-----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, I1gMaGUUOz648JApEFOmhaUN+DoO5shKaYh8tjgRAfSzZDowV5sVZXNAXEPOr/j7 +Ts5DifbgSnZJfygnae0jg== 0000944209-96-000467.txt : 19961108 0000944209-96-000467.hdr.sgml : 19961108 ACCESSION NUMBER: 0000944209-96-000467 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961107 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: 96656145 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 FORM 10-Q 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 September 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 November 7, 1996 2 FIRST REGIONAL BANCORP ---------------------- INDEX -----
Page ---- Part I - Financial Information Item 1. Financial Statements Consolidated Statements of Financial Condition 3 Consolidated Statements of Income 5 Consolidated Statements of 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 FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ---------------------------------------------- (In Thousands)
September 30, December 31, 1996 1995 ------------- ------------- (unaudited) ASSETS - ------ Cash and due from banks $ 4,051 $ 6,777 Time deposits with other financial institutions 3,862 8,121 Investment securities, available for sale 30,190 13,882 Funds sold 19,610 20,690 Federally guaranteed loans 24,675 27,660 Other loans, net of allowance for losses of $2,414,000 in 1996 and $2,000,000 in 1995 60,808 57,667 Premises and equipment, net of accumulated depreciation 188 200 Other real estate owned 320 392 Accrued interest receivable and other assets 3,355 2,421 -------- -------- Total Assets $147,059 $137,810 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Liabilities: Demand deposits $ 25,259 $ 24,005 Savings deposits 4,736 4,706 Money market deposits 83,599 82,998 Time deposits 18,046 13,015 -------- -------- Total deposits 131,640 124,724 Securities sold under agreement to repurchase 20 36 Accrued interest payable and other liabilities 1,733 791 -------- -------- Total Liabilities 133,393 125,551 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 2,314 922
4
September 30, December 31, 1996 1995 ------------- ------------ (unaudited) Net unrealized gain (loss) on securities available for sale 20 5 -------- -------- Total Shareholders' Equity 13,666 12,259 -------- -------- Total Liabilities and Shareholders' Equity $147,059 $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 Nine Months Ended September 30, September 30, ------------------- ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- REVENUE FROM EARNING ASSETS: Interest and fees on loans $2,104 $1,802 $6,538 $6,234 Interest on time deposits with other financial institutions 59 109 203 304 Interest on investment securities 353 93 889 441 Interest on funds sold 335 527 967 1,039 ------ ------ ------ ------ Total revenue from earning assets 2,851 2,531 8,597 8,018 COST OF FUNDS: Interest on deposits 748 744 2,161 2,014 Interest on securities sold under agreements to repurchase 1 0 5 0 ------ ------ ------ ------ Total cost of funds 749 744 2,166 2,014 Net revenue from earning assets before provision for loan losses 2,102 1,787 6,431 6,004 PROVISION FOR LOAN LOSSES 0 160 250 535 ------ ------ ------ ------ Net revenue from earning assets 2,102 1,627 6,181 5,469 Net gain (loss) on sales of securities (45) 0 (65) 0 Other revenue 121 99 327 343 OPERATING EXPENSES: Salaries and related benefits 628 558 1,905 1,644 Occupancy expense 94 91 281 256 Equipment expense 39 39 113 168 Promotion expense 37 38 101 121 Professional service expense 166 170 503 493 Customer service expense 324 308 962 893 Supply/communication expense 38 33 126 97 Other expenses 142 (117) 416 578 ------ ------ ------ ------ Total operating expenses 1,468 1,120 4,407 4,250 ------ ------ ------ ------ Income before provision for income taxes 710 606 2,036 1,562
6 FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- CONSOLIDATED STATEMENTS OF INCOME --------------------------------- (In Thousands Except Per Share Amounts) (Unaudited) (continued)
Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 1996 1995 1996 1995 ---- ---- ---- ---- PROVISION FOR INCOME TAXES 296 67 644 173 ------- ------- ------- ------- NET INCOME $ 414 $ 539 $ 1,392 $ 1,389 ======= ======= ======= ======= NET INCOME (LOSS) PER SHARE (Note 2) $ 0.17 $ 0.23 $ 0.58 $ 0.58 ======= ======= ======= =======
The accompanying notes are an integral part of these statements. 7 FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOW ------------------------------------ (In Thousands) (Unaudited)
Nine Months Ended September 30, ----------------------- 1996 1995 ---------- -------- OPERATING ACTIVITIES Net income (loss) $ 1,392 $ 1,389 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 250 535 Provision for depreciation and amortization 358 41 Amortization of investment securities net discounts (119) (309) Decrease (increase) in interest receivable (19) (52) Increase (decrease) in interest payable 24 34 Increase (decrease) in taxes payable 82 93 Net increase (decrease) in other liabilities 836 255 -------- ------- Net cash provided (used) by operating activities $ 2,804 $ 1,986 INVESTING ACTIVITIES Decrease (increase) in investment securities $(16,184) $ 3,966 Decrease (increase) in time deposits with other financial institutions 4,259 (2,384) Decrease (increase) in guaranteed loans 2,673 (2,373) Decrease (increase) in other loans (3,391) 1,282 Purchases of premises and equipment (24) (84) Net decrease (increase) in other assets (843) 586 -------- ------- Net cash provided by investing activities $(13,510) $ 993 FINANCING ACTIVITIES Net increase (decrease) in demand deposits, savings accounts, and money market accounts $ 1,885 $ 4,112 Net increase (decrease) in time deposits 5,031 3,852
8 FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOW ------------------------------------ (In Thousands) (Unaudited) (continued)
Nine Months Ended September 30, -------------------- 1996 1995 ---- ---- Increase (decrease) in securities sold under agreement to repurchase (16) 2,465 -------- -------- Net cash provided by financing activities $ 6,900 $ 10,429 Increase (decrease) in cash and cash equivalents $ (3,806) $ 13,408 Cash and cash equivalents, beginning of period 27,467 25,977 -------- -------- Cash and cash equivalents, end of period $ 23,661 $ 39,385 ======== ========
The accompanying notes are an integral part of these statements. 9 FIRST REGIONAL BANCORP AND SUBSIDIARY ------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ September 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 September 30, 1996 and December 31, 1995 and the results of operations for the three and nine month periods ended September 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 September 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. The number of shares outstanding was 2,398,800 in 1996 and 1995. NOTE 3 - As of September 30, 1996 the Bank had a total of $434,000 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 September 30, 1996 the Company had identified loans having an aggregate average balance of $336,542 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 September 30, 1996 totalled $138,470 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 September 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 increase shareholders' equity at September 30, 1996 by $20,000 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 (the "Company") did not conduct any significant business activities independent of First Regional Bank (the "Bank"). The following discussion and analysis relates primarily to the Bank. At September 30, 1996 total assets were $147,059,000 compared to $137,810,000 at December 31, 1995, an increase of $9,249,000 or 7%. During 1996 the Company continued its program of expanded marketing and business development activities, which resulted in growth in deposits of $6,916,000, or 6%, to $131,640,000 on September 30, 1996 from $124,724,000 at December 31, 1995. This increase in deposits occurred in all deposit categories, including demand deposits, savings deposits, money market accounts, and time deposits. At the same time that deposits were growing, Net Loans increased by a mere $156,000 to $85,483,000 at September 30, 1996 compared to $85,327,000 at the end of 1995. The modest growth in Net Loans reflected the difficulty in finding acceptable new loans in light of the level of economic activity in the Bank's market area. The funds resulting from the growth in deposits and the much more modest increase in loans principally flowed into Investment Securities, which jumped from $13,882,000 at December 31, 1995 to $30,190,000 at September 30, 1996, an increase of $16,308,000 or 117%. Most other categories of assets and liabilities experienced only minor changes in the period from December 31, 1995 to September 30, 1996. The Company's successful program to increase asset levels while controlling expenses led to revenues growing faster than expenses, and as a result, the Company generated income before taxes of $710,000 in the third quarter of 1996, compared to a gross profit of $606,000 for the same period in 1995. Higher tax provisions in 1996 versus 1995 resulted in a decline in net income to $414,000 in the three months ended September 30, 1996 compared to $539,000 in the third quarter of 1995. The results for the nine months ended September 30, 1996 were profits of $1,392,000 versus a $1,389,000 profit for the like period in 1995. NET INTEREST INCOME - ------------------- Net revenue from earning assets rose by $315,000 (18%) for the three months ended September 30, 1996 compared to the same period in 1995. This increase reflects growth in earning assets combined with the generally stable level of interest rates which existed during the two periods. Net interest income for the nine month period ending September 30, 1996 showed a significant increase of $579,000 (7%) compared to the corresponding period in 1995, and this result was again due to higher levels of earning assets combined with stability in interest rates giving rise to an increase in net revenue. For both the quarter and the first nine months of 1996, total revenue increased, reflecting higher levels of assets combined with the comparable levels of interest rates which prevailed between the two years. Changes in the Cost of Funds were more modest; for the three months ended September 30, 1996, Total Cost of Funds rose by just $5,000, from the 1995 level of $744,000 to $749,000, while for the first nine months of 1996 funding costs rose by $152,000 (8%) to $2,166,000 from the 1995 total of $2,014,000. The modest 12 increases in deposit interest expense, combined with the generally larger increases in interest revenues, gave rise to the improved net revenue performance which occurred. OTHER REVENUE - ------------- Other revenue was $121,000 for the three months ended September 30, 1996, up from the $99,000 recorded in the third quarter of 1995. For the nine months ended September 30, 1995, other revenue was $343,000 versus a corresponding 1996 total of $327,000. The changes in other revenue between 1995 and 1996 primarily reflect fluctuations in service charge income on various deposit accounts. During the third quarter of 1996, losses on sales of securities of $45,000 were incurred, while for the nine months ended September 30, 1996 a total of $65,000 in losses on sales of securities were experienced. No gains or losses on sales of securities were realized in the three or nine month periods ended September 30, 1995. PROVISION FOR POSSIBLE LOAN LOSSES - ---------------------------------- The allowance for possible loan losses is intended to reflect known and inherent risks in the loan portfolio. The allowance for possible loan losses is increased by provisions for possible 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. While the economic recession has had and will continue to have a significant impact on the Bank and its customers, management believes the allowance for possible loan losses is adequate to provide for losses that might be reasonably anticipated. The allowance for possible loan losses was $2,414,000 and $2,000,000 (or 2.75% and 2.29% of gross outstanding loans) at September 30, 1996 and December 31, 1995 respectively. Reflecting continued improvement in perceived credit quality, based on the Company's ongoing analysis of the risks presented by its loan portfolio provisions for possible losses were zero and $250,000 for the three and nine month periods ended September 30, 1996 respectively, compared to provisions of $160,000 and $535,000 for the three and nine month periods ended September 30, 1995. The Company experienced net loan recoveries of $179,000 in the third quarter of 1996 and net recoveries of $165,000 for the first nine months of 1996; by comparison, for 1995 the Company experienced net chargeoffs of $465,000 in the quarter ended September 30, which brought the net chargeoff total through the third quarter of the year to $434,000. In addition, 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 September 30, 1996 the Company had identified loans having an aggregate average balance of $336,542 which it concluded were impaired under SFAS No. 114. The Company's 13 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 established a general loss reserve for each of the loans which at September 30, 1996 totalled $138,470 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 September 30, 1996. OPERATING EXPENSES - ------------------ Management's ongoing programs to limit non-interest expenses led to overall stability in most categories of operating expenses in 1996 compared to the prior year. As mentioned earlier, however, the Company embarked on a growth program in 1995 which required additions to the calling officer force, and as a result salary and related benefits increased by $70,000 for the three month period ended September 30, 1996 compared with the same period in 1995, and for the same reason this category of expense also increased for the nine month period ended September 30, to $1,905,000 in 1996 from $1,644,000 in 1995. Occupancy expense remained essentially stable for the three month period ended September 30, 1996 versus the prior year, as there were no changes in the premises occupied by the Company or the lease agreements covering those premises. Most of the remaining categories of operating expenses either remained generally stable or declined slightly in 1996 versus 1995, both for the third quarter and for the full year to date. The only exception was in Other Expenses, which had fallen sharply in the third quarter of 1995 due to a reclassification of loan premium amortizations in that period which resulted in a one-time reduction of this expense category. The 1996 results represent a return to normal for this item. PROVISION FOR INCOME TAXES - -------------------------- Tax provisions increased substantially in the three and nine month periods ended September 30, 1996 compared to the same periods of 1995. For the third quarter of 1996, tax provisions totalled $296,000 versus provisions of $67,000 for the like period of 1995, while for the nine months ended September 30 the 1996 provisions were $644,000 compared to $173,000 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 $414,000 for the third quarter of 1996, compared to net income of $539,000 for the comparable period of 1995. For the nine months ended September 30, net income in 1996 was $1,392,000, while 1995 net income was $1,389,000. 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 43.8% of total deposits at September 30, 1996. This compares with a level of 39.7% which existed at December 31, 1995; this change reflects the fact that, as deposits have risen during the course of 1996, 14 most of the inflow of funds has taken place in the various liquid asset components, particularly Investment Securities. In addition, at September 30, 1996 and December 31, 1995 respectively, the Bank held approximately $24.6 million and $27.7 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 64.9% and 68.4% as of September 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. Treasury or U.S. Agency securities. As noted earlier, losses on sales of securities of $45,000 were incurred in the third quarter of 1996, while for the nine months ended September 30, 1996 a total of $65,000 in losses on sales of securities were experienced. No gains or losses on sales of securities were realized in the three or nine month periods ended September 30, 1995. At September 30, 1996 the Bank's investment portfolio contained gross unrealized gains of $58,000 and gross unrealized losses of $28,000, for net unrealized gains of $30,000; at December 31, 1995 the portfolio contained gross unrealized gains of $47,000 and gross unrealized losses of $39,000. As discussed more fully in Note 5, the Company adopted SFAS No. 115 in 1994, with the result that the net unrealized gains and losses gave rise to a $20,000 increase (net of taxes) in the Company's shareholders' equity as of September 30, 1996, and a $5,000 increase (net of taxes) in shareholders' equity as of December 31, 1995. 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 the unrealized gains and losses had 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 the rates and maturities of 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 One year but less but less but less Non-interest Floating Less than than than than Five years earning Category Rate one month six months one year five years or more or bearing Total ==================================================================================================================================== Fed funds sold 19,610 0 0 0 0 0 0 19,610 Time deposits with other banks 0 297 3,565 0 0 0 0 3,862 Investment securities 12,921 0 17,045 0 224 0 0 30,190 ------- ----- ------ ---- ---- --- ----- ------- Subtotal 32,531 297 20,610 0 224 0 0 53,662 Loans 85,205 31 100 147 0 0 0 85,483 ------- ----- ------ ---- ---- --- ----- ------- Total earning assets 117,736 328 20,710 147 224 0 0 139,145 Cash and due from banks 0 0 0 0 0 0 4,051 4,051 Premises and equipment 0 0 0 0 0 0 188 188 Other real estate owned 0 0 0 0 0 0 320 320 Other assets 0 0 0 0 0 0 3,355 3,355 ------- ----- ------ ---- ---- --- ----- ------- Total non-earning assets 0 0 0 0 0 0 7,914 7,914 ------- ----- ------ ---- ---- --- ----- ------- Total assets 117,736 328 20,710 147 224 0 7,914 147,059 Funds purchased 20 0 0 0 0 0 0 20 Repurchase agreements 0 0 0 0 0 0 0 0 ------- ------ ------- ------- ------ ------ ------- ------- Subtotal 20 0 0 0 0 0 0 20 Savings deposits 4,736 0 0 0 0 0 0 4,736 Money market deposits 83,599 0 0 0 0 0 0 83,599 Time deposits 0 9,392 7,589 1,051 14 0 0 18,046 ------- ------ ------ ------- ------ ------ ------- ------- Total bearing liabilities 88,355 9,392 7,589 1,051 14 0 0 106,401 Demand deposits 0 0 0 0 0 0 25,259 25,259 Other liabilities 0 0 0 0 0 0 1,733 1,733 Equity capital 0 0 0 0 0 0 13,666 13,666 ------ ------ ------ ------ ------ ------ ------- ------- Total non-bearing liabilities 0 0 0 0 0 0 40,658 40,658 ------ ------ ------ ------ ------ ------ ------- ------- Total liabilities 88,355 9,392 7,589 1,051 14 0 40,658 147,059 GAP 29,381 (9,064) 13,121 (904) 210 0 (32,744) 0 Cumulative GAP 29,381 20,317 33,438 32,534 32,744 32,744 0 0
15 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 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 $13,666,000 and $12,259,000 as of September 30, 1996 and December 31, 1995, respectively. The Company's capital ratios for those dates in comparison with regulatory capital requirements were as follows:
09-30-96 12-31-95 -------- -------- Leverage Ratio (Tier I Capital to Total Assets) Regulatory requirement 3.00% 3.00% First Regional Bancorp 9.26% 8.96%
In addition, bank regulators have issued new risk-adjusted capital guidelines which assign risk weighting 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:
09-30-96 12-31-95 -------- -------- Tier I Capital to Risk-Weighted Assets: Regulatory requirement 4.00% 4.00% First Regional Bancorp 16.76% 15.91% Tier I + Tier II Capital to Risk-Weighted Assets: Regulatory requirement 8.00% 8.00% First Regional Bancorp 18.03% 17.17%
The "regulatory requirement" figures listed above represent the level of capital required for Adequately Capitalized status as established by federal regulators. 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 or defendant to a number of lawsuits which 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 the Bank. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------- No matters were submitted to a vote of security holders during the third quarter of 1996. 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 third 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: November 7, 1996 /s/ Jack A. Sweeney ------------------ ------------------------------------------ Jack A. Sweeney, Chairman of the Board Chief Executive Officer November 7, 1996 /s/ Thomas McCullough ------------------ ------------------------------------------ Thomas McCullough, Chief Financial Officer EX-27 2 ARTICLE 9 OF REGULATION S-X
9 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 4,051,000 3,862,000 19,610,000 0 30,190,000 0 0 87,897,000 2,414,000 147,059,000 131,640,000 20,000 1,733,000 0 0 0 11,332,000 2,334,000 147,059,000 6,538,000 1,092,000 967,000 8,597,000 2,161,000 2,166,000 6,431,000 250,000 (65,000) 4,407,000 2,036,000 1,392,000 0 0 1,392,000 0.58 0.56 0.082 261,000 7,363,000 0 0 2,000,000 231,000 396,000 2,414,000 2,414,000 0 0
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