-----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, HGBuqCNktooeB/3K1Q8KiqL7ZJph54hunXszC8IDRjLMu7oKKIFWsX1D7Xu43EtX /Ip6BY7vstYh39228FWQkg== 0000801443-96-000005.txt : 19960816 0000801443-96-000005.hdr.sgml : 19960816 ACCESSION NUMBER: 0000801443-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORANGE NATIONAL BANCORP CENTRAL INDEX KEY: 0000801443 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 330190684 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15365 FILM NUMBER: 96611751 BUSINESS ADDRESS: STREET 1: P O BOX 6040 CITY: ORANGE STATE: CA ZIP: 92613-6040 BUSINESS PHONE: 7147714000 MAIL ADDRESS: STREET 1: P O BOX 6040 CITY: ORANGE STATE: CA ZIP: 92613-6040 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ******** Quarterly Report Under 13 or 15(d) of Securities Exchange Act of 1934 FOR QUARTER ENDED: June 30, 1996 COMMISSION FILE NUMBER: 0-15365 ORANGE NATIONAL BANCORP Incorporated under the laws I.R.S. Employer ID No. of California 33-0190684 1201 East Katella Avenue Orange, California 92867 (714) 771-4000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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 . APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES NO . APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of Orange National Bancorp as of June 30, 1996 is 1,942,896.
ORANGE NATIONAL BANCORP CONSOLIDATED BALANCE SHEET ASSETS 6/30/96 12/31/95 (Unaudited) (Note*) Time Certificates of Deposit 0 0 Securities Held to Maturity 11,752,200 12,652,817 Securities Available for Sale 38,038,050 26,908,298 Fed Funds Sold 22,500,000 18,500,000 Loans 106,624,197 114,236,578 Less Allowance for Possible Credit Losses 1,455,844 1,512,544 ____________ ____________ Total Interest Earning Assets $177,458,603 $170,785,149 Cash & Non-Interest Earning Assets 21,253,283 22,929,660 Bank Premises - At Cost Building and Land 3,439,822 3,413,100 Leasehold Improvements 2,079,896 2,071,545 Furniture, Fixtures and Equipment 3,204,187 3,132,999 Less Accumulated Depreciation and Amortization 3,363,661 3,091,067 Accrued Interest Receivable 1,306,498 1,167,707 Other Assets 6,758,366 7,518,931 ____________ _____________ TOTAL ASSETS $212,136,994 $207,928,024 LIABILITIES & STOCKHOLDERS' EQUITY Deposits: Demand, Non-Interest Bearing 64,376,247 70,237,126 Money Market & Now 98,777,266 91,698,505 Savings 12,963,267 12,456,884 Time Deposits of $100,000 or More 8,705,934 6,632,038 Other Time Deposits 8,672,072 7,966,817 ____________ ____________ Total Deposits $193,494,786 $188,991,370 Other Liabilities 1,163,897 1,674,757 ____________ ____________ TOTAL LIABILITIES $194,658,683 $190,666,127 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common Stock - No Par Value Authorized: 20,000,000 Shares Issued and Outstanding: 1,942,896 Shares in 1996 1,933,571 Shares in 1995 7,588,399 7,509,888 Retained Earnings 10,321,367 9,920,549 Unrealized Gain(Loss) on Securities Available for Sale, Net (431,455) (168,540) ___________ ___________ TOTAL STOCKHOLDERS' EQUITY $17,478,311 17,261,897 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $212,136,994 $207,928,024
*NOTE: THE BALANCE SHEET AT DECEMBER 31, 1995, HAS BEEN TAKEN FROM THE AUDITED FINANCIAL STATEMENTS. SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
ORANGE NATIONAL BANCORP CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) QTR ENDING QTR ENDING YTD YTD 6/30/96 6/30/95 6/30/96 6/30/95 Interest Income: Loans $2,738,465 $3,223,573 $5,524,116 $6,178,272 Taxable Investment Securities 669,368 636,642 1,230,938 1,225,346 Fed Funds Sold 361,683 244,197 736,319 525,574 Total Interest Income $3,769,516 $4,104,412 $7,491,373 $7,929,192 Interest Expense: Time Deposits of $100,000 or more 93,802 47,300 174,912 92,212 Other Deposits 778,230 723,882 1,529,200 1,406,875 Total Interest Expense 872,032 771,182 1,704,112 1,499,087 NET INTEREST INCOME $2,897,484 $3,333,230 $5,787,261 $6,430,105 Provision For Possible Credit Losses 65,000 125,000 135,000 230,000 Net Interest Income After Provision for Possible Credit Losses $2,832,484 $3,208,230 $5,652,261 $6,200,105 Other Income: Service Charge on Deposit Accounts 267,314 281,085 541,654 531,529 Other 459,225 550,025 1,050,786 1,432,740 Total Other Income $726,539 $831,110 $1,592,440 $1,964,269 Other Expense: Salaries, Wages, Employee Benefits 1,466,880 1,476,021 3,003,522 3,079,220 Occupancy Expense of Bank Premises 291,538 289,405 558,869 567,674 Furniture & Equipment Expense 157,027 178,879 312,466 348,652 Other 902,844 1,186,986 2,004,615 2,304,439 Total Other Expense 2,818,289 3,131,291 5,879,472 6,299,985 Earnings Before Income Taxes 740,734 908,049 1,365,229 1,864,389 Applicable Income Taxes (Credits) 271,000 277,000 480,000 588,000 Net Earnings 469,734 631,049 885,229 1,276,389 Earnings Per Share $0.24 $0.34 $0.46 $0.69
ORANGE NATIONAL BANCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) TR ENDING QTR ENDING YTD YTD 6/30/96 6/30/95 6/30/96 6/30/95 CASH FLOWS FROM OPERATING ACTIVITIES 894,302 1,203,512 1,403,737 1,776,371 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of furniture and equipment (33,015) (107,238) (106,261) (287,586) and leasehold improvements NET (INCREASE) DECREASE IN: Fed Funds Sold 3,500,000 12,795,000 (4,000,000) 14,565,000 Securities (3,356,498) (4,518,079)(10,492,050) (4,666,144) Loans (609,043) (17,473) 7,420,681 (1,225,444) ___________ ___________ ___________ ___________ NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (498,556) 8,152,210 (7,177,630) 8,385,826 ___________ ___________ ___________ ___________ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds From Sale of Common Stock 43,818 - 78,511 - Net Increase (decrease) in deposits (1,049,885) (4,815,129) 4,503,416 (4,895,368) Dividends Paid - - (484,411) (180,348) ___________ ___________ ___________ ___________ NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (1,006,067) (4,815,129) 4,097,516 (5,075,716) ___________ ___________ ___________ ___________ INCREASE (DECREASE) IN CASH AND NON-INTEREST EARNING DEPOSITS (610,321) 4,540,593 (1,676,377) 5,086,481 CASH AND NON-INTEREST EARNING DEPOSITS Beginning 21,863,604 15,940,767 22,929,660 15,394,879 End of Period 21,253,283 20,481,360 21,253,283 20,481,360
Orange National Bancorp & Subsidiary NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet of Orange National Bancorp and its wholly-owned subsidiaries, Orange National Bank and ONB Mortgage Corporation, as of June 30, 1996, and the consolidated statements of earnings and statements of cash flows for the three month and six month periods ended June 30, 1996 and 1995, have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 1996, and 1995, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Management believes that the disclosures presented are adequate to make the information not misleading. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's December, 1995, annual report to shareholders. The results of the operations for the periods ended June 30, 1996 and 1995, are not necessarily indicative of the operating results for the full years. 2.COMMITMENTS AND CONTINGENCIES In the ordinary course of business, the Company enters into commitments to fund loans and extend credit to its customers. These commitments are not reflected in the accompanying condensed consolidated financial statements and management does not expect any loss to result from such commitments. Standby letters of credit at June 30, 1996, and December 31, 1995, amounted to $2,071,543 and $1,533,373 respectively. 3.INCOME TAX MATTERS There are no net deferred income tax assets or liabilities in the June 30, 1996 consolidated balance sheet. The gross amounts of deferred tax assets and liabilities are as follows:
Deferred tax assets $1,106,000 Deferred tax liability (632,000) Valuation allowance for deferred tax asset (165,000) Net deferred tax asset 309,000
Management believes the valuation allowance is adequate. There has been no change in the allowance during the quarter ending June 30, 1996. 4.SECURITIES The fair value of securities classified as held to maturity as of June 30, 1996 is $11,279,974. The unrealized losses of securities available for sale net of unrealized gains as of June 30, 1996 is $621,070. 5. ANALYSIS FOR CREDIT LOSSES An analysis of the change in the allowance for credit losses follows:
Beginning January 1, 1996 1,512,544 Charge offs (212,681) Recoveries 20,981 Provision for loan losses 135,000 Balance June 30, 1996 1,455,844
At June 30, 1996, the Bank has classified $1,268,337 of its loans as impaired with a specific loan loss reserve of $326,657 and $211,799 of its loans as impaired with no related loss reserve as determined in accordance with this Statement. The average recorded investment in impaired loans during the quarter ended June 30, 1996 was $1,599,400. The Bank recognizes interest income on impaired loans using both the cost-recovery method and cash-basis method, depending in the economic substance of each impaired loan, which applies cash payments to principal or interest as received. The amount of interest income recognized during the quarter ended June 30, 1996 on loans classified as impaired was $8,021 which equals the amount of cash payments received. ORANGE NATIONAL BANCORP & SUBSIDIARY Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity The Company maintains substantial liquid and other short-term assets to meet increases in loan demand, deposit withdrawals and maturities. These assets include:
6/30/96 Percent a. Cash on Hand & Deposits with Correspondent Banks $21,253,283 26.0% b. Federal Funds Sold $22,500,000 27.5% c. Marketable Securities (Available for Sale) $38,038,050 46.5% Total $81,791,333 100.0%
All of the Bank's installment loans require monthly payments, which provide a steady return of cash funds. Liquidity needs can also be met through federal funds purchased from correspondent banks and/or direct borrowing from the Federal Reserve Bank. As of this date the Bank has never needed to use these facilities. The loan-to-deposit ratio at June 30, 1996, was 55.1%, compared to 60.4% at December 31, 1995. The ratio of liquid assets (cash and due from banks, time deposits with other banks, fed funds sold and investments with maturities of one year or less) to non interest bearing demand deposits was 87.4% at June 30, 1996, compared to 67.5% at December 31, 1995. Capital Management Capital management requires that sufficient capital be maintained for anticipated growth and to provide depositors assurance that their funds are on deposit with a solvent institution. The ratio of total capital (Shareholders' equity plus reserve for loan losses) to risk adjusted assets equalled 13.71% at June 30, 1996, as compared to 12.8% as of December 31, 1995. Primary capital to total loans was 16.4% at June 30, 1996, as compared to 15.1% as of December 31, 1995. Management believes that the Company and its subsidiary Bank are properly and adequately capitalized, as evidenced by these two ratios and the strong liquidity position. Results of Operations 2nd Quarter 1996 Vs. 2nd Quarter 1995 June 30, 1996 June 30, 1995 Total interest income for the three-month period and quarter ending June 30, 1996, decreased $334,896 or 8.2%, over the like period ending June 30, 1995. Interest and fees on loans decreased $485,108 or 15.0%, due to a decrease in the loan portfolio, plus a decrease in average loan interest rates. The average loan totals for the three months ended June 30, 1996 was $107,725,349, compared to $116,077,693 for the three month period of the prior year. Because of the difference in loan interest rates between the two periods, average yield decreased 91 basis points from 11.11% to 10.20% as of June 30, 1996. Investment income increased $150,212 or 17.1% over the prior period. This increase was caused by a 23.6% increase in investment accounts, plus a decrease in average yields. U. S. Government Agencies and Securities represent 68.6% of the Bank's investment portfolio. Because of a decrease in longer term investments and short term interest rates between the two periods, average yield decreased 28 basis points from 5.81% to 5.53% as of June 30, 1996. Total interest expense increased $100,850 or 13.1% for the subject period ended June 30, 1996, compared to the same period ended June 30, 1995, as a result of the increase in overall cost of funds. Average interest bearing accounts increased $5,523,437 or 4.4%. The cost of funds averaged 21 basis points more during this current quarter than the compared quarter in 1995. Net interest income (total interest income less total interest expense) decreased $375,746 or 11.7%, during the quarter ended June 30, 1996, over the same period in 1995. The loan loss provision decreased $60,000 or 48.0%, from $125,000 to $65,000 as of June 30, 1996, based on the amount to provide for estimated losses. At June 30, 1996, the reserve level was at 1.37% of total loans and leases as compared to 1.43% at June 30, 1995. Total charge-offs in the three month period ended June 30, 1996 were $105,915 and recoveries were $10,924 compared to $37,246 in charge-offs and $58,371 in recoveries in the same period in 1995. At June 30, 1996, non performing loans were $2,297,022 compared to $3,055,000 at December 31, 1995. Real Estate loans totaling $1,997,376 represent 87.0% of non performing loans. Management believes, based upon loan quality, that the current loan loss reserve of $1,455,844 is adequate and is in conformance with established loan policy and guidelines. Other income decreased $104,571 or 12.6%. No gains or losses were realized on the sale of securities. Gains of $66,864 were realized on the sale of Small Business Administration Loans during the quarter ending June 30, 1996, compared to $140,726 in gains in the same period in 1995. No gains were realized on the sale of equipment during the quarter ending June 30, 1996. No gains were realized in the quarter ending June 30, 1995. Other expense decreased $313,002 or 10.0% from $3,131,291 in the second quarter of 1995, to $2,818,289 in the second quarter of 1996. This decrease was partially caused by a $96,474 or 29.1%, decrease in data processing expense relating to a new data processing contract in the second quarter of 1995, a decrease of $111,763 in expenses relating to other real estate owned and a decrease of $63,000 in life insurance expense. Operating profits before taxes for the quarter ended June 30, 1996 decreased $167,315 or 18.4% over the like period in 1995. This decrease in before tax profits occurred partially as the result of a decrease in average loan interest rates and a decrease in average investment yields and an increase in the average cost of funds. Net after taxes income for the three month period and quarter ended June 30, 1996, was $469,734 compared to $631,049 for the three month period ending June 30, 1995. Results of Operations First Half 1996 Vs. First Half 1995 June 30, 1996 June 30, 1995 Total interest income for the six months ended June 30, 1996, decreased $437,819 or 5.5%, over the like period ending June 30, 1995. Interest and fees on loans decreased $654,156 or 10.6%, due to a decrease in the loan portfolio, plus a decrease in average loan interest rates. The average loan totals for the six-months ended June 30, 1996 was $108,189,428, compared to $115,561,456 for the six month period of the prior year. Because of the difference in loan interest rates between the two periods, average yield decreased 38 basis points from 10.69% to 10.31% as of June 30, 1996. Investment income increased $216,337 or 12.4% over the prior period. This increase was caused by a 16.6% increase in the investment accounts, plus a decrease in average yields. U.S. Government Agencies and Securities represent 60.7% of the Bank's investment portfolio. Because of a decrease in longer-term investments between the two periods, average yield decreased 12 basis points from 5.67% to 5.55% as of June 30, 1996. Total interest expense increased $205,025 or 13.7% for the subject period ended June 30, 1996, compared to the same period ended June 30, 1995, as a result of the increase in overall cost of funds. Average interest bearing accounts increased $3,377,731 or 2.7%. The cost of funds averaged 19 basis points more during the six month period ending June 30, 1996, over the same period in 1995. Net interest income (total interest income less total interest expense) decreased $642,844 or 10.0%, during the six months ended June 30, 1996, over the same period in 1995. The loan loss provision decreased $95,000, or 41.3%, from $230,000 as of June 30, 1995 to $135,000 as of June 30, 1996, based on the amount necessary to provide for estimated losses. Management believes that the level of reserve is adequate as of June 30, 1996, and it is within the guidelines of the loan loss reserve policy as approved by the Board of Directors. Other income decreased $371,829 or 18.9%. No gains or losses were realized on the sale of securities. Gains of $270,456 were realized on the sale of Small Business Administration Loans during the six months ending June 30, 1996. Gains of $658,054 were realized in the six months ending June 30, 1995. No gains were realized on the Sale of equipment during the six months ending June 30, 1996. Gains of $6,768 were realized on the sale of equipment during the six months ending June 30, 1995. Other expense decreased $420,513, or 6.7% from $6,299,985 in the first half of 1995, to $5,879,472 in the first half of 1996. This decrease was partially caused by a $75,698, or 2.5% decrease in salary and benefit costs due to a decrease in staff due to a reorganizational study in the second half of 1994. Other expense decreased $299,824 or 13.0% as a result of decreases in data processing expenses of $147,209 relating to a new data processing contract in the second quarter of 1995, decreases in life insurance expense of $63,544 and decreases in other real estate owned expenses of $125,859. Operating profits before taxes for the first half of 1996, decreased $499,160, or 26.8%, over the same period in 1995. This decrease in before tax profits occurred partially as a result of a decrease in average loan interest rates and a decrease in average investment yields and an increase in the average cost of funds. Net after taxes income for the six-month period ending June 30, 1996, was $885,229 compared to $1,276,389 for the six month period ending June 30, 1995. PART II OTHER INFORMATION ITEM 1. Legal proceedings No change since 10-K. ITEM 2. Changes in securities. None to report. ITEM 3. Defaults upon senior securities. Not applicable. ITEM 4. Submission of matters for vote of securities holders. A. Annual meeting held at Orange National Bank May 20, 1996. B. Meeting resulted in the election of the below-listed Directors for one-year term: William Frantz Charles R. Foulger Michael W. Abdalla Gerald R. Holte Fred Barrera James E. Mahoney Michael J. Christianson Wayne F. Miller Kenneth J. Cosgrove Harlan Smith Robert W. Creighton San E. Vacarro Armand Durante All votes by proxy, resulting in total management nominees elected. Secondly, there was no solicitation in opposition to management's nominees. C. Meeting resulted in the ratification of the appointment of McGladrey & Pullen as independent public accountant for Bancorp and its subsidiaries, Orange National Bank and ONB Mortgage Corporation for the year 1996 by a vote of 1,380,432 for and 0 against the ratification. ITEM 5. Other information. None to report. ITEM 6. Exhibits and reports on Form 8-K. A. Exhibits: Proxy Report, which is incorporated herein by reference filed on 4/22/96. 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. KENNETH J. COSGROVE August 13, 1996 Kenneth J. Cosgrove Date Chief Executive Officer ROBERT W. CREIGHTON August 13, 1996 R.W. Creighton Date Secretary & Chief Financial Officer EX-27 2
9 1000 6-MOS DEC-31-1996 JUN-30-1996 21253 0 22500 0 38038 11752 11280 106624 1456 212137 193495 0 1163 0 0 0 7588 0 212137 5524 1967 0 7491 1704 0 5787 135 0 5879 1365 885 0 0 885 $0.46 $0.46 8.31 2297 262 1337 2805 1513 213 22 1456 1456 0 0
-----END PRIVACY-ENHANCED MESSAGE-----