EX-99.2 5 a2083901zex-99_2.htm CONSOLIDATED BALANCE SHEETS
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Exhibit 99.2


FIRST NATIONAL BANK

Unaudited Consolidated Balance Sheets

(dollars in thousands)

 
   March 31,
2002
   December 31,
2001
  
Assets  
Cash and due from banks   $ 31,052   $ 46,579  
Federal funds sold     22,000     80,000  
Money market mutual funds     32,027     66,704  
   
 
 
      Total cash and cash equivalents     85,079     193,283  
   
 
 
Securities available-for-sale     136,540     96,638  

Loans, net
 
 
407,197
 
 
405,826
 
Allowance for loan losses     (10,239 )   (10,668 )
   
 
 
      Net loans     396,958     395,158  
   
 
 
Federal Reserve Bank and Federal Home Loan Bank stock     5,446     5,446  
Premises and equipment, net     5,507     5,847  
Deferred income taxes     7,906     7,879  
Accrued interest and other assets     11,695     9,769  
   
 
 
      Total assets   $ 649,131   $ 714,020  
   
 
 

Liabilities and Shareholders' Equity
 
Noninterest bearing deposits   $ 144,448   $ 150,561  
Interest bearing deposits     380,506     438,154  
   
 
 
      Total deposits     524,954     588,715  
   
 
 
Borrowings     68,000     68,268  
Accrued expenses and other liabilities     4,601     5,512  
   
 
 
      Total liabilities     597,555     662,495  
   
 
 
Commitments and contingencies              

Shareholders' equity:
 
 
 
 
 
 
 
  Common stock, $1 par value, authorized 60,000,000 shares; issued and outstanding 9,803,732 shares in 2002 and 9,664,472 shares in 2001     9,804     9,665  
  Preferred Stock, $1 par value, authorized 5,000,000 shares; issued and outstanding 1,412,202 shares in 2002 and 1,392,600 shares in 2001     1,412     1,393  
  Additional paid-in capital     45,947     45,351  
  Accumulated deficit, since July 1, 2000; ($29,274 eliminated July 1, 2000 in connection with quasi reorganization)     (5,720 )   (5,367 )
  Accumulated other comprehensive income-unrealized gains on securities available-for-sale, net     133     483  
   
 
 
      Total shareholders' equity     51,576     51,525  
   
 
 
      Total liabilities and shareholders' equity   $ 649,131   $ 714,020  
   
 
 

See accompanying notes to unaudited consolidated financial statements.

1


FIRST NATIONAL BANK

Unaudited Condensed Consolidated Statements of Income

(dollars in thousands except per share data)

 
   Three months ended March 31,
  
 
   2002
   2001
  
Interest income   $ 9,020   $ 13,943  
Interest expense     2,940     6,453  
   
 
 
    Net interest income     6,080     7,490  
Provision for loan losses     900     1,125  
   
 
 
    Net interest income after provision for loan losses     5,180     6,365  
   
 
 

Noninterest income:
 
 
 
 
 
 
 
  Data processing fees     639     628  
  Service charges on deposit accounts     564     316  
  Merchant processing fees     117     133  
  Other income     613     1,019  
   
 
 
      Total noninterest income     1,933     2,096  
   
 
 

Noninterest expenses:
 
 
 
 
 
 
 
  Salaries and benefits     3,327     3,972  
  Occupancy     1,302     1,382  
  Professional services     291     211  
  Merchant Processing     78     99  
  Software expense     184     129  
  Supplies     102     141  
  Bank charges     122     173  
  Other     1,167     1,187  
   
 
 
    Total noninterest expense     6,573     7,294  
    Income before income tax     540     1,167  
Income tax expense     228     467  
   
 
 
    Net income from continuing operations     312     700  
    Loss from discontined operations, net of tax benefit of $3 in 2002 and $87 in 2001     (4 )   (130 )
   
 
 
    Net income   $ 308   $ 570  
   
 
 

Basic net income per common share:
 
 
 
 
 
 
 
    Income from continuing operations   $ 0.03   $ 0.08  
    Discontinued operations     —     (0.02 )
   
 
 
      Basic net income per common share   $ 0.03   $ 0.06  
   
 
 

Diluted net income per common share:
 
 
 
 
 
 
 
    Income from contining operations   $ 0.03   $ 0.07  
    Discontinued operations     —     (0.01 )
   
 
 
      Diluted net income per share   $ 0.03   $ 0.06  
   
 
 

See accompanying notes to unaudited consolidated financial statements.

2


FIRST NATIONAL BANK

Unaudited Consolidated Statements of Changes in Shareholders' Equity

(dollars in thousands)

 
    
    
    
    
    
   Accumulated
Deficit Since
July 1, 2000
in Connection
with Quasi-
Reorganization
    
    
  
 
   Common Stock
   Preferred Stock
    
   Accumulated
Other
Comprehensive
Income (Loss)
    
  
 
   Additional
Paid-in
Capital
    
  
 
   Shares
   Amount
   Shares
   Amount
   Total
  
Balance at December 31, 2001   9,664,472   $ 9,665   1,392,600   $ 1,393   $ 45,351   $ (5,367 ) $ 483   $ 51,525  

Issuance of Preferred stock
 
 
 
 
 
 
19,602
 
 
19
 
 
74
 
 
 
 
 
 
 
 
93
 

Issuance of Common shares
 
139,260
 
 
139
 
 
 
 
 
 
 
522
 
 
(661
)
 
 
 
 
—
 

Comprehensive loss:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net income                               308           308  
 
Unrealized loss on securities, net of taxes of $234
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(350
)
 
(350
)
                                         
 
   
Total comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(42
)
   
 
 
 
 
 
 
 
 
Balance at March 31, 2002   9,803,732   $ 9,804   1,412,202   $ 1,412   $ 45,947   $ (5,720 ) $ 133   $ 51,576  
   
 
 
 
 
 
 
 
 

See accompanying notes to unaudited consolidated financial statements.

3


FIRST NATIONAL BANK

Unaudited Consolidated Statements of Cash Flows

(dollars in thousands)

 
   Period ended March 31,
  
 
   2002
   2001
  
Operating activities:              
  Net income   $ 308   $ 570  
  Adjustments to reconcile net income to net cash provided by operating activities:              
      Provision for loan losses     900     1,125  
      Deferred income tax expense     207     —  
      Depreciation and amortization     674     557  
      Net gain on sale of securities available-for-sale     —     (21 )
      Gain on sale of loans     —     (389 )
      Federal Home Loan Bank stock dividends     —     (100 )
      Decrease (increase) in accrued interest and other assets     (2,059 )   2,246  
      Decrease in accrued expenses and other liabilities     (911 )   (2,182 )
   
 
 
        Net cash provided by (used in) operating activities     (881 )   1,806  
   
 
 
Investing activities:              
  Purchases of securities available-for-sale     (50,234 )   (12,788 )
  Proceeds from sales of securities available-for-sale     —     17,206  
  Proceeds from maturities of securities available-for-sale     9,621     21,304  
  Proceeds from sale of loans     —     7,046  
  Net increase in loans made to customers     (2,700 )   (5,663 )
  Redemptions of Federal Home Loan Bank and Federal Reserve Bank stock, net of purchases     —     259  
  Purchases of premises and equipment     (74 )   (767 )
   
 
 
      Net cash provided by (used in) investing activities     (43,387 )   26,597  
   
 
 
Financing activities:              
  Net decrease in deposits     (63,761 )   (13,944 )
  Net decrease in borrowings     (268 )   (2,583 )
  Proceeds from issuance of Preferred stock, net of expenses     93     1,393  
  Proceeds from exercise of stock options     —     5,373  
   
 
 
      Net cash provided by financing activities     (63,936 )   (9,761 )
   
 
 
      Net increase (decrease) in cash and cash equivalents     (108,204 )   18,642  
Cash and cash equivalents at beginning of period     193,283     102,460  
   
 
 
Cash and cash equivalents at end of period   $ 85,079   $ 121,102  
   
 
 

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
  Interest paid   $ 2,670   $ 6,870  
  Income taxes paid   $ —   $ —  

Supplemental disclosures of noncash financing activities:
 
 
 
 
 
 
 
  Common Stock issued as preferred stock dividend   $ 661   $ —  

See accompanying notes to unaudited consolidated financial statements.

4


FIRST NATIONAL BANK

Notes to Unaudited Consolidated Financial Statements

(1) Basis of Presentation

        The accompanying unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods indicated. Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The results of operations for the interim periods presented are not necessarily indicative of the results of operation to be expected for the remainder of the year.

(2) Proposed Merger

        On April 29, 2002, First National Bank announced a pending merger based on an agreement that provides for First Community Bancorp to acquire all of the outstanding common and preferred stock of the Bank.

        The agreement provides that each First National Bank shareholder will have the right to elect to receive for each share of First National Bank common or preferred stock either $10.00 in cash or 0.5008 of a share of First Community Bancorp common stock, provided that at least and no more than 45% of the total consideration shall be in the form of First Community Bancorp common stock. The pending merger is subject to standard conditions, including the approval of the shareholders of First National Bank and bank regulatory agencies. Upon receipt of the approvals and satisfaction or waiver of other conditions the transaction is expected to close in the third quarter of 2002, at which time First National Bank will merge into Rancho Santa Fe National Bank, a subsidiary of First Community Bancorp, and the resulting bank will operate as First National Bank.

        In connection with the pending merger, on April 25, 2002, First Community Bancorp, First National Bank and First National Bank's former Chief Executive Officer (former CEO) entered into an Agreement of Settlement and Compromise and Release, whereby First Community Bancorp agreed to pay the former CEO $1.75 million, conditioned upon the consummation of the pending merger, to settle any and all amounts claimed to be due and owing under the former CEO's employment agreement.

(3) Sale of Trust Business

        On April 29, 2002, the Bank and its wholly-owned subsidiary, Generations Trust Bank, N.A., entered into an Asset Purchase Agreement (the Agreement) with Union Bank of California to sell the Bank's Trust Business, as defined in the Agreement. The sales price was 1.33 times annualized revenue for the first quarter of the year 2002 (the Base Fiscal Quarter), as defined in the Agreement. The transaction closed on May 30, 2002 at which time 75% of the sales price (the Closing Payment), approximately $1,400,000, was received and the Bank recorded a gain of approximately $760,000, after deducting estimated costs. The Closing Payment amount is subject to adjustment based upon the final determination of amounts used in the calculation. The remaining 25% of the sales price (the Second Payment) is payable in the year 2003, provided the annualized revenue from the business sold for the first quarter of the year 2003 (the Anniversary Fiscal Quarter) is at least equal to the annualized revenue for the Base Fiscal Quarter. If the annualized revenue for the Anniversary Fiscal Quarter is less than for the Base Fiscal Quarter, the Second Payment will be reduced by the amount of the decrease in annualized revenue times 1.33, but not below zero.

5


        In accordance with Statement of Financial accounting Standards No 144, "Accounting for the Impairment of Long-lived Assets," the Bank has reported the results of operations of the related Trust Business as discontinued operations for all periods presented in the accompanying unaudited consolidated condensed statements of income.

(4) Net Income Per Share

        The following is a summary of the calculation of basic and diluted net income per share for the three months ended March 31, 2002 and 2001:

 
   Earnings
(numerator)
   Shares
(denominator)
   Per Share
Amount
 
   (In thousands, except per share amounts)
March 31, 2002                
Basic EPS:                
Income from continuing operations   $ 312   9,711   $ 0.03
Effect of convertible preferred stock         1,399     —
Effect of dilutive stock options and warrants         155     —
   
 
 
Diluted EPS   $ 312   11,265   $ 0.03
   
 
 

March 31, 2001
 
 
 
 
 
 
 
 
Basic EPS                
Income from continuing operations   $ 700   9,123   $ 0.08
Effect of convertible preferred stock         913     .01
Effect of dilutive stock options and warrants         190     —
   
 
 
Diluted EPS   $ 700   10,226   $ 0.07
   
 
 

        The effect of dilutive stock options and warrants above excludes 1,726,920 and 2,584,232 shares for 2002 and 2001, respectively, because their impact would be anti-dilutive.

6



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FIRST NATIONAL BANK Unaudited Consolidated Balance Sheets (dollars in thousands)
FIRST NATIONAL BANK Unaudited Condensed Consolidated Statements of Income (dollars in thousands except per share data)
FIRST NATIONAL BANK Unaudited Consolidated Statements of Changes in Shareholders' Equity (dollars in thousands)
FIRST NATIONAL BANK Unaudited Consolidated Statements of Cash Flows (dollars in thousands)
FIRST NATIONAL BANK Notes to Unaudited Consolidated Financial Statements