SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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 0-20082
Alliance Bancorp
(Exact name of registrant as specified in its charter)
Delaware 36-3811768
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Grant Square, Hinsdale, Illinois 60521
(Address of principal executive offices) (Zip Code)
(630) 323-1776
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all the
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES |X| NO______
Indicate the number of shares outstanding of each of the issuer's classes
of stock, as of the latest practicable date.
Common Stock, $0.01 par value -11,021,628 shares outstanding as of August
7, 1999.
<PAGE>
Alliance Bancorp and Subsidiaries
Form 10-Q
Index
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (unaudited)
Consolidated Statements of Financial Condition
as of June 30, 1999 and December 31, 1998 1
Consolidated Statements of Income for the Three
and Six Months Ended June 30, 1999 and 1998 2
Consolidated Statements of Changes in Stockholders' Equity
for the Six Months Ended June 30, 1999 and 1998 3
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1999 and 1998 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Asset/Liability Management" 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities and Use of Proceeds 20
Item 3. Defaults upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 22
Signature Page 23
<PAGE>
Alliance Bancorp and Subsidiaries
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
June 30, December 31,
(In thousands, except share data) 1999 1998
- --------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Assets
Cash and due from banks $ 9,273 17,195
Interest-bearing deposits 1,262 63,802
Investment securities available for sale, at fair value 84,579 61,516
Mortgage-backed securities available for sale, at fair value 468,869 332,347
Loans, net of allowance for losses of $6,307 at
June 30, 1999 and $6,350 at December 31, 1998 1,275,550 1,333,401
Accrued interest receivable 11,026 10,759
Real estate 21,618 20,185
Premises and equipment, net 12,684 12,590
Stock in Federal Home Loan Bank of Chicago, at cost 25,572 24,523
Due from broker - 71,336
Other assets 42,160 34,842
- --------------------------------------------------------------------------------------------------------------------
$ 1,952,593 1,982,496
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 1,231,273 1,298,044
Borrowed funds 516,977 464,450
Advances by borrowers for taxes and insurance 12,418 12,935
Accrued expenses and other liabilities 18,404 21,130
- --------------------------------------------------------------------------------------------------------------------
Total liabilities 1,779,072 1,796,559
- --------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Preferred stock, $.01 par value; authorized 1,500,000 shares; none outstanding - -
Common stock, $.01 par value; authorized 21,000,000 shares;
11,659,211 shares issued and 11,020,628 outstanding at June 30, 1999
11,617,903 shares issued and 11,463,881 outstanding at December 31, 1998 117 116
Additional paid-in capital 107,602 107,130
Retained earnings, substantially restricted 86,227 80,219
Treasury stock, at cost; 638,583 shares at June 30, 1999 and
154,022 at December 31, 1998 (11,202) (1,511)
Accumulated other comprehensive loss (9,223) (17)
- --------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 173,521 185,937
- --------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
- --------------------------------------------------------------------------------------------------------------------
$ 1,952,593 1,982,496
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
Alliance Bancorp and Subsidiaries
Consolidated Statements of Income
Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except per share amounts) 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C>
Interest Income:
Loans $ 23,437 23,776 47,312 47,293
Mortgage-backed securities 7,182 7,391 12,584 12,568
Investment securities 1,842 2,621 3,331 5,154
Interest-bearing deposits 441 566 2,172 2,011
- --------------------------------------------------------------------------------------------------------------------
Total interest income 32,902 34,354 65,399 67,026
- --------------------------------------------------------------------------------------------------------------------
Interest Expense:
Deposits 13,043 15,168 26,682 30,339
Borrowed funds 6,618 6,131 12,733 10,690
Collateralized mortgage obligations - 15 - 38
- --------------------------------------------------------------------------------------------------------------------
Total interest expense 19,661 21,314 39,415 41,067
- --------------------------------------------------------------------------------------------------------------------
Net interest income 13,241 13,040 25,984 25,959
Provision for loan losses 50 56 100 162
- --------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan 13,191 12,984 25,884 25,797
losses
- --------------------------------------------------------------------------------------------------------------------
Noninterest Income:
Gain on sales of loans 87 113 469 152
Gain (loss) on sales of mortgage-backed securities
available for sale (17) - (22) 326
Gain on sales of investment securities available
for sale - - - 178
Income from real estate operations 1,217 206 1,728 901
Servicing fee income 83 78 231 152
ATM fee income 547 507 1,027 968
Other fees and commissions 4,710 3,793 9,514 8,060
Other 56 153 436 289
- --------------------------------------------------------------------------------------------------------------------
Total noninterest income 6,683 4,850 13,383 11,026
- --------------------------------------------------------------------------------------------------------------------
Noninterest Expense:
Compensation and benefits 6,962 8,420 14,369 14,647
Occupancy expense 1,842 1,556 3,616 3,062
Federal deposit insurance premiums 192 203 393 404
Advertising expense 332 299 542 479
ATM expense 340 443 680 836
Computer services 327 594 664 1,005
Other 2,780 3,196 5,387 5,373
- --------------------------------------------------------------------------------------------------------------------
Total noninterest expense 12,775 14,711 25,651 25,806
- --------------------------------------------------------------------------------------------------------------------
Income before income taxes 7,099 3,123 13,616 11,017
Income tax expense 2,592 1,382 4,508 4,439
- --------------------------------------------------------------------------------------------------------------------
Net income $ 4,507 1,741 9,108 6,578
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Basic earnings per share $ 0.41 0.15 0.81 0.58
Diluted earnings per share $ 0.39 0.14 0.78 0.55
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
Alliance Bancorp and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
Common Accumulated
Additional Stock Other
Comprehensive Common Paid-in Retained Treasury Purchased Comprehensive
(In thousands, except per share amounts) Income Stock Capital Earnings Stock By ESOP Income (Loss) Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(unaudited)
Six Months Ended June 30, 1998
Balance at December 31, 1997 $ 114 104,178 70,851 (1,527) (320) 1,630 174,926
Net income 6,578 - - 6,578 - - - 6,578
Other comprehensive income, net of tax
Change in unrealized gain (loss) on
securities available for sale, net of (962) - - - - - (962) (962)
reclassification adjustment
------------
Total comprehensive income 5,616
Cash dividends declared, $0.25 per share - - (2,867) - - - (2,867)
Treasury stock distributed under employee
benefit plan - (17) - 16 - - (1)
Issuance of stock (71,866 shares) 1 1,499 - - - - 1,500
Proceeds from exercise of stock options 1 495 - - - - 496
Tax benefit from stock related compensation - 645 - - - - 645
Principal payment on ESOP loan - - - - 320 - 320
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1998 $ 116 106,800 74,562 (1,511) - 668 180,635
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, 1999
Balance at December 31, 1998 $ 116 107,130 80,219 (1,511) - (17) 185,937
Net income 9,108 - - 9,108 - - - 9,108
Other comprehensive income, net of tax
Change in unrealized gain (loss) on
securities available for sale, net of (9,206) - - - - - (9,206) (9,206)
reclassification adjustment
----------
Total comprehensive loss (98)
Cash dividends declared, $0.28 per share - - (3,100) - - - (3,100)
Purchase of treasury stock - - - (9,691) - - (9,691)
Proceeds from exercise of stock options 1 278 - - - - 279
Tax benefit from stock related - 194 - - - - 194
compensation
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1999 $ 117 107,602 86,227 (11,202) - (9,223) 173,521
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
Alliance Bancorp and Subsidiaries
Consolidated Statements of Cash Flows
Six Months Ended
June 30,
(In thousands) 1999 1998
- --------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 9,108 6,578
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization 1,274 898
Provision for loan losses 100 162
Amortization of premiums, discounts, and deferred loan fees 808 620
Originations of loans held for sale (349,470) (393,663)
Sale of loans originated for resale 438,411 306,608
Gain on sales of loans (469) (152)
(Gain) loss on sales of mortgage-backed securities available for sale 22 (326)
Gain on sales of investment securities available for sale - (178)
Increase in accrued interest receivable (267) (2,623)
Increase in other assets (2,215) (11,323)
Increase (decrease) in accrued expenses and other liabilities (2,470) 10,928
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 94,832 (82,471)
- --------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Loans originated or purchased for investment (223,796) (196,372)
Purchases of:
Mortgage-backed securities available for sale (237,351) (359,763)
Investment securities available for sale (64,655) (66,479)
Stock in Federal Home Loan Bank of Chicago (2,500) (10,173)
Premises and equipment (1,368) (1,749)
Proceeds from sale of:
Mortgage-backed securities available for sale 84,665 51,046
Investment securities available for sale - 234
Stock in Federal Home Loan Bank of Chicago 1,451 370
Loans held for investment 14,594 3,286
Proceeds from maturities of investment securities available for sale 39,425 75,487
Net (increase) decrease in real estate joint ventures (1,786) 350
Principal collected on loans 178,170 188,210
Principal collected on mortgage-backed securities available for sale 75,192 44,214
- --------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (137,959) (271,339)
- --------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Net increase (decrease) in deposits (66,771) 12,635
Proceeds from borrowed funds 59,327 395,287
Repayment of borrowed funds (6,800) (78,500)
Repayment of collateralized mortgage obligations - (535)
Net increase (decrease) in advance payments by borrowers for taxes and insurance (517) 140
Purchase of treasury stock (9,691) -
Proceeds from sale of treasury stock - 1,500
Cash dividends paid (3,162) (2,867)
Decrease in ESOP loan - 320
Proceeds from exercise of stock options 279 496
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (27,335) 328,476
- --------------------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (70,462) (25,334)
Cash and cash equivalents at beginning of period 80,997 58,513
- --------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 10,535 33,179
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 39,270 40,225
Income taxes 6,485 7,343
Supplemental Disclosures of Noncash Activities:
Loans exchanged for mortgage-backed securities $ 473 11,527
Additions to real estate acquired in settlement of loans $ 208 740
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
Alliance Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)
Six Months Ended June 30, 1999 and 1998
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting of only normal recurring
accruals) necessary for a fair presentation have been included.
The unaudited consolidated financial statements include the accounts of
Alliance Bancorp (the "Company") and its wholly-owned subsidiaries. All material
intercompany balances and transactions have been eliminated.
(2) Comprehensive Income
The following table sets forth the required disclosures of the
reclassification amounts as presented in the statements of changes in
stockholders' equity and the related tax effects allocated to each component of
other comprehensive income for the periods indicated:
<TABLE>
<CAPTION>
Before Tax Net
Tax (Expense) of Tax
(In thousands) Amount or Benefit Amount
- -------------------------------------------------------------------- ---- -------------- ------------- -------------
<S> <C> <C> <C>
Six Months Ended June 30, 1998
Disclosure of reclassification amount:
Unrealized holding gain (loss) on securities arising during
the period $ (1,961) 696 (1,265)
Less: reclassification adjustment for gain (loss) included in
net income 504 (201) 303
- -------------------------------------------------------------------- ---- -------------- ------------- -------------
Net unrealized gain (loss) on securities $ (1,457) 495 (962)
- -------------------------------------------------------------------- ---- -------------- ------------- -------------
Six Months Ended June 30, 1999
Disclosure of reclassification amount:
Unrealized holding gain (loss) on securities arising during
the period $ (14,141) 4,949 (9,192)
Less: reclassification adjustment for gain (loss) included in
net income (22) 8 (14)
- -------------------------------------------------------------------- ---- -------------- ------------- -------------
Net unrealized gain (loss) on securities $ (14,163) 4,957 (9,206)
- -------------------------------------------------------------------- ---- -------------- ------------- -------------
</TABLE>
5
<PAGE>
Alliance Bancorp and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
(unaudited)
Six Months Ended June 30, 1999 and 1998
(3) Earnings per Share
The following table sets forth the computation of basic and diluted earnings
per share for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ---------------------------
(In thousands, except share data) 1999 1998 1999 1998
- ------------------------------------------------------ ---- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Numerator:
Net income $ 4,507 1,741 9,108 6,578
Denominator:
Basic earnings per share-weighted average shares 11,042,591 11,364,946 11,217,619 11,327,323
Effect of dilutive securities-stock options 550,956 644,909 521,192 641,812
Diluted earnings per share-adjusted weighted
average shares 11,593,547 12,009,855 11,738,811 11,969,135
Basic earnings per share $ 0.41 0.15 0.81 0.58
Diluted earnings per share $ 0.39 0.14 0.78 0.55
</TABLE>
(4) Commitments and Contingencies
At June 30, 1999, the Company had outstanding commitments to originate or
purchase loans of $115.9 million. Unused equity lines of credit available to
customers were $102.6 million at June 30, 1999.
(5) Operating Segments
The Company's operations include two primary segments: banking and mortgage
brokerage. Through its banking subsidiary's network of 20 retail banking
facilities in Chicago; north, west and southwestern Cook County; and DuPage
County in Illinois, the Company provides traditional community banking services
such as accepting deposits and making loans. Mortgage brokerage activities
conducted through the Bank's subsidiary, Preferred Mortgage Associates, Ltd.
("Preferred") include the origination of primarily residential mortgage loans
for sale to various investors as well as to the Bank. The Company's two
reportable segments are strategic business units that are separately managed as
they offer different products and services and have different marketing
strategies. Smaller operating segments are combined and consist of financial
advice and brokerage services, insurance, joint venture real estate
developments, and holding company investments. Assets and results of operations
are based on generally accepted accounting principles, with profit and losses of
equity method investees excluded. Inter-segment revenues and expenses are
eliminated in reporting consolidated results of operations.
<TABLE>
<CAPTION>
Operating segment information is as follows:
Mortgage Inter-segment Consolidated
(In thousands) Banking Brokerage Other Eliminations Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Three Months Ended June 30, 1999
Interest income $ 32,951 486 121 (656) 32,902
Interest expense 19,671 537 109 (656) 19,661
- --------------------------------------------------------------------------------------------------------------------
Net interest income (expense) 13,280 (51) 12 - 13,241
Provision for loan losses 50 - - - 50
- --------------------------------------------------------------------------------------------------------------------
Net interest income after provision for
loan losses 13,230 (51) 12 - 13,191
Other fees and commissions 1,358 3,696 681 (395) 5,340
Other noninterest income 118 - 1,275 (50) 1,343
Noninterest expense 8,726 3,779 715 (445) 12,775
- --------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 5,980 (134) 1,253 - 7,099
Income tax expense (benefit) 2,148 (53) 497 - 2,592
- --------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 3,832 (81) 756 - 4,507
- --------------------------------------------------------------------------------------------------------------------
Assets $ 1,926,441 58,641 37,485 (69,974) 1,952,593
- --------------------------------------------------------------------------------------------------------------------
Investment in equity method investees $ 9,086 - 164,431 - -
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Alliance Bancorp and Subsidiaries
Notes to Consolidated Financial Statements - (Continued)
(unaudited)
Six Months Ended June 30, 1999 and 1998
Mortgage Inter-segment Consolidated
(In thousands) Banking Brokerage Other Eliminations Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1999
Interest income $ 65,178 1,558 336 (1,673) 65,399
Interest expense 39,442 1,434 212 (1,673) 39,415
- --------------------------------------------------------------------------------------------------------------------
Net interest income 25,736 124 124 - 25,984
Provision for loan losses 100 - - - 100
- --------------------------------------------------------------------------------------------------------------------
Net interest income after provision for
loan losses 25,636 124 124 - 25,884
Other fees and commissions 2,646 8,132 1,249 (1,255) 10,772
Other noninterest income 645 - 2,066 (100) 2,611
Noninterest expense 17,989 7,680 1,337 (1,355) 25,651
- --------------------------------------------------------------------------------------------------------------------
Income before income taxes 10,938 576 2,102 - 13,616
Income tax expense 3,449 224 835 - 4,508
- --------------------------------------------------------------------------------------------------------------------
Net income $ 7,489 352 1,267 - 9,108
- --------------------------------------------------------------------------------------------------------------------
Assets $ 1,926,441 58,641 37,485 (69,974) 1,952,593
- --------------------------------------------------------------------------------------------------------------------
Investment in equity method investees $ 9,086 - 164,431 - -
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30, 1998
Interest income $ 34,177 1,490 344 (1,657) 34,354
Interest expense 21,366 1,476 124 (1,652) 21,314
- --------------------------------------------------------------------------------------------------------------------
Net interest income 12,811 14 220 (5) 13,040
Provision for loan losses 56 - - - 56
- --------------------------------------------------------------------------------------------------------------------
Net interest income after provision for
loan losses 12,755 14 220 (5) 12,984
Other fees and commissions 1,293 3,534 619 (1,068) 4,378
Other noninterest income 369 - 189 (86) 472
Noninterest expense 10,949 3,121 1,800 (1,159) 14,711
- --------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 3,468 427 (772) - 3,123
Income tax expense 1,113 167 102 - 1,382
- --------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 2,355 260 (874) - 1,741
- --------------------------------------------------------------------------------------------------------------------
Assets $ 2,004,851 137,580 41,837 (116,071) 2,068,197
- --------------------------------------------------------------------------------------------------------------------
Investment in equity method investees $ 10,497 - 160,463 - -
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, 1998
Interest income $ 66,663 2,228 738 (2,603) 67,026
Interest expense 41,207 2,198 253 (2,591) 41,067
- --------------------------------------------------------------------------------------------------------------------
Net interest income 25,456 30 485 (12) 25,959
Provision for loan losses 162 - - - 162
- --------------------------------------------------------------------------------------------------------------------
Net interest income after provision for
loan losses 25,294 30 485 (12) 25,797
Other fees and commissions 2,511 6,751 1,134 (1,216) 9,180
Other noninterest income 985 - 1,033 (172) 1,846
Noninterest expense 18,585 6,064 2,557 (1,400) 25,806
- --------------------------------------------------------------------------------------------------------------------
Income before income taxes 10,205 717 95 - 11,017
Income tax expense 3,716 280 443 - 4,439
- --------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 6,489 437 (348) - 6,578
- --------------------------------------------------------------------------------------------------------------------
Assets $ 2,004,851 137,580 41,837 (116,071) 2,068,197
- --------------------------------------------------------------------------------------------------------------------
Investment in equity method investees $ 10,497 - 160,463 - -
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(6) Reclassifications
Certain reclassifications of prior year amounts have been made to conform
with the current year presentation.
7
<PAGE>
Alliance Bancorp and Subsidiaries
Management's Discussion and Analysis of Financial Condition and Results of
Operations
General
Alliance Bancorp ( the "Company") is a registered savings and loan holding
company incorporated under the laws of the state of Delaware and is engaged in
the business of providing financial service products to the public through its
wholly-owned subsidiary, Liberty Federal Bank (the "Bank").
The Bank, a Federal savings bank chartered under the authority of the
Office of Thrift Supervision ("OTS"), originally was organized in 1934, and
changed its charter from a federal savings and loan association to a federal
savings bank in 1991. The Bank is a member of the Federal Home Loan Bank
("FHLB") System and its deposit accounts are insured to the maximum allowable
amount by the Federal Deposit Insurance Corporation ("FDIC"). The Bank is
regulated by the OTS and the FDIC and is further regulated by the Board of
Governors of the Federal Reserve System as to reserves required to be maintained
against deposits and certain other matters.
The Bank is a community-oriented company providing financial services
through twenty full service retail banking facilities in Chicago; north, west
and southwestern Cook County; and DuPage County in Illinois. The Bank offers a
variety of deposit products in an attempt to attract funds from the general
public in highly competitive market areas surrounding its offices. In addition
to deposit products, the Bank also offers its customers financial advice and
security brokerage services through INVEST Financial Corporation ("INVEST"). The
Bank invests its retail deposits primarily in mortgage and consumer loans,
investment securities and mortgage-backed securities, secured primarily by
one-to four-family residential loans.
The earnings of the Bank are primarily dependent on its net interest
income, which is the difference between the interest income earned on its loans,
mortgage-backed and investment securities portfolios, and its cost of funds,
consisting of the interest paid on its deposits and borrowings.
On May 31, 1995, the Company acquired Preferred Mortgage Associates, Ltd.
("Preferred"), one of the largest mortgage brokers in the Chicago metropolitan
area. Preferred has four mortgage origination offices including its headquarters
in Downers Grove, Illinois. The acquisition of Preferred has resulted in
increases in both noninterest income and noninterest expense.
The Bank's earnings are also affected by noninterest income, including
income related to loan origination fees contributed by Preferred and the
noncredit consumer related financial services offered by the Bank, such as net
commissions received by the Bank from securities brokerage services, commissions
from the sale of insurance products, loan servicing income, fee income on
transaction accounts, and interchange fees from its shared ATMs. The Bank's
noninterest income has also been affected by gains from the sale of various
assets, including loans, mortgage-backed securities, investment securities, loan
servicing, and real estate. Noninterest expense consists principally of employee
compensation and benefits, occupancy expense, federal deposit insurance
premiums, and other general and administrative expenses of the Bank and
Preferred.
On February 10, 1997, the Company (then named Hinsdale Financial
Corporation) and Liberty Bancorp, Inc., the holding company for Liberty Federal
Savings Bank, consummated a merger in a stock-for-stock exchange. In connection
with that transaction, Liberty Federal Savings Bank was merged into Hinsdale
Federal Bank for Savings, and the resulting Bank operates under the name Liberty
Federal Bank. The transaction was accounted for under the purchase method of
accounting and 1.054 shares of Alliance Bancorp common stock were exchanged for
each share of Liberty Bancorp outstanding common stock. There were 3,930,405
shares of common stock of Alliance Bancorp issued for 3,733,013 shares of
Liberty Bancorp common stock. Liberty Bancorp had total assets of $680 million
and deposits of $516 million at the date of the merger. The fair value of the
net assets acquired approximated the purchase price, accordingly; no goodwill
was recorded.
8
<PAGE>
On June 30, 1998, the Company consummated the acquisition of Southwest
Bancshares, the holding company for Southwest Federal Savings and Loan
Association of Chicago ("the Association"). The transaction was accounted for
under the pooling-of-interests method of accounting and 1.1981 shares of
Alliance Bancorp common stock were exchanged for each share of Southwest
Bancshares outstanding common stock. There were 3,411,500 shares of Alliance
Bancorp shares issued for 2,847,585 shares of Southwest Bancshares. Southwest
Bancshares had total assets of $391 million and deposits of $308 million at the
date of acquisition. The consolidated financial statements of Alliance Bancorp
for periods prior to the combination have been restated to include the accounts
and the results of operations of Southwest Bancshares for all periods presented.
The Bank's results of operations are also significantly affected by general
economic and competitive conditions, particularly changes in market interest
rates, government policies and actions of regulatory authorities.
Forward-Looking Statements
This Quarterly Report on Form 10-Q may contain certain forward-looking
statements consisting of estimates with respect to the financial condition,
results of operations and business of the Company that are subject to various
factors which could cause actual results to differ materially from these
estimates. These factors include, but are not limited to, general economic
conditions, changes in interest rates, deposit flows, loan demand, real estate
values, and competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and other economic,
competitive, governmental, regulatory, and technological factors affecting the
Company's operations, pricing, products and services, including Year 2000
issues.
Liquidity/Capital Resources
The Company's primary sources of funds are deposits, borrowings, principal
and interest payments on loans and mortgage-backed securities and the sale of
loans, mortgage-backed and investment securities. While maturities and scheduled
amortization of loans and mortgage-backed securities are a predictable source of
funds, deposit flows and mortgage prepayments are greatly influenced by interest
rate cycles and economic conditions.
The Bank is required by regulation to maintain specific minimum levels of
liquid investments. Regulations currently in effect require the Bank to maintain
liquid assets at least equal to 4.0% of the sum of its average daily balance of
net withdrawable accounts and short-term borrowed funds. This regulatory
requirement may be changed from time to time by the OTS to reflect current
economic conditions and deposit flows. The Bank's average liquidity ratio was
5.29% for the quarter ended June 30, 1999.
The Company's most liquid assets are cash and cash equivalents, which
include investments in highly liquid, short-term investments and
interest-bearing deposits. The levels of these assets are dependent on the
Company's operating, financing, lending and investing activities during any
given period. At June 30, 1999, cash and cash equivalents totaled $10.5 million.
Liquidity management for the Company is both a daily and long-term function
of the Company's management strategy. Excess funds are generally invested in
short-term investments and interest-bearing deposits. In the event that the
Company should require funds beyond its ability to generate them internally,
additional sources of funds are available through the use of Federal Home Loan
Bank of Chicago ("FHLB") advances.
The Company's cash flows are comprised of three classifications: cash flows
from operating activities, cash flows from investing activities, and cash flows
from financing activities. Net cash related to operating activities, consisting
primarily of interest and dividends received less interest paid on deposits, and
the origination and sale of loans, provided $94.8 million for the six months
ended June 30, 1999. Net cash related to investing activities, consisting
primarily of disbursements for loans originated or purchased for investment,
purchases of mortgage-backed and investment securities available for sale,
offset by sales of mortgage-backed securities available for sale, maturities of
investment securities available for sale, principal collections on loans and
mortgage-backed securities, utilized $138.0 million for the six months ended
June 30, 1999. Net cash utilized by financing activities, consisting primarily
of net activity in deposit and escrow accounts, net proceeds from borrowed
funds, the payment of dividends and the purchase of treasury stock, totaled
$27.3 million for the six months ended June 30, 1999.
9
<PAGE>
In connection with the Company's loan origination activities, the Company's
interest rate risk management policy specifies the use of certain hedging
activities in an attempt to reduce exposure to changes in loan market prices
from the time of commitment until securitization. The Company may engage in
hedging transactions as a method of reducing its exposure to interest rate risk
present in the secondary market. The Company's hedging transactions are
generally forward commitments to sell fixed-rate mortgage-backed securities at a
specified future date. The loans securitized through the Federal National
Mortgage Association ("FNMA") are generally used to satisfy these forward
commitments. The sale of fixed-rate mortgage-backed securities for future
delivery presents a risk to the Company that, if the Company is not able to
deliver the mortgage-backed securities on the specified delivery date, it may be
required to repurchase the forward commitment to sell at the then current market
price. At June 30, 1999 the Company had no forward commitments to sell FNMA
mortgage-backed securities.
The Bank's tangible capital ratio at June 30, 1999 was 7.70%. This exceeded
the tangible capital requirement of 1.5% of adjusted assets by $119.5 million.
The Bank's leverage capital ratio at June 30, 1999 was 7.70%. This exceeded the
leverage capital requirement of 3.0% of adjusted assets by $90.5 million. The
Bank's risk-based capital ratio was 14.02% at June 30, 1999. The Bank currently
exceeds the risk-based capital requirement of 8.0% of risk-weighted assets by
$65.9 million.
Changes in Financial Condition
The Company had total assets of $2.0 billion at June 30, 1999, a decrease of
$29.9 million, or 1.5%, from December 31, 1998. Mortgage-backed and investment
securities increased $159.6 million offset by a decrease in cash and cash
equivalents and due from broker of $141.8 million. Loans decreased $57.9
million. Loans held for sale were $52.5 million at June 30, 1999 compared to
$110.6 million at December 31, 1998, a decrease of $58.1 million.
Loans totaled $1.3 billion at June 30, 1999, a decrease of $57.9 million.
Loan originations were $573.3 million for the six months ended June 30, 1999,
offset by loan sales of $453.0 million and principal repayments of $178.2
million.
Deposits totaled $1.2 billion at June 30, 1999, a decrease of $66.8 million.
The deposit base and the interest paid on deposits continues to be affected by
alternative investment products and competition within the Company's market
areas.
Stockholders' equity totaled $173.5 million at June 30, 1999, a decrease of
$12.4 million. On February 2, 1999, the Company announced a stock repurchase
plan under which the Company is authorized to repurchase up to 1,146,000 shares
of its outstanding common stock. At June 30, 1999, 484,561 shares had been
repurchased for a total cost of $9.7 million, which is reflected as a reduction
in stockholders' equity. In addition, Stockholders' equity was reduced by $9.2
million as a result of changes in the market values of investment securities and
mortgage-backed securities available for sale, net of tax. At June 30, 1999, the
number of common shares outstanding was 11,020,628 and the book value per common
share outstanding was $15.75 per share. On June 17, 1999, the Company declared a
$0.14 per share cash dividend payable July 14, 1999 to shareholders of record on
June 30, 1999.
Year 2000
The Company has established a Year 2000 Project plan to address systems and
facilities changes necessary to properly recognize dates after 1999, has
assigned implementation responsibilities, and has established management and
Board reporting processes. All of the Company's significant financial accounting
systems are provided under contract with major national banking systems
providers who are progressing under their own Year 2000 plans. Most significant
systems changes have been completed as of December 31, 1998. The Company's plan
follows the five step approach required by its regulators: Awareness,
Assessment, Modification, Verification, and Implementation. The Company's
project also addresses its other suppliers, customers, and other constituents,
as well as remediation and business resumption contingency plans. The costs of
the project, and the date on which the Company plans to complete the Year 2000
modifications are based on management's best estimates, which were derived
utilizing numerous assumptions of future events including the continued
availability of certain resources, third party modification plans and other
factors. However, there can be no guarantee that these estimates will be
achieved and
10
<PAGE>
actual results could differ materially from those plans. The
primary uncertainty facing the Company is the ability of third party systems
providers to identify and modify software as planned. Specific factors that
might cause material differences from plans include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to locate
and correct all relevant computer codes, and similar uncertainties.
Additional information about the Company's Year 2000 status at June 30, 1999
was as follows:
Readiness: The Company's plan includes both information technology ("IT")
and non-IT systems. Most of the Company's primary Year 2000 exposures relate to
IT systems, primarily to the vendor of its account processing systems. The
Company utilizes a national third party provider for the bulk of its data
processing needs. As a result, a large part of the Company's mission critical
Year 2000 testing is for products and services processed by that service
provider. The service provider has completed the remediation and testing of its
system and has had its Year 2000 compliant systems in production since June 30,
1998. The Company continues to independently test its activities on that system
to verify that the service provider's system functions in the Year 2000 for
those services used by the Company. In November 1998, the Company successfully
completed the first phase of that testing. Testing of the second phase was
successfully completed in April 1999.
Costs: The Company has not incurred material costs specifically related to
its Year 2000 program and does not expect these costs to have a significant
impact on the Company's results of operations, liquidity or capital resources.
Direct costs of the Year 2000 issue have been estimated to not exceed $250,000
per year for the years ended December 31, 1998, 1999 and 2000. The primary
direct costs include compensation and benefits paid to staff dedicated solely to
the Year 2000 issues, direct costs paid to vendors or others related to Year
2000 preparedness and the income statement effect of hardware and software
purchased to replace items not Year 2000 compliant. The figure does not include
costs considered by the Company to be indirect costs. The primary indirect cost
includes the time and effort of many of the Company's employees to prepare for
the Year 2000 in addition to performing their normal work routine. The costs of
the Year 2000 project are based on the Company's best estimates, which include
numerous assumptions about future events. Actual costs may differ due to actual
events being different than those assumed at the time the cost estimates were
prepared.
Risks: The most significant risk anticipated by the Company is the
possibility of interruptions to its account processing systems. Due to the
progress described above, the Company does not presently foresee any material
interruptions to these systems. The next most significant risk relates to
interruptions in the payment processing systems, which are integrated with the
Company's account processing systems. The Company is working with its payment
processing vendors, the most significant of which are reported to be making
satisfactory progress in complying with federal regulatory guidelines for Year
2000 readiness.
Contingency Plans: The Company has taken actions to comply with federal
regulatory requirements for Year 2000 contingency planning. The Company
presently believes that the compliance effort can and will be completed prior to
the Year 2000. However, if required product or service upgrades are not complete
by that time, the Year 2000 issues could disrupt normal business operations.
Although not expected at this time, the most likely worst case scenario includes
the Company being unable to process some or all of its transactions on a
temporary basis. Because of the nature of this scenario, the Company established
contingency plans for all mission critical services. Those contingency plans
will also be tested as part of the Company's Year 2000 preparedness, which is
scheduled for the fall of 1999. Additionally, a business resumption plan has
been developed to mitigate risks associated with the failure of mission critical
systems. The Year 2000 business resumption contingency plan is designed to
ensure that mission critical core banking processes will continue if one or more
supporting systems fail and to allow for limited transaction processing until
the Year 2000 problems are fixed.
Readers should be cautioned that forward looking statements contained in the
Year 2000 disclosure should be read in conjunction with the Company's
disclosures regarding "Forward-Looking Statements".
Recent and Proposed Changes in Accounting Rules
In June 1998, FASB issued SFAS No. 133, "Accounting for Derivatives and
Similar Financial Instruments and for Hedging Activities," which is effective
for fiscal years beginning after June 15, 1999. The statement requires all
derivatives to be measured at fair value and to be recognized as either assets
or liabilities in the statement of
11
<PAGE>
financial position. In June 1999, FASB issued
SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133, an
Amendment of FASB Statement No. 133." This statement defers the effective date
for one year. Management, at this time, has not determined the impact of
adopting this statement on January 1, 2001.
Asset Quality
Non-performing Assets
The following table sets forth information as to non-accrual loans and real
estate owned at the dates indicated. The Company discontinues the accrual of
interest on loans ninety days or more past due, at which time all accrued but
uncollected interest is reversed. There were no loans at June 30, 1999 nor
during the quarter ended June 30, 1999, which met the definition of an impaired
loan. A loan is considered impaired when it is probable that a creditor will be
unable to collect contractual principal and interest due according to the
contractual terms of the loan agreement. Loans considered for impairment do not
include residential mortgage and consumer installment loans.
<TABLE>
<CAPTION>
Quarter Ended
--------------------------------------------------------------------------------
June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 1999 1999 1998 1998 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Non-accrual mortgage loans
90 days or more past due $ 3,416 4,513 3,117 3,363 2,231
Non-accrual commercial loans
90 days or more past due 250 - - - 3
Non-accrual consumer loans
90 days or more past due 177 157 165 61 110
--------------------------------------------------------------------------------
Total non-performing loans 3,843 4,670 3,282 3,424 2,344
Total foreclosed real estate 164 148 514 212 261
--------------------------------------------------------------------------------
Total non-performing assets $ 4,007 4,818 3,796 3,636 2,605
--------------------------------------------------------------------------------
Total non-performing loans
to total loans 0.30 % 0.37 0.25 0.24 0.18
Total non-performing assets
to total assets 0.21 % 0.25 0.19 0.17 0.13
</TABLE>
Classification of Assets
The Company regularly reviews the assets in its portfolio to determine
whether any assets require classification in accordance with applicable
regulations.
As of June 30, 1999 the Company had total classified assets of $3.6 million,
of which $3.4 million were classified "substandard" and $200,000 were classified
as "doubtful." The assets so classified consisted of auto loans, single family
residential loans and foreclosed single family residential loans (real estate
owned).
Asset/Liability Management
The Company's asset and liability management strategy attempts to minimize
the risk of a significant decrease in net interest income caused by changes in
the interest rate environment without penalizing current income. Net interest
income, the primary source of the Company's earnings, is affected by interest
rate movements. To mitigate the impact of changes in interest rates, a balance
sheet must be structured so that repricing opportunities exist for both assets
and liabilities in approximately equivalent amounts at basically the same time
intervals.
The Company seeks to reduce the volatility of its net interest income by
managing the relationship of interest rate sensitive assets to interest rate
sensitive liabilities. To accomplish this, the Company has attempted to increase
the percentage of assets, whose interest rates adjust more frequently, and to
reduce the average maturity of such assets. A principal focus in recent years,
has been the origination of adjustable-rate residential real estate loans and
consumer loans, which generally have shorter maturities than fixed-rate
residential real estate loans. The Company also originates shorter maturity
fixed-rate commercial real estate loans and purchases commercial leases, which
generally mature or reprice more quickly than fixed-rate residential real estate
loans.
12
<PAGE>
However, adjustable-rate loans are nearly as likely to refinance in low
interest rate environments as fixed-rate loans. Often, interest rate cycles
allow for these refinancings before the adjustable-rate loans can adjust to
fully indexed market rates. In such declining interest rate environments, that
result in high levels of loan refinancings, the Company may decide to acquire
longer fixed-rate mortgage loans or mortgage-backed securities. To provide an
acceptable level of interest rate risk, the Company will implement a funding
strategy using long-term Federal Home Loan Bank borrowings. Imbalances in
repricing opportunities at any point in time constitute an interest sensitivity
gap, which is the difference between interest sensitive assets and interest
sensitive liabilities. These static measurements do not reflect the results of
any potential activity and are best used as early indicators of potential
interest rate exposures.
As part of its asset/liability strategy, the Company has implemented a
policy to maintain its cumulative one-year interest sensitivity gap ratio within
a range of (15%) to 15% of total assets, which reflects the current interest
rate environment and allows the Company to maintain an acceptable net interest
rate spread. The gap ratio will fluctuate as a result of market conditions and
management's expectation of future interest rate trends.
<TABLE>
<CAPTION>
Interest Rate Sensitivity Gap Analysis
At June 30, 1999
-----------------------------------------------------------------
More Than More Than
1 Year 1 Year 3 Years More Than
(Dollars in thousands) Or Less To 3 Years To 5 Years 5 Years Total
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest-Earning Assets:
Mortgage loans (1) $ 322,684 180,273 164,150 400,414 1,067,521
Equity lines of credit (1) 92,193 - - - 92,193
Consumer loans and leases (1) 8,544 23,839 75,607 10,228 118,218
Mortgage-backed securities (2) 164,489 93,133 69,642 153,613 480,877
Interest-bearing deposits 1,262 - - - 1,262
Investment securities (2) 110,757 70 - 1,250 112,077
- --------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 699,929 297,315 309,399 565,505 1,872,148
Interest-Bearing Liabilities:
Savings accounts 35,787 54,356 35,436 84,930 210,509
NOW interest-bearing accounts 22,425 20,528 5,493 12,163 60,609
Money market accounts 67,297 9,372 4,462 4,055 85,186
Certificate accounts 694,959 107,395 14,854 - 817,208
Borrowed funds 135,827 168,650 112,500 100,000 516,977
- --------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 956,295 360,301 172,745 201,148 1,690,489
- --------------------------------------------------------------------------------------------------------------------
Interest sensitivity gap $ (256,366) (62,986) 136,654 364,357 181,659
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Cumulative interest sensitivity gap $ (256,366) (319,352) (182,698) 181,659
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Cumulative interest sensitivity gap as a
percentage of total assets (13.04) % (16.24) (9.29) 9.24
Cumulative net interest-earning assets as a
percentage of interest-bearing liabilities 73.19 % 75.74 87.73 110.75
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For purposes of the gap analysis, mortgage, equity and consumer loans and
leases are not reduced by the allowance for loan losses and are reduced for
non-performing loans.
(2) Mortgage-backed and investment securities are not increased (decreased) by
unrealized gains (losses) resulting from the accounting for available for
sale securities under SFAS No. 115.
Certain shortcomings are inherent in the method of analysis presented in the
foregoing table. For example, although certain assets and liabilities may have
similar maturities or periods to repricing, they may react in different degrees
to changes in market interest rates. Also, the interest rates on certain types
of assets and liabilities may fluctuate in advance of changes in market interest
rates, while interest rates on other types may lag behind changes in market
rates. Additionally, certain assets, such as ARM loans, have features which
restrict changes in interest rates on a short-term basis and over the life of
the asset. Further, in the event of a change in interest rates, prepayment and
early withdrawal levels would likely deviate significantly from those assumed in
calculating the
13
<PAGE>
table. Finally, the ability of many borrowers to service their
debt may decrease in the event of an interest rate increase.
Quantitative and Qualitative Disclosures About Market Risk
As its primary interest rate risk planning tool, the Bank utilizes a market
value model. The model measures the Bank's interest rate risk by approximating
the Bank's net portfolio value ("NPV"), which is the net present value of
expected cash flows from assets, liabilities and any off-balance sheet
contracts, under a range of interest rate scenarios, which range from an
immediate 300 basis point increase to an immediate 300 basis point decrease in
market interest rates (measured in 100 basis point increments). The Bank's asset
and liability structure results in a decrease in NPV in a rising interest rate
scenario and an increase in NPV in a declining interest rate scenario. During
periods of rising interest rates, the value of monetary assets declines more
rapidly than the value of monetary liabilities rises. Conversely, during periods
of falling interest rates, the value of monetary assets rises more rapidly than
the value of monetary liabilities declines. However, the amount of change in
value of specific assets and liabilities due to changes in interest rates is not
the same in a rising rate environment as in a falling interest rate environment
(i.e., the amount of value increase under a specific rate decline may not equal
the amount of value decrease under an identical upward interest rate movement).
There have been no material changes in market risk since December 31, 1998,
as reported in the Company's Form 10-K for the year ended December 31, 1998.
Analysis of Net Interest Income
Net interest income represents the difference between income on
interest-earning assets and expense on interest-bearing liabilities. Net
interest income depends upon the volume of interest-earning assets and
interest-bearing liabilities and the interest rate earned or paid on them.
14
<PAGE>
Average Balance Sheets
The following table sets forth certain information relating to the Company's
Consolidated Statements of Financial Condition and reflects the average yield on
assets and the average cost of liabilities for the periods indicated. Such
yields and costs are derived by dividing income or expense by the average
balance of assets or liabilities, respectively, for the periods shown. Average
balances are derived from average daily balances and include non-performing
loans. The yields and costs include fees which are considered adjustments to
yields.
<TABLE>
<CAPTION>
Three Months Ended June 30,
----------------------------------------------------------
1999 1998
----------------------------------------------------------
Average Average
Average Yield/ Average Yield/
(Dollars in thousands) Balance Interest Cost Balance Interest Cost
- -------------------------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Mortgage loans, net $ 1,059,629 $ 19,593 7.40 % $ 1,112,641 $ 20,780 7.47 %
Equity lines of credit 95,077 1,719 7.25 93,584 1,856 7.95
Consumer loans and leases 104,799 2,125 8.13 53,529 1,140 8.52
Mortgage-backed securities 464,167 7,182 6.19 448,012 7,391 6.60
Interest-bearing deposits 37,853 441 4.61 40,315 566 5.55
Investment securities 111,099 1,842 6.64 149,269 2,621 7.03
- ----------------------------------------------------------------------------------------
Total interest-earning 1,872,624 32,902 7.03 1,897,350 34,354 7.24
assets
Noninterest-earning assets 97,245 91,025
- ----------------------------------------------------------------------------------------
Total assets $ 1,969,869 $ 1,988,375
- ----------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity:
Interest-bearing
liabilities:
Deposits:
Savings accounts $ 1,039,348 $ 12,186 4.70 % $ 1,087,984 $ 14,137 5.21 %
NOW interest-bearing 63,803 162 1.02 71,045 162 0.91
accounts
Money market accounts 85,520 695 3.26 109,694 869 3.18
- ----------------------------------------------------------------------------------------
Total deposits 1,188,671 13,043 4.40 1,268,723 15,168 4.80
Funds borrowed:
Borrowed funds 498,802 6,618 5.25 444,990 6,131 5.45
Collateralized mortgage - - - 539 15 11.13
- ----------------------------------------------------------------------------------------
Total funds borrowed 498,802 6,618 5.25 445,529 6,146 5.46
- ----------------------------------------------------------------------------------------
Total interest-bearing 1,687,473 19,661 4.65 1,714,252 21,314 4.97
liabilities
Noninterest-bearing 102,712 94,650
liabilities
- ----------------------------------------------------------------------------------------
Total liabilities 1,790,185 1,808,902
Stockholders' equity 179,684 179,473
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity $ 1,969,869 $ 1,988,375
- ----------------------------------------------------------------------------------------
Net interest income/
interest rate spread $ 13,241 2.38 % $ 13,040 2.27 %
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Net interest-earning
assets/ $ 185,151 2.83 % $ 183,098 2.75 %
net interest margin
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Interest-earning assets to
interest-bearing 1.11 X 1.11 X
liabilities
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Average Balance Sheets (Continued)
Six Months Ended June 30,
----------------------------------------------------------- At June 30,
1999 1998 1999
----------------------------------------------------------- ----------------
Average Average
Average Yield/ Average Yield/ Yield/
(Dollars in thousands) Balance Interest Cost Balance Interest Cost Balance Cost
- -------------------------------------------------------- ----------------------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Motgage loans, net $ 1,083,393 $ 39,941 7.37 % $ 1,101,284 $ 41,606 7.56 % $ 1,064,479 7.43 %
Equity lines of credit 95,097 3,414 7.24 93,498 3,695 7.97 92,426 7.44
Consumer loans and leases 96,858 3,957 8.22 48,026 1,992 8.30 118,645 8.19
Mortgage-backed securities 402,950 12,584 6.25 374,860 12,568 6.71 468,869 6.32
Interest-bearing deposits 94,599 2,172 4.57 70,588 2,011 5.67 1,262 5.53
Investment securities 98,530 3,331 6.78 148,321 5,154 6.96 110,152 6.62
- ---------------------------------------------------------------------------------------- ----------------
Total interest-earning
assets 1,871,427 65,399 6.99 1,836,577 67,026 7.30 1,855,833 7.15
Noninterest-earning assets 94,658 85,233 96,760
- ---------------------------------------------------------------------------------------- ----------------
Total assets $ 1,966,085 $ 1,921,810 $ 1,952,593
- ---------------------------------------------------------------------------------------- ----------------
- ---------------------------------------------------------------------------------------- ----------------
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Deposits:
Savings Accounts $ 1,053,541 $ 25,008 4.79 % $ 1,088,871 $ 28,216 5.23 % $ 1,027,717 4.74 %
NOW interest-bearing
accounts 61,081 312 1.03 71,010 370 1.05 60,609 0.95
Money market accounts 84,934 1,362 3.23 111,051 1,753 3.18 85,186 3.31
- ---------------------------------------------------------------------------------------- ----------------
Total deposits 1,199,565 26,682 4.49 1,270,932 30,339 4.81 1,173,512 4.44
Funds borrowed:
Borrowed funds 480,465 12,733 5.27 380,158 10,690 5.59 516,977 5.25
Collateralized mortgage - - - 654 38 11.62 - -
- ---------------------------------------------------------------------------------------- ----------------
Total funds borrowed 480,465 12,733 5.27 380,812 10,728 5.60 516,977 5.25
- ---------------------------------------------------------------------------------------- ----------------
Total interest-bearing
liabilities 1,680,030 39,415 4.71 1,651,744 41,067 5.00 1,690,489 4.69
Noninterest-bearing
liabilities 103,237 92,106 88,583
- ---------------------------------------------------------------------------------------- ----------------
Total liabilities 1,783,267 1,743,850 1,779,072
Stockholders' equity 182,818 177,960 173,521
- ---------------------------------------------------------------------------------------- ----------------
Total liabilities and
stockholders' equity $ 1,966,085 $ 1,921,810 $ 1,952,593
- ---------------------------------------------------------------------------------------- ----------------
- ---------------------------------------------------------------------------------------- ----------------
Net interest income/
interest rate spread $ 25,984 2.28 % $ 25,959 2.30 % 2.46 %
- ---------------------------------------------------------------------------------------- -----
- ---------------------------------------------------------------------------------------- -----
Net interest-earning assets/
net interest margin $ 191,397 2.78 % $ 184,833 2.83 %
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
Interest-earning assets to
interest-bearing
liabilities 1.11 X 1.11 X
- ----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Rate/Volume Analysis
The following table presents the extent to which changes in interest rates
and changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Company's interest income and interest expense
during the periods indicated. Information is provided in each category with
respect to (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate), (ii) changes attributable to changes in rate (changes
in rate multiplied by prior volume), and (iii) the net change. The changes
attributable to the combined impact of volume and rate have been allocated
proportionately to the changes due to volume and the changes due to rate.
<TABLE>
<CAPTION>
Three Months Ended June 30, 1999 Six Months Ended June 30, 1999
Compared To Compared To
Three Months Ended June 30, 1998 Six Months Ended June 30, 1998
-------------------------------------- ---------------------------------------
Increase (Decrease) Increase (Decrease)
In Net Interest Income In Net Interest Income
Due To Due To
-------------------------------------- ---------------------------------------
(In thousands) Volume Rate Net Volume Rate Net
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest-Earning Assets:
Mortgage loans, net $ (992) (195) (1,187) (654) (1,011) (1,665)
Equity lines of credit 30 (167) (137) 63 (344) (281)
Consumer loans and leases 1,039 (54) 985 1,984 (19) 1,965
Mortgage-backed securities 261 (470) (209) 909 (893) 16
Interest-bearing deposits (33) (92) (125) 597 (436) 161
Investment securities (640) (139) (779) (1,693) (130) (1,823)
- --------------------------------------------------------------------------------------------------------------------
Total (335) (1,117) (1,452) 1,206 (2,833) (1,627)
- --------------------------------------------------------------------------------------------------------------------
Interest-Bearing Liabilities:
Deposits (916) (1,209) (2,125) (1,674) (1,983) (3,657)
Funds borrowed 708 (236) 472 2,659 (654) 2,005
- --------------------------------------------------------------------------------------------------------------------
Total (208) (1,445) (1,653) 985 (2,637) (1,652)
- --------------------------------------------------------------------------------------------------------------------
Net change in net interest $ (127) 328 201 221 (196) 25
income
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Comparison of Operating Results for the Three Months Ended
June 30, 1999 and June 30, 1998
General
Net income totaled $4,507,000, or $0.39 per diluted share for the three
months ended June 30, 1999, as compared to $1,741,000, or $0.14 per diluted
share reported for the quarter ended June 30, 1998. On June 30, 1998, the
Company completed its acquisition of Southwest Bancshares, which was accounted
for as a pooling-of-interests. The prior year quarter includes acquisition
related costs, totaling $3,550,000, reducing net income by $2,485,000, resulting
in a decrease in diluted earnings per share by $0.21. These costs include
professional fees, data processing conversion penalties and employee severance.
Net interest income for the three months ended June 30, 1999 was $13.2 million,
an increase of $201,000, or 1.5%, from the June 30, 1998 quarter of $13.0
million.
Interest Income
Interest income for the quarter ended June 30, 1999 totaled $32.9 million, a
decrease of $1.5 million, or 4.2%, from the prior year's quarter. Interest
income on mortgage loans, the largest component of interest-earning assets,
decreased $1.2 million, or 5.7%, to $19.6 million from the June 1998 quarter.
The average balance of the mortgage portfolio decreased $53 million. The
annualized average yield on the mortgage loan portfolio decreased to 7.40% for
the three months ended June 30, 1999 from 7.47% for the 1998 period. The Bank's
mortgage loan portfolio is being affected by market conditions which prevailed
over the last twelve months, whereby, higher yielding loans were repaid and
replaced by lower yielding loans. Interest income on equity lines of credit
decreased $137,000, or 7.4%, to $1.7 million from the prior year's quarter. The
Bank's home equity line of credit product is priced based on the prime rate,
which was 7.75% for the current quarter as compared to 8.50% for the comparable
quarter a year
16
<PAGE>
ago. The average balance of equity lines of credit increased $1.5
million, or 1.6%, to $95.1 million from $93.6 million from the June 1998
quarter. Interest income on consumer loans and leases increased $985,000 to $2.1
million for the three months ended June 30, 1999. The average balance of the
consumer loans and leases increased $51.3 million, or 95.8% from the 1998
period, primarily as a result of indirect auto lending. Interest income on
mortgage-backed securities for the three months ended June 30, 1999 decreased
$209,000 to $7.2 million while the average balance of the mortgage-backed
securities portfolio increased $16.2 million from the June 1998 period. The
annualized average yield on the mortgage-backed securities portfolio decreased
to 6.19% for the three months ended June 30, 1999 from 6.60% for the 1998
period. Interest income on investment securities for the three months ended June
30, 1999 decreased $779,000 to $1.8 million and the average balance of the
investment securities portfolio decreased $38.2 million from the June 1998
period. The annualized average yield on the investment securities portfolio
decreased to 6.64% for the three months ended June 30, 1999 from 7.03% for the
1998 period. Until recently, market interest rates had been declining, leading
to rapid repayment of mortgage-backed securities and the maturity of callable
Federal Home Loan Bank notes. The net cash received from these portfolios was
reinvested at current market rates resulting in lower yields. Purchases of
mortgage-backed and investment securities for the three months ended June 30,
1999 totaled $117.6 million offset by maturities, sales and principal repayments
of $62.4 million.
Interest Expense
Interest expense on deposit accounts decreased $2.1 million, or 14.0%, to
$13.0 million, for the quarter ended June 30, 1999 compared to the prior year's
quarter. The decrease is related to both a decrease in the average
interest-bearing deposit base and the annualized average cost of deposits. The
annualized average cost of deposits for the three months ended June 30, 1999 was
4.40%, a decrease from the annualized average cost of 4.80% for the June 1998
period. The average interest-bearing deposit base decreased $80.1 million to
$1.2 billion during the 1999 period. For the quarter ended June 30, 1999, the
Company recorded interest expense on borrowed funds of $6.6 million on an
average balance of $498.8 million at an annualized cost of 5.25% primarily
related to FHLB borrowings. Additional net proceeds from FHLB borrowings for the
three months ended June 30, 1999 totaled $49.5 million.
Net Interest Income
Net interest income for the three months ended June 30, 1999 increased
$201,000 or 1.5%, to $13.2 million from the 1998 period. The annualized average
yield on interest-earning assets decreased from 7.24% to 7.03% when comparing
the 1998 and 1999 quarters. The annualized average cost of interest-bearing
liabilities decreased from 4.97% to 4.65%. This resulted in an annualized
average net interest rate spread of 2.38% for the three-month period ended June
30, 1999 compared to 2.27% for the prior year's period.
Provision for Loan Losses
Based on management's evaluation of the loan portfolio, a provision of
$50,000 for loan losses was recorded during the quarter ended June 30, 1999
compared to $56,000 for the prior year quarter. The allowance for loan losses
represents 0.49% of total loans receivable at June 30, 1999. The amount of
non-performing loans at June 30, 1999, was $3.8 million, or 0.30% of total
loans, compared to $2.3 million or 0.18% of total loans at June 30, 1998.
Noninterest Income
Total noninterest income for the three months ended June 30, 1999 was $6.7
million, an increase of $1.8 million from the 1998 period. Income from real
estate operations increased $1.0 million from the year ago period, primarily due
to income generated from additional investments in joint venture partnerships
entered into in 1998. Other fees and commissions increased $917,000, primarily
due to loan origination fees contributed by Preferred.
17
<PAGE>
Noninterest Expense
Noninterest expense for the quarter ended June 30, 1999 totaled $12.8
million, a decrease of $1.9 million, or 13.2% from the prior year's quarter. The
June 1998 quarter included acquisition costs including professional fees, data
processing conversion penalties and employee severance of $3.6 million.
Exclusive of these expenses, noninterest expense increased $1.6 million.
Compensation and benefits increased $738,000, or 11.9%, exclusive of year ago
acquisition costs. This increase is primarily related to the origination, sale
and delivery of loans by Preferred. Occupancy expense increased $286,000
primarily due to depreciation expense on additional equipment. Other noninterest
expense increased $688,000, exclusive of year ago acquisition costs. This
increase is primarily attributable to consulting fees related to operational
efficiency studies and other loan servicing and loan origination costs.
Income Tax Provision
The provision for income taxes for the three months ended June 30, 1999 was
$2.6 million. The effective tax rate for the three months ended June 30, 1999
was 36.5% compared to the effective tax rate of 44.3% for the prior year
quarter. The prior year quarter included certain acquisition costs which were
not tax deductible.
Comparison of Operating Results for the Six Months Ended
June 30, 1999 and June 30, 1998
General
Net income totaled $9,108,000, or $0.78 per diluted share for the six months
ended June 30, 1999, as compared to $6,578,000, or $0.55 per diluted share
reported for the six months ended June 30, 1998. On June 30, 1998, the Company
completed its acquisition of Southwest Bancshares, which was accounted for as a
pooling-of-interests. The prior year period included acquisition related costs,
totaling $3,795,000, reducing net income by $2,679,000, resulting in a decrease
in diluted earnings per share by $0.22. These costs include professional fees,
data processing conversion penalties and employee severance. Net interest income
for the six months ended June 30, 1999 was $26 million, an increase of $25,000
from the June 30, 1998 period.
Interest Income
Interest income for the six months ended June 30, 1999 totaled $65.4
million, a decrease of $1.6 million, or 2.4%, from the prior year's period.
Interest income on mortgage loans decreased $1.7 million, or 4.0%, to $39.9
million from the June 1998 period. The average balance of the mortgage portfolio
decreased $18 million. The annualized average yield on the mortgage loan
portfolio decreased to 7.37% for the six months ended June 30, 1999 from 7.56%
for the 1998 period. The Bank's mortgage loan portfolio is being affected by
market conditions which prevailed over the last twelve months, whereby, higher
yielding loans were repaid and replaced by lower yielding loans. Interest income
on equity lines of credit decreased $281,000, or 7.6%, to $3.4 million from the
prior year's period. The Bank's home equity line of credit is priced based on
the prime rate, which was 7.75% for the current six months as compared to 8.50%
for the comparable period a year ago. The average balance of equity lines of
credit increased $1.6 million, or 1.7%, to $95.1 million from $93.5 million from
the June 1998 period. Interest income on consumer loans and leases increased
$2.0 million to $4.0 million for the six months ended June 30, 1999. The average
balance of the consumer loans and leases increased $48.8 million from the 1998
period, primarily as a result of indirect auto lending. Interest income on
mortgage-backed securities for the six months ended June 30, 1999 remained
approximately the same and the average balance of the mortgage-backed securities
portfolio increased $28.1 million from the June 1998 period. Interest income on
investment securities for the six months ended June 30, 1999 decreased $1.8
million to $3.3 million and the average balance of the investment securities
portfolio decreased $49.8 million from the June 1998 period. The decreases in
the average annualized yields on the mortgage-backed and investment portfolios
can be attributed to the market interest rates which had been declining, until
recently, leading to rapid repayment of mortgage-backed securities and the
maturity of callable Federal Home Loan Bank notes. The net cash received from
these portfolios was reinvested at current market rates resulting in lower
yields. Purchases of mortgage-backed and investment securities for the six
months ended June 30, 1999 totaled $302.0 million offset by maturities, sales
18
<PAGE>
and principal repayments of $199.3 million. The average balance of
interest-bearing cash increased $24.0 million, to $94.6 million primarily as a
result of repositioning the investment portfolios to accommodate the cash flow
and liquidity needs of the Bank.
Interest Expense
Interest expense on deposit accounts decreased $3.7 million, or 12.1%, to
$26.7 million, for the six months ended June 30, 1999 compared to the prior
year's period. The decrease is related to both a decrease in the average
interest-bearing deposit base and the annualized average cost of deposits. The
annualized average cost of deposits for the six months ended June 30, 1999 was
4.49%, a decrease from the annualized average cost of 4.81% for the June 1998
period. The average interest-bearing deposit base decreased $71.4 million to
$1.2 billion during the 1999 period. For the six months ended June 30, 1999, the
Company recorded interest expense on borrowed funds of $12.7 million on an
average balance of $480.5 million at an annualized cost of 5.27% primarily
related to FHLB borrowings. Additional net proceeds from FHLB borrowings for the
six months ended June 30, 1999 totaled $52.5 million.
Net Interest Income
Net interest income for the six months ended June 30, 1999 increased
$25,000. The annualized average yield on interest-earning assets decreased from
7.30% to 6.99% when comparing the 1998 and 1999 periods. The annualized average
cost of interest-bearing liabilities decreased from 5.00% to 4.71%. This
resulted in an annualized average net interest rate spread of 2.28% for the
six-month period ended June 30, 1999 compared to 2.30% for the prior year's
period. Both the average balance of interest-earning assets and interest-bearing
liabilities increased during the six months ended June 30, 1999 compared to the
1998 period.
Provision for Loan Losses
Based on management's evaluation of the loan portfolio, a provision of
$100,000 for loan losses was recorded during the six months ended June 30, 1999
as compared to $162,000 recorded during the six months ended June 30, 1998. The
allowance for loan losses represents 0.49% of total loans receivable at June 30,
1999. The amount of non-performing loans at June 30, 1999, was $3.8 million, or
0.30% of total loans, compared to $2.3 million or 0.18% of total loans at June
30, 1998.
Noninterest Income
Total noninterest income for the six months ended June 30, 1999 was $13.4
million, an increase of $2.4 million from the 1998 period. Other fees and
commissions increased $1.5 million, primarily due to an increase in security
brokerage fees contributed by Liberty Financial Services, Inc. of $128,000 and
an increase in loan origination fees contributed by Preferred of $1.4 million.
The current six months includes gains on sales of loans, mortgage-backed and
investment securities of $447,000, compared to $656,000 for the 1998 period.
Income from real estate operations for the six months ended June 30, 1999
increased $827,000, primarily due to income generated from additional
investments in joint venture partnerships entered into in 1998. Real estate
income for the 1998 period included income of $474,000 related to the
termination of a real estate venture. Other income for the six months ended June
30, 1999, includes a gain on the sale of Liberty Financial Services Inc.'s
insurance book of business of $250,000.
Noninterest Expense
Noninterest expense for the six months ended June 30, 1999 totaled $25.7
million, a decrease of $155,000 from the prior year's period. The six months
ended June 30, 1998 included acquisition costs including professional fees, data
processing conversion penalties and employee severance of $3.8 million.
Exclusive of these expenses, noninterest expense increased $3.6 million.
Compensation and benefits increased $1.9 million, or 15.4%, exclusive of year
ago acquisition costs. This increase is primarily related to the origination,
sale and delivery of loans by Preferred for a total of $1.5 million. Other
noninterest expense increased $1.3 million, exclusive of year ago acquisition
costs. This increase is primarily attributable to consulting fees related to
operational efficiency studies and other loan servicing and loan origination
costs.
19
<PAGE>
Income Tax Provision
The provision for income taxes for the six months ended June 30, 1999 was
$4.5 million. The effective tax rate for the six months ended June 30, 1999 was
33.1% compared to the effective tax rate of 40.3% for the six months ended June
30, 1998. The lower effective tax rate for the current period was due to a
reduction in the provision of $700,000 as a result of the completion of a review
of the Company's tax liability and the effective tax rate for the prior year's
period included certain acquisition costs which were not tax deductible.
Part II - Other Information
Item 1. Legal Proceedings
Not Applicable.
Item 2. Changes in Securities and Use of Proceeds
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its Annual Meeting of Shareholders on June 23, 1999
(b) The names of each director elected at the Annual Meeting are as
follows:
Edward J. Burns
Whit G. Hughes
Edward J. Nusrala
William R. Rybak
Donald E. Sveen
(c) The names of each of the directors whose term of office continued
after the Annual Meeting are as follows:
Kenne P. Bristol
Howard A. Davis
H. Verne Loeppert
David D. Mill
Howard R. Jones
Fredric G. Novy
William C. O'Donnell
Russell F. Stephens, Jr.
Vernon B. Thomas, Jr.
Richard E. Webber
20
<PAGE>
(d) The following matters were voted upon at the Annual Meeting and
the number of votes cast with the respect to each matter is as
follows:
(i) The election of five directors for terms of three years each:
<TABLE>
<CAPTION>
Management Nominees For Withheld
- ---------------------------- ------------------------- --------------------------
<S> <C> <C>
Edward J. Burns 5,229,122 374,216
Whit G. Hughes 5,227,236 376,102
Edward J. Nusrala 5,487,990 115,348
William R. Rybak 5,249,617 353,721
Donald E. Sveen 5,252,800 350,538
</TABLE>
LaSalle Financial Partners, Limited Partnership ran a slate of nominees for
election as directors which received the following votes:
<TABLE>
<CAPTION>
Opposition Nominees For Withheld
- ---------------------------- ------------------------- --------------------------
<S> <C> <C>
Richard J. Nelson 3,039,644 15,122
William D. King 3,039,644 15,122
George L. Barr 3,039,644 15,122
</TABLE>
Management's nominees, having received a plurality of votes cast,
were elected as directors of the Company.
(ii)The ratification of KPMG LLP as independent auditors of
Alliance Bancorp for the fiscal year ending December 31, 1999:
<TABLE>
<CAPTION>
For Against Withheld
- ---------------------------- ------------------------- --------------------------
<S> <C> <C> <C>
8,447,877 143,365 66,863
</TABLE>
Item 5. Other Information
Not Applicable.
21
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit No. 11 Statement re: Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended
June 30, 1999 June 30, 1998
--------------------------------
<S> <C> <C>
Net income $ 4,507,000 1,741,000
--------------------------------
Basic earnings per share-weighted average shares 11,042,591 11,364,946
Effect of dilutive securities-stock options 550,956 644,909
--------------------------------
Diluted earnings per share-adjusted weighted average shares 11,593,547 12,009,855
--------------------------------
Basic earnings per share $ 0.41 0.15
--------------------------------
Diluted earnings per share $ 0.39 0.14
--------------------------------
Six Months Ended
June 30, 1999 June 30, 1998
--------------------------------
Net income $ 9,108,000 6,578,000
--------------------------------
Basic earnings per share-weighted average shares 11,217,619 11,327,323
Effect of dilutive securities-stock options 521,192 641,812
--------------------------------
Diluted earnings per share-adjusted weighted average shares 11,738,811 11,969,135
--------------------------------
Basic earnings per share $ 0.81 0.58
--------------------------------
Diluted earnings per share $ 0.78 0.55
--------------------------------
</TABLE>
(b) Reports on Form 8-K.
None.
22
<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.
Alliance Bancorp
Dated: August 7, 1999 /s/ Kenne P. Bristol
------------------------
-----------------------------
Kenne P. Bristol
President and
Chief Executive Officer
Dated: August 7, 1999 /s/ Richard A. Hojnicki
------------------------
-----------------------------
Richard A. Hojnicki
Executive Vice President and
Chief Financial Officer
23
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000885638
<NAME> Alliance Bancorp, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 9,273
<INT-BEARING-DEPOSITS> 1,262
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 553,448
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,281,857
<ALLOWANCE> 6,307
<TOTAL-ASSETS> 1,952,593
<DEPOSITS> 1,231,273
<SHORT-TERM> 135,827
<LIABILITIES-OTHER> 411,972
<LONG-TERM> 0
0
0
<COMMON> 117
<OTHER-SE> 173,404
<TOTAL-LIABILITIES-AND-EQUITY> 1,952,593
<INTEREST-LOAN> 47,312
<INTEREST-INVEST> 15,915
<INTEREST-OTHER> 2,172
<INTEREST-TOTAL> 65,399
<INTEREST-DEPOSIT> 26,682
<INTEREST-EXPENSE> 39,415
<INTEREST-INCOME-NET> 25,984
<LOAN-LOSSES> 100
<SECURITIES-GAINS> 447
<EXPENSE-OTHER> 25,651
<INCOME-PRETAX> 13,616
<INCOME-PRE-EXTRAORDINARY> 13,616
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,108
<EPS-BASIC> 0.81
<EPS-DILUTED> 0.78
<YIELD-ACTUAL> 2.78
<LOANS-NON> 3,843
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,350
<CHARGE-OFFS> 168
<RECOVERIES> 25
<ALLOWANCE-CLOSE> 6,307
<ALLOWANCE-DOMESTIC> 3,367
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,940
</TABLE>
