-----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, FUOoWwr0erlF6aHp6OLRCduqZUJhR4htsITvidjB+MA3v0TYRkOWfrf8NYrYZ+WY VsCRvRYWY9JF/t/fYyD3cw== 0000353650-96-000006.txt : 19960429 0000353650-96-000006.hdr.sgml : 19960429 ACCESSION NUMBER: 0000353650-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960426 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BWC FINANCIAL CORP CENTRAL INDEX KEY: 0000353650 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 942621001 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10658 FILM NUMBER: 96551056 BUSINESS ADDRESS: STREET 1: 1400 CIVIC DR CITY: WALNUT CREEK STATE: CA ZIP: 94596 BUSINESS PHONE: 5109325353 MAIL ADDRESS: STREET 1: P O BOX 8080 STREET 2: 1400 CIVIC DRIVE CITY: WALNUT CREEK STATE: CA ZIP: 94596-8080 10-Q 1 PERIOD ENDING 3-31-1996 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 1996. Commission File Number 0-10658 BWC FINANCIAL CORP. (Exact name of registrant as specified in its charter) CALIFORNIA 94-262100 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1400 Civic Drive, Walnut Creek, California _ 94596 __ (Address of principal executive officer) (510) 932-5353 (Registrant's Telephone Number, including area code) N/A (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 requirements for the past 90 days. Yes X No _____ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS 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 1924 subsequent to the distribution of securities under a plan confirmed by court. Yes No _____ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as the latest practicable date. As of March 31, 1996, there were 919,167 shares of common stock, no par value outstanding. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE Item 1 Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6-7 Item 2 Management's Discussion and Analysis of Results of Operations 8-11 Interest Rate Sensitivity Table 12 PART II - OTHER INFORMATION Item 1 Legal Proceedings 13 Item 2 Changes in Securities 13 Item 3 Defaults Upon Senior Securities 13 Item 4 Submission of Matters to a Vote of Security Holders 13 Item 5 Other Materially Important Events 13 Item 6 Exhibits and Reports on Form 8-K 13 Signatures 14 BWC FINANCIAL CORP CONSOLIDATED BALANCE SHEETS
March 31, December 31, 1996 1995 ASSETS Cash and Due From Banks $9,950,000 $11,377,000 Federal Funds Sold $6,000,000 1,230,000 Other Short Term Investments 11,000 10,000 Total Cash and Cash Equivalents 15,961,000 12,617,000 Investment Securities: Available for Sale 15,151,000 23,500,000 Held to Maturity (approximate fair value of $10,895,000 in 1996 and $11,061,000 in 199 10,862,000 10,971,000 Loans, Net of Allowance for Credit Losses of $1,667,000 in 1996 and $1,528,000 in 1995. 100,996,000 99,776,000 Bank Premises and Equipment, Net 1,515,000 1,475,000 Interest Receivable and Other Assets 1,982,000 2,258,000 Total Assets $146,467,000 $150,597,000 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Deposits: Noninterest-bearing $34,541,000 $36,854,000 Interest-bearing: Money Market Accounts 28,532,000 33,917,000 Savings and NOW Accounts 23,859,000 21,224,000 Time Deposits: Under $100,000 22,676,000 21,733,000 $100,000 or more 20,665,000 20,873,000 Total Interest-bearing 95,732,000 97,747,000 Total Deposits 130,273,000 134,601,000 Interest Payable and Other Liabilities 1,331,000 1,103,000 Total Liabilities 131,604,000 135,704,000 COMMITMENTS AND CONTINGENT LIABILITIES SHAREHOLDERS' EQUITY Preferred Stock, no par value: 5,000,000 shares authorized, none outstandi -- -- Common Stock, no par value: 25,000,000 shares authorized; issued and outstanding - 935,907 shares in 1996 and 830,737 in 1995 10,187,000 10,508,000 Retained Earnings 4,720,000 4,257,000 Capital adjustment on available-for-sale securities (44,000) 128,000 Total Shareholders' Equity 14,863,000 14,893,000 Total Liabilities and Shareholders' $146,467,000 $150,597,000 The accompanying notes are an intergral part of these consolidated statements.
BWC FINANCIAL CORP CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 1996 1995 INTEREST INCOME Loans, Including Fees $2,620,000 $2,264,000 Investment Securities: Taxable 285,000 280,000 Non-taxable 129,000 87,000 Federal Funds Sold 30,000 19,000 Other Short Term Investments -- 35,000 Total Interest Income 3,064,000 2,685,000 INTEREST EXPENSE Deposits 886,000 729,000 Fed Funds Purchased 6,000 1,000 Total Interest Expense 892,000 730,000 NET INTEREST INCOME 2,172,000 1,955,000 PROVISION FOR CREDIT LOSSES 150,000 75,000 NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 2,022,000 1,880,000 NONINTEREST INCOME Service Charges on Deposit Accounts 140,000 127,000 Income from Real Estate Brokerage Subsidiar 40,000 -- Gain on SBA Loan Sales 26,000 1,000 Investment Securities Gains, Net 45,000 -- Other 97,000 98,000 Total Noninterest Income 348,000 226,000 NONINTEREST EXPENSE Salaries and Related Benefits 899,000 773,000 Occupancy 183,000 188,000 Furniture and Equipment 158,000 98,000 Other 473,000 464,000 Total Noninterest Expense 1,713,000 1,523,000 INCOME BEFORE INCOME TAXES 657,000 583,000 Provision for Income Taxes 194,000 192,000 NET INCOME $463,000 $391,000 NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $0.45 $0.40 Average common and common equivalent shares 1,026,519 981,018 The accompanying notes are an intergral part of these consolidated statements.
BWC FINANCIAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 1995 OPERATING ACTIVITIES: Net Income $463,000 $391,000 Adjustments to reconcile net income to net cash provided(used): Amortization of loan fees (198,000) (159,000) Provision for credit losses 150,000 75,000 Depreciation and amortization 73,000 71,000 (Increase)decrease in accrued interest receivable and other assets 276,000 198,000 Increase(decrease) in accrued interest payable and other liabilities 228,000 345,000 Net Cash Provided (Used) by Operatin 992,000 921,000 INVESTING ACTIVITIES: Proceeds from maturities of investment securities -- 2,871,000 Proceeds from the sales of investment securities 5,692,000 -- Purchase of investment securities (2,496,000) -- Loans originated, net of collections (1,173,000) 2,553,000 Purchase of bank premises and equipment (112,000) (31,000) Net Cash Used by Investing Activitie 1,911,000 5,393,000 FINANCING ACTIVITIES: Net increase(decrease) in deposits (4,329,000) (5,734,000) Net Cash Provided(Used) by Financing (4,329,000) (5,734,000) CASH AND CASH EQUIVALENTS: Increase(decrease)in cash and cash equivalents (1,426,000) 580,000 Cash and cash equivalents at beginning of year 11,377,000 14,871,000 Cash and Cash Equivalents at period end $9,951,000 $15,451,000 ADDITIONAL CASH FLOW INFORMATION: Interest Paid $750,000 $655,000 Income Taxes Paid $114 $1,000 The accompanying notes are an integral part of these consolidated statements.
BWC FINANCIAL CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. CONSOLIDATED FINANCIAL STATEMENTS In the opinion of management, the unaudited interim consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position at March 31, 1996 and the results of operations for the three months ended March 31, 1996 and 1995 and cash flows for the three months ended March 31, 1996 and 1995. Certain information and footnote disclosures presented in the Corporation's annual consolidated financial statements are not included in these interim financial statements. Accordingly, the accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Corporation's 1995 Annual Report to Shareholders, which is incorporated by reference in the Company's 1995 annual report on Form 10-K. The results of operations for the three months ended March 31, 1996 are not necessarily indicative of the operating results for the full year. Net income per common and common equivalent share is computed using the weighted average number of shares outstanding during the period, adjusted for the dilutive effect of stock options and stock dividends. 2. INVESTMENT SECURITIES AND OTHER SHORT TERM INVESTMENTS The amortized cost and approximate market value of investment securities at March 31, 1996 are as follows: Gross Amortized Unrealized Market Cost Gain(Loss) Value Held-to-maturity Obligations of State and Political Subdivisions $ 10,862,000 $ 33,000 $10,895,000 Available-for-sale Taxable Obligations of State & Political Subdivisions $ 5,015,000 $ (78,000) $ 4,937,000 Available-for-sale U.S. Treasury Securities $ 5,041,000 $ 25,000 $ 5,066,000 Available-for-sale U.S. Government Agencies $ 5,162,000 $ (14,000) $ 5,148,000 Total available-for sale $10,568,000 $ (67,000) $15,151,000 For the three months ended March 31, 1996, the Bank had proceeds of $5,692,000 from sale of investment securities. The following table shows the amortized cost and estimated market value of investment securities by contractual maturity at March 31, 1996. Held-to-Maturity Available-for-Sale Amortized Market Amortize Market Cost Value Cost Value Within one year $2,139,000 $2,144,000 $ 2,406,000 $ 2,422,000 After one but within five years $8,113,000 $8,149,000 $10,221,000 $10,211,000 Over five years $ 610,000 $ 602,000 $ 2,591,000 $ 2,518,000 3. ALLOWANCE FOR CREDIT LOSSES For the Three months Ended March 31, 1996 1995 Allowance for credit losses at beginning of period $1,529,000 $1,498,000 Chargeoffs (20,000) (13,000) Recoveries 8,000 5,000 Net chargeoffs (12,000) (8,000) Provisions 150,000 75,000 Allowance for credit losses at end of period $1,667,000 $1,565,000 Ratio of allowance for credit losses to loans 1.62 1.83% MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS Net Income Net income for the first three months in 1996 of $463,000 was $72,000 greater then the first three months in 1995. This represented a return on average assets during the quarter of 1.25% and a return on average equity of 12.46%. Net income for the first three months in 1995 was $391,000. This represented a return on average assets during that quarter of 1.24% and a return on average equity of 12.04%. Net interest income increased $217,000 during the first quarter of 1996 as compared to 1995, and noninterest income increased $123,000. Noninterest expense increased $190,000 between the respective periods. Provision for credit losses increased $75,000 and the provision of income taxes increased a modest $2,000 between the respective periods. Earning assets averaged $133,731,000 during the first quarter of 1996, an increase of $15,813,000 from the comparable quarter of 1995. During this same period loans averaged $102,396,000 and deposits averaged $128,174,000 as compared to $86,780,000 in average loans and $113,579,000 in average deposits during the first quarter of 1995. Earnings per average common and common equivalent shares (this includes any dilutive effect of unexercised options outstanding) was $0.45 for the first three months of 1996 as compared to $0.40 for the first three months of 1995. Net Interest Income Interest income represents the interest earned by the Corporation on its portfolio of loans, investment securities, and other short term investments. Interest expense represents interest paid to the Corporation's depositors, as well as to others from whom the Corporation borrows funds on a temporary basis. Net interest income is the difference between interest income on earning assets and interest expense on deposits and other borrowed funds. The volume of loans and deposits and interest rate fluctuations caused by economic conditions greatly affect net interest income. Net interest income during the first three months of 1996 was $2,172,000 or $217,000 greater than the comparable period in 1995. This increase is the result of increases in volume of funds rather than in rates. Based on the volume increase alone, net interest income increased by $259,000 over the comparable quarter in 1995. However, a slightly reduced rate spread resulted in the reduction by $42,000. Provision for Credit Losses An allowance for credit losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. The allowance is increased by provisions charged to expense and reduced by net charge-offs. Management continually evaluates the economic climate, the performance of borrowers, and other conditions to determine the adequacy of the allowance. The ratio of the allowance for credit losses to total loans as of March 31, 1996 was 1.62% as compared to 1.83% for the period ending March 31, 1995. Industry standards for this ratio generally range between 1% to 1.5%. The Corporation's ratios for both periods reflect a conservative attitude on the part of management and is considered adequate to provide for potential future losses. The Corporation had net recoveries of $4,000 during the first quarter of 1996 as compared to $5,000 during the comparable period in 1995. The following table provides information on past due and nonaccrual loans: For the Three Months Ended March 31, 1996 1995 Loans Past Due 90 Days or More $ -- $ -- Nonaccrual Loans 289,000 686,000 Total $ 289,000 $ 686,000 As of March 31, 1996 and 1995, no loans were outstanding that had been restructured. No interest earned on nonaccrual loans that was recorded in income during 1996 remains uncollected. Interest foregone on nonaccrual loans was approximately $18,000 and $91,000 as of March 31, 1996 and 1995 respectively. Noninterest Income Noninterest income during the first quarter of 1996 was $122,000 greater than earned during the comparable quarter of 1995. This was reflected in increases in most areas of noninterest income and fees. It also includes income from the Corporation's Real Estate Brokerage subsidiary of $40,000 and gains on sales of securities available for sale of $45,000. The Corporation also realized an increase in gains on SBA loan sales of $25,000 over the comparable period in 1995. Noninterest Expense Salaries and related benefits are $126,000 greater during the first quarter of 1996 as compared to 1995. This increase is related to general merit increases, growth of operations and a new business financing department in the Corporation. Staff averaged 67.4 FTE (full time equivalent) persons during the first quarter of 1996 as compared to 61.8 FTE in 1995. Occupancy expense remained relatively constant, reflecting a modest $5,000 decrease as compared to the 1995 period. Total Furniture and Equipment expense increased $60,000 as compared to the 1995 period. The primary reason was the write down of the Bank's primary computer system and its replacement with a newer model. Other Expense reflects a modest increase of $9,000 between the respective periods. Other Real Estate Owned As of March 31, 1996 the Corporation had $108,000 in Other Real Estate Owned assets (assets acquired as the result of foreclosure on real estate collateral) on its books. Capital Adequacy In 1989, the Federal Deposit Insurance Corporation (FDIC) established risk- based capital guidelines requiring banks to maintain certain ratios of "qualifying capital" to "risk-weighted assets". Under the guidelines, qualifying capital is classified into two Tiers, referred to as Tier 1 (core) and Tier 2 (supplementary) capital. Currently, the bank's Tier 1 capital consists of shareholders' equity, while Tier 2 capital consists of the eligible allowance for loan losses. The Bank has no subordinated notes or debentures included in its capital. Risk-weighted assets are calculated by applying risk percentages specified by the FDIC to categories of both balance- sheet assets and off-balance-sheet assets. The Bank's Tier 1 and Total (which included Tier 1 and Tier 2) risk-based capital ratios surpassed the regulatory minimum of 8% at March 31, for both 1995 and 1994. At year-end 1990, the FDIC also adopted a leverage ratio requirement. This ratio supplements the risk-based capital ratios and is defined as Tier 1 capital divided by the quarterly average assets during the reporting period. The requirement established a minimum leverage ratio of 3% for the highest rated banks. The following table shows the Corporation's risk-based capital ratios and leverage ratio as of March 31, 1996, December 31, 1995, and March 31, 1995. Risk-based capital ratios: Capital Ratios Minimum Current guidelines March 31, December 31, March 31 regulatory 1996 1995 1995 requirements Tier 1 capital 12.84% 12.51% 13.61% 4.00% Total capital 14.09% 13.76% 14.86% 8.00% Leverage ratio 9.52% 9.51% 9.84% 3.00% Liquidity Liquidity is a key aspect in the overall fiscal health of a financial corporation. The primary source of liquidity for BWC Financial Corp. is its marketable securities and Federal Funds sold. Cash, investment securities and other temporary investments represented 29% of total assets at March 31, 1996 and 32% at March 31, 1995. The Corporation's management has an effective asset and liability management program and carefully monitors its liquidity on a continuing basis. Additionally, the Corporation has available from correspondent banks Federal Fund lines of credit totaling $10,000,000. General Total assets of the Corporation at March 31, 1996 of $146,467,000 are up $18,056,000 as compared to March 31, 1995 Total deposits of $130,273,000 are up $16,034,000 from March 31, 1995. The Corporation's loan to deposit ratio as of March 31, 1996 was 79%, as compared to 75% on March 31, 1995. Other Short Term Investments are investments in a mutual fund operated by Federated Funds Investments and comprised of short term US Treasury Securities. Investments are done on a daily basis and are similar in liquidity to Fed Funds Investments, but carry a slightly higher yield. The Corporation's Mortgage Brokerage Subsidiary and the Bank's SBA Division and Business Financing Division are all positive contributors to the income growth of the Corporation this year. INTEREST RATE SENSITIVITY (in thousands except share and per share data) Proper management of the rate sensitivity and maturities of assets and liabilities are required to provide an optimum and stable net interest margin. Interest rate sensitivity spread management is an important tool for achieving this objective and for developing strategies and means to improve profitability. The schedules shown below reflect the interest rate sensitivity position of the Corporation as of March 31, 1996. Management believes that the sensitivity ratios reflected in these schedules fall within acceptable ranges, and represent no undue interest rate risk to the future earnings prospects of the Corporation.
Interest Rate Sensitivity 3 3-6 12 1-5 Over 5 Repricing within: months months months years years Totals March 31, 1996 ASSETS: Federal funds sold $6,000 -- -- -- -- $6,000 Other Short Term Securities 11 -- -- -- -- 11 Investment securities 200 $1,731 $2,629 $18,324 $3129 26,013 Construction & real estate l 25,837 8,408 3,802 257 737 39,041 Commercial loans 31,137 339 363 896 162 32,897 Consumer loans 25,445 357 699 4,064 160 30,725 Interest-bearing assets $88,630 $10,835 $7,493 $23,541 $4,188 $134,687 Savings and Now accounts $23,859 0 0 0 0 $23,859 Money market accounts 28,532 0 0 0 0 28,532 Time deposits <$100,000 11,704 $5,143 $4,387 $1,442 0 22,676 Time deposits >$100,000 11,000 5,444 3,998 223 0 20,665 Interest-bearing liabilities $75,095 $10,587 $8,385 $1,665 0 $95,732 Rate sensitive gap $13,535 $248 ($892) $21,876 $4,188 $38,955 Cumulative rate sensitiveity $13,535 $13,783 $12,891 $34,767 $38,955 $77,910 Cumulative position to average earning assets 10.05% 10.23% 9.57% 25.81% 28.92%
PART II - OTHER INFORMATION Item 1 - Legal Proceedings At this time there are no pending or threatened material legal proceedings to which the corporation is a party or to which any of the corporation's properties are subject. Item 2 - Changes in Securities None Item 3 - Defaults Upon Senior Securities None Item 4 - Submission of Matters to a Vote of Security Holders None Item 5 - Other Materially Important Events None Item 6 - Exhibits and Reports on Form 8-K None 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. BWC FINANCIAL CORP. (Registrant) ___________________________ _________________________________ Date James L. Ryan Chairman and Chief Executive Officer ______________________ ________________________________ Date Leland E. Wines CFO and Corp. Secretary EX-27 2
9 0000353650 BWC FINANCIAL CORP 3-MOS DEC-31-1996 MAR-31-1996 9950000 0 6011000 0 15151000 10862000 10895000 102663000 1667000 146467000 130273000 0 1331000 0 0 0 10187000 4676000 146467000 2620000 414000 30000 3064000 886000 892000 2172000 150000 45000 1713000 657000 657000 0 0 463000 .49 .45 6.71 289000 0 0 1481000 1529000 20000 8000 1667000 1109000 0 558000
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