-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FbW88e4dve0N7QSiO5GyIplYfg5kJbTT4rSPTqL5I7bOUXWu75x2nYf2uDWJtshp QlV2795/vT1OLmFGGNCEuA== 0000705356-99-000006.txt : 19990514 0000705356-99-000006.hdr.sgml : 19990514 ACCESSION NUMBER: 0000705356-99-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL BANCORP OF ALASKA INC CENTRAL INDEX KEY: 0000705356 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 920087646 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10769 FILM NUMBER: 99618991 BUSINESS ADDRESS: STREET 1: 301 NORTHERN LIGHTS BLVD C ST STREET 2: P O BOX 100600 CITY: ANCHORAGE STATE: AK ZIP: 99503 BUSINESS PHONE: 9072761132 MAIL ADDRESS: STREET 1: 301 W NORTHERN LIGHTS STREET 2: P O BOX 100600 CONTROLLERS DEPT CITY: ANCHORAGE STATE: AK ZIP: 99510-0600 10-Q 1 1 UNITED STATES 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 March 31, 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 0-10769 National Bancorp of Alaska, Inc. - ------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 92-0087646 - ------------------------------------------------------------------------ (State of other jurisdiction of (IRS Employer incorporation or organization) Identification No.) Northern Lights Boulevard and C Street, Anchorage, AK 99503 - ------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (907) 276-1132 - ------------------------------------------------------------------------ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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___ The registrant has one class of Common Stock, $2.50 par value. Number of shares outstanding as of May 5, 1999: 30,297,321 2 Table of Contents Page Part I Item 1 Financial Statements...............................................3 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations..........................................8 Part II Item 1 Legal Proceedings.................................................13 Item 2 Changes in Securities.............................................13 Item 3 Defaults Upon Senior Securities...................................13 Item 4 Submission of Matters to a Vote of Security Holders...............13 Item 5 Other Information.................................................14 Item 6 Exhibits and Reports on Form 8-K..................................14 -2- 3 ITEM 1. FINANCIAL STATEMENTS. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In Thousands Except Statistics) Three Months Ended March 31 1999 1998 INTEREST INCOME: Loans & Lease Financing Including Fee $36,747 $37,117 Balances with Banks - 8 Federal Funds Sold 464 1,398 Investment Securities Including Dividends U.S. Government 2,226 2,814 U.S. Agencies 6,591 5,992 States & Political Subdivisions 198 113 Mortgage and Asset-Backed Securities 4,199 2,942 Other Securities 1,751 2,360 ------------------ TOTAL INTEREST INCOME 52,176 52,744 INTEREST EXPENSE: Deposits 13,713 14,040 Federal Funds Purchased & Securities Sold Under Agreement to Repurchase 3,789 4,607 Other Purchased Funds 2 3 ------------------ TOTAL INTEREST EXPENSE 17,504 18,650 ------------------ NET INTEREST INCOME 34,672 34,094 Provision for Loan Losses 1,200 1,200 ------------------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 33,472 32,894 OTHER INCOME: Trust Department Income 712 672 Service Charges on Deposit Accounts 3,363 3,289 Loan Servicing Fees 2,491 2,404 Securities Transactions - - Gains on limited partnership investments 331 368 Credit Card Service Fees 1,610 1,518 Other 4,546 4,157 ------------------ TOTAL OTHER INCOME 13,053 12,408 OTHER EXPENSE: Salaries 10,628 10,016 Profit Sharing & Other Employee Benefits 3,510 3,219 Net Occupancy Expense of Bank Premises 1,995 2,002 Furniture & Equipment Expense 2,156 2,140 Other 8,453 8,170 ------------------ TOTAL OTHER EXPENSE 26,742 25,547 Income Before Income Taxes 19,783 19,755 Applicable Income Taxes 7,063 7,067 ------------------ NET INCOME $12,720 $12,688 ================== Per Share Statistics Net Income $ 0.42 $ 0.41 ================== Average Number of Shares Outstanding 30,560,760 31,045,456 (See note to consolidated statements.) -3- 4 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands Except Statistics) Three Months Ended March 31 1999 1998 Net income $12,720 $12,688 Other comprehensive income, net of taxes: Unrealized losses securities: Unrealized holding losses arising during period (642) (349) Less: reclassification adjustment for gains included in net income - - ---------------- Other comprehensive income (642) (349) ---------------- Comprehensive Income $12,078 $12,339 ================ -4- 5
CONSOLIDATED STATEMENTS OF CONDITION (Unaudited) March 31 December 31 (In Thousands Except Statistics) 1999 1998 1998 ASSETS: Cash and Due from Banks $ 139,755 $ 170,568 $ 153,143 Interest-Bearing Balances with Banks 155 185 116 Federal Funds Sold 126,000 23,000 - Investment Securities: U. S. Agencies 326,421 352,040 382,748 States and Political Subdivisions 18,108 11,037 20,229 Mortgage and Asset-Backed Securities 237,104 164,579 262,431 Other Securities 60,110 115,605 109,755 --------------------------------- Total Investment Securities 641,743 643,261 775,163 (Market Value $644,347 in 1999) Securities Available for Sale at Market 222,243 236,901 239,325 Loans and Lease Financing 1,502,589 1,476,024 1,487,263 Reserve for Loan Losses (25,690) (24,774) (24,678) ---------------------------------- Net Loans and Lease Financing 1,476,899 1,451,250 1,462,585 Loans Held for Sale 71,553 55,793 144,735 Net Premises and Equipment 71,415 70,279 70,302 Limited Partnership Investments 76,533 48,653 71,416 Other Assets 64,374 55,339 58,795 ---------------------------------- Total Assets $2,890,670 $2,755,229 $2,975,580 ================================== LIABILITIES AND SHAREHOLDERS' EQUITY: Demand Deposits $ 572,783 $ 550,539 $ 617,532 Interest-Bearing Deposits: NOW 222,792 204,111 237,245 Savings 297,912 285,898 308,924 Money Market Savings 305,823 290,817 291,587 Time 674,214 614,663 683,427 ---------------------------------- Total Interest-Bearing Deposits 1,500,741 1,395,489 1,521,183 ---------------------------------- Total Deposits 2,073,524 1,946,028 2,138,715 Federal Funds Purchased 242 5,935 41,315 Securities Sold Under Agreement to Repurchase 350,637 353,245 334,572 Other Purchased Funds 165 116 110 Other Liabilities 45,270 43,332 35,223 ---------------------------------- Total Liabilities 2,469,838 2,348,656 2,549,935 Shareholders' Equity 1999 1998 Common Stock-$2.50 Par Value 80,000 80,000 80,000 Shares Authorized 40,000,000 40,000,000 Shares Outstanding 32,000,000 32,000,000 Capital Surplus 63,099 63,039 63,095 Retained Earning 315,707 278,718 307,550 Net Unrealized Gains on Available-for-Sale Securities, Net of Tax 1,992 2,700 2,634 Treasury Stock at Cost (1,691,817 shares on March 31, 1999 and 974,340 Shares on March 31, 1998) (39,966) (17,884) (27,634) ---------------------------------- Total Shareholders' Equity 420,832 406,573 425,645 ---------------------------------- Total Liabilities and Shareholders Equity $2,890,670 $2,755,229 $2,975,580 ================================== Per Share Statistics Net Book Value $13.89 $13.10 $13.86 (See note to consolidated statements.) ==================================
-5- 6 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In Thousands) Three Months Ended March 31 1999 1998 OPERATING ACTIVITIES: Net Income $ 12,720 $ 12,688 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Provision for Loan Losses 1,200 1,200 Deferred Taxes Credit (201) (1,584) Depreciation and Amortization 2,112 1,979 Net amortization on Securities 88 (144) Gain on Security and Limited Partnership Transactions (331) (2,422) Loss on Security and Limited Partnership Transactions - 2,054 Gain on Loan Sales (483) (287) Loss on Sales of Premises and Equipment 1 - Gain on Sale of Other Assets - (5) Net Decrease in Loans Held for Sale 73,665 2,798 Decrease in Interest Receivable, Prepaid Expense, and Other Assets 194 1,541 Increase in Interest Payable, Accrued Expenses and Other Liabilities 4,667 6,108 ----------------- Net Cash Provided by Operating Activities 93,632 23,926 INVESTING ACTIVITIES: Net Decrease (Increase) in Federal Funds Sold, and Interest Bearing Deposits with Other Banks (126,039) 76,965 Proceeds from Maturities of Securities Held to Maturity 141,327 47,261 Purchases of Securities Held to Maturity (8,080) (80,927) Proceeds from Maturities of Securities Available for Sale 26,394 16,336 Purchases of Securities Available for Sale (10,315) (25,075) Net Increase in Loans and Lease Financing (15,750) (5,597) Proceeds from Sales of Premises and Equipment 2 - Purchases of Premises and Equipment (2,921) (1,042) Proceeds from Sale of Limited Partnership Investments 367 8,003 Purchases of Limited Partnership Investments (5,153) (3,680) Acquisition of NBA Insurance Services LLP (3,500) - Proceeds from Sale of Other Assets - 25 Purchases of Other Assets (1,309) (1,192) ------------------ Net Cash Provided by (Used in) Investing Activities (4,977) 31,077 FINANCING ACTIVITIES: Net Decrease in Total Deposit (63,432) (32,167) Net Decrease in Short-Term Borrowings (24,953) (3,466) Acquisition of Treasury Stock (9,167) (2,262) Proceed from Sale of Treasury Stock 116 1,493 Cash Dividends Paid (4,607) (3,882) ----------------- Net Cash Used in Financing Activities (102,043) (40,284) ----------------- Increase (Decrease) in Cash and Cash Equivalents (13,388) 14,719 Cash and Cash Equivalents at Beginning of Year 153,143 155,849 ----------------- Cash and Cash Equivalents at End of March $139,755 $170,568 ================= -6- 7 National Bancorp of Alaska Notes to the Consolidated Financial Statements (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions and regulations for filing Form 10-Q. Operating results for the three-month period ended March 31, 1999, are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. The statements should be read in conjunction with the summary of accounting policies and notes to the financial statements included in the Registrant's annual report for the year ended December 31, 1998. In the opinion of management, all adjustments (consisting of normal recurring accruals necessary for a fair presentation) have been included. -7- 8 Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations National Bancorp of Alaska (the Corporation) recorded earnings of $12.72 million in the first quarter of 1999 compared to $12.69 million for the first quarter of 1998. Earnings per share were $0.42 as of March 31, 1999 up 2% from the $0.41 earned through March 31, 1998. Return on average assets using annualized income from operations plus year-to- date net security gains and nonrecurring loan loss recoveries was 1.78% for the three-month period ended March 31, 1999, compared to 1.86% for the three-month period ended March 31, 1998. The annualized return on average stockholders' equity was 12.04% for the first three months of 1999. Net interest income increased $578,000 after the provision for loan losses during the first three months of 1999 compared to the same period during the previous year. The increase is due to decreased cost of funds. Interest on earning assets decreased $568,000 from the first quarter of 1998 to the first quarter of 1999, while interest expense decreased $1,146,000. The provision for loan loss was $1,200,000 at March 31, 1999, compared to a provision for loan losses $1,200,000 at March 31, 1998. The reserve for loan loss was 1.71% of outstanding loans at March 31, 1999 and 1.68% at March 31, 1998 and 1.66% at December 31, 1998. Nonperforming assets, defined as other real estate owned, nonaccrual loans, restructured loans, and loans past due 90 days and still accruing, as a percentage of total loans and other real estate owned decreased to 0.70% at March 31, 1999 from 1.01% at March 31, 1998, and increased from 0.68% at December 31, 1998. Non-interest income increased $645,000 for the first quarter from the same period in 1998. Non-interest expense increased by $1,195,000 over the first quarter one year ago. Increases include $903,000 in personnel and benefits expenses and $283,000 in other expense. On April 16, 1999, a pre-tax gain of $9 million was received from a limited partnership investment. This gain was previously reported on a Form 8K dated March 17, 1999. Investments in limited partnership totaled $76 million as of March 31, 1999. Material Changes in Financial Condition Total assets at March 31, 1999, were $2,890,670,000 an increase of 4.9% or $135 million from the same period one year earlier, and an decrease of $85 million or 2.9% from December 31, 1998. Investment securities and securities available for sale have decreased by $16 million over the first quarter of 1998. Loans and leases and loans held for sale have increased $42 million over the same period in 1998. Limited partnership investments increased $28 million over the first quarter of 1998. Total deposits have increased by $127 million from March 31, 1998, and decreased by $65 million from December 31, 1998. Liquidity The Corporation maintains sufficient excess liquidity to satisfy contractual liabilities, meet withdrawal requirements of depositors, fund operations, and provide for customers' credit needs. Management knows of no demand, commitments, or events that would result in liquidity changing in a material amount. -8- 9 Capital Resources Shareholders' equity decreased by $4.8 million from December 31, 1998, to $420.8 million at March 31, 1999. This decrease is primarily due to purchases of treasury stock. Federal regulatory agencies have established capital adequacy guidelines setting a minimum for Tier 1, total capital and leverage ratios which were 4%, 8% and 3%, respectively. The Corporation's and National Bank of Alaska's ratios are as follows: March 31 December 31 1999 1998 1998 Tier 1 Risk Based Capital Ratio National Bancorp of Alaska, Inc. 18.29% 18.73% 18.08% National Bank of Alaska 11.86 12.52 11.90 Total Risk Based Capital Ratio National Bancorp of Alaska, Inc. 19.43% 19.88% 19.14% National Bank of Alaska 13.09 13.75 13.05 Leverage Ratio National Bancorp of Alaska 14.51% 14.80% 14.24% National Bank of Alaska 9.04 9.57 9.01 Impact of the Year 2000 Issue The Bank began formally addressing the year 2000 issue in 1996 with a comprehensive project plan. The plan remains dynamic and has full senior management support. It provides for a periodic review of the project's status by the Corporation's board. The Bank's year 2000 strategy includes building awareness throughout the organization and with suppliers and major customers. The plan also includes assessing all hardware, software, network and customer impacts. The Bank relies on several third party providers for data processing. M&I Data Services operates and provides systems to process the Bank's key deposit, loan, trust, financial control, teller operation, electronic fund transfer system, and merchant credit card transactions. Alltel Information Services, Inc., provides a similar service for the Bank's mortgage loan processing, and Norwest Financial Information provides processing for our consumer loan company. All these service providers have renovated and implemented programming to correct the year 2000 problem. The Bank has completed testing of mission critical third party software and systems by March 31, 1999. The Bank has already retired systems that will not function in the year 2000, and installed replacement systems. The Bank intends to have all internal systems and third party provided systems year 2000 capable and operating by June 30, 1999. The costs associated with this process will not have a material impact on the Bank's financial results. Even with extensive testing to ensure readiness, disruptions may occur from unforeseen conditions or other events outside of management's control. To prevent these disruptions from interfering with meeting customer needs, a contingency plan has been developed for each core business function. The contingency plan will be completed and tested by June 30, 1999. -9- 10 Statistical Disclosures Selected Guide 3-Statistical Disclosure by Bank Holding Companies III. Loan Portfolio C. Risk Elements Nonperforming Assets March 31 December 31 (In Thousands) 1999 1998 1998 Nonaccrual Commercial and industrial $ 2,321 $ 6,616 $ 2,153 Real estate construction - 323 166 Real estate long-term 4,465 4,763 4,196 Other - 651 67 ----------------------------- Total 6,786 12,353 6,582 ----------------------------- Restructured Loans Real estate long-term - 89 - ----------------------------- Total - 89 - ----------------------------- Accruing loans past due 90 days or more 3,039 2,201 3,101 ----------------------------- Other real estate owned 723 208 486 ----------------------------- Total nonperforming assets $10,548 $14,851 $10,169 ============================= Nonperforming assets as a percentage of loans and leases and other real estate owned at end of period 0.70% 1.01% 0.68% Potential Problem Loans At March 31, 1999, an additional $79,353,000 in loans are being closely monitored by management. These loans are not include in any category of non- performing loans. However, management has concern about the borrower's abilities to comply with their present loan repayment terms. These loans are reviewed monthly to assess any change in collectability. -10- 11 IV. Summary of Loan Loss Experience A: Analysis of Reserve for Loan Loss (In Thousands) March 31, 1999 December 31, 1998 Balance January 1 $24,678 $24,530 Provision charged to operations 1,200 4,800 Recoveries on loans previously charged off 1,075 5,348 Less loans charged off (1,263) (10,000) ------------------------ Balance at end of period $25,690 $24,678 ======================== Composition of Loan Charge Off and Recoveries Loans Charged Off: Commercial loans and leases $ 200 $ 4,805 Real estate long-term 10 175 Consumer 813 3,963 Visa 240 1,057 ------------------------ Total Charge Offs 1,263 10,000 Recoveries: Commercial loans and leases 420 2,428 Real estate construction 7 4 Real estate long-term 46 502 Consumer 533 2,146 Visa 69 268 ------------------------ Total Recoveries 1,075 5,348 ------------------------ Net Charge Offs $ 188 $ 4,652 ======================== -11- 12 B. Allocation of the Allowance for Loan Loss Allocation of Reserves To Loan Categories Loan Category As a % % of Total Amount of of Total Loans Reserve Reserves(000's) March 31, 1999 Commercial and Industrial 38.7% 8.9% $ 2,283 Real Estate Construction 3.3 - - Real Estate Long Term 31.9 1.0 262 Installment 21.6 32.8 8416 Nontaxable 3.9 - 6 Lease Financing 0.6 - - Unallocated - 57.3 14,723 --------------------------------- 100.0% 100.0% $25,690 December 31, 1998 Commercial and Industrial 38.2% 9.6% $ 2,357 Real Estate Construction 3.7 - 12 Real Estate Long Term 32.1 1.4 343 Installment 21.5 34.0 8,387 Nontaxable 3.8 - 12 Lease Financing 0.7 - 3 Unallocated - 55.0 13,564 --------------------------------- 100.0% 100.0% $24,678 -12- 13 PART II - OTHER INFORMATION Item 1: Legal Proceedings Not applicable. Item 2: Changes in Securities Not applicable. Item 3: Defaults Upon Senior Securities Not applicable. Item 4: Submission of Matters to a Vote of Security Holders The Annual Meeting of Shareholders was held in Anchorage on March 16, 1999. At that time shareholders elected 25 Directors to the Board. All Directors stand for election annually. Votes for Votes Withheld Director Director from Director Donald B. Abel, Jr. 28,925,183 19,743 Gary M. Baugh 28,925,484 19,442 Carl F. Brady, Jr. 28,925,240 19,686 Alec W. Brindle 28,782,900 162,026 James O. Campbell 28,925,344 19,582 Jeffry J. Cook 28,925,484 19,442 Patrick S. Cowan 28,925,484 19,442 Sharon D. Gagnon 28,923,264 21,662 Roy Huhndorf 28,919,371 25,555 James H. Jansen 28,925,484 19,442 Donald L. Mellish 28,925,484 19,442 Emil R. Notti 28,924,684 20,242 Howard R. Nugent 28,923,564 21,362 Tennys B. Owens 28,925,344 19,582 Eugene A. Parrish, Jr. 28,925,484 19,442 J. Michael Pate 28,925,484 19,442 Martin R. Pihl 28,925,484 19,442 Edward F. Randolph 28,920,511 24,415 Edward B. Rasmuson 28,925,076 19,850 Maj. Gen. John Schaeffer (Ret.) 28,643,727 301,199 Michael K. Snowden 28,917,688 27,238 Richard J. Strutz 28,925,076 19,850 George S. Suddock 28,924,684 20,242 Richard A. Wien 28,925,484 19,442 Sharon Wikan 28,920,831 24,095 A total of 28,944,926 votes were presented in proxy and in person. Absent or no proxy votes amounted to 1,626,224. -13- 14 Item 5: Other Information Not applicable. Item 6: Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27. Financial Data Schedule (b) Reports on Form 8-K There was two Form 8-K during the quarter ended March 31, 1999. On February 17, 1999, a Form 8-K reported the donation of $90 million of National Bancorp of Alaska stock to charitable entities by its majority shareholder. On March 17, 1999, a Form 8-K reported an anticipated $9 million pre-tax gain from a limited partnership investment during the second quarter of 1999 and reported the quarterly cash dividend of $0.15 per share payable on April 9, 1999. -14- SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) 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. NATIONAL BANCORP OF ALASKA, INC. May 10, 1999 /s/Edward B. Rasmuson - ---------------------- ------------------------------ Date Edward B. Rasmuson, Chairman of the Board May 10, 1999 /s/Richard Strutz - ---------------------- ------------------------------ Date Richard Strutz, President May 7, 1999 /s/Gary Dalton - ---------------------- ------------------------------ Date Gary Dalton, Executive Vice President and Controller (Principal Accounting Officer) -15- EX-27 2 ARTICLE 9. FINANCIAL DATA SCH. FOR MARCH 31, 1999 10Q
9 1,000 3-MOS DEC-31-1998 MAR-31-1999 139,755 155 126,000 0 222,243 641,743 644,347 1,502,589 25,690 2,890,670 2,073,524 351,044 45,270 0 420,832 0 0 0 2,890,670 36,747 14,965 464 52,176 13,713 17,504 34,672 1,200 0 26,742 19,783 19,783 0 0 12,720 0.42 0.42 0 6,786 3,039 0 79,353 24,678 1,263 1,075 25,690 10,967 0 14,723
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