[TYPE] 10-Q
[DOCUMENT-COUNT] 1
[SROS] NASD
[SUBMISSION-CONTACT]
[NAME] KAREN E. CREPPS
[PHONE] 970-925-6700
[SUBMISSION-CONTACT]
[FILER]
[CIK] 0000868453
[CCC] 2kec@abs
[FILER]
[PERIOD] 06/30/96
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 June 30, 1996
( ) 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: 0-19376
Aspen Bancshares, Inc.
(Exact name of registrant as specified in its charter)
Colorado 84-1068527
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
534 East Hyman Avenue, P. O. Box 3677, Aspen, Colorado 81612
(Address of principal executive offices) (Zip Code)
(970) 925-6700
(Registrant's telephone number, including area code)
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.
(X) Yes ( ) No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
( ) Yes ( ) No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of July 15, 1996: 3,717,714
<PAGE>
ASPEN BANCSHARES, INC.
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited interim financial statements have been
prepared in accordance with the instructions for Form 10-Q and do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. All
adjustments which are, in the opinion of management, of a normal
recurring nature necessary to a fair statement of the results for the
interim periods presented have been made. The results of operations for
such interim periods are not necessarily indicative of results of
operations for a full year. The statements should be read in conjunction
with the summary of accounting policies and the notes to the consolidated
financial statements included in Aspen Bancshares' Annual Report on Form
10-K for the year ended December 31, 1995, which is incorporated herein
by this reference. In addition, Aspen Bancshares, Inc. ("the Company")
acquired Val Cor Bancorporation, Inc. ("Val Cor") on June 18, 1996. The
acquisition was accounted for using the purchase method. The results of
Val Cor have only been included in the financial statements since that
time. Therefore, June 30, 1996 results of operations do not reflect
combined results.
<PAGE>
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(unaudited)
(in thousands)
June 30, December 31,
1996 1995 1995
------ ------ ------
ASSETS
Cash and Due From Banks $ 13,678 $ 11,364 $ 10,029
Interest Bearing Deposits in Banks 1,560 340 1,115
Securities:
Held to Maturity-Market
Value at 6/30/95: $21,031 - 21,352 -
Available for Sale 72,885 38,012 42,183
Federal Funds Sold and Securities
Purchased Under Resale Agreements 3,890 - 20,740
Loans Held for Resale 5,189 834 9,550
Loans 327,623 255,449 254,992
Loan Loss Reserve (3,224) (2,190) (2,197)
------- ------- -------
Loans, Net 324,399 253,259 252,795
Property, Equipment,
and Leasehold Improvements 9,524 9,184 7,761
Accrued Interest Receivable 3,430 2,192 2,145
Other Assets 7,566 3,296 2,805
-------- -------- --------
Total Assets $442,121 $339,833 $349,123
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand Noninterest Bearing $ 50,025 $ 24,619 $ 29,634
Demand Interest Bearing 135,523 112,865 108,987
Savings and Time Deposits
Less Than $100,000 139,160 94,812 108,907
Time Deposits $100,000 and Over 52,402 35,432 52,489
------- ------- --------
Total Deposits 377,110 267,728 300,017
------- ------- --------
Federal Funds Purchased 900 26,660 -
Other Borrowings 31,670 16,675 16,285
Other Liabilities 2,778 3,784 5,523
------- ------- --------
Total Liabilities 412,458 314,847 321,825
------- ------- --------
Shareholders' Equity:
Preferred Stock - 6,150 6,150
Common Stock 38 24 30
Additional Paid in Capital 11,631 4,774 4,879
Retained Earnings 19,119 15,031 16,994
Net Unrealized Loss on Sec-
urities Available for Sale (1,125) (993) (755)
------- ------- -------
Total Shareholders' Equity 29,663 24,986 27,298
------- ------- -------
Total Liabilities and $442,121 $339,833 $349,123
Shareholders' Equity ======== ======== ========
<PAGE>
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)
Three Months Six Months
Ended Ended
June 30, June 30,
1996 1995 1996 1995
------- ------ ------- -------
Interest Income:
Loans Receivable $7,080 $5,977 $13,501 $11,806
Investment Securities 733 922 1,312 1,905
Deposits in Banks 14 22 28 18
Federal Funds Sold 144 2 451 30
----- ------ ------ ------
Total Interest Income 7,971 6,923 15,292 13,759
----- ----- ------ ------
Interest Expense:
Deposits 3,198 2,473 6,334 4,731
Other 311 552 557 1,136
----- ----- ----- -----
Total Interest Expense 3,509 3,025 6,891 5,867
----- ----- ----- -----
Net Interest Income Before Provision
for Loan Losses 4,462 3,898 8,401 7,892
Provision for Loan Losses 103 9 112 18
----- ----- ----- ------
Net Interest Income After Provision
for Loan Losses 4,359 3,889 8,289 7,874
----- ----- ----- ----
Non-interest Income:
Service Charges 211 171 399 361
Other Fees and Charges 65 178 466 369
Gain on Sale of Investments 13 42 18 50
Gain on Sale of Loans 243 27 374 72
----- ----- ----- -----
Total Other Income 532 418 1,257 852
Non-interest Expense:
Salaries and Benefits 1,411 1,314 2,737 2,695
Occupancy 384 363 780 720
Other Expense 1,036 880 1,990 1,804
Loss on Sale of Investments - 27 - 32
Loss on Sale of Loans 3 1 7 6
----- ----- ----- -----
Total Other Expense 2,834 2,585 5,514 5,257
----- ----- ----- -----
Income from Operations 2,057 1,722 4,032 3,469
----- ----- ----- -----
Provision for Income Tax 753 600 1,458 1,236
----- ----- ----- -----
Net Income $1,304 $1,122 $2,574 $2,233
====== ====== ====== ======
Net Income Available to Common Stock $1,304 $1,014 $2,466 $2,017
====== ====== ====== ======
Net Income per Share $ 0.36 $ 0.33 $ 0.73 $ 0.66
Net Income per Share-Fully Diluted $ 0.34 $ 0.30 $ 0.67 $ 0.60
Book Value per Share $ 7.98 $ 6.10 $ 7.98 $ 6.10
Average Number of Shares Outstanding-
Primary 3,602 3,086 3,343 3,069
Average Number of Shares Outstanding-
Fully Diluted 3,828 3,729 3,824 3,711
<PAGE>
<TABLE>
<CAPTION>
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
(in thousands, except number of shares)
Net Unreal-
ized Loss
Additional on Securities
Preferred Stock Common Stock Paid-in Retained Available
Shares Amount Shares Amount Capital Earnings for Sale Total
------- ------ ------- ------ ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31, 1996 246,000 $6,150 2,979,72 $30 $4,879 $16,994 $(755) $27,298
Net Income - - - - - 2,574 - 2,574
Dividends - - - - - (449) - (449)
Exercise of Options - - 1,562 - 10 - - 10
Conversion ofPreferred (246,000)(6,150) 642,674 7 6,143 - - -
Conversion of Warrants - - 93,750 1 599 - - 600
Net Gain (Loss) - - - - - - (370) (370)
-------- ------ -------- --- ------ ------- ------ -------
Balance at
June 30, 1996 - $ - 3,717,714 $38 $11,631 $19,119 $(1,125) $29,663
======== ====== ========= === ======= ======= ======== ========
</TABLE>
<PAGE>
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
Six Months
Ended June 30,
1996 1995
------ ------
Operating Activities:
Net Income $ 2,574 $ 2,233
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision for Loan Losses 112 18
Depreciation and Amortization 382 457
Net Gain on Sale of Investments and Loans (392) (74)
Sales of Loans Originated for Resale 14,342 3,941
Loans Originated for Resale (9,607) (4,209)
(Increase) Decrease in Other Assets (4,761) (841)
(Increase) Decrease in Interest Receivable (1,285) 71
Increase (Decrease) in Other Liabilities (3,453) (1,586)
Increase (Decrease) in Interest Payable 708 100
------- -------
Net Cash Provided (Used) by Operating Activities (1,380) 110
------- -------
Investing Activities:
Federal Funds Sold, Net (Increase) Decrease 16,850 -
Net (Increase) Decrease in Interest Bearing
Deposits in Other Banks (445) 1,877
Proceeds From Maturities and Sales
of Held to Maturity Investments - 3,238
Purchases of Held to Maturity Securities - (75)
Proceeds From the Sales of Available
for Sale Investments 410 3,900
Proceeds From Maturities of Available
for Sale Investments 7,004 471
Purchases of Available for Sale Securities (14,129) (1,282)
Decrease in Net Unrealized Loss on
Securities Available for Sale 532 (1,866)
Purchases of Trading Securities (467) -
Proceeds From the Sale of Trading Securities 472 486
Net Increase in Loans (31,229) 6,699
Purchase of Property, Equipment, and
and Leasehold Improvements (189) (861)
Sale of Property, Equipment,
and Leasehold Improvements - 40
Acquisition of Subsidiary (372)
------- -------
Net Cash Used by Investing Activities (21,563) 12,627
------- -------
Financing Activities:
Net Changes in Deposit Accounts 10,516 (15,829)
Change in Net Unrealized Loss on
Securities Available for Sale (370) 1,163
Exercise of Common Stock Options 10 14
Redemption of Preferred Stock - (300)
Conversion of Warrants 600 -
Dividends Paid (449) (459)
Federal Funds Purchased 900 5,895
Other Borrowed Funds 15,385 (961)
------- -------
Net Cash Provided by Financing Activities 26,592 (10,477)
------- -------
Net Increase (Decrease) in Cash and Cash Equivalents 3,649 2,260
Cash and Cash Equivalents-Beginning of Year 10,029 9,104
------- -------
Cash and Cash Equivalents-End of Year $13,678 $11,364
======= =======
Cash Paid During the Year
Interest $ 6,162 $ 5,817
Income Taxes 1,410 1,218
------- -------
Total $ 7,572 $ 7,035
======= =======
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The Company is a bank holding company whose principal assets are the
common stock of Pitkin County Bank and Trust Company ("Pitkin"), a
commercial bank organized in 1979, the common stock of Centennial Savings
Bank, F.S.B. ("Centennial"), a thrift originally created in 1905 which
has its headquarters in Durango, Colorado, and the common stock of Val
Cor, a bank holding company formed in December, 1982. Val Cor owns 99.1%
of the common stock of Valley National Bank, a national bank
headquartered in Cortez, Colorado.
The Company acquired all of the stock of Centennial on October 6, 1993.
Centennial has five branches in Colorado, located in Grand Junction,
Montrose, Cortez, Pagosa Springs, and Dolores, and one branch in
Farmington, New Mexico. Centennial continues operating under its present
name and charter as a separate subsidiary of the Company. The
acquisition was accounted for using the purchase method of accounting.
Pitkin County Bank is headquartered in Aspen, Colorado, with a loan
production office in Telluride and a full service branch in El Jebel.
On June 18, 1996, the Company acquired all of the stock of Val Cor on
June 18, 1996. Valley has three branches in Colorado; two located in
Cortez and one located in Dolores. Valley continues to operate under its
present name and charter as a separate subsidiary of Val Cor. The total
purchase price was approximately $10.3 million including acquisition
expenses. Pursuant to the Second Amended Acquisition Agreement and Plan
of Merger dated January 12, 1996, Val Cor's stockholders received from
the Company $32.653 in cash for each share of Val Cor common stock owned
by them. The Company funded the acquisition through a combination of
bank debt of $6.5 million and cash on hand.
As a result of the acquisition, Val Cor's assets and liabilities were
adjusted on June 18, 1996 to reflect their fair values in conformity with
the procedures specified by Accounting Principles Board Opinion No. 16,
Business Combinations, for transactions reported on the basis of the
purchase method. This resulted in a net increase in stockholders' equity
as of June 18, 1996 of approximately $4.2 million.
On March 28, 1996 a Registration Statement on Form S-3 filed under the
Securities Act of 1933 became effective with respect to Common Stock
being issued upon conversion of the Company's Cumulative Convertible
Preferred Stock (the "Preferred Stock") and upon conversion of warrants
originally issued to the underwriters of the Company's public offering in
July, 1991. All shares of the Preferred Stock were converted to Common
Stock on April 15, 1996 at the rate of 2.6125 shares of Common Stock for
each one share of Preferred Stock, resulting in the issuance of 642,674
additional shares of Common Stock. The warrants were converted to common
stock on June 28, 1996, resulting in the issuance of 93,750 additional
shares of Common Stock. The following table presents pro forma earnings
per share at June 30, 1996, assuming conversion of the Preferred Stock as
of January 1, 1996.
Three Months Six Months
Ended June 30, 1996 Ended June 30, 1996
------------------- -------------------
Net Income $2,574,000 $1,304,000
Net Income per Share $ 0.69 $ 0.35
Average Number of
Shares Outstanding 3,718,000 3,718,000
<PAGE>
The following table provides a summary of the major elements of income
and expense for the second quarter of 1996 compared with the second
quarter of 1995 and the first six months of 1996 compared with the first
six months of 1995.
Percentage
Three Months Ended Change
June 30, Increase
1996 1995 Change (Decrease)
------ ------ ------ ----------
Interest Income $ 7,971 $ 6,923 $1,048 15.1%
Interest Expense 3,509 3,025 484 16.0%
----- ------ ----- -------
Net Interest Income 4,462 3,898 564 14.5%
Provision for Loan Losses 103 9 94 1044.4%
----- ------ ----- -------
Net Interest Income after
Provision for Loan Losses 4,359 3,889 470 12.1%
----- ------ ----- -------
Other Income 532 418 114 27.3%
Other Expense 2,834 2,585 249 9.6%
----- ----- ----- -------
Income from Operations 2,057 1,722 335 19.5%
Provision for Income Tax 753 600 153 25.5%
----- ----- ----- -------
Net Income $ 1,304 $ 1,122 $ 182 16.2%
======= ======= ====== =======
Net Income Available to
Common Stock $ 1,304 $ 1,014 $ 290 28.6%
======= ======= ====== =======
Earnings per Common Share $ 0.36 $ 0.33 $ 0.03 9.1%
Earnings per share-Fully Diluted $ 0.34 $ 0.30 $ 0.04 13.3%
Percentage
Six Months Ended Change
June 30, Increase
1996 1995 Change (Decrease)
------ ------ ------ --------
Interest Income $15,292 $13,759 $1,533 11.1%
Interest Expense 6,891 5,867 1,024 17.5%
------ ------ ----- ------
Net Interest Income 8,401 7,892 509 6.4%
Provision for Loan Losses 112 18 94 522.2%
------ ------ ----- ------
Net Interest Income after
Provision for Loan Losses 8,289 7,874 415 5.3%
------ ------ ----- ------
Other Income 1,257 814 443 54.4%
Other Expense 5,514 5,219 295 5.7%
------ ------ ----- ------
Income from Operations 4,032 3,469 563 16.2%
Provision for Income Tax 1,458 1,236 222 18.0%
------ ------ ------ ------
Net Income $ 2,574 $ 2,233 $ 341 15.3%
======= ======= ====== ======
Net Income Available to
Common Stock $ 2,466 $ 2,017 $ 449 22.3%
======= ======= ====== ======
Earnings per Common Share $ 0.73 $ 0.66 $ 0.07 10.6%
Earnings per share-Fully Diluted $ 0.67 $ 0.60 $ 0.07 11.7%
<PAGE>
Net Interest Income
The major portion of the Company's income results from net interest
income, which is the excess of interest generated by interest-earning
assets, including loan fees, over the interest paid for the funds
required to support these assets. Net interest income expressed as a
percentage of average total earning assets is referred to as the net
interest margin.
Net interest income is influenced primarily by changes in a) the volume
and mix of earning assets and sources of funding, b) market rates of
interest, and c) income tax rates. The effect of some of these factors
can be influenced by management policies and actions. External factors,
such as customer loan demand, Federal Reserve Board monetary policy and
changes in tax laws, can have a significant effect on net interest income
from one period to another.
For the six months ended June 30, 1996, net interest income rose by
$564,000, or 14.5%, over 1995. The increase was accounted for by a 7.5%
rise in average earning assets for the first six months, and a 3.4%
increase in the yield on average earning assets. For the quarter ended
June 30, 1996, average loans increased 12.1% or $30.9 million. Average
investment securities decreased 17.7% or $11.1 million for the quarter
ended June 30, 1996 as funds from maturing securities were used to supply
loan demand. The acquisition of Val Cor did not significantly effect
the average balance sheet of the Company as Val Cor's averages were only
included since June 18, 1996.
For the six months ended June 30, 1996, the net interest margin decreased
5 basis points, from 4.88% as of June 30, 1995 to 4.83% as of June 30,
1996. Average interest bearing deposits increased $36.0 million or
14.5%, partially replacing other borrowings which decreased 45.6% or
$16.3 million. Time deposits accounted for most of the increase in
average deposits. The net interest margin increased 24 basis points or
4.9%, from 4.86% in the second quarter of 1995 to 5.10% in the second
quarter of 1996. The net interest spread, which is the difference
between the rate earned on earning assets less the rate paid on interest-
bearing liabilities, decreased from 4.37% for the six months ended June
30, 1995 to 4.25% for the six months ended June 30, 1996, and increased
from 4.34% for the second quarter of 1995 to 4.53% for the second quarter
of 1996.
The tables on pages 10 and 11 present average balances, interest income
and interest expense, as well as average rates earned and paid on the
Company's major asset and liability items for the three months and six
months ended June 30, 1996 and 1995.
<PAGE>
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF CHANGE IN NET INTEREST INCOME
(unaudited)
(in thousands)
Three Months Ended
June 30, 1996 June 30, 1995
Average Income/ Yield/ Average Income/ Yield/
ASSETS Balance Expense Rate(1) Balance Expense Rate(1)
------- ------- ------- ------- ------- -------
Interest-Earning Assets:
Interest-Bearing Deposits
in Financial Institutions $ 1,076 $ 14 5.20% $ 1,820 $ 22 4.84%
U.S. Treasury and Agency
Securities 23,069 309 5.36% 29,348 408 5.56%
Tax Exempt Securities 3,218 30 3.73% 3,769 49 5.20%
Other Securities 25,458 394 6.19% 29,747 465 6.25%
Federal Funds Sold 10,372 144 5.55% 121 2 6.61%
Loans (2) 286,741 7,080 9.88% 255,850 5,977 9.34%
Real Estate Owned - - - -
------- ----- ----- ------- ----- -----
Total Earning Assets $349,934 $7,971 9.11% $320,655 $6,923 8.64%
------- ----- ----- -------- ------ -----
Cash and Due from Banks 10,238 7,764
Premises and Equipment 7,868 9,084
Accrued Interest Receivable 2,456 2,003
Allowance for Loan Losses (2,382) (2,199)
Net Unrealized Gain (Loss) on
Securities Available for Sale (1,451) (1,921)
Other Assets 4,008 2,684
------- --------
Total Assets $370,671 $338,070
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Demand Deposits $118,870 $ 957 3.22% $120,544 $940 3.12%
Savings Deposits 19,033 140 2.94% 20,303 146 2.88%
Time Deposits Over $100,000 50,236 763 6.08% 32,125 470 5.85%
Other Time Deposits 96,651 1,338 5.54% 73,784 917 4.97%
Other Borrowings 21,659 311 5.74% 34,316 552 6.43%
Total Interest-Bearing
Liabilities $306,449 $3,509 4.58% $281,072 $3,025 4.30%
-------- ------ ----- -------- ------ -----
Noninterest-Bearing Deposits 32,940 27,762
Other Liabilities 2,768 4,784
Shareholders' Equity 28,514 24,452
------ -------
Total Liabilities and
and Shareholders' Equity $370,671 $338,070
======== ========
Net Interest Income $4,462 $3,898
====== ======
Net Interest Spread 4.53% 4.34%
Net Interest Margin 5.10% 4.86%
(1) Annualized
(2) Includes Loans Held for Sale
<PAGE>
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF CHANGE IN NET INTEREST INCOME
(unaudited)
(in thousands)
Six Months Ended
June 30, 1996 June 30, 1995
Average Income/ Yield/ Average Income/ Yield/
ASSETS Balance Expense Rate(1) Balance Expense Rate(1)
------- ------- ------- ------- ------- -------
Interest-Earning Assets:
Interest-Bearing Deposits
in Financial Institutions $ 1,129 $ 28 4.96% $ 1,823 $ 43 4.72%
U.S. Treasury and Agency
Securities 19,615 488 4.98% 31,224 855 5.48%
Tax Exempt Securities 3,168 69 4.36% 3,765 101 5.37%
Other Securities 25,421 755 5.94% 29,240 949 6.49%
Federal Funds Sold 17,694 451 5.10% 163 5 6.13%
Loans (2) 280,483 13,501 9.63% 257,196 11,806 9.18%
Real Estate Owned - - - -
------- ------ ----- ------- ------ -----
Total Earning Assets $347,510 $15,292 8.80% $323,411 $13,759 8.51%
Cash and Due from Banks 10,143 7,061
Premises and Equipment 7,922 8,960
Accrued Interest 2,344 2,163
Allowance for Loan Losses (2,357) (2,190)
Net Unrealized Gain (Loss) on
Securities Available for Sale (1,243) (2,304)
Other Assets 3,844 3,966
------- -------
Total Assets $368,163 $341,067
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
Demand Deposits $117,401 $ 1,836 3.13% $123,966 $ 1,923 3.10%
Savings Deposits 19,332 277 2.87% 20,803 316 3.04%
Time Deposits Over $100,000 51,187 1,520 5.94% 31,193 841 5.39%
Other Time Deposits 95,511 2,701 5.66% 71,538 1,651 4.62%
Other Borrowings 19,473 557 5.72% 35,799 1,136 6.35%
------ ----- ----- ------- ----- -----
Total Interest-Bearing
Liabilities $302,904 $6,891 4.55% $283,299 $5,867 4.14%
------- ----- ----- ------- ----- -----
Noninterest-Bearing Deposits 33,466 29,252
Other Liabilities 3,636 4,627
Shareholders' Equity 28,157 23,889
------ ------
Total Liabilities and
Shareholders' Equity $368,163 $341,067
======== ========
Net Interest Income $8,401 $7,892
====== ======
Net Interest Spread 4.25% 4.37%
Net Interest Margin 4.83% 4.88%
(1) Annualized
(2) Includes Loans Held for Sale
<PAGE>
ASPEN BANCSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF VOLUME AND RATE CHANGES ON NET INTEREST INCOME
AND EXPENSE
(unaudited)
(in thousands)
For the Six Months Ended
June 30, 1996 over June
30, 1995
Yield
Volume(1) Rate(2) /Total
------- ------ -------
Increase (Decrease) in Interest Income:
Interest-Bearing Deposits
in Financial Institutions $ (17) $ 2 $ (15)
U.S. Treasury and Agency Securities (289) (78) (367)
Tax Exempt Securities (13) (19) (32)
Other Securities (113) (81) (194)
Federal Funds Sold 447 (1) 446
Loans (3) 1,121 574 1,695
----- ---- -----
Total Earning Assets $1,135 $398 $1,533
====== ==== ======
Increase (Decrease) in Interest Expense:
Demand Deposits $ (103) $ 16 $ (87)
Savings Deposits (21) (18) (39)
Time Deposits Over $100,000 594 85 679
Other Time Deposits 678 372 1,050
Federal Funds Purchased and
Other Borrowed Money (467) (112) (579)
----- ---- -----
Total Interest-Bearing Liabilties $ 681 $343 $1,024
====== ==== ======
Increase (Decrease) in Net
Interest Income $ 454 $ 55 $ 509
====== ===== ======
(1) Represents the difference betweeen the average balances of the two
periods applied to the current year average rate, adjusted from
an annualized rate to six month activity.
(2) Represents the difference between the average rates of the two
periods applied to the prior year average balance, adjusted from
an annualized rate to six month activity.
(3) Loans held for sale are included.
<PAGE>
Other Income
Overall, other income increased 54.4%, or $443,000, for the first six
months of 1996 versus the same period in 1995. This is primarily
attributable to an increase of $301,000 in gains on sales of loans.
Other fees and charges increased 26.3% for the six months ended June 30,
1996 over June 30, 1995 also primarily due to an increase in mortgage
servicing fees related to the increase in mortgage loan demand.
Other Expenses
Other expenses increased $295,000 or 5.7% from the six months ended June
30, 1995 to the similar period in 1996 and $249,000 or 9.6% for the three
months ended June 30, 1996 over the same period in 1995. Other expenses
include items such as occupancy, data processing, insurance, and legal
fees. Salaries and benefits increased $42,000 or 1.6% in the first six
months of 1996 versus the same period in 1995. Staff increased from 163
to 218 employees from June 30, 1995 to June 30, 1996, primarily due to
the acquisition of Val Cor. At June 30, 1996, Pitkin had 64 employees,
Centennial had 109 employees and Valley had 45 employees. At June 30,
1995, Pitkin had 63 employees and Centennial had 100 employees.
Provision for Income Taxes
The effective tax rate for the six months ended June 30, 1996 is 36.2%
compared to 35.6% for the six months ended June 30, 1995. These rates are
less than the statutory tax rate of 39.5%, primarily due to earnings on
investments which are tax-exempt for state purposes.
Allowance for Loan Loss
The Company maintains its allowance for loan losses at a level considered
by management to be adequate to cover the risk of loss in the loan
portfolio at a particular point in time. In determining whether an
additional amount should be added to the reserve in excess of the amount
of loan losses, management takes into consideration a number of factors,
including loss experience in relation to outstanding loans and the
existing level of the reserve for losses, a continuing review of problem
loans and overall portfolio quality, regular examinations of the loan
portfolio conducted by the Company's staff and by State and Federal
supervisory authorities and economic conditions. During the period from
June 30, 1995 to June 30, 1996, loans increased 28.3%, or $72.1 million.
The increase is attributable to continued strong loan demand and
approximately $42 million to the acquisition of Val Cor. The loan loss
reserve increased 47.2% or $1.034 million from June 30, 1995 to June 30,
1996, primarily attributable to the acquisition of Val Cor. Management
of the Company established this level of reserve after extensive analysis
and continuing reviews.
Beginning with fiscal 1995, the Company adopted Financial Accounting
Standards No. 114, "Accounting by Creditors for Impairment of a Loan"
(SFAS No. 114), and Financial Accounting Standards No. 118, "Accounting
by Creditors for Impairment of a Loan-Income Recognition and Disclosures"
(SFAS No. 118).
A loan is impaired when, based on current information and events, it is
probable that the Company will be unable to collect all amounts due
according to the contractual terms of the loan agreement. Loans are not
classified as impaired because of minimal payment delays or insignificant
shortfalls in amounts if management expects to collect all amounts due
including interest. Management determines loan impairments on a loan by
loan basis for the entire portfolio.
Accrual of interest can be discontinued on impaired loans and loans
designated as nonaccrual loans. Accrual of interest on loans is
generally discontinued either when reasonable doubt exists as to the
full, timely collection of interest or principal, or when a loan becomes
contractually past due 90 days or more with respect to interest or
principal. When a loan is placed on impaired or nonaccrual status, all
interest previously accrued but not collected is charged against income.
Income on such loans is then recognized only to the extent that cash is
received and where the future collection of principal is probable.
Interest accruals are resumed on such loans only when they are brought
fully current with respect to such interest and principal and when, in
the judgment of management, the loans are estimated to be fully
collectible as to both principal and interest.
For impaired loans based on SFAS No. 114, the entire change in present
value of expected cash flows is reported as bad debt expense in the same
manner in which impairment initially was recognized or as a reduction in
the amount of bad debt expense that otherwise would be reported. The
Company had no loans considered impaired at June 30, 1996.
<PAGE>
LOAN LOSS RESERVE ANALYSIS
(unaudited)
(in thousands)
June 30,
1996 1995
-------- -------
Balance, Beginning of Period $ 2,197 $ 2,178
Provision Charged to Operations 112 18
Loans Charged Off (5) (8)
Recoveries of Loans Previously
Charged Off 15 2
Other-Val Cor Balance
at Acquisition Date 905 -
------ -----
Balance, End of Period $ 3,224 $ 2,190
======== ========
Ending Loan Portfolio (1) $332,812 $256,283
======== ========
Allowance For Loan Losses as a
Percentage of Ending Loan Portfolio 0.97% 0.85%
======== ========
NONPERFORMING ASSETS
(unaudited)
(in thousands)
June 30,
1996 1995
------- -------
Non-accrual Loans $ 68 $ -
Loans 90 days Past Due and Still
Accruing Interest 1,806 1,181
------ -----
Total Nonperforming Loans and Assets 1,874 1,181
====== ======
Nonperforming Loans to Total Ending
Loans 0.56% 0.46%
======= =======
Nonperforming Assets to Total Ending
Loans and Other Assets Acquired 0.56% 0.46%
======= =======
(1) Includes Loans Held for Sale
Real Estate Owned
There was no other real estate owned at June 30, 1996.
Other Banks Owned
The Company had no other banks owned at June 30, 1996.
At June 30, 1996, Pitkin owned 70.8% of the total capital stock of
Thatcher Financial Group, Inc. ("TFG"). Pitkin acquired the stock at
sale of the collateral on a loan made by Pitkin. TFG's primary asset was
100% of the common stock of Thatcher Bank, F.S.B. Pitkin also had a loan
collateralized by the stock of Thatcher Bank and an art collection.
During 1993, Pitkin sold the stock of Thatcher Bank and the art
collection. Proceeds from the sales were used to satisfy outstanding
loan principal, interest and expenses related to the loans made by
Pitkin. Directors of TFG, who are parties related to Pitkin, are in the
process of determining outstanding liabilities, including possible
federal and state income taxes payable. The determination of some of
these liabilities is dependent upon the final outcome of pending
litigation. After determination and payment of outstanding liabilities
of TFG, TFG directors plan to distribute the remaining funds, if any, to
the shareholders of TFG. There is no determination as to when this can
be accomplished. Pitkin has not recorded any receivable with respect to
its ownership of TFG stock. At June 30, 1996, TFG had assets, primarily
cash and investments, of approximately $1 million (unaudited).
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
See discussion in the Company's Annual Report on Form 10-K dated for
the year ended December 31, 1995, which is incorporated herein by this
reference.
In May, 1996, management of Centennial determined that it had no
further liability regarding clean-up costs on a property that was
obtained through foreclosure. Management had previously accrued
approximately $112,000 in other liabilites for costs to protect
Centennial's interest. The accrual was reversed.
Item 4. Submission of Matters to a Vote of Security Holders
a. The Company's Annual Meeting of Shareholders was held on May 23,
1996.
c. The following matters were voted upon at the Annual Meeting:
1. Election of six directors to hold office until the next
Annual Meeting of Shareholders, or until their respective
successors shall be elected and qualified.
Name of Director Votes For Votes Against Votes Withheld
---------------- --------- ------------- --------------
Morton A. Heller 2,238,331 686
Charles B.Israel 2,238,331 686
J. Thomas Clark, Jr. 2,238,331 686
Carol Ann Kopf 2,238,316 701
Robert R. Oden, M.D. 2,237,706 1,311
Christopher L. Tolk 2,237,706 1,311
2. Ratify selection of Dalby Wendland & Co. , P.C., Certified
Public Accountants, as the Company's independent accountant
for 1996.
Votes For Votes Against Votes Withheld
--------- ------------- --------------
2,236,652 1,678 687
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit
Number Description of Exhibit
------ ----------------------
3.1 Articles of Incorporation of Aspen
Bancshares, Inc. (1)
3.2 Bylaws of Aspen Bancshares, Inc. (1)
10.1 Pitkin County Bank and Trust Co.
Building Lease (1)
10.2 Form of Loan Participation Agreement (1)
10.3 Incentive Stock Option Plan (1)
10.4 Non-qualified Stock Option Plan (2)
10.5 Second Amended Acquisition Agreement
and Plan of Merger between Aspen
Bancshares, Inc. and Val Cor
Bancorporation, Inc. dated January
12, 1996 (3)
10.6 Loan Agreement between Aspen
Bancshares, Inc. and The Laredo
National Bank dated June 18, 1996
11.0 Statement Regarding Computation of
Per Share Earnings:
Statement re: Computation of Earnings per Share
Weighted Average Shares
Outstanding:
(in thousands)
(unaudited)
Three Months Six Months Ended
Ended
June 30, June 30,
1996 1995 1996 1995
------- ------- ------- -------
Common Stock 3,492 2,968 3,236 2,968
Incentive Stock Options 78 60 76 54
Warrants - 43 - 39
Nonqualified Stock Options 32 16 31 9
----- ----- ----- -----
Primary Shares Outstanding 3,602 3,086 3,343 3,069
Convertible Preferred and Warrants 226 643 481 642
----- ----- ----- -----
Fully Diluted Shares Outstanding 3,828 3,729 3,824 3,711
===== ===== ===== =====
Net Income Net Income
Net Income $1,304 $1,122 $2,574 $2,233
Less: Preferred Dividends Paid - 108 108 216
----- ----- ----- -----
Net income available to
Common Stock $1,304 $1,014 $2,466 $2,017
====== ====== ====== ======
27.0 Financial Data Schedule
(1) Incorporated by reference from the Company's Form S-1
Registration Statement, File No. 33-37098
(2) Incorporated by reference from the Company's Form S-8 Registration
Statement, File No. 33-93908
(3) Incorporated by reference from the Company's Form S-3 Registration
Statements, File No. 33-97700
b. Reports on Form 8-K
A report on Form 8-K was filed on June 27, 1996 regarding the
acquisition of Val Cor Bancorporation, Inc. by the Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ASPEN BANCSHARES, INC.
Date: By: /s/ Charles B. Israel
Charles B. Israel,
President and CEO
Date: By: /s/ Amy G. Beidleman
Amy G. Beidleman, Vice
President, CFO and Secretary
