-----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, Pk3NXgCDlzPS5CI24RajwXZyClws/U9d3YVquBbrfvGC+7hU8cEyMHlLjDpDH0i5 l2twNIE9mkYv16MOqlXHFQ== 0000801443-97-000006.txt : 19970918 0000801443-97-000006.hdr.sgml : 19970918 ACCESSION NUMBER: 0000801443-97-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970917 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: SEC FILE NUMBER: 000-15365 FILM NUMBER: 97681656 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, 1997 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 CORPORATE ISSUERS: The number of shares outstanding of Orange National Bancorp as of August 12, 1997 is 1,960,921. ORANGE NATIONAL BANCORP CONSOLIDATED BALANCE SHEET
ASSETS 06/30/97 12/31/96 (Unaudited) (Note*) Time Certificates of Deposit 0 0 Securities Held to Maturity 10,551,987 11,111,231 Securities Available for Sale 10,882,376 28,899,373 Fed Funds Sold 25,000,000 26,800,000 Loans 135,817,491 120,360,458 Less Allowance for Possible Credit Losses 1,479,747 1,369,288 ____________ ____________ Total Interest Earning Assets $180,772,107 $185,801,774 Cash & Non-Interest Earning Assets 25,595,440 19,635,829 Bank Premises - At Cost Building and Land 3,465,408 3,448,756 Leasehold Improvements 2,138,099 2,079,896 Furniture, Fixtures and Equipment 3,438,378 3,285,113 Less Accumulated Depreciation and Amortization 3,829,632 3,601,171 Accrued Interest Receivable 1,049,611 1,352,331 Other Assets 5,942,063 6,842,841 ____________ _____________ TOTAL ASSETS $218,571,474 $218,845,369 LIABILITIES & STOCKHOLDERS EQUITY Deposits: Demand, Non-Interest Bearing 78,661,426 77,828,911 Money Market & Now 88,564,939 92,176,073 Savings 11,759,102 10,935,397 Time Deposits of $100,000 or More 8,323,971 8,808,554 Other Time Deposits 9,694,325 8,614,818 ____________ ____________ Total Deposits $197,003,763 $198,363,753 Other Liabilities 1,517,055 1,525,629 ____________ ____________ TOTAL LIABILITIES $198,520,818 $199,889,382 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS EQUITY Common Stock - No Par Value Authorized: 20,000,000 Shares Issued and Outstanding: 1,960,921 Shares in 1997 1,952,671 Shares in 1996 7,751,015 7,675,505 Retained Earnings 12,421,595 11,403,180 Unrealized Gain(Loss) on Securities Available for Sale, Net (121,954) (122,698) ___________ ___________ TOTAL STOCKHOLDERS EQUITY 20,050,656 18,955,987 TOTAL LIABILITIES & STOCKHOLDERS EQUITY $218,571,474 $218,845,369
*NOTE: THE BALANCE SHEET AT DECEMBER 31, 1996, 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 6/30/97 6/30/96 6/30/97 6/30/96 Interest Income: Loans $3,237,775 $2,738,465 $6,214,063 $5,524,116 Taxable Investment Securities 424,111 669,368 988,764 1,230,938 Fed Funds Sold 424,111 361,683 541,884 736,319 Total Interest Income $3,961,589 $3,769,516 $7,744,711 $7,491,373 Interest Expense: Time Deposits of $100,000 or more 103,709 93,802 207,389 174,912 Other Deposits 713,153 778,230 1,380,074 1,529,200 Total Interest Expense 816,862 872,032 1,587,463 1,704,112 NET INTEREST INCOME $3,144,727 $2,897,484 $6,157,248 $5,787,261 Provision For Possible Credit Losses 40,000 65,000 75,000 135,000 Net Interest Income After Provision for Possible Credit Losses $3,104,727 $2,832,484 $6,082,248 $5,652,261 Other Income: Service Charge on Deposit Accounts 283,251 267,314 579,421 541,654 Other 878,021 459,225 1,735,084 1,050,786 Total Other Income $1,161,272 $726,539 $2,314,505 $1,592,440 Other Expense: Salaries, Wages, Employee Benefits 1,504,406 1,466,880 3,015,893 3,003,522 Occupancy Expense of Bank Premises 282,585 291,538 566,597 558,869 Furniture & Equipment Expense 167,929 157,027 359,422 312,466 Other 1,050,115 902,844 2,052,435 2,004,615 Total Other Expense 3,005,035 2,818,289 5,994,347 5,879,472 Earnings Before Income Taxes 1,260,964 740,734 2,402,406 1,365,229 Applicable Income Taxes (Credits) 501,000 271,000 953,000 480,000 Net Earnings 759,964 469,734 1,449,406 885,229 Earnings Per Share $0.38 $0.24 $0.73 $0.46 Weighted Average Number of Shares 1,985,651 1,950,000 1,984,746 1,950,000
ORANGE NATIONAL BANCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
YTD YTD 6/30/97 6/30/96 CASH FLOWS FROM OPERATING ACTIVITIES 2,984,918 1,403,737 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of furniture and equipment (265,247) (106,261) and leasehold improvements NET (INCREASE) DECREASE IN: Fed Funds Sold 1,900,000 (4,000,000) Securities 18,576,985 (10,492,050) Loans (15,421,575) 7,420,681 ___________ ___________ NET CASH PROVIDED BY (USED IN)INVESTING ACTIVITIES 4,690,163 (7,177,630) ___________ ___________ CASH FLOWS FROM FINANCING ACTIVITIES Proceeds From Sale of Common Stock 75,510 78,511 Net Increase (decrease) in deposits (1,359,990) 4,503,416 Dividends Paid (430,990) (484,411) ___________ ___________ NET CASH PROVIDED BY (USED IN)FINANCING ACTIVITIES (1,715,470) (4,097,516) ___________ ___________ INCREASE (DECREASE) IN CASH AND NON-INTEREST EARNING DEPOSITS 5,959,611 (1,676,377) CASH AND NON-INTEREST EARNING DEPOSITS Beginning 19,635,829 22,929,660 End of Period 25,595,440 21,253,283
>PAGE> 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, 1997, and the consolidated statements of earnings and statements of cash flows for the three month and six month periods ended June 30, 1997 and 1996, 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, 1997, and 1996, 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, 1996, annual report to shareholders. The results of the operations for the periods ended June 30, 1997 and 1996, 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, 1997, and December 31, 1996, amounted to $236,843 and $1,906,580 respectively. 3.INCOME TAX MATTERS The gross amounts of deferred tax assets and liabilities are as follows:
Deferred tax assets $1,035,000 Deferred tax liability (678,000) Valuation allowance for deferred tax asset -0- Net deferred tax asset 357,000
Management believes no valuation allowance is necessary. There has been no change in the allowance during the quarter ending June 30, 1997. 4.SECURITIES The fair value of securities classified as held to maturity as of June 30, 1997 is $10,300,578. The unrealized losses of securities available for sale net of unrealized gains as of June 30, 1997 is $121,954. 5. ANALYSIS FOR CREDIT LOSSES An analysis of the change in the allowance for credit losses follows:
Beginning January 1, 1997 1,369,288 Charge offs (5,410) Recoveries 40,869 Provision for loan losses 75,000 Balance June 30, 1996 1,479,747
At June 30, 1997, 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, 1997 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, 1997 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:
6/30/97 Percent a. Cash on Hand & Deposits with Correspondent Banks $25,595,440 41.6% b. Federal Funds Sold $25,000,000 40.7% c. Marketable Securities (Available for Sale) $10,882,376 17.7% Total $61,477,816 100.0%
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, 1997, was 69.0%, compared to 60.6% at December 31, 1996. 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 64.3% at June 30, 1997, compared to 65.2% at December 31, 1996. 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 equaled 13.71% at June 30, 1997, as compared to 13.3% as of December 31,1996. Primary capital to total loans was 14.8% at June 30, 1997, as compared to 15.8% as of December 31, 1996. 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 1997 Vs. 2nd Quarter 1996 June 30, 1997 June 30, 1996 Total interest income for the three-month period and quarter ending June 30, 1997, increased $192,073 or 5.1%, over the like period ending June 30, 1996. Interest and fees on loans increased $499,310 or 18.2%, due to an increase in the loan portfolio, with a decrease in average loan interest rates. The average loan totals for the three months ended June 30, 1997 was $130,171,224, compared to $107,725,349 for the three month period of the prior year. Because of the difference in loan interest rates between the two periods, average yield decreased 22 basis points from 10.20% to 9.98% as of June 30, 1997. Investment income decreased $307,237 or 29.8% over the prior period. This decrease was caused by a 33.1% decrease in investment accounts, with an increase in average yields. U. S. Government Agencies and Securities represent 55.6% of the Banks investment portfolio. Because of an increase in longer term investments and short term interest rates between the two periods, average yield increased 27 basis points from 5.52% to 5.79% as of June 30, 1997. Total interest expense decreased $55,170 or 6.3% for the subject period ended June 30, 1997, compared to the same period ended June 30, 1996, as a result of a decrease in average interest bearing accounts of $7,925,271 or 6.1%. The cost of funds averaged 1 basis point less during this current quarter than the compared quarter in 1996. Net interest income (total interest income less total interest expense) increased $247,243 or 8.5%, during the quarter ended June 30, 1997, over the same period in 1996. The loan loss provision decreased $25,000 or 38.5%, from $65,000 to $40,000 as of June 30, 1997, based on the amount to provide for estimated losses. At June 30, 1997, the reserve level was at 1.09% of total loans and leases as compared to 1.37% at June 30, 1996. Total charge-offs in the three month period ended June 30, 1997 were $2,500 and recoveries were $28,123 compared to $105,915 in charge-offs and $10,924 in recoveries in the same period in 1996. At June 30, 1997, non performing loans were $3,015,618 compared to $2,463,576 at December 31, 1996. Real Estate loans totaling $2,548,110 represent 84.5% of non performing loans. Management believes, based upon loan quality, that the current loan loss reserve of $1,479,747 is adequate and is in conformance with established loan policy and guidelines. Other income increased $434,733 or 59.8%. No gains or losses were realized on the sale of securities. Gains of $383,052 were realized on the sale of Small Business Administration Loans during the quarter ending June 30, 1997, compared to $66,864 in gains in the same period in 1996. No gains were realized on the sale of equipment during the quarter ending June 30, 1997. No gains were realized in the quarter ending June 30, 1996. Other expense increased $186,746 or 6.6% from $2,818,289 in the second quarter of 1996, to $3,005,035 in the second quarter of 1997. Salary and benefit costs increased $37,526 due to normal cost of living increases. Other expense increased $147,271 or 16.3% as a result of increases of $70,036 in business referral fees, relating to an increase in Small Business Administration Loans, and increases in insurance expenses of $79,467. Operating profits before taxes for the quarter ended June 30, 1997 increased $520,230 or 70.2% over the like period in 1996. This increase in before tax profits occurred partially as the result of an increase in average loans outstanding and an increase in average investment yields. Net after taxes income for the three month period and quarter ended June 30, 1997, was $759,964 compared to $469,734 for the three month period ending June 30, 1996. Current Accounting Development Effective for financial statements issues after December 15, 1997, the Company will be required to implement FASB Statement No. 128, Earnings per Share. The Statement establishes standards for computing and presenting earnings per share (EPS) and applies to entities with publicly held common stock or potential common stock. It replaces the presentation of primary EPS with a presentation of basic EPS and also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures. The Company has not yet determined the effect this Statement will have on its 1998 financial statements. The FASB has also issued Statement No. 131 Disclosures about Segments of an Enterprise and Related Information. Statement No. 131 modifies the disclosure requirements for reportable segments and is effective for the Company's year ending December 31, 1998. The Company has not determined the effect of the adoption of this Statement would have on the Company's financial statements. Results of Operations First Half 1997 Vs. First Half 1996 June 30, 1997 June 30, 1996 Total interest income for the six months ended June 30, 1997, increased $253,338 or 3.4%, over the like period ending June 30, 1996. Interest and fees on loans increased $689,947 or 12.5%, due to an increase in the loan portfolio, plus a decrease in average loan interest rates. The average loan totals for the six-months ended June 30, 1997 was $125,538,128, compared to $108,189,428 for the six month period of the prior year. Because of the difference in loan interest rates between the two periods, average yield decreased 32 basis points from 10.22% to 9.91% as of June 30, 1997. Investment income decreased $436,609 or 22.2% over the prior period. This decrease was caused by a 26.4% decrease in the investment accounts, plus an increase in average yields. U.S. Government Agencies and Securities represent 60.8% of the Bank's investment portfolio. Because of an increase in longer-term investments and short term interest rates between the two periods, average yield increased 31 basis points from 5.47% to 5.78% as of June 30, 1997. Total interest expense decreased $116,649 or 6.8% for the subject period ended June 30, 1997, compared to the same period ended June 30, 1996, as a result of a decrease in average interest bearing accounts of $7,709,431 or 6.0%. The cost of funds averaged 2 basis points less during the six month period ending June 30, 1997, over the same period in 1996. Net interest income (total interest income less total interest expense) increased $369,6.4 or 6.4%, during the six months ended June 30, 1997, over the same period in 1996. The loan loss provision decreased $60,000, or 44.4%, from $135,000 as of June 30, 1996 to $75,000 as of June 30, 1997, based on the amount necessary to provide for estimated losses. Management believes that the level of reserve is adequate as of June 30, 1997, and it is within the guidelines of the loan loss reserve policy as approved by the Board of Directors. Other income increased $722,065 or 45.3%. Losses of $6,562 were realized on the sale of securities during the six months ending June 30, 1997. No gains or losses were realized on the sale of securities in the six month period ending June 30, 1996. Gains of $790,608 were realized on the sale of Small Business Administration Loans during the six months ending June 30, 1997. Gains of $270,456 were realized in the six months ending June 30, 1996. Gains of $4,769 were realized on the Sale of equipment during the six months ending June 30, 1997. No gains were realized on the sale of equipment during the six months ending June 30, 1996. Other expense increased $114,875, or 2.0% from $5,879,472 in the first half of 1996, to $5,994,347 in the first half of 1997. This increase was partially caused by a $138,543 increase in business referral fees and a $72,528 decrease in legal fees and a $45,620 increase in insurance expense. Operating profits before taxes for the first half of 1997, increased $1,037,177, or 76.0%, over the same period in 1996. This increase in before tax profits occurred partially as a result of an increase in average loans outstanding and an increase in average investment yields. Net after taxes income for the six-month period ending June 30, 1997, was $1,449,406 compared to $885,229 for the six month period ending June 30, 1996. 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 a one-year term: Charles R. Foulger Michael W. Abdalla Gerald R. Holte James E. Mahoney Michael J. Christianson Wayne F. Miller Kenneth J. Cosgrove Robert W. Creighton San E. Vacarro 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 adoption of the Orange national Bancorp 1997 Stock Option Plan by a vote of 969,641 for and 37,145 against the ratification. D. 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 1997 by a vote of 1,175,652 for and 11,271 against the ratification. ITEM 5. Other information. None to report. ITEM 6. Exhibits and reports on Form 8-K. Proxy Report, which is incorporated herein by reference filed on 4/7/97. #27 Financial Data Schedule 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, 1997 Kenneth J. Cosgrove Date Chief Executive Officer ROBERT W. CREIGHTON AUGUST 13, 1997 R.W. Creighton Date Secretary & Chief Financial Officer EX-27 2
9 1000 6-MOS DEC-31-1997 JUN-30-1997 25595 0 25000 0 10882 10552 10306 135817 1480 218571 197003 0 1517 0 0 0 7751 0 218571 6214 1531 0 7745 1587 1587 6157 75 0 5994 2402 2402 0 0 1449 $0.73 $0.73 8.55 3016 105 1048 1498 1369 5 41 1480 1480 0 0
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