury -
March 31, 1998 - 25,703 shares
December 31, 1997 - 36,255 shares . . . . . . (1,340) (1,383)
- -------------------------------------------------------------------------------------------
Total shareholders' equity. . . . . . . . . . 345,376 339,294
- -------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity. . $5,158,045 $4,855,526
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
COMMUNITY FIRST BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
------------------------
(Dollars in thousands, except per share data)
(Unaudited) 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Interest income:
Loans. . . . . . . . . . . . . . . . . . . . . . . . $ 64,517 $ 46,799
Investment securities. . . . . . . . . . . . . . . . 26,270 11,465
Interest-bearing deposits. . . . . . . . . . . . . . 60 45
Federal funds sold and resale agreements. . . . . . 152 0
- ------------------------------------------------------------------------------------------
Total interest income. . . . . . . . . . . . . . . . 90,999 58,309
Interest expense:
Deposits . . . . . . . . . . . . . . . . . . . . . . 34,881 21,166
Short-term and other borrowings. . . . . . . . . . . 2,052 1,844
Long-term debt . . . . . . . . . . . . . . . . . . . 2,114 904
- ------------------------------------------------------------------------------------------
Total interest expense . . . . . . . . . . . . 39,047 23,914
- ------------------------------------------------------------------------------------------
Net interest income . . . . . . . . . . . . . . . . . . 51,952 34,395
Provision for loan losses . . . . . . . . . . . . . . . 1,339 1,230
- ------------------------------------------------------------------------------------------
Net interest income after provision for loan losses . . 50,613 33,165
- ------------------------------------------------------------------------------------------
Noninterest income:
Service charges on deposit accounts. . . . . . . . . 5,716 3,505
Fees from fiduciary activities . . . . . . . . . . . 1,174 933
Insurance commissions. . . . . . . . . . . . . . . . 1,479 1,205
Net gain (loss) on sales of available-for-sale
securities. . . . . . . . . . . . . . . . . . . . 476 (3)
Other . . . . . . . . . . . . . . . . . . . . . . . 3,503 1,398
- ------------------------------------------------------------------------------------------
Total noninterest income:. . . . . . . . . . . 12,348 7,038
- ------------------------------------------------------------------------------------------
Noninterest expense:
Salaries and employee benefits . . . . . . . . . . . 21,484 13,529
Net occupancy. . . . . . . . . . . . . . . . . . . . 7,507 3,849
FDIC insurance . . . . . . . . . . . . . . . . . . . 174 12
Legal and accounting . . . . . . . . . . . . . . . . 541 346
Other professional service . . . . . . . . . . . . . 421 447
Data processing. . . . . . . . . . . . . . . . . . . 349 277
Acquisitions . . . . . . . . . . . . . . . . . . . . 52 69
Company-obligated mandatorily redeemable
preferred securities of CFB Capital I & II. . . . 2,534 814
Amortization of intangibles. . . . . . . . . . . . . 2,361 982
Other . . . . . . . . . . . . . . . . . . . . . . . 8,259 4,624
- ------------------------------------------------------------------------------------------
Total noninterest expense. . . . . . . . . . . . . . 43,682 24,949
Income from continuing operations before income
taxes and extraordinary item . . . . . . . . . . . . 19,279 15,254
Provision for income taxes. . . . . . . . . . . . . . . 5,426 5,138
- ------------------------------------------------------------------------------------------
Income from continuing operations before
extraordinary item . . . . . . . . . . . . . . . . 13,853 10,116
Discontinued operations:
Income from operations of discontinued
operations (less applicable income taxes) . . . . (68) 681
- ------------------------------------------------------------------------------------------
Net income before extraordinary item. . . . . . . . . . 13,785 10,797
Extraordinary item:
Loss from early extinguishment of debt . . . . . . . 0 (265)
- ------------------------------------------------------------------------------------------
Net income. . . . . . . . . . . . . . . . . . . . . . . $ 13,785 $ 10,532
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
------------------------
(Dollars in thousands, except per share data)
(Unaudited) 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Earnings per common and common equivalent share:
Basic income from continuing operations before
extraordinary items. . . . . . . . . . . . . . . . . $0.34 $0.29
Discontinued operations . . . . . . . . . . . . . . . . 0.00 0.02
Extraordinary item. . . . . . . . . . . . . . . . . . . $0.00 ($0.01)
- ------------------------------------------------------------------------------------------
Basic net income. . . . . . . . . . . . . . . . . . . . $0.34 $0.30
- ------------------------------------------------------------------------------------------
Diluted income from continuing operations before
extraordinary items. . . . . . . . . . . . . . . . . $0.33 $0.27
Discontinued operations . . . . . . . . . . . . . . . . 0.00 0.02
Extraordinary item. . . . . . . . . . . . . . . . . . . $0.00 ($0.01)
- ------------------------------------------------------------------------------------------
Diluted net income. . . . . . . . . . . . . . . . . . . $0.33 $0.28
- ------------------------------------------------------------------------------------------
Average common shares outstanding:
Basic. . . . . . . . . . . . . . . . . . . . . . . . 40,659,812 34,986,156
Diluted. . . . . . . . . . . . . . . . . . . . . . . 41,397,456 37,727,816
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Dividend declared per common share. . . . . . . . . . . $0.11 $0.08
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
COMMUNITY FIRST BANKSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
------------------------
(In thousands)
(Unaudited) 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income. . . . . . . . . . . . . . . . . . . . . . . $ 13,785 $ 10,532
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses . . . . . . . . . . . . 1,339 1,230
Depreciation. . . . . . . . . . . . . . . . . . . 3,240 1,911
Amortization of intangibles . . . . . . . . . . . 2,361 982
Net of amortization of premiums & discounts
on securities . . . . . . . . . . . . . . . . . . (1,005) 241
(Increase) decrease in interest receivable . . . (2,559) 2,582
Increase (decrease) in interest payable . . . . . 2,891 (629)
Other - net . . . . . . . . . . . . . . . . . . . (44,665) (8,849)
- ------------------------------------------------------------------------------------------
Net cash (used) provided by operating activities. . . . (24,613) 8,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in interest-bearing deposits. . . . . . (1,771) (6,313)
Purchases of available-for-sale securities . . . . . (2,316,013) (45,087)
Maturities of available-for-sale securities. . . . . 1,742,864 32,874
Sales of securities, net of gains. . . . . . . . . . 34,292 2,853
Purchases of held-to-maturity securities . . . . . . (1,168) (9,467)
Maturities of held-to-maturity securities. . . . . . 3,674 7,907
Net increase in loans. . . . . . . . . . . . . . . . (97,366) 57,980
Net increase in bank premises and equipment. . . . . (10,264) (1,509)
Net decrease in minority interest . . . . . . . . . 0 (1,292)
- ------------------------------------------------------------------------------------------
Net cash used in investing activities . . . . . . . . . (645,752) 37,946
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in demand deposits, NOW
accounts and savings accounts. . . . . . . . . . . . 391,667 (58,409)
Net increase in time accounts . . . . . . . . . . . . . 243,715 14,469
Net decrease in short-term & other borrowings . . . . . (2,464) (92,013)
Net increase (decrease) in long-term debt . . . . . . . 3,053 (28,106)
Net proceeds from issuance of Company-obligated
mandatorily redeemable preferred securities
of CFB Capital I. . . . . . . . . . . . . . . . . 0 60,000
Net proceeds from issuance of common stock. . . . . . . 0 1,067
Purchase of common stock held in treasury . . . . . . . (3,039) (524)
Conversion of preferred stock to common stock . . . . . 0 (52)
Sale of common stock held in treasury . . . . . . . . . 721 542
Common stock dividends paid . . . . . . . . . . . . . . (4,471) (2,754)
- ------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities. . . . 629,182 (105,780)
- ------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents . . . . . . . (41,183) (59,834)
Cash and cash equivalents at beginning of period. . . . 234,778 179,332
- ------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period. . . . . . . $ 193,595 $ 119,498
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
COMMUNITY FIRST BANKSHARES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements,
which include the accounts of Community First Bankshares, Inc. (the "Company"),
its wholly-owned data processing, credit origination, insurance agency and
properties subsidiaries, and its ten majority-owned subsidiary banks, have been
prepared in accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments considered necessary for fair presentation have been included.
On April 28, 1998, the shareholders approved a charter amendment that
facilitated a two-for-one split of the Company common stock, in the form of a
100 percent dividend payable to shareholders of record on May 1, 1998 to be
distributed on May 15, 1998. Accordingly, the consolidated financial
information has been restated to reflect the impact of the two-for-one split on
the common share, weighted average common share and basic and diluted earnings
per share data.
EARNINGS PER COMMON SHARE
Basic earnings per common share is calculated by dividing net income
applicable to common equity by the weighted average number of shares of common
stock outstanding.
Diluted earnings per common share is calculated by dividing net income
applicable to common equity by the weighted average number of shares of common
stock outstanding. The weighted average number of shares of common stock
outstanding is increased by the number of shares of common stock that would be
issued assuming the exercise of stock options and warrants during each period.
Such adjustments to the weighted average number of shares of common stock
outstanding are made only when such adjustments dilute earnings per share.
NOTE B - BUSINESS COMBINATIONS
On January 23, 1998, the Company completed the purchase and assumption of
approximately $730 million in assets and liabilities of 37 offices of Banc One
Corporation located in Arizona, Colorado and Utah. The 25 Arizona and four Utah
offices were merged into the Company's Arizona affiliate. The eight Colorado
offices were merged into one of the Company's Colorado affiliates. The
transaction was accounted for as a purchase of certain assets and assumption of
certain liabilities and resulted in the recognition of a deposit based
intangible of approximately $44 million.
NOTE C - SUBSEQUENT EVENTS
On May 7, 1998, the Company issued approximately 568,000 shares of common
stock to acquire FNB, Inc. ("FNB") a bank holding company with banks in Greeley,
Colorado and Fort Collins, Colorado. At acquisition, FNB had approximately $120
million in assets and $109 million in deposits. The Company used the pooling of
interests method to account for the transaction. This merger was not material
to the Company's consolidated financial information or operating results.
Accordingly, the Company's consolidated financial information has not been
restated to reflect this merger. The operating results will be included in the
Company's consolidated statements from the date of the merger.
On April 30, 1998, the Company issued approximately 716,000 shares of
common stock to acquire Pioneer Bank of Longmont ("Longmont"), Longmont,
Colorado, with offices in Berthoud, Longmont, Lyons,
7
<PAGE>
and Niwot, Colorado. At acquisition, Pioneer had approximately $138 million in
assets and $128 million in deposits. The Company used the pooling of interests
method to account for the transaction. This merger was not material to the
Company's consolidated financial information or operating results. Accordingly,
the Company's consolidated financial information has not been restated to
reflect this merger. The operating results will be included in the Company's
consolidated statements from the date of the merger.
On April 28, 1998, shareholders of the Company approved an increase in the
authorized shares under the Restated Certificate of Incorporation. This
increase facilitated a two-for-one split of the Company's common stock, in the
form of a 100 percent stock dividend payable to shareholders of record on May 1,
1998 to be distributed on May 15, 1998.
On April 3, 1998, the Company issued approximately 426,000 shares of common
stock to acquire Community Bancorp., Inc. ("CBI"), the parent company of
Community First National Bank, Thornton, Colorado, with two offices in Thornton,
Colorado and one office in Arvada, Colorado. At acquisition, CBI had
approximately $78 million in assets and $72 million in deposits. The Company
used the pooling of interests method to account for the transaction. The merger
was not material to the Company's consolidated financial information or
operating results. Accordingly, the Company's consolidated financial
information has not been restated to reflect this merger. The operating results
will be included in the Company's consolidated statements from the date of the
merger.
On April 2, 1998, the Company signed a definitive agreement to acquire
Western Bancshares of Las Cruces, Inc. ("Western"), the holding company for
Western Bank, Las Cruces, New Mexico, through the issuance of Company common
stock to holders of Western common stock. The transaction is expected to be
completed during the third quarter of 1998 and is expected to be accounted for
using the pooling of interests method of accounting. The merger will not be
material to the Company's consolidated financial information or operating
results. Accordingly, the Company's consolidated financial information will not
be restated to reflect this merger. Western had assets of approximately $170
million and deposits of approximately $142 million as of March 31, 1998.
NOTE D - ACCOUNTING CHANGES
REPORTING COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting
and display of comprehensive income and its components; however, the adoption
of this Statement had no impact on the Company's net income or shareholder's
equity. Statement 130 requires unrealized gains or losses on the Company's
available-for-sale securities which prior to adoption was reported separately
in shareholder's equity to be included in other comprehensive income. Prior
year financial statements have been reclassified to conform to the
requirements of Statement 130.
During the first quarter of 1998 and 1997, total comprehensive income
amounted to $12.6 million and $5.9 million, respectively.
EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
no. 128, "Earnings Per Share", which the Company adopted on December 31, 1997.
This Statement replaced the previous method of computing earnings per share with
basic and diluted earnings per share and required restatement for all prior
periods. Under the new requirements for calculating basic earnings per share,
the dilutive effect of stock options will be excluded. The calculation of
diluted earnings per share is similar to the previous diluted earnings per
share. The adoption of SFAS 128 did not have a material impact on the
calculation of earnings per share.
8
<PAGE>
NOTE E - INVESTMENTS
The following is a summary of available-for-sale and held-to-maturity
securities at March 31, 1998 (in thousands):
<TABLE>
<CAPTION>
Available-for-Sale Securities
- ------------------------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States Treasury. . . . . . . . . . . . $ 140,959 $ 1,094 $ (92) $ 141,961
United States Government agencies . . . . . . 306,770 1,074 (787) 307,057
Mortgage-backed securities. . . . . . . . . . 1,073,399 7,716 (3,951) 1,077,164
Collateralized mortgage obligations . . . . . 97,349 430 (82) 97,697
State and Political Securities. . . . . . . . 127,254 2,364 (418) 129,200
Other securities. . . . . . . . . . . . . . . 56,931 35 (146) 56,820
- ------------------------------------------------------------------------------------------------------------------------
. . . . . . . . . . . . . . . . . . . . . . . $ 1,802,662 $ 12,713 $(5,476) $ 1,809,899
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Held-to-Maturity Securities
- ------------------------------------------------------------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Other securities. . . . . . . . . . . . . . . 64,898 - - 64,898
- ------------------------------------------------------------------------------------------------------------------------
. . . . . . . . . . . . . . . . . . . . . . . $ 64,898 $ - $ - $ 64,898
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from the sale of available-for-sale securities during the three
months ended March 31, 1998 and 1997, were $34,292,000 and $2,853,000,
respectively. Gross gains of $477,000 and $2,000 were realized on sales during
1998 and 1997, respectively. Gross losses of $1,000 and $2,000 were realized on
these sales during 1998 and 1997, respectively. Gains and losses at disposition
of these securities were computed using the specific identification method.
NOTE F - LOANS
The composition of the loan portfolio at March 31, 1998, was as follows (in
thousands):
<TABLE>
<S> <C>
Real estate. . . . . . . . . . . . . . . . . . . $ 1,230,589
Commercial . . . . . . . . . . . . . . . . . . . 725,687
Agricultural . . . . . . . . . . . . . . . . . . 261,091
Consumer and other . . . . . . . . . . . . . . . 496,198
------------
. . . . . 2,713,565
Less allowance for loan losses . . . . . . . . . 36,155
------------
Net loans. . . . . . . . . . . . . . . . . . . . $ 2,677,410
------------
------------
</TABLE>
NOTE G - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Company is party to financial
instruments with off-balance sheet risk to meet the financing needs of its
customers and to manage its interest rate risk. These financial instruments
include commitments to extend credit and letters of credit. The contract or
notional amounts of these financial instruments at March 31, 1998, were as
follows (in thousands):
<TABLE>
<S> <C>
Commitments to extend credit. . . . . . . . . . . . . . $ 474,025
Letters of credit . . . . . . . . . . . . . . . . . . . 21,521
</TABLE>
9
<PAGE>
NOTE H - SUBORDINATED NOTES
Long-term debt at March 31, 1998, included $60 million of 7.30%
Subordinated Notes issued in June 1997. These notes are due June 30, 2004, with
interest payable semi-annually. Long-term debt also included $12 million of
9.00% Subordinated Notes issued in July 1995, which are due August 15, 2005,
with interest payable quarterly. At March 31, 1998, both issues, totaling $72
million, qualified as Tier 2 capital.
NOTE I - INCOME TAXES
The reconciliation between the provision for income taxes and the amount
computed by applying the statutory federal income tax rate was as follows (in
thousands):
<TABLE>
<CAPTION>
MARCH 31, 1998
--------------
<S> <C>
35% of pretax income. . . . . . . . . . . . . . . . . . $ 6,748
State income tax, net of federal tax benefit. . . . . . 106
Tax-exempt interest . . . . . . . . . . . . . . . . . . (1,537)
Amortization of goodwill. . . . . . . . . . . . . . . . 260
Other . . . . . . . . . . . . . . . . . . . . . . . . . (151)
--------
Provision for income taxes. . . . . . . . . . . . . . . $ 5,426
</TABLE>
NOTE J - SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended March 31 (in thousands) 1998 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Noncash transfers of held-to-maturity securities
to available-for-sale securities. . . . . . . . . . . . $ 113,075 $ 37
Unrealized loss on available-for-sale securities . . . . . . 1,491 7,304
Conversion of preferred stock to common stock. . . . . . . . - 22,937
</TABLE>
NOTE K - CONTINGENT LIABILITIES
As a result of certain legal proceedings related to the May 1995 purchase
of a bank in Alliance, Nebraska, the Company retained a portion of the purchase
price in the form of a contingency reserve. Upon resolution of various
proceedings, associated balances may be remitted to the former Abbott Bank Group
shareholders. At March 31, 1998, the reserve balance was $838,000. All
remaining issues subject to the reserve are expected to be resolved during 1998.
It is management's expectation that resolution of the remaining issues will not
exceed the current reserve balance.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
BASIS OF PRESENTATION
The following is a discussion of the Company's financial condition as of
March 31, 1998, and December 31, 1997, and its results of operations for the
three month periods ended March 31, 1998 and 1997. Each of the acquisitions
described in the table below is reflected in the Company's results of operations
for all periods following the acquisition and is reflected in the Company's
statement of financial condition at all dates subsequent to the acquisition.
MERGER, ACQUISITION AND DIVESTITURE ACTIVITY
The Company completed three acquisitions during 1997, and, as of March 31,
1998, the Company had four pending bank acquisitions. Each of these
acquisitions has had, or will have, an effect upon the Company's results of
operations and financial condition.
During 1997, the Company made the following acquisitions of banks or
associated holding companies:
<TABLE>
<CAPTION>
Total Assets
at Date of
Month and Holding Company or Acquisition
Year Location of Bank (In Millions)
------------------------------------------------------------------
<S> <C> <C>
December 1997 Gunnison, Colorado $ 90
November 1997 Phoenix, Arizona 54
July 1997 Cheyenne, Wyoming 1,100
</TABLE>
On January 23, 1998, the Company completed the purchase and assumption of
approximately $730 million in assets and liabilities of 37 offices of Banc One
Corporation located in Arizona, Colorado, and Utah. The transaction was
accounted for as a purchase of certain assets and assumption of certain
liabilities and resulted in the recognition of a deposit based intangible of
approximately $44 million.
During 1997, the Company made the determination to dispose of its
sub-prime lending affiliates, Mountain Parks Financial Services, Inc.
("MPFS") and Equity Lending, inc. ("ELI"). Both MPFS, which purchases auto
contracts and ELI, which originates residential, non-conforming mortgages
were acquired by the Company in December 1996 through the merger with
Mountain Parks Financial Corporation. The Company has accounted for these
entities as discontinued operations on the consolidated financial statements.
At March 31, 1998, net assets of these entities of approximately $91 million
has been included as an Other Asset. The Company recognized a loss of $68,000
and net income of $681,000 net of tax, from these entities for the periods
ended March 31, 1998 and 1997, respectively. The Company does not expect to
incur a loss upon the disposal of these businesses, nor during the period
from April 1, 1998 through the date of disposal.
OVERVIEW
For the three months ended March 31, 1998, net income was $13.8 million, an
increase of $3.3 million, or 31.4%, from the $10.5 million earned during the
1997 period. The 1997 period included the effect of a $265,000 after tax
extraordinary expense associated with the Company's early extinguishment of its
$23 million in principal amount of 7.75% Subordinated Notes due April 2000,
which were redeemed on March 31, 1997. The Company's basic earnings per common
share for the first quarter of 1998 were $0.34 after the effect of the
extraordinary item, compared to $0.30 in 1998. Diluted earnings per common
share for the first quarter of 1998 were $0.33.
11
<PAGE>
Return on average assets was 1.12% for the first quarter of 1998, compared
with 1.40% for the 1997 period. Return on average common shareholders' equity
for the 1998 and 1997 periods was 16.52% and 18.77%, respectively. Principal
factors contributing to these changes included incremental net noninterest
expenses associated with the acquisition and integration of entities acquired
during 1998 and 1997 and a decrease in net interest margin. The decrease in the
net interest margin is principally due to the lower loan to deposit ratios at
those institutions acquired in the Banc One and KeyBank transactions, which
resulted in the Company having a greater percentage of its earning assets
invested initially in lower yielding investment securities.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income for the three months ended March 31, 1998, was $52.0
million, an increase of $17.6 million, or 51.2%, from the net interest income of
$34.4 million earned during the 1997 period. The increase was principally due
to the increased asset base associated with the acquisitions completed during
1998 and 1997 partially offset by a decrease in the net interest margin to 4.95%
during the first quarter of 1998, from 5.27% during the 1997 period.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the three months ended March 31, 1998,
was $1,339,000, an increase of $109,000, or 8.9%, from the $1,230,000 provision
during the 1997 period. This increase reflects the Company's objective of
maintaining adequate reserve levels in recognition of significant loan growth in
the Company's subsidiaries, including those acquired in 1998 and 1997.
NONINTEREST INCOME
Noninterest income for the three months ended March 31, 1998, was $12.3
million, an increase of $5.3 million, or 75.7%, from the 1997 level of $7.0
million. The increase included an increase of $3.8 million earned by banks
acquired in 1998 and 1997, a $249,000 increase in existing bank insurance
commissions and an increase in other income of $987,000.
NONINTEREST EXPENSE
Noninterest expense for the three months ended March 31, 1998, was $43.7
million, an increase of $18.8 million, or 75.5%, from the level of $24.9 million
during the 1997 period. The increase was principally due to an increase of $8.0
million, or 58.8%, in salaries and employee benefits, a significant portion
resulting from banks acquired in 1998 and 1997. Net occupancy increased $3.7
million, or 97.4% from $3.8 million in the period ended March 31, 1997, to $7.5
million at the end of the current period, principally due to banks acquired in
1998 and 1997. Amortization of intangibles increased $1.4 million or 140%, from
$1.0 million in the period ended March 31, 1997, to $2.4 million in the current
period, due principally to 1998 and 1997 acquisitions. The first quarter of
1998 included $2.5 million in payments related to Company-obligated mandatorily
redeemable preferred securities, an increase of $1.7 million from the first
quarter of 1997, due to the increased principal amount.
PROVISION FOR INCOME TAXES
The provision for income taxes for the three months ended March 31, 1998,
was $5.4 million, an increase of $288,000, or 5.6%, from the 1997 level of $5.1
million, due primarily to the increase in pre-tax income resulting from
acquisitions completed since July 1997. The reduction in the effective tax
rate results primarily from the realization of the effect of certain tax
planning strategies.
YEAR 2000 ISSUE
The Company is evaluating the potential impact of what is commonly
referred to as the "Year 2000" issue, concerning the inability of certain
information systems to properly recognize and process dates containing the
year 2000 and beyond. If not corrected, these systems could fail or create
erroneous results. The Company is in the process of determining which of its
systems, if any, may present Year 2000 issues, the magnitude of these issues,
and the steps that may be necessary to correct them. Therefore, the
potential liabilities and costs associated with Year 2000 compliance cannot
be estimated at this time. Regardless of the Year 2000 compliance of the
Company's systems, there can be no assurance that the Company will not be
adversely affected by the failure of others to become Year 2000 compliant.
Such risks may include potential losses related to loans made to third
parties whose businesses are adversely affected by the Year 2000 issue, the
disruption or inaccuracy of data provided by non-Year 2000 compliant third
parties and business disruption caused by the failure of service providers,
such as security and data processing companies, to become Year 2000
compliant. Because of these uncertainties, there can be no assurance that
the Year 2000 issue will not have a material financial impact in any future
period.
12
<PAGE>
FINANCIAL CONDITION
LOANS
Total loans were $2.7 billion at March 31, 1998 and $2.6 billion at
December 31, 1997.
The following table presents the Company's balance of each major category
of loans:
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------------
PERCENT OF PERCENT OF
AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS
--------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Loan category:
Real estate. . . . . . . . . . . . . . . $ 1,230,589 45.35% $ 1,158,822 43.94%
Commercial . . . . . . . . . . . . . . . 725,687 26.74% 708,084 26.85%
Consumer and other . . . . . . . . . . . 496,198 18.29% 499,924 18.96%
Agricultural . . . . . . . . . . . . . . 261,091 9.62% 270,227 10.25%
- ------------------------------------------------------------------------------------------------------------------------
Total loans. . . . . . . . . . . . . . . 2,713,565 100.00% 2,637,057 100.00%
--------- ---------
--------- ---------
Less allowance for loan losses . . . . . . . 36,155 36,194
------------ ------------
Total. . . . . . . . . . . . . . . . . . . . $ 2,677,410 $ 2,600,863
------------ ------------
------------ ------------
</TABLE>
NONPERFORMING ASSETS
At March 31, 1998, nonperforming assets were $14.7 million, a decrease of
$1.4 million, or 8.7%, from the $16.1 million level at December 31, 1997. The
decrease was principally due to the Company's decision to return an agricultural
real estate loan at the Nebraska affiliate to an accrual basis. At March 31,
1998, nonperforming loans as a percent of total loans was .40%, down from the
December 31, 1997 level of .48%. OREO was $3.8 million at March 31, 1998, an
increase of $377,000 from $3.4 million at December 31, 1997.
Nonperforming assets of the Company are summarized in the following table:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
--------------------------------
<S> <C> <C>
Loans:
Nonaccrual loans . . . . . . . . . . . . . . . . . . . $ 10,772 $ 12,507
Restructured loans . . . . . . . . . . . . . . . . . . 123 140
- -----------------------------------------------------------------------------------------------
Nonperforming loans. . . . . . . . . . . . . . . . . . 10,895 12,647
Other real estate owned . . . . . . . . . . . . . . . . . . 3,783 3,406
- -----------------------------------------------------------------------------------------------
Nonperforming assets. . . . . . . . . . . . . . . . . . . . $ 14,678 $ 16,053
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Loans 90 days or more past due but still accruing . . . . . $ 5,748 $ 3,616
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Nonperforming loans as a percentage of total loans. . . . . .40% .48%
Nonperforming assets as a percentage of total assets. . . . .28% .33%
Nonperforming assets as a percentage of loans and OREO. . . . .54% .61%
</TABLE>
13
<PAGE>
ALLOWANCE FOR LOAN LOSSES
At March 31, 1998 and December 31, 1997, the allowance for loan losses was
$36.2 million. Net charge-offs during the 1998 period were $411,000 more than
those incurred during the three months ended March 31, 1997.
At March 31, 1998, the allowance for loan losses as a percentage of total
loans was 1.33%, a slight increase from the March 31, 1997, level of 1.31%.
During the three months ended March 31, 1998, net charge-offs increased to $1.4
million. These charge-offs related to the Company's continued periodic review
of the existing loan portfolios and an increase in charge-offs related to loan
growth at the Company's subsidiaries, including those recently acquired.
The following table sets forth the Company's allowance for loans losses:
<TABLE>
<CAPTION>
MARCH 31,
1998 1997
---------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance at beginning of period . . . . . . . . . . . . . . . $ 36,194 $ 26,215
Discontinued operation adjustment. . . . . . . . . . . . . . -- (345)
Charge-offs:
Commercial. . . . . . . . . . . . . . . . . . . . . . 532 764
Real estate . . . . . . . . . . . . . . . . . . . . . 211 29
Agricultural. . . . . . . . . . . . . . . . . . . . . 141 58
Consumer and other. . . . . . . . . . . . . . . . . . 1,321 623
- -----------------------------------------------------------------------------------------------
Total charge-offs. . . . . . . . . . . . . . 2,205 1,474
- -----------------------------------------------------------------------------------------------
Recoveries:
Commercial. . . . . . . . . . . . . . . . . . . . . . 300 341
Real estate . . . . . . . . . . . . . . . . . . . . . 11 4
Agricultural. . . . . . . . . . . . . . . . . . . . . 137 29
Consumer and other. . . . . . . . . . . . . . . . . . 379 133
- -----------------------------------------------------------------------------------------------
Total recoveries. . . . . . . . . . . . . . . . . . . 827 507
Net charge-offs. . . . . . . . . . . . . . . . . . . . . . . 1,378 967
Provision charged to operations. . . . . . . . . . . . . . . 1,339 1,230
- -----------------------------------------------------------------------------------------------
Balance at end of period . . . . . . . . . . . . . . . . . . $ 36,155 $ 26,133
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Allowance as a percentage of total loans . . . . . . . . . . 1.33% 1.31%
Annualized net charge-offs to average
loans outstanding . . . . . . . . . . . . . . . . . . 0.21% 0.20%
</TABLE>
INVESTMENTS
The investment portfolio, including available-for-sale securities and
held-to-maturity securities, increased $195 million, or 11.8%, to $1.9 billion
at March 31, 1998, from $1.7 billion at December 31, 1997. At March 31, 1998,
the investment portfolio represented 36.3% of total assets, compared with 34.6%
at December 31, 1997. In addition to investment securities, the Company had
investments in interest-bearing deposits of $3 million at March 31, 1998, a $2
million increase from the $1 million at December 31, 1997.
14
<PAGE>
DEPOSITS
Total deposits were $4.3 billion at March 31, 1998, an increase of $636
million or 17.6% from $3.6 billion at December 31, 1997. Noninterest-bearing
deposits at March 31, 1998, were $686 million, a decrease of $89 million, or
14.9%, from $597 million at December 31, 1997. The company's core deposits as a
percent of total deposits were 88.8% and 89.0% as of March 31, 1998, and
December 31, 1997, respectively. Interest-bearing deposits were $3.6 billion at
March 31, 1998, an increase of $547 million, or 18.1% from the $3.0 billion at
December 31, 1997.
BORROWINGS
Short-term borrowings of the Company were $184 million as of March 31,
1998, as compared to $231 million at December 31, 1997, a decrease of $47
million, or 20.3%.
Long-term debt of the Company was $120 million as of March 31, 1998, an
increase of $4 million, or 3.4%, from the $116 million as of December 31, 1997.
CAPITAL MANAGEMENT
Shareholders' equity increased $6 million, or 1.8%, to $345 million at
March 31, 1998, from $339 million at December 31, 1997. At March 31, 1998, the
Company's Tier 1 capital, total risk-based capital and leverage ratios were
9.34%, 12.78%, and 6.24%, respectively, compared to minimum required levels of
4%, 8% and 3%, respectively (subject to change and the discretion of regulatory
authorities to impose higher standards in individual cases). At March 31, 1998,
the Company had risk-weighted assets of $3.4 billion.
15
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have been no material changes in market risk exposures that
affect the quantitative and qualitative disclosures presented as of
December 31, 1997.
16
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings:
None.
Item 2. Changes in Securities:
None.
Item 3. Defaults upon Senior Securities:
None.
Item 4. Submission of Matters to a Vote of Security Holders:
None.
Item 5. Other Information:
None.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits:
Exhibit 3(i) Restated Certificate of Incorporation of the
Registrant, as amended by a Certificate of
Amendment filed with the Delaware Secretary
of State on May 7, 1998.
Exhibit 27.1 Restated Financial Data Schedule relating to
Financial Statements at March 31, 1997,
June 30, 1997 and September 30, 1997
Exhibit 27.2 Financial Data Schedule relating to Financial
Statements at March 31, 1998
(b) Reports on Form 8-K:
None.
17
<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.
COMMUNITY FIRST BANKSHARES, INC.
Date: May 11, 1998 /s/ Mark A. Anderson
--------------------------------------------------
Mark A. Anderson
Executive Vice President, Chief Financial Officer,
Chief Information Officer, Treasurer,
Secretary (Principal Financial and
Accounting Officer)
18
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3(i) Restated Certificate of Incorporation, as amended
27.1 Restated Financial Data Schedule relating to Financial
Statements at March 31, 1997, June 30, 1997 and September
30, 1997
27.2 Financial Data Schedule relating to Financial Statements at
March 31, 1998
<PAGE>
EXHIBIT 3(i)
RESTATED
CERTIFICATE OF INCORPORATION
OF
COMMUNITY FIRST BANKSHARES, INC.
ARTICLE I
NAME
The name of the corporation is Community First Bankshares, Inc.
ARTICLE II
REGISTERED OFFICE
The address of the corporation's registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, in
the County of New Castle. The name of its registered agent at such address is
The Corporation Trust Company.
ARTICLE III
PURPOSES
The nature of the business or purposes to be conducted or promoted by the
corporation shall include any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
ARTICLE IV
CAPITAL STOCK
4.1) AUTHORIZED CAPITAL STOCK. The total number of shares of stock which
the corporation shall have authority to issue is Eighty-Two Million (82,000,000)
shares, divided into Eighty Million (80,000,000) shares of Common Stock, $.01
par value per share ("Common Stock"), and Two Million (2,000,000) shares of
Preferred Stock, $.01 par value per share ("Preferred Stock"). The designations
and the powers, preferences, and rights, and the qualifications, limitations, or
restrictions of the shares of each class of capital stock shall be as provided
in this Article IV and by applicable law.
4.2) GENERAL.
<PAGE>
a) PREEMPTIVE RIGHTS. Unless otherwise provided by the Board of
Directors, no holder of capital stock of the corporation shall have any
preferential, preemptive, or other rights of subscription to any shares of any
class of capital stock of the corporation allotted or sold or to be allotted or
sold now or hereafter authorized, or to any obligations convertible into the
capital stock of the corporation of any class, or any right of subscription to
any part thereof.
b) STOCK RIGHTS AND OPTIONS. The Board of Directors shall have the
power to create and issue rights, warrants, or options entitling the holders
thereof to purchase from the corporation any shares of its capital stock of any
class or series, upon such terms and conditions and at such times and prices as
the Board of Directors may provide, which terms and conditions shall be
incorporated in instrument or instruments evidencing such rights.
4.3) COMMON STOCK. Subject to all of the rights of the Preferred Stock,
and except as may be expressly provided herein with respect to the Preferred
Stock, by applicable law or by the Board of Directors pursuant to this Article
IV:
a) VOTING RIGHTS GENERALLY. Each holder of record of the Common
Stock shall be entitled to one vote for each share of Common Stock held by him
or her at each meeting of the shareholders with respect to any matter, other
than the election of directors, on which such shareholders have a right to vote.
The right to vote provided herein shall be subject to the provisions of the
Bylaws of the corporation in effect from time to time with respect to closing
the transfer books and fixing a record date for the determination of shares
entitled to vote.
b) CUMULATIVE VOTING FOR DIRECTORS. At all elections of directors,
each holder of record of the Common Stock shall be entitled to as many votes as
shall equal the number of votes which (except for this provision as to
cumulative voting) he or she would be entitled to cast for the election of
directors with respect to his or her shares of Common Stock multiplied by the
number of directors to be elected, and such holder may cast all of such votes
for a single director candidate or may distribute them among any number of such
candidates.
c) DIVIDENDS. Each holder of record of Common Stock of the
corporation shall be entitled to receive when as declared by the Board of
Directors, out of earnings or surplus legally available therefor, dividends,
payable either in cash, in property, or in shares of the capital stock of the
corporation.
4.4) PREFERRED STOCK. The Preferred Stock may be issued from time to time
by the Board of Directors as shares of one or more class or series. Subject to
the provisions hereof and the limitations prescribed by law, the Board of
Directors is expressly authorized by adopting resolutions providing for the
issuance of shares of any particular series and, if and to the extent from time
to time required by law, by filing with the Secretary of State of the State of
Delaware a statement with respect to the adoption of the resolutions pursuant to
the Delaware General Corporation Law (or other law hereafter in effect relating
to the same or substantially similar subject matter), to establish the number of
shares to be included in each class or series and to fix
2
<PAGE>
the designation and relative powers, preferences and rights and the
qualifications and limitations or restrictions thereof relating to the shares of
each such class or series. The authority of the Board of Directors with respect
to each series shall include, but not be limited to, determination of the
following:
(a) the distinctive serial designation of such class or series and
the number of shares constituting such class or series, provided that the
aggregate number of shares constituting all classes or series of Preferred
Stock shall not exceed nine hundred thousand (900,000);
(b) the annual dividend rate on shares of such class or series, if
any, whether dividends shall be cumulative and, if so, from which date or
dates;
(c) whether the shares of such class or series shall be redeemable
and, if so, the terms and conditions of such redemption, including the date
or dates upon and after which such shares shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(d) the obligations, if any, of the corporation to retire shares of
such class or series pursuant to a sinking fund;
(e) whether shares of such class or series shall be convertible into,
or exchangeable for, shares of stock of any other class or classes and, if
so, the terms and conditions of such conversion or exchange, including the
price or prices or the rate or rates of conversion or exchange and the
terms of adjustment, if any;
(f) whether the shares of such class or series shall have voting
rights provided by law, and, if so, the terms of such voting rights;
(g) the rights of the shares of such class or series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation; and
(h) any other relative rights, powers, preferences, qualifications,
limitations or restrictions thereof relating to such class or series.
The shares of Preferred Stock of any one class or series shall be identical
with each other in all respects except as to the dates from and after which
dividends thereon shall cumulate, if cumulative.
ARTICLE V
EXISTENCE
3
<PAGE>
The corporation is to have perpetual existence.
ARTICLE VI
STOCKHOLDER MEETING AND BOOKS
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the corporation may be kept
(subject to applicable law) outside the State of Delaware at such place or
places as may be designated from time to time by the Board of Directors or in
the Bylaws of the corporation.
ARTICLE VII
DIRECTORS
7.1) In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the Bylaws of the corporation.
7.2) Elections of directors need not be by written ballot unless the Bylaws
of the corporation shall so provide.
ARTICLE VIII
DIRECTOR LIABILITY
8.1) A director of the corporation shall not be liable to the corporation
or the stockholders of the corporation for monetary damages for a breach of the
fiduciary duty of care as a director, except to the extent such exception from
liability or limitation thereof is not permitted under the Delaware General
Corporation Law as the same currently exists or hereafter is amended.
8.2) The provisions of this Article shall not be deemed to limit or
preclude indemnification of a director by the corporation for any liability of a
director which has not been eliminated by the provisions of this Article.
4
<PAGE>
ARTICLE IX
AMENDMENT OF CERTIFICATE
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
5
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S QUARTERLY REPORTS IN FORM 10-Q
FOR QUARTERS ENDED MARCH 31, 1997, JUNE 30, 1997 AND SEPTEMBER 30, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 119,398 119,052 205,160
<INT-BEARING-DEPOSITS> 9,911 14,898 12,782
<FED-FUNDS-SOLD> 100 705 260
<TRADING-ASSETS> 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 508,837 481,500 920,835
<INVESTMENTS-CARRYING> 223,768 229,857 227,234
<INVESTMENTS-MARKET> 222,665 230,204 228,545
<LOANS> 1,998,247 2,086,702 2,516,741
<ALLOWANCE> 26,133 28,180 36,086
<TOTAL-ASSETS> 3,008,484 3,070,618 4,141,670
<DEPOSITS> 2,493,500 2,470,691 3,457,537
<SHORT-TERM> 155,332 189,151 215,345
<LIABILITIES-OTHER> 32,250 10,825 16,373
<LONG-TERM> 18,644 78,566 120,988
0 0 0
0 0 0
<COMMON> 187 187 187
<OTHER-SE> 248,552 261,198 271,240
<TOTAL-LIABILITIES-AND-EQUITY> 3,008,484 3,070,618 4,141,670
<INTEREST-LOAN> 46,799 48,518 60,431
<INTEREST-INVEST> 11,465 11,330 16,697
<INTEREST-OTHER> 45 324 281
<INTEREST-TOTAL> 58,309 60,172 77,409
<INTEREST-DEPOSIT> 21,166 21,369 29,292
<INTEREST-EXPENSE> 23,914 24,514 33,498
<INTEREST-INCOME-NET> 34,395 35,658 43,911
<LOAN-LOSSES> 1,230 2,486 1,710
<SECURITIES-GAINS> 0 64 62
<EXPENSE-OTHER> 24,949 27,831 34,448
<INCOME-PRETAX> 15,254 15,664 17,461
<INCOME-PRE-EXTRAORDINARY> 10,116 10,524 12,070
<EXTRAORDINARY> 416 611 229
<CHANGES> 0 0 0
<NET-INCOME> 10,532 11,135 12,299
<EPS-PRIMARY> .60 .60 .66
<EPS-DILUTED> .56 .58 .65
<YIELD-ACTUAL> 0 0 0
<LOANS-NON> 8,747 9,984 12,221
<LOANS-PAST> 1,949 1,747 6,006
<LOANS-TROUBLED> 251 195 156
<LOANS-PROBLEM> 0 0 0
<ALLOWANCE-OPEN> 26,215 26,215 26,215
<CHARGE-OFFS> 1,474 2,459 4,590
<RECOVERIES> 507 1,054 1,880
<ALLOWANCE-CLOSE> 26,133 28,180 36,086
<ALLOWANCE-DOMESTIC> 0 0 0
<ALLOWANCE-FOREIGN> 0 0 0
<ALLOWANCE-UNALLOCATED> 0 0 0
<FN>
Financial data for the Company's quarterly reports in Form 10-Q for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997 have
been restated to reflect the Company's accounting for its sub-prime lending
affiliates as discontinued operations.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S QUARTERLY REPORTS IN FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 178,625
<INT-BEARING-DEPOSITS> 3,058
<FED-FUNDS-SOLD> 14,970
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,809,899
<INVESTMENTS-CARRYING> 64,898
<INVESTMENTS-MARKET> 64,898
<LOANS> 2,713,565
<ALLOWANCE> 36,155
<TOTAL-ASSETS> 5,158,045
<DEPOSITS> 4,254,716
<SHORT-TERM> 184,493
<LIABILITIES-OTHER> 133,931
<LONG-TERM> 119,529
120,000
0
<COMMON> 407
<OTHER-SE> 344,969
<TOTAL-LIABILITIES-AND-EQUITY> 5,158,045
<INTEREST-LOAN> 64,517
<INTEREST-INVEST> 26,270
<INTEREST-OTHER> 212
<INTEREST-TOTAL> 90,999
<INTEREST-DEPOSIT> 34,881
<INTEREST-EXPENSE> 39,047
<INTEREST-INCOME-NET> 51,952
<LOAN-LOSSES> 1,339
<SECURITIES-GAINS> 476
<EXPENSE-OTHER> 43,682
<INCOME-PRETAX> 19,279
<INCOME-PRE-EXTRAORDINARY> 13,853
<EXTRAORDINARY> (68)
<CHANGES> 0
<NET-INCOME> 13,785
<EPS-PRIMARY> .34<F1>
<EPS-DILUTED> .33<F1>
<YIELD-ACTUAL> 0
<LOANS-NON> 10,772
<LOANS-PAST> 5,748
<LOANS-TROUBLED> 123
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 36,194
<CHARGE-OFFS> 2,205
<RECOVERIES> 827
<ALLOWANCE-CLOSE> 36,155
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Earnings per share data has been restated to reflect a two-for-one split
of the Company's common stock, in the form of a 100 percent common stock
dividend payable on May 15, 1998 to shareholders of record as of May 1, 1998.
Prior period financial data has not been restated to reflect this dividend.
</FN>
</TABLE>
