-----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, Ezp6fCc4GfMe8TqsNoqP3gbZwbZJOw2EzGhNN/uHcf0aIdxgUaiX6h5QjuGc/VGp y2EP2dEghC3MhiEbgRujPQ== 0000944209-96-000220.txt : 19960816 0000944209-96-000220.hdr.sgml : 19960816 ACCESSION NUMBER: 0000944209-96-000220 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST REGIONAL BANCORP CENTRAL INDEX KEY: 0000356708 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 953582843 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10232 FILM NUMBER: 96611568 BUSINESS ADDRESS: STREET 1: 1801 CENTURY PARK EAST CITY: LOS ANGELES STATE: CA ZIP: 90067 BUSINESS PHONE: 3105521776 MAIL ADDRESS: STREET 1: 1801 CENTURY PARK EAST CITY: LOS ANGELES STATE: CA ZIP: 90067 FORMER COMPANY: FORMER CONFORMED NAME: GREAT AMERICAN BANCORP DATE OF NAME CHANGE: 19880309 10-Q 1 QUARTERLY REPORT Page 1 of 17 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 Quarter Ended June 30, 1996 ------------------------------------------------------------------ Commission File Number 0-10232 --------------------------------------------------------- FIRST REGIONAL BANCORP - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-3582843 - -------------------------------------------------------------------------------- State or other jurisdiction of IRS Employer incorporation or organization Identification Number 1801 Century Park East, Los Angeles, California 90067 - -------------------------------------------------------------------------------- Address of principal executive offices Zip Code (310) 552-1776 - ------------------------------------------------------------------------------- Registrant's telephone number, including area code Not applicable - ------------------------------------------------------------------------------- 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 CORPORATE ISSUERS Indicate the number of shares outstanding in each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, No Par Value 2,398,800 -------------------------- ----------------------------- Class Outstanding on August 9, 1996 2 FIRST REGIONAL BANCORP ---------------------- INDEX ----- Part I - Financial Information
Page ---- Item 1. Financial Statements Consolidated Statements of Financial Condition 3 Consolidated Statements of Income 5 Consolidated Statements Cash Flow 7 Notes to Consolidated Financial Statements 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Part II - Other Information Item 1. Legal Proceedings 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 6. Exhibits and Reports on Form 8-K 16 Signatures 17
3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ----------------------------- FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ---------------------------------------------- (In Thousands) (Unaudited)
June 30 December 31, 1996 1995 -------- ------------ ASSETS - ------ Cash and due from banks $ 6,175 $ 6,777 Time deposits with other financial institutions 4,063 8,121 Investment securities, available for sale 16,969 13,882 Funds sold 27,720 20,690 Federally guaranteed loans 26,085 27,660 Other loans, net of allowance for losses of $2,235,000 in 1996 and $2,000,000 in 1995 53,823 57,667 Premises and equipment, net of accumulated depreciation 196 200 Other real estate owned 350 392 Accrued interest receivable and other assets 3,275 2,421 -------- -------- Total Assets $138,656 $137,810 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Liabilities: Demand deposits $ 28,388 $ 24,005 Savings deposits 5,094 4,706 Money market deposits 74,330 82,998 Time deposits 15,921 13,015 -------- -------- Total deposits 123,733 124,724 Securities sold under agreement to repurchase 7 36 Accrued interest payable and other liabilities 1,691 791 -------- -------- Total Liabilities 125,431 125,551 Shareholders' Equity: Common Stock, no par value, 50,000,000 shares authorized; 2,398,800 shares outstanding in 1996 and 1995, respectively 11,332 11,332 Retained earnings 1,900 922
4 FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ---------------------------------------------- (In Thousands) (Unaudited) (continued)
June 30 December 31, 1996 1995 --------- ------------ Net unrealized gain (loss) on securities available for sale (7) 5 -------- -------- Total Shareholders' Equity 13,225 12,259 -------- -------- Total Liabilities and Shareholders' Equity $138,656 $137,810 ======== ========
The accompanying notes are an integral part of these statements. 5 FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- CONSOLIDATED STATEMENTS OF INCOME --------------------------------- (In Thousands Except Per Share Amounts) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, -------------------------- ------------------------- 1996 1995 1996 1995 ---- ---- ---- ---- REVENUE FROM EARNING ASSETS: Interest and fees on loans $2,314 $2,237 $4,434 $4,432 Interest on time deposits with other financial institutions 47 93 144 195 Interest on investment securities 273 154 536 348 Interest on funds sold 338 303 632 512 ------ ------ ------ ------ Total revenue from earning assets 2,972 2,787 5,746 5,487 COST OF FUNDS: Interest on deposits 689 660 1,413 1,270 Interest on securities sold under agreements to repurchase 0 0 4 0 ------ ------ ------ ------ Total cost of funds 689 660 1,417 1,270 Net revenue from earning assets before provision for loan losses 2,283 2,127 4,329 4,217 PROVISION FOR LOAN LOSSES 150 100 250 375 ------ ------ ------ ------ Net revenue from earning assets 2,133 2,027 4,079 3,842 Net gain (loss) on sales of securities 0 11 (20) 11 Other revenue 101 108 206 233 OPERATING EXPENSES: Salaries and related benefits 652 565 1,277 1,086 Occupancy expense 98 82 187 165 Equipment expense 41 86 74 129 Promotion expense 34 46 64 83 Professional service expense 166 181 337 323 Customer service expense 320 297 638 585 Supply/communication expense 46 36 88 64 Other expenses 151 467 274 695 ------ ----- ------ ------ Total operating expenses 1,508 1,760 2,939 3,130 ------ ------ ------ ------ Income before provision for income taxes 726 386 1,326 956
6 FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- CONSOLIDATED STATEMENTS OF INCOME --------------------------------- (In Thousands Except Per Share Amounts) (Unaudited) (continued)
Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- PROVISION FOR INCOME TAXES 282 43 348 106 ----- ----- ----- ----- NET INCOME $ 444 $ 343 $ 978 $ 850 ===== ===== ===== ===== NET INCOME PER SHARE (Note 2) $0.19 $0.14 $0.41 $0.35 ===== ===== ===== =====
The accompanying notes are an integral part of these statements. 7 FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOW ------------------------------------ (In Thousands) (Unaudited)
Six Months Ended June 30, -------------------- 1996 1995 ---- ---- OPERATING ACTIVITIES Net Income $ 978 $ 850 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 250 375 Provision for depreciation and amortization 240 29 Amortization of investment securities net discounts (68) (249) Decrease (increase) in interest receivable 98 (59) Increase (decrease) in interest payable 12 19 Increase (decrease) in taxes payable 98 26 Net increase (decrease) in other liabilities 790 115 ----- ------ Net cash provided (used) by operating activities $ 2,398 $ 1,106 INVESTING ACTIVITIES Decrease (increase) in investment securities available for sale $(3,031) $ 5,155 Decrease (increase) in time deposits with other financial institutions 4,058 1,378 Decrease (increase) in guaranteed loans 1,359 (381) Decrease (increase) in other loans 3,594 (763) Purchases of premises and equipment (20) (15) Net decrease (increase) in other real estate owned 42 467 Net decrease (increase) in other assets (952) (189) ------ ------ Net cash provided by investing activities $ 5,050 $ 5,652 FINANCING ACTIVITIES Net decrease in demand deposits, savings accounts, and money market accounts $(3,897) $ 885
8 FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOW ------------------------------------ (In Thousands) (Unaudited) (continued)
Six Months Ended June 30, -------------------- 1996 1995 ---- ---- Net increase in time deposits 2,906 4,862 Increase (decrease) in securities sold under agreement to repurchase (29) 2 ------ ------- Net cash (used) provided by financing activities $(1,020) $ 5,749 Increase in cash and cash equivalents $ 6,428 $12,507 Cash and cash equivalents, beginning of period 27,467 25,977 ------- ------- Cash and cash equivalents, end of period $33,895 $38,484 ======= =======
The accompanying notes are an integral part of these statements. 9 FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ June 30, 1996 (Unaudited) NOTE 1 - The consolidated financial statements include the accounts of First Regional Bancorp (the Company), a bank holding company, and its wholly-owned subsidiary, First Regional Bank (the Bank). In the opinion of management, the unaudited consolidated financial statements of First Regional Bancorp at June 30, 1996 and December 31, 1995 and the results of operations for the three and six month periods ended June 30, 1996 and 1995 contain all adjustments (which consist only of normal recurring adjustments) necessary to present fairly the financial position of the Company. Certain items in the 1995 consolidated financial statements have been reclassified to conform to the 1996 presentation. The results of operations for the periods ended June 30, 1996 and 1995 are not necessarily indicative of operating results that may be expected for any other interim period or for the full year. While management believes that the disclosures presented are adequate to make the information not misleading, it is suggested that these financial statements be read in conjunction with the financial statements and the notes included in the Company's 1995 annual report. NOTE 2 - Per share information was based on the number of common shares outstanding, which was 2,398,800 in 1996 and 1995. No adjustment has been made for outstanding stock options. NOTE 3 - As of June 30, 1996 the Bank had a total of $354,000 in standby letters of credit outstanding. No losses are anticipated as a result of these transactions. NOTE 4 - The Company adopted Statement of Financial Accounting Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan," effective January 1, 1995. This Statement defines an impaired loan as one for which it is likely that an institution will be unable to collect all amounts due (that is, all principal and interest) according to the contractual terms of the loan. The Statement generally requires impaired loans to be measured at the present value of expected future cash flows discounted at the effective interest rate of the loan, or, as an expedient, at the loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. For the quarter ended June 30, 1996 the Company had identified loans having an aggregate average balance of $589,000 which it concluded were impaired under SFAS No. 114. The Company's policy is to discontinue the accrual of interest income on impaired loans, and to recognize income on such loans only after the loan principal has been repaid in full. Pursuant to this policy, the Company had already ceased to accrue interest on the impaired loans, and had 10 established a general loss reserve for each of the loans which at June 30, 1996 totalled $113,000 for the loans as a group. As the loss reserves established by the Company were greater than those called for under SFAS No. 114, the adoption of SFAS No. 114 had no effect on the Company's financial statements as of June 30, 1996. NOTE 5 - The Company adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Investments in Certain Debt and Equity Securities," effective January 1, 1994. This Statement supersedes SFAS No. 12, and significantly amends SFAS No. 65 and SFAS No. 60, the standards previously used by the Company. The effect of adopting SFAS No. 115 on the Company's financial statements was to decrease shareholders' equity at June 30, 1996 by $7,000 from the level which would have existed had SFAS No. 115 not been adopted. Because the applicable investment securities are classified by the Company as "available for sale," there was no effect on the Company's income statement. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - -------------------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- SUMMARY - ------- First Regional Bancorp did not conduct any significant business activities independent of First Regional Bank. The following discussion and analysis relates primarily to the Bank. At June 30, 1996 total assets were $138,656,000 compared to $137,810,000 at December 31, 1995, an increase of $846,000 or 1%. This modest increase was due to a slight shrinkage in deposits combined with a small amount of growth in other liabilities. The overall stability which took place in liabilities was matched by generally stable asset composition as well. Other loans declined slightly, falling by $3,844,000 or 7% to $53,823,000 at June 30, 1996 from $57,667,000 at the end of 1995. The reduction in loans combined with the overall stability in deposits resulted in an increase in liquid assets, principally funds sold, which rose from $20,690,000 at December 31, 1995 to $27,720,000 at June 30, 1996, an increase of $7,030,000 or 34%. In addition, changes in the levels and the relationships in yield between time deposits with other financial institutions, investment securities, and funds sold resulted in higher levels of investment securities and lower levels of time deposits; time deposits with other financial institutions fell from $8,121,000 at December 31, 1995 to $4,063,000 at June 30, 1996, while investment securities rose from a yearend 1995 level of $13,882,000 to $16,969,000 at June 30, 1996. Most other categories of assets and liabilities experienced relatively minor changes in the period from December 31, 1995 to June 30, 1996. The Company earned a profit of $444,000 in the three months ended June 30, 1996 compared to $343,000 in the second quarter of 1995. The results for the six months ended June 30, 1996 were profits of $978,000 compared to a profit of $850,000 for the corresponding period of 1995. NET INTEREST INCOME - ------------------- Net revenue from earning assets before provisions for loan losses rose by $156,000 (7%) for the three months ended June 30, 1996 compared to the same period in 1995. The results for the six month period ending June 30, 1996 were an increase of $112,000 (3%) compared to the corresponding period in 1995. Total revenue increased due to higher levels of earning assets, general stability in interest rates, and the continued low levels of non-performing or non-earning assets. In the area of the cost of funds, expense levels likewise remained quite stable, as modest growth in total deposits and overall interest rate stability served to limit the increase in this category of expense. OTHER REVENUE - ------------- Other revenue fell slightly, to $101,000 in the second quarter of 1996 from $108,000 for the three months ended June 30, 1995, a 6% decrease. For the first half of 1995 other revenue was $233,000 compared to $206,000 for the six months ended June 30, 1996, for a 1996 decrease of $27,000 or 12%. The changes between 1995 and 1996 primarily reflect lower income from service 12 charges on deposit accounts. Most other categories of other revenue were largely unchanged between the two years. During the second quarter of 1995, total gains of $11,000 were realized on the sale of investment securities. No gains on securities sales were realized in the second quarter of 1996. For the first six months of 1996, a loss on securities sales of $20,000 was incurred. For the like period of 1995, gains of $11,000 were realized. PROVISION FOR LOAN LOSSES - ------------------------- The allowance for loan losses is intended to reflect known and inherent risks in the loan portfolio. The allowance for loan losses is increased by provisions for loan losses, and is decreased by net loan chargeoffs. Management continues to evaluate the loan portfolio in light of many factors, including loan loss experience and current economic conditions. Management believes the allowance for loan losses is adequate to provide for losses that might be reasonably anticipated. The allowance for loan losses was $2,235,000 and $2,000,000 (or 2.80% and 2.34% of gross outstanding loans) at June 30, 1996 and December 31, 1995 respectively. Although the credit quality of the Company's loan portfolio has steadily improved, based on its ongoing analysis of the risks presented by its loan portfolio and the expectation of future loan growth the Company made provisions of $150,000 and $250,000, respectively, for the second quarter and the first six months of 1996. By comparison, the Company's provisions for losses were $100,000 and $375,000 for the three and six month periods ended June 30, 1995, respectively. In 1995, the Bank generated net loan recoveries of $14,000 and $52,000, respectively, for the three and six month periods ended June 30, 1995; by comparison, the Bank experienced net loan chargeoffs of $58,000 in the second quarter of 1996 and net chargeoffs of $15,000 for the first six months of 1996. OPERATING EXPENSES - ------------------ Overall, the Company experienced decreases in operating expenses in 1996 compared to the prior year. Those decreases were the result of management's continuing efforts to control non-interest expenses. Operating expenses decreased to a total of $1,508,000 for the three months ended June 30, 1996 from $1,760,000 for the same period in 1995. For the six months ended June 30, 1995, operating expenses totaled $3,130,000, and declined to just $2,939,000 in the corresponding period in 1996. Salary and related benefits increased from $565,000 for the three month period ended June 30, 1995 to $652,000 for the same period in 1996, and also rose for the six month periods ended June 30, from $1,086,000 in 1995 to $1,277,000 in 1996. The increases in salary expense reflect additions to staff required by the Company's program to resume business development activity and the addition of new business customers. Occupancy expense remained generally stable for the three and six month periods of 1996 and 1995. While most of the remaining categories of expenses underwent reductions or only slight increases in 1996 compared to 1995, there were important exceptions: customer service expense rose due to the costs associated with servicing the new account relationships which been developed by the bank, and other expenses fell substantially in 1996 compared to 1995 due to the virtual absence of FDIC deposit insurance premiums in 1996 due to the financial strength of the Bank Insurance Fund. 13 PROVISION FOR INCOME TAXES - -------------------------- Tax provisions increased substantially in the three and six month periods ended June 30, 1996 compared to the same periods of 1995. For the second quarter of 1996, tax provisions totalled $282,000 versus provisions of $43,000 for the like period of 1995, while for the six months ended June 30 the 1996 provisions were $348,000 compared to $106,000 in 1995. The higher 1996 provisions in comparison with those of the prior year reflected both the Company's higher 1996 income and reduced tax provisions in 1995 resulting from the reversal in that year of reserves for deferred tax assets which had been established in a prior period. The combined effects of the above-described factors were net income of $444,000 for the second quarter of 1996, compared to net income of $343,000 for the comparable period of 1995. For the six months ended June 30, net income in 1996 was $978,000, while 1995 net income was $850,000. LIQUIDITY, SOURCES OF FUNDS, AND CAPITAL RESOURCES - -------------------------------------------------- The Company's financial position remains highly liquid. Total liquid assets (cash and due from banks, time deposits, investment securities, and funds sold) stood at 44.4% of total deposits at June 30, 1996. This compares with a level of 39.7% which existed at December 31, 1995; this change reflects growth in the level of liquid asset components at the same time that slight shrinkage was taking place in the various deposit categories. In addition, at both June 30, 1996 and December 31, 1995, the Bank held over $26 million of loans fully guaranteed by the United States government; due to the presence of an active secondary market for such loans, these loans represent an important additional source of liquidity. The ratio of net loans (including government guaranteed loans) to deposits was 64.6% and 68.4% as of June 30, 1996 and December 31, 1995, respectively. The Bank's investment portfolio continues to be composed of high quality, low risk securities, primarily U.S. Agency securities or securities guaranteed by the U.S. Treasury. As mentioned above, a total of $11,000 in gains on securities sales were realized in the second quarter of 1995, and no gains or losses on securities sales were recorded for the same period in 1996. Gains of $11,000 were recorded for the first six months of 1995, but for the first half of 1996 losses of $20,000 were incurred on securities sales. At June 30, 1996 the Bank's investment portfolio contained gross unrealized gains of $48,279 and gross unrealized losses of $57,857; at December 31, 1995 the portfolio contained gross unrealized gains of $47,080 and gross unrealized losses of $39,267. As discussed more fully in Note 5, the Company adopted SFAS No. 115 in 1994, with the result that the unrealized losses of $7,000 (net of taxes) gave rise to a corresponding $7,000 decrease in the Company's shareholders' equity. Because the Company's holdings of securities are intended to serve as a source of liquidity should conditions warrant, the securities have been classified by the Company as "available for sale," and thus there was no effect on the Company's income statement. Because customer deposits are the Company's principal funding source outside of its capital, management has attempted to match rates and maturities of 14 its deposits with its investment and loan portfolios as part of its liquidity and asset and liability management policies. The objective of these policies is to limit the fluctuations of net interest income resulting from interest rate changes. The table which follows indicates the repricing or maturity characteristics of the major categories of the Bank's assets and liabilities, and thus the relative sensitivity of the Bank's net interest income to changes in the overall level of interest rates. A positive "gap" for a period indicates that an upward or downward movement in the level of interest rates would cause a corresponding change in net interest income, while a negative "gap" implies that an interest rate movement would result in an inverse change in net interest income.
One month Six months Floating Less than but less than but less than Category Rate one month six months one year ======================================================================================= Fed funds sold 27,720 0 0 0 Time deposits with other banks 0 793 3,270 0 Investment securities 10,468 1,000 3,049 1,238 ------ ----- ----- ----- Subtotal 38,188 1,793 6,319 1,238 Loans 74,304 0 3,947 1,657 ------ - ----- ----- Total earning assets 112,492 1,793 10,266 2,895 Cash and due from banks 0 0 0 0 Premises and equipment 0 0 0 0 Other real estate owned 0 0 0 0 Other assets 0 0 0 0 - - - - Total non-earning assets 0 0 0 0 - - - - Total assets 112,492 1,793 10,266 2,895 Funds purchased 7 0 0 0 Repurchase agreements 0 0 0 0 - - - - Subtotal 7 0 0 0 Savings deposits 5,094 0 0 0 Money market deposits 74,330 0 0 0 Time deposits 0 6,971 6,881 1,902 - ----- ----- ----- Total bearing liabilities 79,431 6,971 6,881 1,902 Demand deposits 0 0 0 0 Other liabilities 0 0 0 0 Equity capital 0 0 0 0 - - - - Total non-bearing liabilitie 0 0 0 0 - - - - Total liabilities 79,431 6,971 6,881 1,902 GAP 33,061 (5,178) 3,385 993 Cumulative GAP 33,061 27,883 31,268 32,261 One year Non-interest but less than Five years earning five years or more or bearing Total ======================================================================================= Fed funds sold 0 0 0 27,720 Time deposits with other banks 0 0 0 4,063 Investment securities 225 989 0 16,969 --- --- - ------ Subtotal 225 989 0 48,752 Loans Total earning assets 0 0 0 79,908 - - - ------ 225 989 0 128,660 Cash and due from banks Premises and equipment 0 0 6,175 6,175 Other real estate owned 0 0 196 196 Other assets 0 0 350 350 Total non-earning assets 0 0 3,275 3,275 - - ----- ----- 0 0 9,996 9,996 - - ----- ----- Total assets 225 989 9,996 138,656 Funds purchased 0 0 0 7 Repurchase agreements 0 0 0 0 - - - - Subtotal 0 0 0 7 Savings deposits Money market deposits 0 0 0 5,094 Time deposits 0 0 0 74,330 Total bearing liabilities 167 0 0 15,921 --- - - ------ 167 0 0 95,352 Demand deposits Other liabilities 0 0 28,388 28,388 Equity capital 0 0 1,691 1,691 Total non-bearing liabilitie 0 0 13,225 13,225 - - ------ ------ 0 0 43,304 43,304 - - ------ ------ Total liabilities 167 0 43,304 138,656 GAP 58 989 (33,308) 0 Cumulative GAP 32,319 33,308 0 0
As the table indicates, the vast majority of the Company's assets are either floating rate or, if fixed rate, have extremely short maturities. Since the yields on these assets quickly adjust to reflect changes in the overall 15 level of interest rates, there are no significant unrealized gains or losses with respect to the Company's assets, nor is there much likelihood of large realized or unrealized gains or losses developing in the future. For this reason, realized or unrealized gains or losses are not expected to have any significant impact on the Company's future operating results or liquidity. The Company continues to enjoy a strong capital position. Total capital was $13,225,000 and $12,259,000 as of June 30, 1996 and December 31, 1995, respectively. The Company's capital ratios for those dates in comparison with regulatory capital requirements were as follows:
06-30-96 12-31-95 -------- -------- Leverage Ratio (Tier I Capital to Total Assets) Regulatory requirement 3.00% 3.00% First Regional Bancorp 9.51% 8.96%
In addition, bank regulators have issued risk-adjusted capital guidelines which assign risk weights to assets and off-balance sheet items and place increased emphasis on common equity. The Company's risk adjusted capital ratios for the dates listed in comparison with the risk adjusted regulatory capital requirements were as follows:
06-30-96 12-31-95 -------- -------- Tier I Capital to Risk-Weighted Assets: Regulatory requirement 4.00% 4.00% First Regional Bancorp 17.84% 15.91% 06-30-96 12-31-95 -------- -------- Tier I + Tier II Capital to Risk-Weighted Assets: Regulatory requirement 8.00% 8.00% First Regional Bancorp 19.12% 17.17%
The "regulatory requirement" figures listed above represent the level of capital required for Adequately Capitalized status. The Company believes that it will continue to meet all applicable capital standards. INFLATION - --------- The impact of inflation on the Company differs significantly from other industries, since virtually all of its assets and liabilities are monetary. During periods of rising inflation, companies with net monetary assets will always experience a reduction in purchasing power. Inflation continues to have an impact on salary, supply, and rent expenses, but the rate of inflation in general and its impact on these expenses in particular has remained moderate in recent years. 16 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - --------------------------- Litigation - ---------- The Company is a party as plaintiff to a number of lawsuits that have arisen in connection with the normal conduct of its banking business. It is management's opinion, based upon advice of legal counsel, that none of the pending litigation will have a materially adverse effect on the Company or on the Bank beyond what has already been provided in the financial statements. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------- The 1996 annual meeting of shareholders was held on May 16, 1996. The following persons were nominated and elected to the Board of Directors to serve until the 1997 annual meeting of shareholders: Alexander S. Lowy Thomas E. McCullough Frank R. Moothart Mark Rubin Lawrence J. Sherman Jack A. Sweeney Steven J. Sweeney There was no other action taken at the meeting. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------------------------------------------ Exhibits - -------- There are no exhibits to this report. Reports on Form 8-K - ------------------- No reports on Form 8-K were filed during the second quarter of 1996. 17 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. FIRST REGIONAL BANCORP Date: August 9, 1996 /s/ Jack A. Sweeney -------------------- ------------------------------------------ Jack A. Sweeney, Chairman of the Board and Chief Executive Officer Date: August 9, 1996 /s/ Thomas McCullough -------------------- ------------------------------------------ Thomas McCullough, Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE--ARTICLE 9
9 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 6,175,000 4,063,000 27,720,000 0 16,969,000 0 0 82,143,000 2,235,000 138,656,000 123,733,000 7,000 1,691,000 0 0 0 11,332,000 1,893,000 138,656,000 4,434,000 536,000 776,000 5,746,000 1,413,000 1,417,000 4,329,000 250,000 (20,000) 2,939,000 1,326,000 978,000 0 0 978,000 0.41 0.39 0.089 318,000 2,251,000 0 0 2,000,000 225,000 211,000 2,235,000 2,235,000 0 0
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