-----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, KwyHYYxCtwLjuh5RnlV0yNtmRL9aQ6qZqxLsuu0L7DMm9tGr5Xm3FBtkHPFfV9L8 ShkkYn8ysARHZvq131kN1g== 0000892569-96-000705.txt : 19960517 0000892569-96-000705.hdr.sgml : 19960517 ACCESSION NUMBER: 0000892569-96-000705 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELDORADO BANCORP CENTRAL INDEX KEY: 0000351991 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 953642383 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09709 FILM NUMBER: 96567796 BUSINESS ADDRESS: STREET 1: 17752 E 17TH ST CITY: TUSTIN STATE: CA ZIP: 92680 BUSINESS PHONE: 7147981100 MAIL ADDRESS: STREET 1: 19100 VON KARMAN AVE SUITE 550 CITY: IRVINE STATE: CA ZIP: 92715 10-Q 1 FORM 10-Q FOR THE PERIOD ENDING MARCH 31, 1996 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 period ended March 31, 1996 -------------------------------------------------------- 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: 1-9709 ----------------------------------------------------- ELDORADO BANCORP - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 95-3642383 - ----------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 17752 EAST SEVENTEENTH STREET, TUSTIN, CALIFORNIA 92680 - ----------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (714) 798-1100 - ----------------------------------------------------------------------------- Registrant's telephone number, including area code) - ----------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. [ X ] Yes [ ] No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all 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 There were 3,764,600 shares of common stock for the registrant outstanding as of March 31, 1996. 1 2 Part I. Financial Information Item I. Financial Statements Eldorado Bancorp and Its Subsidiary Eldorado Bank CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in Thousands)
ASSETS March 31, 1996 December 31, 1995 ------ -------------- ----------------- Cash and due from banks $ 30,045 $ 32,233 Federal funds sold 19,200 9,700 Securities available-for-sale 94,893 86,580 Securities held-to-maturity - approximate market value of $8,540 in 1996 and $7,212 in 1995 8,581 7,087 Loans and direct lease financing 222,943 229,957 Less allowance for possible credit losses 4,903 6,265 --------- ---------- Net loans and direct lease financing 218,040 223,692 Premises and equipment, net 8,468 8,598 Other real estate owned 1,535 1,965 Accrued interest receivable and other assets 14,584 13,331 --------- ---------- $ 395,346 $ 383,186 ========= ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Liabilities Deposits Demand, non-interest bearing $ 106,245 $ 99,770 Savings and money market 155,111 157,882 Time certificates under $100,000 47,410 43,534 Time certificates of $100,000 or more 37,283 32,092 --------- --------- Total deposits 346,049 333,278 Federal funds purchased 2,036 3,772 Other liabilities 3,851 3,763 --------- --------- Total liabilities $ 351,936 $ 340,813 Shareholders' equity Preferred stock, no par value; authorized 5,000 shares, none issued --- --- Common stock, no par value; authorized 12,500,000 shares, issued and outstanding 3,764,600 shares in 1996 and 3,733,822 shares in 1995 32,034 31,798 Retained earnings 11,183 10,175 Net unrealized gain on securities available-for-sale 193 400 --------- --------- 43,410 42,373 --------- --------- Total shareholders' equity and liabilities $ 395,346 $ 383,186 ========= =========
2 3 Part I. Financial Information Item I. Financial Statements (continued) Eldorado Bancorp and Its Subsidiary Eldorado Bank CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (Dollars in Thousands except for earnings per share and weighted average number of shares outstanding)
Three Months Ended March 31 ------------------ 1996 1995 Interest Income Loans $ 5,593 $ 4,129 Securities 1,443 1,255 Federal funds sold 294 224 Direct lease financing 24 36 -------- -------- 7,354 5,644 Interest Expense Savings, NOW and money market deposits 775 735 Time deposits of $100,000 or more 454 225 Time deposits under $100,000 623 240 Other 37 39 -------- -------- Total interest expense 1,889 1,239 -------- -------- Net interest income 5,465 4,405 Provision for loan lease losses 152 302 -------- -------- Net interest income after provision for loan and lease losses 5,313 4,103 Other Income Service charges on deposit accounts 607 503 Loan servicing income 224 221 Bank card discounts 29 209 Gain (loss) on sales of SBA loans 13 (52) Net gain (loss) on sales of securities --- (2) Other 304 125 -------- -------- 1,177 990 Other Expense Salaries 1,364 1,054 Employee benefits 561 570 Net occupancy of bank premises 406 376 Furniture and equipment expense 298 223 Other real estate owned writedowns/expense 33 61 Other 1,603 1,312 -------- -------- 4,265 3,596 -------- -------- Earnings before taxes 2,225 1,497 Income Taxes 915 615 --------- -------- Net Earnings $ 1,310 $ 882 ======== ======== Earnings per common share $ 0.34 $ 0.29 ======== ======== Weighted average common shares outstanding 3,865,806 3,032,401
3 4 Part I. Financial Information Item I. Financial Statements (continued) Eldorado Bancorp and Its Subsidiary Eldorado Bank CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Three Months Ended Three Months Ended March 31, 1996 March 31, 1995 ------------------ ------------------ Cash Flows from operating activities: Net earnings $ 1,310 $ 882 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 240 182 Amortization of goodwill 167 28 Provision for possible credit losses 152 302 Provision for possible losses on other real estate owned --- 58 (Gain) loss on sale of SBA loans (13) 52 (Gain) loss on sale of securities available-for-sale --- 2 Amortization of deferred income, costs, discounts and fees (97) (40) Loan fees collected 4 121 (Gain) loss on sale of other real estate owned (170) (1) Change in assets and liabilities: (Increase) decrease in accrued interest receivable 98 (17) (Increase) decrease in other assets/current tax receivable and other real estate owned (1,442) (1,322) Increase (decrease) in other liabilities 88 329 -------- -------- Total adjustments (973) (305) -------- -------- Net cash provided by operating activities 337 577 Cash flows from investing activities: Proceeds from maturity of securities available-for-sale 11,444 28,296 Proceeds from sale of securities available-for-sale 1,160 --- Proceeds from sale of securities held-to-maturity 2,000 --- Proceeds from sale of equipment 14 --- Purchase of securities available-for-sale (21,246) (22,764) Purchase of securities held-to-maturity (3,492) (503) Net (increase) decrease in loans and leases 5,606 4,526 Purchases of premises and equipment (111) (241) Proceeds from sale of other real estate owned 671 53 Proceeds from sale of loans --- 1,162 -------- -------- Net cash used in investing activities $ (3,994) $ (13,257) -------- ---------
4 5 Part I. Financial Information Item I. Financial Statements (continued) Eldorado Bancorp and Its Subsidiary Eldorado Bank CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Three Months Ended Three Months Ended March 31, 1996 March 31, 1995 ------------------ =------------------ Cash Flows from operating activities: Net increase (decrease) in deposits $12,771 $(2,482) Net increase (decrease) in federal funds purchased (1,736) 4,858 Dividends paid (302) 221 Proceeds from stock options exercised 236 --- ------- ------- Net cash provided by financing activities 10,969 2,155 ------- ------- Increase (decrease) in cash and cash equivalents 7,312 13,261 Cash and cash equivalents at beginning of year 41,933 32,950 Cash and cash equivalents at March 31 $49,245 $46,211 ======= =======
5 6 Part I. Financial Information Item I. Financial Statements (continued) Eldorado Bancorp and Its Subsidiary Eldorado Bank CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For three months ended March 31, 1996 and For years ended December 31, 1995, 1994, and 1993 (Unaudited)
Net Unrealized Securities Gain (Loss) on Total Common Stock Securities Retained Shareholders' Shares Amount Available-for-Sale Earnings Equity ---------------------- ------------------ --------- ------------- ------------------------------------------ Balance, December 31, 1993 2,752,255 17,427,000 --- 9,862,000 27,289,000 Net unrealized holding gain on securities available-for-sale as of January 1, 1994 --- --- $ 1,179,000 --- 1,179,000 Cash dividends declared ($0.16 per share) --- --- --- (441,000) (441,000) Stock options exercised 4,473 35,000 --- --- 35,000 Change in net unrealized gain on securities available-for-sale --- --- (1,524,000) --- (1,524,000) Net earnings --- --- --- 2,556,00 2,556,000 ------------------------------------------ --------------------- ----------- ----------- ----------- Balance, December 31, 1994 2,756,728 $17,462,000 $ (345,000) $11,977,000 $29,094,000 Cash dividends declared ($0.36 per share) --- --- --- (960,000) (960,000) Stock options exercised 7,380 62,000 --- --- 62,000 Common stock issued 630,276 8,928,000 --- --- 8,928,000 10% common stock dividend 339,438 5,346,000 --- (5,346,000) --- Change in net unrealized gain on securities available-for-sale --- --- 745,000 --- 745,000 Net earnings --- --- --- 4,504,000 4,504,000 ----------------------------------------- --------------------- ------------------------------------------- Balance, December 31, 1995 3,733,822 $31,798,000 $ 400,000 $10,175,000 $42,373,000 Cash dividends declared ($0.08 per share) --- --- --- (302,000) (302,000) Stock options exercised 30,778 236,000 --- --- 236,000 Change in net unrealized gain (loss) in securities available-for-sale --- --- (207,000) --- (207,000) Net earnings --- --- --- 1,310,000 1,310,000 ----------------------------------------- --------------------- -------------------------------------------- Balance, March 31, 1996 3,764,600 $32,034,000 $ 193,000 $11,183,000 $43,410,000
6 7 Part I. Financial Information Item I. Financial Statements (continued) Eldorado Bancorp and Its Subsidiary Eldorado Bank NOTE OF CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) --------------------------- NOTE A - BASIS OF PRESENTATION --------------------- The financial statements for interim periods are unaudited. In the opinion of management, all material adjustments necessary for fair presentation of the interim financial statements have been included. Interim period financial statements are not necessarily indicative of results to be expected for the entire year. NOTE B - EARNINGS PER SHARE ------------------ Net earnings per common share are based on the weighted average number of shares outstanding giving retroactive effect to stock dividends, including the 10% stock dividend declared in November 1995. Stock options have been included as common stock equivalents. NOTE C - RECLASSIFICATIONS ----------------- Certain items in prior periods have been reclassified to conform to the current presentation. 7 8 Part I. Financial Information Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Financial Condition - ------------------- Total assets at March 31, 1996 were $395.3 million compared to $383.2 million at December 31, 1995. The increase in total assets was primarily due to an increase in total deposits. The funds received from depositors and loan repayments, net of loan disbursements, were deployed largely in federal funds sold and securities available-for-sale. Federal funds sold , considered as overnight loans to other banks, increased to $19.2 million at March 31, 1996 compared to $9.7 million at December 31, 1995. Securities available-for-sale increased $8.3 million to $94.9 million at March 31, 1996 compared to $86.6 million at December 31, 1995. The following table summarizes the components of total gross loans outstanding in each category at the date indicated (in thousands):
March 31, December 31, 1996 1995 1994 1993 1992 1991 --------- --------- ------- ------- ------- ------- Commercial, Secured and Unsecured $ 95,021 $ 95,548 $66,987 $66,987 $74,603 $83,937 Interim Construction 17,900 18,219 4,789 4,789 21,595 28,770 Real Estate 80,745 88,097 78,607 78,607 90,985 98,373 Installment 26,908 26,553 18,945 18,945 21,374 28,229 Credit Card 1,593 1,791 1,298 1,298 1,456 1,491 Lease Financing 904 876 1,286 1,286 3,515 3,853 Less: Unearned Income (128) (127) (38) (38) (739) 1,208) -------- -------- -------- -------- -------- -------- Total Gross Loans $222,943 $229,957 $171,874 $182,465 $212,789 $243,445
Total gross loans decreased to $222.9 million at March 31, 1996 from $230.0 million at December 31, 1995 due primarily to loan repayments exceeding funding of loans. The Company had experienced declining loan balances from 1991 to 1994 largely due to more stringent underwriting criteria, fewer borrowers in the recessionary environment meeting the underwriting criteria, loan payoffs and reduced demand for new credit. Additional during this period, the Company eliminated the construction lending department in order to reduce its exposure to the declining real estate market. The Company, through the acquisition of Mariners Bancorp in October 1995, operates a construction lending department. The Company intends to originate and service interim construction loans. 8 9 The following tables show the maturities of loans and their sensitivities to changes in interest rates at March 31, 1996. Lease financing is not included in this table:
Due in Due after One Year One Year to Due after Or Less Five Years Five Years Total --------- ----------- ---------- --------- Commercial, Secured and Unsecured $ 74,778 $16,118 $ 4,468 $ 95,364 Interim Construction 14,193 3,059 648 17,900 Real Estate 62,374 13,445 4,926 80,745 Installment 20,886 4,501 1,174 26,561 Credit Card 1,564 0 29 1,593 Leases 245 535 0 780 -------- ------- ------- -------- $174,040 $37,658 $11,245 $222,943 ======== ======= ======= ========
Maturing Within After One Year One Year Total ---------------------------------------- Loans with Predetermined Interest Rates $ 27,112 $40,715 $ 67,827 Loans with Floating or Adjustable Interest Rates 146,928 8,188 155,116
The following table provides information with respect to the components of the Company's nonperforming assets at the dates indicated (amounts in thousands):
December 31, March 31, --------------------------------------------------------- 1996 1995 1994 1993 1992 1991 --------- --------------------------------------------------------- Nonaccrual Loans $3,378 $5,818 $3,161 $2,092 $2,927 $8,364 Loans More Than 90 Days Past Due 259 380 246 56 361 349 ------ ------ ------ ------ ------ ------ Total Nonperforming Loans $3,637 $6,198 $3,407 $2,148 $3,288 $8,713 ------ ------ ------ ------ ------ ------
Ordinarily, the accrual of interest ceases when no payment of interest or principal has been made for 90 days or if the Bank has reason to believe that continued payment of interest and principal is unlikely. Accrued interest, if any, is reversed at the time such loans are placed on nonaccrual status. If these loans had been current throughout their terms, interest and fees on loans would have increased by approximately $43,000 the three months ended March 31, 1996 and $172,000, $144,000, $108,000, $103,000, and $166,000, for the years ended 1995, 1994, 1993, 1992, and 1991 respectively. 9 10 The following is a summary of impaired loans and the related allowance for possible credit losses:
March 31, 1996 December 31, 1995 ------------------------- ------------------------------ Allowance Allowance Recorded for Possible Recorded for Possible Investment Credit Losses Investment Credit Losses ------------------------- ------------------------------ Impaired loans requiring an allowance for possible credit losses $1,264,000 $ 186,000 $5,077,000 $1,985,000 Impaired loans not requiring an allowance for possible credit losses 1,922,000 --- 741,000 --- ------------------------- ----------------------------- $3,186,000 $ 186,000 $5,818,000 $1,985,000 ========================= =============================
Troubled Debt Restructurings - ----------------------------
December 31, March 31, ------------------------------------------------------ 1996 1995 1994 1993 1992 1991 ----------- ------------------------------------------------------ (In thousands) Troubled debt restructuring $2,514 $1,531 $7,069 $1,431 $ --- $ ---
Troubled debt restructurings consist primarily of loans for which the interest rate was reduced or the payment provisions were modified because of the inability of the borrower to service the obligation under the original terms of the agreements. Income is accrued at the lower effective rate provided the borrower is current under the revised terms and conditions of the agreements. Under the original terms of the restructured loans, interest earned would have totaled approximately $25 thousand for the three months ended March 31, 1996 and $235 thousand for the year ended December 31, 1995. Under the restructured terms, recorded interest income amounted to $19 thousand for the three months ended March 31, 1996 and $187 thousand for the year ended December 31, 1995. 10 11 The following table summarizes, for the periods indicated, changes in the allowance for possible credit losses arising from loans charged off, recoveries on loans previously charged off, and additions to the allowance which have been charged to operating expenses and certain ratios relating to the allowance for possible credit losses (amounts in thousands):
For the Three For the Year Ended December 31, Months Ended ------------------------------------------- March 31, 1996 1995 1994 1993 1992 1991 -------------- ------------------------------------------- Allowance for possible credit losses: Balance at beginning of period $6,265 $5,564 $4,740 $3,530 $3,757 $2,656 Actual charge-offs: Commercial 20 342 570 502 574 406 Interim construction -- -- -- 590 741 -- Credit cards 6 36 36 35 66 48 Consumer 105 165 151 98 494 307 Real estate 1,458 763 720 1,277 142 -- Direct lease financing 2 5 97 32 60 21 ------------ ----------------------------------------- Total charge-offs 1,591 1,311 1,574 2,534 2,077 782 Less recoveries: Commercial 13 156 118 27 54 61 Interim construction -- -- -- 11 -- -- Credit cards 9 9 13 21 5 8 Consumer 16 49 30 106 50 60 Real estate 40 225 -- -- -- -- Direct lease financing -- -- 8 3 6 -- ------------ ----------------------------------------- Total recoveries 78 439 169 168 115 129 ------------ ----------------------------------------- Net loans charged off 1,513 872 1,405 2,366 1,962 653 Provision for credit losses 151 756 2,006 3,576 1,735 1,159 Changes incident to acquisitions -- 817 223 -- -- -- ------------ ----------------------------------------- Balance at end of period $4,903 $6,265 $5,564 $4,740 $3,530 $3,757 ============ ========================================= Ratios: Net loans charged off to average loans 0.67% 0.47% 0.79% 1.22% 0.84% 0.30% Allowance for credit losses to total gross loans 2.20% 2.72% 3.24% 2.60% 1.66% 1.54% Net loans charged off to allowance for credit losses 30.86% 13.92% 25.25% 49.92% 55.58% 17.38% Net loans charged off to provision for credit losses 1,001.99% 115.34% 70.04% 66.16% 113.08% 56.34% Allowance for credit losses to non- performing loans 145.15% 101.08% 163.31% 220.07% 107.36% 43.12%
The allowance for possible credit losses is established by a provision for possible credit losses charged against current period income. Loans and leases are charged against the allowance for possible credit losses when management believes that the collectibility of principal is unlikely. The allowance is an amount that management believes will be adequate to absorb losses inherent in existing loans, leases and commitments to extend credit, based on the evaluations of the collectibility and prior loss experience of loans, leases and commitments to extend credit. The evaluations take into consideration such factors as changes in the nature and volume of the portfolio, overall portfolio quality; loan concentrations; specific problem loans, leases and commitments; and current and anticipated economic conditions that may affect the borrowers' ability to pay. 11 12 Management believes that the allowance for possible credit losses is adequate. While management uses available information to recognize losses on loans and leases, future additions to the allowance may be necessary based on changes in economic conditions. In addition, both Federal and state regulators, as an integral part of their examination process, periodically review the Bank's allowance for possible credit losses and may recommend additions based upon their evaluation of the portfolio at the time of their examination. The risk of nonpayment of loans is an inherent feature of the banking business. That risk varies with the type and purpose of the loan, the collateral which is utilized to secure payment, and ultimately, the credit worthiness of the borrower. In order to minimize this credit risk, the Bank has established lending limits for each of its officers having lending authority, in each case based upon the officer's experience level and prior performance. Whenever a proposed loan by itself, or when aggregated with outstanding extensions of credit to the same borrower, exceeds the officer's lending limits, the loan must be approved by the Bank's Chairman, President or Executive Vice President/Chief Credit Officer or by the Bank's loan committee, depending upon the dollar amount involved. The loan committee is comprised of two directors and four members of the Bank's senior management. In addition, each loan officer has primary responsibilities to conduct credit documentation reviews of all loans made by that officer. Furthermore, the Bank also maintains a program of periodic review of all existing loans and employs a specialist who reviews loans over a certain dollar amount and grades these loans based upon the dollar amount and credit worthiness using a grading system. Loans are graded from "one" to "eight" depending on credit quality, with "grade one" representing a prime loan with a definite and reliable repayment program based upon liquid collateral with adequate margin or supported by a strong up-to-date financial statement. Problem or substandard loans identified in the review process are scheduled for remedial action, and where appropriate, allowances are established for such loans. Periodically, an outside loan review consultant further reviews loans for credit quality. Additionally, the Bank is examined regularly by the FDIC and California State Banking Department at which time a further review of loans is conducted. Problem or substandard loans identified in the review process are largely due to a decline in local real estate values during the past several years. Management believes that it has adequately provided an allowance to cover estimated losses in the credit portfolio. Significant further deterioration in California real estate values could materially impact future operating results, liquidity or capital resources. The Company has allocated the allowance for credit losses according to the amount deemed to be reasonably necessary to provide for the possibility of losses being incurred within the categories of loans set forth in the following table:
For the Three Months Ended For the Year Ended December 31, March 31, 1996 1995 1994 1993 1992 1991 ---------------- ---- ---- ---- ---- ---- Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- Commercial, Secured and Unsecured $2,089 42.6% $2,117 33.8% $2,281 39.0% $2,164 37.1% $1,715 35.1% $1,296 34.5% Interim Construction 392 8.0 280 4.5 310 2.8 325 7.1 440 10.1 443 11.8 Real Estate 1,775 36.2 3,274 52.3 2,597 45.7 1,780 43.9 1,091 42.8 1,518 40.4 Installment 543 12.1 500 8.0 271 11.0 334 9.8 245 10.0 428 11.4 Credit Card 34 0.7 64 1.0 52 0.8 101 0.8 11 0.7 23 0.6 Lease Financing 20 0.4 30 0.4 53 0.7 36 1.3 28 1.3 49 1.3 ------ ------ ------ ----- ------ ----- ------ ----- ------ ----- ------ ----- Total $4,903 100.00% $6,265 100.0% $5,564 100.0% $4,740 100.0% $3,530 100.0% $3,757 100.0% ====== ====== ====== ===== ====== ===== ====== ===== ====== ===== ====== =====
The Company sometimes acquires real estate properties in satisfaction of loans receivable through foreclosure or other means. These real estate properties acquired are accounted for pursuant to Statement of Position 92-3, Accounting for Foreclosed Assets, which presumes that foreclosed assets are held for sale and not for the production of income. Accordingly, the real estate properties are carried at fair value less estimated costs to sell. Fair value is determined based upon appraisals near the date of foreclosure. These appraisals are updated periodically and subsequent write-downs of the carrying value may be recognized in the event of declining fair values. On March 31, 1995 other real estate owned totaled $1.5 million compared to $2.0 million at December 31, 1995. Total deposits increased $12.7 million at March 31, 1996 to $346.0 million compared to $333.3 million at December 31, 1995. Noninterest bearing demand deposits, time certificates of deposits under $100,000 and time certificates of $100,000 and greater increased $6.4 million, $3.9 million and $5.2 million, respectively during the first quarter of 1996. Savings and money market deposits, however, declined $2.8 million during this same period. 12 13 Federal funds purchased increased $1.8 million to $2.0 million at March 31, 1996 compared to December 31, 1995. The Company purchases federal funds from one of its financial institution customers as an accommodation. Total shareholders' equity increased $1.0 million during the three months ended March 31, 1996. Net earnings for the period contributed $1.3 million to retained earnings while cash dividends of approximately $300 thousand decreased retained earnings. During this period common stock increased approximately $200 as a result of exercise of stock options and the value of securities available-for-sale declined approximately $200. Liquidity and Interest Sensitivity - ---------------------------------- In order to meet periodic increases in loan demand, potential deposit withdrawals and maturities of short-term, large time certificates of deposit, the Company maintains short-term fund sources. These include cash on hand and on deposit with correspondent banks; "federal funds sold", which are essentially demand loans to other banks; and securities available-for-sale. Such cash and near-cash items, and securities available-for-sale totaled $144.1 million at March 31, 1996, which represented 36.5 percent of total assets. Other possible liquidity sources to meet cash requirements include federal funds purchased lines, the sale of loans, and anticipated increases in deposits. Substantially all of the Company's installment loans and leases are made on terms that require regular monthly repayments, which provides a regular flow of cash funds. The Company manages its interest rate sensitivity by matching the repricing opportunities on its earning assets to those on its funding liabilities. Management uses various asset/liability strategies to manage the repricing characteristics of its assets and liabilities to ensure that exposure to interest rate fluctuations is limited within Company guidelines of acceptable levels of risk-taking. Hedging strategies, including the terms and pricing of loans and deposits, and managing the deployment of its securities are used to reduce mismatches in interest rate repricing opportunities of portfolio assets and their funding sources. The Company does not utilize derivative financial instruments as part of its hedging strategy. One way to measure the impact that future change in interest rates will have on net interest income is through a cumulative gap measure. The gap represents the net position of assets and liabilities subject to repricing in specified time periods. The Company's cumulative gap at March 31, 1996 for a three month and one year period was 74 percent and 110 percent, respectively. Since interest rate changes do not affect all categories of assets and liabilities equally or simultaneously, a cumulative gap analysis alone cannot be used to evaluate the Company's interest rate sensitivity position. To supplement traditional gap analysis, the Company performs simulation modeling to estimate the potential effects of changing interest rates. The process allows the Company to explore the complex relationships within the gap over time and various interest rate environments. The simulation analysis indicates certain scenarios in which the Company may experience a decline in its net interest income despite its strategy of matching repricing opportunities of its earning assets and funding liabilities. Results of Operations - Quarter Ended March 31, 1996 - ---------------------------------------------------- Net income for the three months ended March 31, 1996 was $1.3 million, or $0.34 per share, compared to $882 thousand, or $0.29 per share, for the same period in 1995. This increase was primarily due to higher net interest margins, lower provisions for possible credit losses, higher other income, and lower noninterest expenses. Net interest income totaled $5.4 million for the three months ended March 31, 1996 compared to $4.4 million for the same period in 1995, an increase of $1.0 million. This increase was primarily due to higher yield and greater volume of earning assets, and partially offset by higher rate and greater volume on interest bearing deposits. During this period, interest expense on deposits and borrowings has not increased as rapidly as interest income from earning assets. 13 14 The provision for loan and lease losses during the three months ended March 31, 1996 was $152 thousand compared to $302 in the same period in 1995. This reduction was made based upon the Company's evaluation of the adequacy of its allowance for possible credit losses. The allowance for possible credit losses is established based upon an analysis providing specific allowances for loans that management has identified to have potential loss and general allowances for unidentified losses inherent in the portfolio. The general allowance is determined by segmenting the portfolio by risk rating and loan type with allowances established based upon historical losses in each portfolio segment. Additionally, consideration is given to loan type concentrations in the portfolio and the current and anticipated economic environment. Other income for the quarter ended March 31, 1996 was $1.2 million compared to $1.0 million for the same period in1995. Other expenses for the three months ended March 31, 1996 were $3.4 million compared to $3.6 million for the same period in 1995. Other real estate owned writedowns and expenses were $24 thousand in the third quarter of 1995 compared to $274 thousand for the same quarter last year. Additionally, other miscellaneous expenses were down in the 1995 period. 14 15 Part II. Items 1 - 4. No reportable events. Item 5. Other Information On February 21, 1996 the Board of Directors declared a cash dividend of 8 cents per share payable April 5, 1996 to Shareholders of record March 4, 1996. Item 6. Exhibits and Reports on Form 8-K Exhibits (27) Financial Data Schedule. Reports on Form 8-K (1) None. 15 16 SIGNATURE --------- Pursuant to 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. Eldorado Bancorp -------------------------------- (Registrant) May 14, 1996 /s/ RAYMOND E. DELLERBA - ------------ -------------------------------- Date Raymond E. Dellerba President Chief Operating Officer May 14, 1996 /s/ DAVID R. BROWN - ------------ --------------------------------- Date David R. Brown Executive Vice President Chief Financial Officer 16 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 US DOLLARS 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1 30,045 0 19,200 0 94,893 8,581 8,540 222,943 4,903 395,346 346,049 2,036 3,851 0 0 0 32,034 11,376 395,346 5,593 1,443 318 7,354 1,852 1,889 5,465 152 0 4,265 2,225 2,225 0 0 1,310 0.34 0.34 6.41 3,378 259 2,514 0 6,265 1,591 78 4,903 4,903 0 4,903
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