-----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, NUzOPhmtJV0Wzv1lu2AUNxqhIwzQAOtVg0FpiaGS7vtbwTe8TEoY5+b1C9LS0n3s ea6QB/cvLguxQslcIQq0mw== 0000892569-97-001418.txt : 19970520 0000892569-97-001418.hdr.sgml : 19970520 ACCESSION NUMBER: 0000892569-97-001418 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 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: 97607495 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 PERIOD ENDED MARCH 31, 1997 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, 1997 -------------------------------------------------------- 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 3,813,987 shares of common stock for the registrant outstanding as of March 31, 1997. 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, 1997 December 31, 1996 - ------ -------------- ----------------- Cash and due from banks .................................... $ 35,304 $ 34,101 Federal funds sold ......................................... 21,000 28,400 Securities available-for-sale .............................. 95,990 95,919 Securities held-to-maturity - approximate market value of $7,946 in 1997 and $8,074 in 1996 ........................ 8,082 8,082 Loans and direct lease financing ........................... 226,519 223,904 Less allowance for possible credit losses .................. 4,603 4,672 --------- --------- Net loans and direct lease financing ..... 221,916 219,232 Premises and equipment, net ................................ 7,944 8,139 Other real estate owned .................................... 863 394 Accrued interest receivable and other assets ............... 12,951 12,494 --------- --------- $ 404,050 $ 406,761 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Liabilities Deposits Demand, non-interest bearing ...................... $ 112,916 $ 111,414 Savings and money market .......................... 152,794 156,857 Time certificates under $100,000 .................. 48,246 47,782 Time certificates of $100,000 or more ............. 35,237 37,351 --------- --------- Total deposits ........................... 349,193 353,404 Federal funds purchased .................................... 2,881 2,188 Other liabilities .......................................... 4,377 4,225 --------- --------- Total liabilities ........................ $ 356,451 $ 359,817 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 3,813,987 shares in 1997 and 3,810,756 shares in 1996 .......................... 32,477 32,448 Retained earnings .......................................... 15,186 14,358 Net unrealized gain on securities available-for-sale ....... (64) 138 --------- --------- 47,599 46,944 --------- --------- Total shareholders' equity and liabilities $ 404,050 $ 406,761 ========= =========
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 --------------------- 1997 1996 ---- ---- Interest Income Loans ................................ $ 5,269 $ 5,593 Securities ........................... 1,535 1,443 Federal funds sold ................... 316 294 Direct lease financing ............... 14 24 ---------- ---------- 7,134 7,354 Interest Expense Savings, NOW and money market deposits 742 775 Time deposits of $100,000 or more .... 477 454 Time deposits under $100,000 ......... 589 623 Other ................................ 30 37 ---------- ---------- Total interest expense ............. 1,838 1,889 ---------- ---------- Net interest income .................. 5,296 5,465 Provision for loan and lease losses ........... -- 152 ---------- ---------- Net interest income after provision for loan and lease losses .......... 5,296 5,313 Other Income Service charges on deposit accounts .. 579 607 Loan servicing income ................ 182 224 Gain on sales of SBA loans ........... 13 13 Other ................................ 219 333 ---------- ---------- 993 1,177 Other Expense Salaries ............................. 1,237 1,364 Employee benefits .................... 834 561 Net occupancy of bank premises ....... 418 406 Furniture and equipment expense ...... 285 298 Other ................................ 1,488 1,636 ---------- ---------- 4,262 4,265 ---------- ---------- Earnings before taxes ......................... 2,027 2,225 Income Taxes .................................. 817 915 ---------- ---------- Net Earnings ......................... $ 1,210 $ 1,310 ========== ========== Earnings per common share ..................... $ 0.30 $ 0.34 ========== ========== Weighted average common shares outstanding .... 3,967,423 3,865,806
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, 1997 March 31, 1996 ------------------ ------------------ Cash Flows from operating activities: Net earnings ................................................... $ 1,210 $ 1,310 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization ............................ (402) 240 Amortization of intangible assets ........................ 154 167 Provision for possible credit losses ..................... -- 152 (Gain) loss on sale of SBA loans ......................... 13 (13) Amortization of deferred income, costs, discounts and fees (48) (97) Loan fees collected ...................................... 209 4 (Gain) loss on sale of other real estate owned ........... -- (170) Increase in deferred income taxes ........................ 433 -- Change in assets and liabilities: (Increase) decrease in other assets ...................... (1,296) (1,344) Increase (decrease) in other liabilities ................. 75 88 -------- -------- Total adjustments ............................... (862) (973) -------- -------- Net cash provided by operating activities ....... 348 337 Cash flows from investing activities: Proceeds from maturity of securities available-for-sale .. 23,758 11,404 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 ................ (23,517) (21,246) Purchase of securities held-to-maturity .................. -- (3,492) Net (increase) decrease in loans and leases .............. (2,858) 5,606 Purchases of premises and equipment ...................... (57) (111) Proceeds from sale of other real estate owned ............ -- 671 -------- -------- Net cash used in investing activities ........... $ (2,674) $ (3,994) -------- --------
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, 1997 March 31, 1996 ------------------ ------------------ Cash Flows from operating activities: Net increase (decrease) in deposits .............. $ (4,211) $ 12,771 Net increase (decrease) in federal funds purchased 693 (1,736) Dividends paid ................................... (382) (302) Proceeds from stock options exercised ............ 29 236 -------- -------- Net cash provided by financing activities (3,871) 10,969 -------- -------- Increase (decrease) in cash and cash equivalents .......... (6,197) 7,312 Cash and cash equivalents at beginning of year ............ 62,501 41,933 Cash and cash equivalents at March 31 ..................... $ 56,304 $ 49,245 ======== ========
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, 1997 and For years ended December 31, 1996 and 1995 (Unaudited)
Net Unrealized Securities Gain (Loss) on Total Common Stock Securities Retained Shareholders' Shares Amount Available-for-Sale Earnings Equity ------ ------ ------------------ ------------ ------------- Balance, December 31, 1994 ................ 2,756,728 $ 17,462,000 $(345,000) $ 11,977,000 $ 29,094,000 Cash dividends declared ($0.32 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 ($0.37) per share . -- -- -- (1,397,000) (1,397,000) Stock options exercised ................... 76,934 650,000 -- -- 650,000 Change in net unrealized loss on securities available-for-sale .................... -- -- (262,000) -- (262,000) Net earnings .............................. -- -- -- 5,580,000 5,580,000 --------- ------------ --------- ------------ ------------ Balance, December 31, 1996 ................ 3,810,756 $ 32,448,000 $ 138,000 $ 14,358,000 $ 46,944,000 Cash dividends declared ($0.10 per share) . -- -- -- (382,000) (382,000) Stock options exercised ................... 3,231 29,000 -- -- 29,000 Change in net unrealized loss on securities available-for-sale .................... -- -- (202,000) -- (202,000) Net earnings .............................. -- -- -- 1,210,000 1,210,000 --------- ------------ --------- ------------ ------------ Balance, March 31, 1997 ................... 3,813,987 $ 32,477,000 $ (64,000) $ 15,186,000 $ 47,599,000
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. 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, 1997 were $404.1 million compared to $406.8 million at December 31, 1996. The decrease in total assets was primarily due to a decrease in federal funds sold as a result of a decline in total deposits. Federal funds sold , considered as overnight loans to other banks, decreased to $21.0 million at March 31, 1997 compared to $28.4 million at December 31, 1996. Securities available-for-sale increased $71.0 thousand to $96.0 million at March 31, 1997 compared to $95.9 million at December 31, 1996. The following table summarizes the components of total gross loans outstanding in each category at the date indicated (in thousands):
March 31, 1997 1996 1995 1994 1993 1992 --------- --------- --------- --------- --------- --------- Commercial, Secured and Unsecured $ 91,439 $ 101,798 $ 95,548 $ 66,987 $ 66,987 $ 74,603 Interim Construction ............ 15,417 14,464 18,219 4,789 4,789 21,595 Real Estate ..................... 90,059 77,570 88,097 78,607 78,607 90,985 Installment ..................... 27,385 27,623 26,553 18,945 18,945 21,374 Credit Card ..................... 1,673 1,864 1,791 1,298 1,298 1,456 Lease Financing ................. 610 668 876 1,286 1,286 3,515 Less: Unearned Income ........... (64) (83) (127) (38) (38) (739) --------- --------- --------- --------- --------- --------- Total Gross Loans ........... $ 226,519 $ 223,904 $ 229,957 $ 171,874 $ 182,465 $ 212,789
Total gross loans increased to $226.5 million at March 31, 1997 from $223.9 million at December 31, 1996 due primarily to funding of new loans and the disbursement of existing lines of credit reflecting the strength of the local economy. This loan growth reverses the long-term trend of declining loan balances experienced during the past five years, not including the effects of acquisition, due to fewer borrowers in the recessionary environment meeting the underwriting criteria, loan payoffs, especially in the real estate sector, and reduced demand for new credit. Additionally during this earlier 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, again operates a construction lending department. 8 9 The following tables show the maturities of loans and their sensitivities to changes in interest rates at March 31, 1997:
Due in Due after One Year One Year to Due after Or Less Five Years Five Years Total -------- ----------- ---------- -------- Commercial, Secured and Unsecured $ 65,771 $ 17,196 $ 8,512 $ 91,479 Interim Construction ............ 11,022 2,940 1,455 15,417 Real Estate ..................... 61,701 18,164 10,135 90,000 Installment ..................... 19,619 5,172 2,561 27,352 Credit Card ..................... 1,733 0 0 1,733 Leases .......................... 138 106 294 538 -------- -------- -------- -------- $159,984 $ 43,578 $ 22,957 $226,519 ======== ======== ======== ========
Maturing Within After One Year One Year Total -------- -------- -------- Loans with Predetermined Interest Rates ........ $ 16,928 $ 65,992 $ 82,920 Loans with Floating or Adjustable Interest Rates 128,290 15,309 143,599
The following table provides information with respect to the components of the Company's nonperforming assets at the dates indicated (amounts in thousands):
March 31, December 31, 1997 1996 1995 1994 1993 1992 --------- ---------------------------------------------- Nonaccrual Loans ............... $5,248 $4,661 $5,818 $3,161 $2,092 $2,927 Loans More Than 90 Days Past Due 60 11 380 246 56 361 ------ ------ ------ ------ ------ ------ Total Nonperforming Loans ..... $5,308 $4,672 $6,198 $3,407 $2,148 $3,288 ====== ====== ====== ====== ====== ======
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 $63,000 three months ended March 31, 1997 and $343,000, $172,000, $144,000, $108,000, $103,000 for the years ended 1996, 1995, 1994, 1993, and 1992 respectively. 9 10 The following is a summary of impaired loans and the related allowance for possible credit losses:
March 31, 1997 December 31, 1996 ------------------------------ ----------------------------- Allowance Allowance Recorded for Possible Recorded for Possible Investment Credit Losses Investment Credit Losses ---------- ------------- ---------- ------------- Impaired loans requiring an allowance for possible credit losses ............. $3,506,570 $ 361,575 $4,060,000 $ 449,000 Impaired loans not requiring an allowance for possible credit losses ............. -- -- -- -- ---------- ---------- ---------- ---------- $3,506,570 $ 361,575 $4,060,000 $ 449,000 ========== ========== ========== ==========
Troubled Debt Restructurings - ----------------------------
December 31, March 31, ------------------------------------------------------------------- 1997 1996 1995 1994 1993 1992 ------------ ------------------------------------------------------------------- (In thousands) Troubled debt restructuring $2,595 $3,425 $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 $78 thousand for the three months ended March 31, 1997 and $496 thousand for the year ended December 31, 1996. Under the restructured terms, recorded interest income amounted to $57 thousand for the three months ended March 31, 1997 and $316 thousand for the year ended December 31, 1996. 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, 1997 1996 1995 1994 1993 1992 -------------- ------ ------ ------ ------ ------ Allowance for possible credit losses: Balance at beginning of period ........... $4,672 $6,265 $5,564 $4,740 $3,530 $3,757 Actual charge-offs: Commercial ........................... 23 197 342 570 502 574 Interim construction ................. -- -- -- -- 590 741 Credit cards ......................... 39 44 36 36 35 66 Consumer ............................. 28 198 165 151 98 494 Real estate .......................... -- 1,532 763 720 1,277 142 Direct lease financing ............... -- 5 5 97 32 60 ------ ------ ------ ------ ------ ------ Total charge-offs .................. 90 1,976 1,311 1,574 2,534 2,077 Less recoveries: Commercial ........................... 8 80 156 118 27 54 Interim construction ................. -- -- -- -- 11 -- Credit cards ......................... 1 10 9 13 21 5 Consumer ............................. 11 86 49 30 106 50 Real estate .......................... 1 47 225 -- -- -- Direct lease financing ............... -- 7 -- 8 3 6 ------ ------ ------ ------ ------ ------ Total recoveries .................... 21 230 439 169 168 115 ------ ------ ------ ------ ------ ------ Net loans charged off .................... 69 1,746 872 1,405 2,366 1,962 Provision for credit losses .............. -- 153 756 2,006 3,576 1,735 Changes incident to acquisitions ......... -- -- 817 223 -- -- ------ ------ ------ ------ ------ ------ Balance at end of period ................. $4,603 $4,672 $6,265 $5,564 $4,740 $3,530 ====== ====== ====== ====== ====== ====== Ratios: Net loans charged off to average loans 0.03% 0.79% 0.47% 0.79% 1.22% 0.84% Allowance for credit losses to total gross loans ........................ 2.03% 2.09% 2.72% 3.24% 2.60% 1.66% Net loans charged off to allowance for credit losses ...................... 1.50% 37.37% 13.92% 25.25% 49.92% 55.58% Net loans charged off to provision for credit losses .................. -- 1,141.18% 115.34% 70.04% 66.16% 113.08% Allowance for credit losses to non- performing loans ................... 86.72% 100.24% 101.08% 163.31% 220.07% 107.36%
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. 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, 1997 1996 1995 1994 1993 1992 -------------- ---- ---- ---- ---- ---- Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ ------- Commercial, Secured and Unsecured $1,859 40.37% $2,126 45.5% $2,117 33.8% $2,281 39.0% $2,164 37.1% $1,715 35.1% Interim Construction 313 6.81 304 6.5 280 4.5 310 2.8 325 7.1 440 10.1 Real Estate 1,830 39.76 1,616 34.6 3,274 52.3 2,597 45.7 1,780 43.9 1,091 42.8 Installment 556 12.09 575 12.3 500 8.0 271 11.0 334 9.8 245 10.0 Credit Card 34 0.74 37 0.8 64 1.0 52 0.8 101 0.8 11 0.7 Lease Financing 11 0.24 14 0.3 30 0.4 53 0.7 36 1.3 28 1.3 ------ ------ ------ ------ ------ ----- ------ ----- ------ ----- ------ ----- Total $4,603 100.00% $4,672 100.0% $6,265 100.0% $5,564 100.0% $4,740 100.0% $3,530 100.0% ====== ====== ====== ===== ====== ===== ====== ===== ====== ===== ====== =====
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, 1997 other real estate owned totaled $863.3 thousand compared to $394.0 thousand at December 31, 1996. Total deposits decreased $4.2 million at March 31, 1997 to $349.2 million compared to $353.4 million at December 31, 1996. Savings and money market deposits, and time certificates of $100 thousand and greater decreased $4.1 million and $2.1 million, respectively, during the first quarter of 1997. Non-interest bearing demand deposits and time certificates under $100 thousand increased $1.5 million and $464 thousand, respectively, during this same period. Federal funds purchased increased $693 thousand to $2.9 million at March 31, 1997 compared to December 31, 1996. The Company purchases federal funds from one of its financial institution customers as an accommodation. Total shareholders' equity increased $655 thousand during the three months ended March 31, 1997. Net earnings for the period contributed $1.2 million to retained earnings while cash dividends of $382 thousand decreased retained earnings. During this period common stock increased approximately $29 thousand as a result of exercise of stock options and the value of securities available-for-sale declined approximately $202 thousand. 12 13 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 $152.3 million at March 31, 1997, which represented 37.7 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, 1997 for a three month and one year period was 89 percent and 108 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, 1997 - ---------------------------------------------------- Net earnings for the three months ended March 31, 1997 was $1.2 million, or $0.30 per share, compared to $1.3 million, or $0.34 per share, for the same period in 1996. This decrease was primarily due to lower net interest margins, and lower other income. Net interest income decreased $169 thousand to $5.3 million in the three month period ended March 31, 1997 compared to $5.5 million for the same period in 1996. A higher volume of earning assets in 1997 was offset by narrower net interest margins. Lower loan yields, investment securities and Fed Fund sold yields is a result of lower market interest rates during the 1997 period compared to 1996. While lower yields have been earned on the Company's earning assets, the cost of funds increased only slightly during the same period. An increase in the volume of non-interest bearing liabilities funding the earning assets has assisted in preserving the net interest margin. The provision for loan and lease losses during the three months ended March 31, 1997 was zero compared to $152 thousand in the same period in 1996. 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, 1997 was $1.0 million compared to $1.2 million for the same period in1996 due to lower service charges on deposit accounts, lower loan servicing income and lower levels of miscellaneous income. Other expenses for the three months ended March 31, 1997 were nearly flat at $4.3 million compared to the same period in 1996. Lower salary expense during the first quarter of 1997 was offset by higher levels of employee benefit expense as compared to the same period for the 1996 year. 13 14 Part II. Items 1 - 3. No reportable events. Item 4. Submission of Matters to a Vote of Security Holders On April 30, 1997 a Special Meeting of Shareholders of Eldorado Bancorp was held. At the meeting the shareholders were asked to consider and vote upon a proposal to approve the principal terms of the Agreement and Plan of Merger, dated as of December 24, 1996, by and between the Company and Commerce Security Bancorp, Inc. (CSBI), pursuant to which CSBI will acquire the Company by means of a cash merger. Total shares outstanding entitled to vote were 3,811,746 of which 2,950469 shares, or 77.4 percent, voted in favor of the proposal and 252,552 shares, or 6.6 percent, voted against the proposal. 6,839 shares, or 0.2 percent, abstained and the balance of shares did not vote. Item 5. Other Information On February 19, 1997 the Board of Directors declared a cash dividend of 10 cents per share payable April 4, 1997 to Shareholders of record March 3, 1997. Item 6. Exhibits and Reports on Form 8-K Exhibits (27) Financial Data Schedule. Reports on Form 8-K (1) None. 14 15 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, 1997 /s/ RAYMOND E. DELLERBA - ------------------------- ------------------------------- Date Raymond E. Dellerba President Chief Operating Officer May 14, 1997 /s/ DAVID R. BROWN - -------------------------- ------------------------------- Date David R. Brown Executive Vice President Chief Financial Officer 15 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 35,304 0 21,000 0 95,990 8,082 7,946 226,519 4,603 404,050 349,193 2,881 4,377 0 0 0 32,477 15,122 404,050 5,269 1,535 330 7,134 1,808 1,838 5,296 0 0 4,262 2,027 2,027 0 0 1,210 0.30 0.30 8.23 5,248 60 2,595 3,507 4,672 90 21 4,603 4,603 0 4,603
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