-----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, MiG5bwej+KaBEUIrczamiNAaAnphLplXQieUezrc4hyoDjlwcgew6l8CFpmvMBkV a7FkHMJ4lzRowI8UWxIOlg== 0000801443-97-000008.txt : 19971113 0000801443-97-000008.hdr.sgml : 19971113 ACCESSION NUMBER: 0000801443-97-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 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: 97716733 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: September 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 November 12, 1997 is 1,966,171. ORANGE NATIONAL BANCORP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
ASSETS 9/30/97 12/31/96 (Unaudited) (Note*) Time Certificates of Deposit 0 0 Securities Held to Maturity 10,160,561 11,111,231 Securities Available for Sale 8,972,225 28,899,373 Fed Funds Sold 36,500,000 26,800,000 Loans 137,942,097 120,360,458 LESS Allowance for Possible Credit Losses -1,564,858 -1,369,288 ___________ ___________ Total Interest Earning Assets 192,010,025 185,801,774 Cash & Non-Interest Earning Assets 25,770,850 19,635,829 Bank Premises - At Cost Building and Land 3,467,676 3,448,756 Leasehold Improvements 2,146,270 2,079,896 Furniture, Fixtures & Equipment 3,404,750 3,285,113 LESS Accumulated Depreciation & Amortization -3,912,043 -3,601,171 Accrued Interest Receivable 878,453 1,352,331 Other Assets 5,742,414 6,842,841 ___________ ___________ TOTAL ASSETS 229,508,395 218,845,369 LIABILITIES & STOCKHOLDERS' EQUITY Deposits: Demand, Non-Interest Bearing 80,293,382 77,828,911 Money Market & Now 92,859,951 92,176,073 Savings 12,190,560 10,935,397 Time Deposits of $100,000 or More 11,371,098 8,808,554 Other Time Deposits 10,267,259 8,614,818 ___________ ___________ Total Deposits 206,982,250 198,363,753 Other Liabilities 1,720,484 1,525,629 ___________ ___________ TOTAL LIABILITIES 208,802,734 199,889,382 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common Stock - No Par Value Authorized: 20,000,000 Shares Issued and Outstanding: 1,963,546 Shares in 1997 1,952,671 Shares in 1996 7,796,147 7,675,505 Retained Earnings 13,077,005 11,403,180 Unrealized Gain(Loss)on Securities Available for Sale, Net -67,491 -122,698 ___________ ___________ TOTAL STOCKHOLDERS' EQUITY 20,805,661 18,955,987 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 229,508,395 218,845,369
*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 AND SUBSIDIARY CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
QTR ENDED QTR ENDED YTD YTD 9/30/97 9/30/96 9/30/97 9/30/96 Interest Income: Loans 3,457,470 2,740,815 9,671,533 8,264,931 Taxable Investment Securities 313,002 703,141 1,301,766 1,934,079 Fed Funds Sold 440,154 402,114 982,038 1,138,433 Total Interest Income 4,210,626 3,846,07011,955,33711,337,443 Interest Expense: Time Deposits of $100,000 or more 131,151 95,452 338,540 270,364 Other Deposits 716,857 817,186 2,096,931 2,346,386 Total Interest Expense 848,008 912,638 2,435,471 2,616,750 NET INTEREST INCOME 3,362,618 2,933,432 9,519,866 8,720,693 Provision for Possible Credit Losses 15,000 60,000 90,000 195,000 Net Interest Income After Provision for Possible Credit Losses 3,347,618 2,873,432 9,429,866 8,525,693 Other Income: Service Charge on Deposit Accounts 259,682 264,171 839,103 805,825 Other 740,470 616,686 2,475,554 1,667,472 Total Other Income 1,000,152 880,857 3,314,657 2,473,297 Other Expense: Salaries, Wages, Employee Benefits 1,522,185 1,433,439 4,538,078 4,436,961 Occupancy Expense of Bank Premises 286,316 304,788 852,913 863,657 Furniture & Equipment Expense 181,541 163,480 540,963 475,946 Other 946,225 960,846 2,998,660 2,965,461 Total Other Expense 2,936,267 2,862,553 8,930,614 8,742,025 Earnings Before Income Taxes 1,411,503 891,736 3,813,909 2,256,965 Applicable Income Taxes (Credits) 560,000 281,000 1,513,000 761,000 Net Earnings 851,503 610,736 2,300,909 1,495,965 Earnings Per Share $0.43 $0.31 $1.16 $0.77 Weighted average number of shares 2,002,582 1,970,120 1,990,691 1,942,800
ORANGE NATIONAL BANCORP AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
QTR ENDED QTR ENDED YEAR TO DATE YEAR TO DATE 9/30/97 9/30/96 9/30/97 9/30/96 CASH FLOWS FROM OPERATING ACTIVITIES 1,563,642 975,595 4,548,560 2,379,332 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Furniture & Equipment and Leasehold Improvements (17,303) (24,246) (282,550) (130,507) NET (INCREASE) DECREASE IN: Federal Funds Sold (11,500,000)(10,800,000) (9,700,000)(14,800,000) Securities 2,356,040 4,493,175 20,933,025 (5,998,875) Loans (2,054,494) (4,325,723) (17,476,069) 3,094,958 NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (11,215,757)(10,656,794) (6,525,594)(17,834,424) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Sale of Common Stock 45,132 63,700 120,642 142,211 Net Increase (decrease) in Deposits9,978,487 7,738,436 8,618,497 12,241,852 Dividends Paid (196,094) -0- (484,411) (484,411) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 9,827,525 7,802,136 8,112,055 11,899,652 INCREASE (DECREASE) IN CASH AND NON-INTEREST EARNING DEPOSITS 175,410 (1,879,063) 6,135,021 (3,555,440) CASH AND NON-INTEREST EARNING DEPOSITS Beginning 25,595,440 21,253,283 19,635,829 22,929,660 End of Period 25,770,850 19,374,220 25,770,850 19,374,220
ORANGE NATIONAL BANCORP AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet of Orange National Bancorp and its wholly-owned subsidiary, Orange National Bank, as of September 30, 1997, and the consolidated statements of earnings and statements of cash flows for the three and nine months ended September 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 September 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 September 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 September 30, 1997 and December 31, 1996 amounted to $336,843 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 assets Net Deferred tax asset $357,000
Management believes no valuation allowance is necessary. There has been no change in the allowance during the quarter ended September 30, 1997. 4.SECURITIES The fair value of securities classified as held to maturity as of September 30, 1997 was $10,138,215. The net unrealized losses of available for sale securities net of unrealized gains and net of applicable income taxes as of September 30, 1997 was $25,171. Net unrealized losses on securities transferred from available for sale to held to maturity securities net of applicable income taxes was $52,215. 5. ANALYSIS FOR CREDIT LOSS Analysis of the change in the allowance for credit losses follows:
Beginning January 1, 1997 1,369,288 Charge offs -22,253 Recoveries 127,823 Provision for loan losses 90,000 Balance September 30, 1997 1,564,858
At September 30, 1997, the bank has classified $805,992 of its loans as impaired with a specific loan loss reserve of $264,905 and $215,793 of its loans as impaired with no related specific loss reserve as determined in accordance with this September Statement. The average recorded investment in impaired loans during the quarter ended September 30, 1997 was $1,037,000. 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 September 30, 1997 on loans classified as impaired was $2,991 which equals the amount of cash payments received. ORANGE NATIONAL BANCORP AND 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:
09/30/97 Percent a. Cash on Hand & Deposits with Correspondent Banks $25,770,850 36.2% b. Federal Funds Sold 36,500,000 51.2% c. Marketable Securities 8,972,225 12.6% (Available for Sale) Total $71,243,075 100.0%
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 September 30, 1997, was 66.6%, 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 78.8% at September 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 total risk adjusted assets equaled 13.35% at September 30, 1997, as compared to 13.3% as of December 31, 1996. Primary capital to total loans was 15.1% at September 30, 1997 as compared to 15.8% as of December 31, 1996. On October 15, 1997 a $0.10 per share cash dividend was declared to shareholders of record on November 14, 1997, payable on December 2, 1997, totaling $196,617. 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 3rd Quarter 1997 Vs. 3rd Quarter 1996 September 30, 1997 September 30, 1996 Total interest income for the three months ended September 30, 1997, increased $364,556 or 9.5%, over the three months ended September 30, 1996. Interest and fees on loans increased $716,655 or 26.1%, due to an increase in the average loan portfolio. The average loan totals for the three months ended September 30, 1997 was $136,322,916, compared to $108,067,840 for the three months ended September 30, 1996. The loan interest rates between the two periods remained the same at 10.06%. Investment income decreased $352,099 or 31.9% over the prior period. This decrease was caused by a 32.5% decrease in the investment accounts, plus an increase in average yields. U.S. Government Agencies and Securities represent 40.0% of the Bank's investment portfolio. Because of an increase in the longer term investments and short term interest rates between the two periods, average yield increased 6 basis points from 5.56% to 5.61% as of September 30, 1997. Total interest expense decreased $64,630 or 7.1% for the three months ended September 30, 1997, compared to the same period ended September 30, 1996 as a result of a decrease in average interest-bearing accounts of $9,606,412 or 7.3%. The cost of funds averaged 1 basis point more during the current quarter than the compared quarter in 1996. Net interest income (total interest income less total interest expense) increased $429,186 or 11.2%, during the quarter ended September 30, 1997, over the same period in 1996. The loan loss provision decreased $45,000, or 75.0%, from $60,000 to $15,000 as of September 30, 1997, due to the adequacy of the loan loss reserve. At September 30, 1997, the reserve level was at 1.13% of total loans as compared to 1.34% as September 1996. Total charge-offs in the three months ended September 30, 1997 were $16,842 and recoveries were $86,954 compared to $39,804 in charge-offs and $13,163 in recoveries in the same period in 1996. At September 30, 1997, non performing loans were $2,593,875 compared to $2,463,576 at December 31. 1996. Real Estate loans totaling $2,214,608 represent 85.4% of non performing loans. Management believes, based upon loan quality, that the current loan loss reserve of $1,564,858 is adequate and is in conformance with established loan policy and guidelines. Other income increased $121,759 or 13.8%. No gains or losses were realized on the sale of securities. Gains of $319,303 were realized on the sale of Small Business Administration Loans during the quarter ended September 30, 1997. Gains of $164,960 were realized on the sale of Small Business Administration Loans during the quarter ended September 30, 1996. No gains were realized on the sale of equipment in the quarters ended September 30, 1997 and 1996. Other expense increased $73,714, or 2.6% from $2,862,553 in the third quarter of 1996, to $2,936,267 in the third quarter of 1997. This increase was partially caused by an increase of $88,746 in salary and benefit costs due to normal cost-of -living salary increases and the growth of the bank. Operating profits before taxes for the quarter ended September 30, 1997 increased $519,767, or 58.3%, over the like 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 three months ended September 30, 1997, was $851,503 compared to $610,736 for the three months ended September 30, 1996. Results of Operations Nine Months 1997 Vs. Nine Months 1996 September 30, 1997 September 30, 1996 Total interest income for the nine months ended September 30, 1997, increased $617,894 or 5.5%, over the like period ended September 30, 1996. Interest and fees on loans increased $1,406,602 or 17.0%, due to an increase in the loan portfolio, plus a decrease in average loan interest rates. The average loan totals for the nine months ended September 30, 1997 was $129,172,562, compared to $108,148,603 for the nine months ended September 30, 1996. Because of the difference in loan interest rates between the two periods, average yield decreased 21 basis points from 10.19% to 9.98% as of September 30, 1997. Investment income decreased $788,708 or 25.7% over the prior period. This decrease was caused by a decrease in investment accounts, plus an increase in average yields. U.S. Government Agencies and Securities represent 53.7% 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 22 basis points from 5.52% to 5.74% as of September 30, 1997. Total interest expense decreased $181,279 or 6.9% for the nine months ended September 30, 1997, compared to the same period ended September 30, 1996 as a result of a decrease in average interest-bearing accounts of $8,344,189 or 6.4%. The cost of funds averaged 2 basis points less during the nine months ended September 30, 1997 over the same period in 1996. Net interest income (total interest income less total interest expense) increased $799,173 or 9.2%, during the nine months ended September 30, 1997, over the same period in 1996. The loan loss provision decreased $105,000 or 53.8%, from $195,000 as of September 30, 1996 to $90,000 as of September 30, 1997 based on the amount necessary to provide for estimated losses. Management believes that the level of reserve is adequate as of September 30, 1997, and it is within the guidelines of the loan loss reserve policy as approved by the Board of Directors. Other income increased $841,360 or 34.0%. Gains of $1,250 and $12,953 were realized on the sale of securities during the nine months ended September 30, 1997 and 1996, respectively. Gains of $1,109,911 and $435,417 were realized on the sale of Small Business Administration Loans during the nine months ended September 30, 1997 and 1996, respectively. Gains of $4,769 were realized on the sale of equipment in the nine months ended September 30, 1997. No gains were realized on the sale of equipment in the nine months ended September 30, 1996. Other expense increased $188,589 or 2.2% from $8,742,025 in the first nine months of 1996, to $8,930,614 in the first nine months of 1997. This increase was partially caused by a $165,052 increase in business referral fees and a $77,700 decrease in legal fees and an increase in salary and benefit costs due to normal cost of living increases and growth of the bank. Operating profits before taxes for the first nine months of 1997 increased $1,556,944 or 69.0% over the same 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 nine months ended September 30, 1997, was $2,300,909 compared to $1,495,965 for the nine months ended September 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. None to report. ITEM 5. Other information. None to report. ITEM 6. Exhibits and reports on Form 8-K. None to report. 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 NOVEMBER 13, 1997 Kenneth J. Cosgrove Date Chief Executive Officer ROBERT W. CREIGHTON NOVEMBER 13, 1997 R.W. Creighton Date Secretary & Chief Financial Officer EX-27 2
9 1000 9-MOS DEC-31-1997 SEP-30-1997 25771 0 36500 0 8972 10161 10138 137942 1565 229508 206982 0 1720 0 0 0 7796 0 229508 9672 2284 0 11955 2435 2435 9520 90 0 8931 3814 3814 0 0 2301 1.16 1.16 8.75 2594 594 727 1527 1369 22 128 1565 1565 0 0
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