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Previous: USCI INC, 8-K, 1998-11-03 |
Next: MUNICIPAL INVT TR FD MULTISTATE SER 69 DEFINED ASSET FUNDS, 497, 1998-11-03 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
November 03, 1998
AVONDALE FINANCIAL CORP.
(Exact name of Registrant as specified in its Charter)
DELAWARE 0-24566 36-3895923
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation) Number)
20 NORTH CLARK STREET, CHICAGO, ILLINOIS 60602
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 782-6200
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
Avondale Financial Corp. ("Avondale") is filing this Current Report on Form
8-K to incorporate by reference herein the financial results for the quarter
ended September 30, 1998 of Coal City Corporation ("Coal City"). This Current
Report on Form 8-K will be incorporated by reference into the Registration
Statement on Form S-4 to be filed by Avondale in connection with the previously
announced merger of Coal City with and into Avondale.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99 Press Release of Coal City dated October 31, 1998.
2
<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.
AVONDALE FINANCIAL CORP.
Date: November 2, 1998 By: /s/ ROBERT S. ENGELMAN, JR.
--- ---------------------------
Robert S. Engelman, Jr.
President and Chief
Executive Officer
3
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
99 Press Release of Coal City dated October 31, 1998.
5
EXHIBIT 99
<PAGE>
PRESS RELEASE
FOR INFORMATION AT COAL CITY CORPORATION OR MANUFACTURERS BANK CONTACT:
MITCHELL FEIGER - PRESIDENT (773) 292- 6271
DONNA ADAM - CONTROLLER (773) 292-6280
FOR IMMEDIATE RELEASE
COAL CITY CORP. REPORTS 1998 THIRD QUARTER NET INCOME OF $1.1 MILLION
CHICAGO, OCTOBER 31, 1998 - COAL CITY CORPORATION, the holding company for
Manufacturers Bank, announced today third quarter net income of $1.1 million. In
1997, Coal City Corporation had third quarter net income of $0.8 million. In
1997, the Company had higher operating expenses related to the purchase of U.S.
Bancorp, Inc. and higher intangible amortization expenses. Basic earnings per
share for the most recent quarter were $12.73 compared to $10.36 for the same
quarter last year.
For the nine months ended September 30, 1998 the Company earned $5.8 million or
$100.91 per share compared to $2.6 million, or $46.70 for the same period in
1997. The 1998 results include a $4.1 million pretax gain on the sale of Coal
City National Bank in January 1998. Net income improved in 1998 due to growth in
the Company's core banking businesses and as a result of the purchase of U.S.
Bancorp in May 1997.
Mitchell Feiger, President, said, "We are delighted with the steady improvement
of our financial results and contribution from our U.S. Bancorp acquisition. We
are especially pleased about the strong growth of our Business Banking line of
business. More and more small and midsize businesses in the Chicago area are
learning of our terrific ability to meet their banking needs."
RESULTS OF OPERATION
The Company had net income of $1.1 million for the third quarter of 1998
compared to $0.8 million for the quarter ended September 30, 1997. Net interest
income remained flat at $7.1 million for the third quarters of 1998 and 1997,
however third quarter 1997 net interest income included $1.4 million from Coal
City National Bank. Coal City National Bank was sold in January 1998.
Non-interest income decreased $0.3 million to $1.3 million for the quarter ended
September 30, 1998 from $1.6 million for the same period in 1997. This decrease
was primarily due to the sale of Coal City National Bank and lower loan fees.
Non-interest expense decreased from $7.3 million in the third quarter of 1997 to
$6.4 million in the third quarter 1998. The decrease is attributable to the sale
of Coal City National Bank, cost savings associated with the consolidation of
U.S. Bancorp into Manufacturers Bank in September 1997, and lower intangible
amortization expenses.
<PAGE>
NET INTEREST MARGIN
The following table sets forth a summary of the Company's net interest income,
average earning assets and net interest margin (dollar amounts in thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
-------------------------- -------------------------
SEPT. 30, 1998 SEPT. 30, 1997 SEPT. 30, 1998 SEPT. 30, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net interest income $ 7,062 $ 7,091 $ 20,892 $ 19,003
Average earning assets $ 788,593 $ 717,879 $ 746,290 $ 625,306
Net interest margin (1) 3.57% 3.95% 3.76% 4.10%
Net interest margin 3.55% 3.92% 3.74% 4.06%
</TABLE>
(1) Net interest margin is presented on a fully tax equivalent basis assuming a
34% tax rate.
The Company's net interest income remained flat at $7.1 million for the quarters
ended September 30, 1997 and 1998. For the nine months ended September 30, 1998,
net interest income is up $1.9 million to $20.9 million from $19.0 million
during the same period in 1997. The increase in net interest income resulted
from an increase in interest income of $5.7 million, or 15.4%, partially offset
by an increase in interest expense of $3.8 million, or 21.1%. Interest income
increased due to a $121.0 million, or 19.3% increase in average interest earning
assets while interest expense rose as a result of a $99.9 million, or 18.8%
increase in average interest bearing liabilities. Much of the increase is due to
the purchase of U.S. Bancorp in May 1997 with averages and related income
included from the purchase date forward offset by the effect of the sale of Coal
City National Bank. The remaining increase is due to growth in the Company's
core banking businesses.
Although net interest income has increased in 1998, the net interest margin has
decreased from 4.06% for the nine months ended September 30, 1997 to 3.74% for
the same period in 1998. This decrease is due to increased leverage in the
Company's balance sheet as a result of the purchase of certain additional U.S.
Treasury investments and the addition of certain repurchase agreements used to
fund those investments.
NON-INTEREST INCOME
Non-interest income decreased $0.3 million to $1.3 million for the quarter ended
September 30, 1998 from $1.6 million for the same period in 1997. This decrease
was primarily due to the sale of Coal City National Bank and lower loan fees.
For the first nine months of 1998, non-interest income increased $4.8 million
with $4.1 million of the increase attributable to the gain resulting from the
sale of Coal City National Bank in January 1998. $0.3 million of the increase is
related to the Company's leasing business.
NON-INTEREST EXPENSE
Non-interest expense decreased from $7.3 million in the third quarter of 1997 to
$6.4 million in the third quarter 1998. The decrease is attributable to cost
savings associated with the consolidation of U.S. Bancorp into Manufacturers
Bank in September 1997, the sale of Coal City National Bank, and lower
intangible amortization expenses.
For the first nine months of 1998, non-interest expense increased $2.2 million
to $19.6 million from $17.4 million for the nine months of 1997. This increase
occurred due to the purchase of U. S. Bancorp in May
<PAGE>
1997, as expenses for U. S. Bancorp for the first four months of 1997 are not
included in the Company's financial statements for 1997.
BALANCE SHEET
Total assets were $824.3 million at September 30, 1998 compared to $787.1
million at September 30, 1997 and $802.7 million at December 31, 1997. The
increase from September 1997 to December 1997 was primarily due to an increase
in federal funds sold and U.S. Treasury securities of $14.2 million with a
related increase in deposit accounts of $15.7 million. The increase in total
assets at September 30, 1998 was due to an increase of U.S. Treasury securities
of $49.5 million offsetting a decline caused by the sale Coal City National
Bank. Short-term borrowings increased to fund the increase in U.S. Treasuries.
Net loans increased $13.6 million from $518.5 million at September 30, 1997 to
$532.1 million at September 30, 1998 due to strong loan demand offsetting a
reduction caused by the sale of Coal City National Bank. Total deposits
decreased from $668.3 million at the period ended September 30, 1997 to $634.6
million at September 30, 1998 also due to the sale of Coal City National Bank.
Additionally, in July 1998 the Company issued $25.0 million in Capital Obligated
Mandatorily Redeemable Capital Securities and retired $10.0 million of
Corporation Obligated Mandatorily Redeemable Preferred Securities issued in
1997.
The risk-based total capital ratio of 12.00%, the Tier 1 capital to
risk-weighted assets ratio of 7.41%, and the Tier 1 capital to average asset
ratio of 5.22% at September 30, 1998. The FDIC has categorized the bank
subsidiary as "Well-Capitalized" at September 30, 1998.
As of September 30, 1998, the Company's book value per share was $963, compared
to $852 at December 31, 1997 and $834 at September 30, 1997.
ASSET QUALITY
The following table presents a summary of non-performing assets as of the dates
indicated (dollars in thousands):
<TABLE>
<CAPTION>
AT SEPT. 30, 1998 AT DEC. 31, 1997 AT SEPT. 30, 1997
----------------- ---------------- -----------------
<S> <C> <C> <C>
Non-accruing loans $ 6,798 $ 9,879 $ 9,487
Loans 90 days or more past due, still
accruing interest 27 2 55
------- ------- -------
Total non-performing loans 6,825 9,881 9,542
Other real estate owned 409 3,726 3,289
------- ------- -------
Total non-performing assets $ 7,234 $13,607 $12,831
======= ======= =======
Total non-performing loans to total loans 1.27% 1.87% 1.81%
Total non-performing loans to total assets 0.83% 1.23% 1.21%
</TABLE>
<PAGE>
A reconciliation of the activity of the Company's allowance for loan losses
follows (dollars in thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
-------------------------- -------------------------
SEPT. 30, 1998 SEPT. 30, 1997 SEPT. 30, 1998 SEPT. 30, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Balance at beginning of period $ 7,014 $ 7,590 $ 7,922 $ 4,692
Decrease from sale of subsidiary (399)
Additions resulting from acquisitions 2,574
Provision for loan losses 188 212 563 582
Charge-offs (1) (6) (995) (63)
Recoveries 44 14 154 25
--------- --------- --------- ---------
Balance at September 30 $ 7,245 $ 7,810 $ 7,245 $ 7,810
========= ========= ========= =========
Loans at September 30 $ 539,355 $ 526,302 $ 539,355 $ 526,302
Ratio of allowance to total loans 1.34% 1.48% 1.34% 1.48%
</TABLE>
For the three months ended September 30, 1998 and 1997, there were net
recoveries of $43 thousand and $8 thousand respectively. Net charge-offs were
$841 thousand for the nine months ended September 30, 1998 compared to $38
thousand for 1997. This increase was primarily due to loans acquired with the
purchase of U.S. Bancorp in 1997.
The Company maintains its allowance for loan losses at a level that management
believes will be adequate to absorb estimated losses on existing loans, based on
an evaluation of the collectibility of loans and prior loss experience. In
January 1998, Coal City National Bank was sold, reducing the allowance for loan
losses by $399 thousand. In 1997, $2.6 million was added to the allowance with
the purchase of U.S. Bancorp.
TABLES TO FOLLOW
<PAGE>
COAL CITY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(STATEMENT AMOUNTS IN THOUSANDS EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
1998 1997 1998 1997
-------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Interest Income:
Loans $ 11,232 $ 11,120 $ 33,483 $ 29,674
Investment securities:
Taxable 3,307 2,516 8,615 6,144
Nontaxable 72 118 225 373
Federal funds sold 333 376 542 963
-------- -------- -------- --------
TOTAL INTEREST INCOME 14,944 14,130 42,865 37,154
-------- -------- -------- --------
Interest expense on:
Deposits 5,619 6,012 16,822 15,647
Short-term borrowings 1,624 390 3,435 958
Long-term borrowings 639 637 1,716 1,546
-------- -------- -------- --------
TOTAL INTEREST EXPENSE 7,882 7,039 21,973 18,151
-------- -------- -------- --------
NET INTEREST INCOME 7,062 7,091 20,892 19,003
Provision for loan losses 188 212 563 582
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 6,874 6,879 20,329 18,421
-------- -------- -------- --------
Other income:
Service fees 867 1,221 2,637 2,572
Lease financing, net 285 210 1,189 869
Net gains on sale of securities available for sale 21 104 36 138
Gain on sale of Coal City National Bank -- -- 4,099 --
Other operating income 120 80 598 229
-------- -------- -------- --------
1,293 1,615 8,559 3,808
-------- -------- -------- --------
Other expense:
Salaries and employee benefits 3,102 3,408 9,833 8,534
Occupancy and equipment expenses 973 905 2,852 1,973
Intangible amortization expense 808 1,044 2,429 2,281
Other operating expenses 1,506 1,946 4,481 4,583
-------- -------- -------- --------
6,389 7,303 19,595 17,371
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 1,778 1,191 9,293 4,858
Applicable income taxes 695 350 3,395 1,873
-------- -------- -------- --------
INCOME BEFORE MINORITY INTEREST 1,083 841 5,898 2,985
Minority interest (27) (50) (82) (386)
-------- -------- -------- --------
NET INCOME 1,056 791 5,816 2,599
Other comprehensive income, unrealized
securities gains (losses), net of income taxes 679 115 554 (22)
-------- -------- -------- --------
COMPREHENSIVE INCOME $ 1,735 $ 906 $ 6,370 $ 2,577
======== ======== ======== ========
NET INCOME $ 1,056 $ 791 $ 5,816 $ 2,599
Preferred stock dividend 433 276 867 276
-------- -------- -------- --------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 623 $ 515 $ 4,949 $ 2,323
======== ======== ======== ========
Basic earnings per common share $ 12.73 $ 10.36 $ 100.91 $ 46.70
Diluted earnings per common share $ 12.73 $ 10.36 $ 100.91 $ 46.70
Weighted average common shares outstanding 48,957 49,707 49,042 49,746
</TABLE>
<PAGE>
COAL CITY CORPORATION
CONSOLIDATED BALANCE SHEETS
(STATEMENT AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
ASSETS 1998 1997 1997
------------- ------------ -------------
<S> <C> <C> <C>
Cash and due from banks $ 19,445 $ 36,302 $ 32,926
Investment securities:
Securities available for sale 184,138 136,685 145,984
Securities held to maturity (fair value of $10,309 at September 30, 1998, 9,884 5,242 8,832
$5,679 at December 31, 1997 and $9,263 at September 30, 1997)
Stock in Federal Home Loan Bank 2,239 615 615
Federal funds sold 16,700 37,400 13,900
Loans (net of allowance for loan losses of $7,245 at September 30, 1998, 532,110 519,399 518,492
$7,922 at December 31, 1997 and $7,810 at September 30, 1997)
Lease investments, net 20,971 22,887 20,702
Premises and equipment, net 11,509 11,045 10,770
Other assets 7,848 10,703 11,042
Intangibles, net 19,439 22,418 23,867
-------- -------- --------
TOTAL ASSETS $824,283 $802,696 $787,130
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest bearing $121,815 $131,064 $125,557
Interest bearing 512,773 552,996 542,768
-------- -------- --------
TOTAL DEPOSITS 634,588 684,060 668,325
Short-term borrowings 84,494 18,013 16,371
Long-term borrowings 9,510 22,415 21,505
Other liabilities 11,969 12,261 12,630
-------- -------- --------
TOTAL LIABILITIES 740,561 736,749 718,831
-------- -------- --------
Minority Interest in Subsidiary 1,367 3,421 6,651
-------- -------- --------
Corporation Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust Holding Solely Junior Subordinated Debentures -- 10,000 10,000
-------- -------- --------
Corporation Obligated Mandatorily Redeemable Capital Securities of
Subsidiary Trust Holding Solely Junior Subordinated Debentures 25,000 -- --
-------- -------- --------
Stockholders' Equity
Preferred stock, Class B, $150,000 par value; authorized 100 shares;
issued 68 shares 10,200 10,200 10,200
Common stock, no par value, $10 stated value; authorized 200,000 shares;
issued September 30, 1998 48,957 shares; December 31, 1997 490 497 497
49,707 shares; September 30, 1997 49,707 shares)
Additional paid-in capital 23,779 24,446 24,446
Retained earnings 22,011 17,062 16,212
Accumulated other comprehensive income 875 321 293
-------- -------- --------
TOTAL STOCKHOLDERS' EQUITY 57,355 52,526 51,648
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $824,283 $802,696 $787,130
======== ======== ========
</TABLE>
<PAGE>
COAL CITY CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS
(UNAUDITED)
<TABLE>
<CAPTION>
AT OR FOR THE THREE MONTHS ENDED AT OR FOR THE NINE MONTHS ENDED
-------------------------------- -------------------------------
SEPT. 30, 1998 SEPT. 30, 1997 SEPT. 30, 1998 SEPT. 30, 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
PERFORMANCE RATIOS:
Return on average assets 0.50% 0.42% 0.95% 0.57%
Return on average equity 7.36 6.23 14.27 7.97
Net interest rate spread 2.82 3.26 3.04 3.41
Net interest margin 3.57 3.95 3.76 4.10
Non-interest expense to average assets 0.74 0.91 2.37 2.48
Average interest-earning assets to
average interest-bearing liabilities 118.89 117.83 118.49 117.99
Net interest income to other expense 110.53 97.10 106.62 109.39
ASSET QUALITY RATIOS:
Non-performing loans to total loans 1.27% 1.81% 1.27% 1.81%
Non-performing assets to total assets 0.88 1.63 0.88 1.63
Allowance for loan losses to total loans 1.34 1.48 1.34 1.48
Allowance for loan losses to non-performing loans 106.15 81.85 106.15 81.85
CAPITAL RATIOS:
Average equity to average assets 6.59% 6.31% 6.59% 6.23%
Equity to total assets 6.96 6.56 6.96 6.56
Total capital (to risk-weighted assets) 12.00 10.14 12.00 10.14
Tier 1 captial (to risk-weighted assets) 7.41 7.38 7.41 7.38
Tier 1 capital (to average assets) 5.22 5.47 5.22 5.47
</TABLE>
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