-----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, Jblz7IvrQHy1vxO/C8aHfi80QtobAHmZPe2BCByiDYXopgulVydFOZy82xIv7vpt pRz+gtq6WGSLKBD5f63+Wg== 0000940401-95-000018.txt : 19951119 0000940401-95-000018.hdr.sgml : 19951119 ACCESSION NUMBER: 0000940401-95-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAY AREA BANCSHARES CENTRAL INDEX KEY: 0000701153 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 942779021 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-76003 FILM NUMBER: 95590413 BUSINESS ADDRESS: STREET 1: 900 VETERANS BLVD CITY: REDWOOD CITY STATE: CA ZIP: 94063 BUSINESS PHONE: 4153671600 MAIL ADDRESS: STREET 1: 900 VETERANS BLVD CITY: REDWOOD CITY STATE: CA ZIP: 94063 FORMER COMPANY: FORMER CONFORMED NAME: AREA FINANCIAL CORP DATE OF NAME CHANGE: 19890612 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED September 30, 1995 Commission File Number 2-76003 BAY AREA BANCSHARES California #94-2779021 900 Veterans Blvd., Redwood City, CA 94063 Telephone (415) 367-1600 The registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months, and x Yes No (2) has been subject to such filing requirements for the past 90 days. x Yes No 812,593 Shares of Common Stock Outstanding as of September 30, 1995 Part 1 Item 1
BAY AREA BANCSHARES & SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED) ASSETS 9/30/95 12/31/94 Cash and due from banks $10,470,983 $8,406,265 Federal Funds Sold 15,800,000 6,355,000 ------------- -------------- Cash and cash equivalents 26,270,983 14,761,265 Time deposits with other financial institutions 102,728 197,585 Investment securities available for sale (market value approximates book value) 1,510,626 1,439,872 Investment securities held to maturity (market value of $10,244,000 in 1995 and $8,122,000 in 10,206,790 8,426,348 1994 Loans, net of reserve for possible loan losses of $1,455,500 in 1995 and $1,505,400 in 1994 50,254,929 52,016,341 Loans held for sale 1,888,017 327,586 Premises and equipment,net 979,233 1,023,060 Real estate owned 0 0 Interest receivable and other assets 1,414,382 1,344,825 ------------- -------------- Total assets $92,627,688 $79,536,882 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Demand $22,282,212 $20,818,159 Interest-bearing transaction 41,316,761 32,884,654 Savings 4,490,868 4,439,217 Time 15,895,922 13,871,559 ------------- -------------- Total Deposits 83,985,763 72,013,589 Interest payable and other liabilities 811,076 552,649 ------------- -------------- Total liabilities 84,796,839 72,566,238 ------------- -------------- Shareholders' equity: Preferred stock, $10 stated value; 6% Series A, convertible and redeemable: Authorized - 10,000,000 shares; issued & outstanding 3,000 in 1995 and 10,300 in 1994 30,000 103,000 Common stock, no par value: Authorized - 20,000,000 shares; issued & outstanding 4,033,059 3,908,616 812,593 in 1995 and 789,525 in 1994 Unrealized loss on securities held for sale 2,500 (76,000) Retained earnings 3,765,290 3,035,028 ------------- -------------- Total shareholders' equity 7,830,849 6,970,644 ------------- -------------- Total liabilities and shareholders' equity $92,627,688 $79,536,882
BAY AREA BANCSHARES & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Three Months Ended Ended 9/30/95 9/30/94 Interest Income: ------------- -------------- Interest and fees on loans $1,584,059 $1,368,506 Interest on investment securities 171,147 158,114 Interest on federal funds sold 171,202 50,669 Interest on time deposits with other financial institutions 1,466 1,979 ------------- -------------- Total Interest Income 1,927,874 1,579,268 Interest Expense: ------------- -------------- Interest on interest-bearing transaction amounts 328,015 229,180 Interest on savings deposits 50,440 15,334 Interest on time deposits 205,993 152,591 Interest on short-term borrowing 0 0 Interest on notes payable and redeemable debentures 0 2,438 ------------- -------------- Total Interest Expense 584,448 399,543 ------------- -------------- Net interest income 1,343,426 $1,179,725 Provision for possible loan losses 15,000 75,000 ------------- -------------- Net interest income after provision for possible loan losses 1,328,426 $1,104,725 Noninterest income: ------------- -------------- Service charges on deposit accounts 64,269 72,349 Net loss on sales of securities (16,301) 0 Net gain on disposal of assets 7,500 0 Net gain on sale of loans held for sale 133,081 80,251 Other Mortgage Banking Revenue 51,250 20,760 ATM network revenue 436,623 263,398 Other 43,125 8,936 ------------- -------------- Total noninterest income 719,547 445,694 Noninterest expense: ------------- -------------- Salaries and related benefits 685,111 555,213 Occupancy 93,153 77,968 Equipment 136,925 119,287 Professional fees 74,272 51,404 Stationery and supplies 31,175 37,296 Other 398,700 351,776 ------------- -------------- Total noninterest expense 1,419,336 1,192,944 ------------- -------------- Income before provision for income taxes 628,637 $357,475 Provision for income taxes 266,000 140,000 ------------- -------------- Net Income $362,637 $217,475 Earnings per share: ============= ============== Average common and equivalent shares outstanding 915,000 865,000 ============= ============== Net income per share $0.40 $0.25 ============= ==============
BAY AREA BANCSHARES & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Nine Months Nine Months Ended Ended 9/30/95 9/30/94 Interest Income: ------------- -------------- Interest and fees on loans $4,662,524 $4,075,232 Interest on investment securities 464,011 437,524 Interest on federal funds sold 388,994 179,791 Interest on time deposits with other financial institutions 4,591 5,348 ------------- -------------- Total Interest Income 5,520,120 4,697,895 Interest Expense: ------------- -------------- Interest on interest-bearing transaction amounts 918,957 648,449 Interest on savings deposits 154,491 47,121 Interest on time deposits 544,668 449,840 Interest on short-term borrowing 0 0 Interest on notes payable and redeemable debentures 0 8,726 ------------- -------------- Total Interest Expense 1,618,116 1,154,136 ------------- -------------- Net interest income 3,902,004 3,543,759 Provision for possible loan losses 95,000 300,000 ------------- -------------- Net interest income after provision for possible loan losses 3,807,004 3,243,759 Noninterest income: ------------- -------------- Service charges on deposit accounts 195,878 223,171 Net loss on sales of securities (16,301) 0 Net gain on disposal of assets 7,500 21,081 Net gain on sale of loans held for sale 368,019 423,119 Other Mortgage Banking Revenue 153,717 92,945 ATM network revenue 1,124,185 521,565 Other 100,642 30,318 ------------- -------------- Total noninterest income 1,933,640 1,312,199 Noninterest expense: ------------- -------------- Salaries and related benefits 1,962,710 1,697,876 Occupancy 281,125 254,532 Equipment 421,881 259,632 Professional fees 182,977 188,506 Stationery and supplies 106,620 92,501 Other 1,233,555 930,386 ------------- -------------- Total noninterest expense 4,188,868 3,423,433 ------------- -------------- Income before provision for income taxes 1,551,776 1,132,525 Provision for income taxes 646,000 463,000 ------------- -------------- Net Income $905,776 $669,525 Earnings per share: Average common and equivalent shares outstanding 915,000 865,000 Net income per share $0.99 $0.77
BAY AREA BANCSHARES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) Nine Months Nine Months Ended Ended 9/30/95 9/30/94 Cash flows from operating activities: ------------- -------------- Net Income $905,776 $669,525 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment 319,225 162,948 Provision for possible loan losses 95,000 300,000 Net gain on sale of assets (7,500) (21,081) Net gain on sale of loans held for sale (368,019) (423,119) Net loss on sale of investment securities 16,301 0 Net amortization and accretion of investment premiums and discounts 35,195 52,856 Net increase in interest receivable and other assets (69,557) (830,090) Net increase (decrease) in interest payable and other liabilities 258,427 (60,564) Net decrease in deferred loan fees (37,362) (19,707) ------------- -------------- Total adjustments 241,710 (838,757) ------------- -------------- Net cash provided by (used in) operating activities 1,147,486 (169,232) Cash flows from investing activities: Net decrease in time deposits with other financial institutions 94,857 3,915 Proceeds from sale of investment securities 0 0 Proceeds from the maturity of investment securities held to maturity 2,054,375 795,000 Mortgage backed securities principal payments 215,627 750,309 Purchase of investment securities held to maturity (3,595,053) (2,076,353) Purchase of investment securities held for sale (499,141) (500,156) Funding of loans held for sale (24,877,322) (16,537,329) Proceeds from the sale of loans held for sale 23,684,910 16,960,448 Net decrease in gross loans 1,654,544 5,952,505 Proceeds from the sale of Real Estate Owned 0 0 Capital expenditures (275,398) (836,498) ------------- -------------- Net cash (used in) provided by investing activities (1,542,601) 4,511,841 Cash flows from financing activities: Net increase (decrease) in demand deposits,transaction and savings 9,947,811 (420,104) Net increase (decrease) in time deposits 2,024,363 (2,031,926) Principle payments on short-term notes payable 0 (50,000) Proceeds from stock warrants and options exercised 50,968 83,277 Cash Dividends paid (118,309) (93,261) ------------- -------------- Net cash provided by (used in) financing activities 11,904,833 (2,512,014) Net increase in cash and cash equivalents 11,509,718 1,830,595 Cash and cash equivalents, beginning of period 14,761,265 11,980,321 ------------- -------------- Cash and cash equivalents, end of period $26,270,983 $13,810,916 There were no loans transferred to Real Estate Owned in 1995 and 1994 respectively.
BAY AREA BANCSHARES & SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS All adjustments, which in the opinion of management are necessary for a fair statement of the Company's financial condition at September 30, 1995, results of operations for the three month and nine month periods ended September 30, 1995 and the statement of cash flows for the nine month period ended September 30, 1995 have been included. These adjustments are of a normal and recurring nature. The results of operations and statement of cash flows are not necessarily indicative of the results for a full year's activity. The accompanying unaudited financial statements have been prepared on a basis consistent with the accounting principles and policies reflected in the Company's Annual Report for the year ended December 31, 1994. BAY AREA BANCSHARES & SUBSIDIARIES ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Item 2A Financial Condition Liquidity Liquid assets (Cash, Federal Funds Sold, Time Deposits with other Financial Institutions and Investments) increased $13.3 million to $38.1 million over the nine month period from December 31, 1994 to September 30, 1995. At year-end, total liquid assets as a percentage of total assets was 31.2% whereas on September 30, 1995 it had increased to 41.1%. Cash & due from banks increased $2.1 million over the first nine months of 1995 to $10.5 million at September 30, 1995. During the first nine months of 1995 cash and due from banks averaged $9.1 million. The portion of the total cash & due from banks representing ATM network cash inventory has averaged approximately $2.5 million during 1995 and at September 30, 1995 ATM cash was approximately $2.5 million. At December 31, 1994, there was approximately $3.0 in ATM network cash inventory. The reduction in average ATM cash is a result of more aggressive cash management and the closure of unproductive sites. The increase in total liquid investments was a result of a decline in total net loans outstanding of $1.8 million (3.4%) to $50.3 million and an increase in deposits of $12.0 million (16.6%) to $84.0 million during the first nine months of 1995. Deposits have averaged $75.4 million thus far in 1995 and $83.0 million in the third quarter of 1995 while they averaged $73.4 million during 1994. Gross loans outstanding have averaged $53.7 million thus far in 1995 as compared to $54.2 million averaged in 1994. Management believes the decline in demand for loans is primarily a result of intense pricing competition in the marketplace as well as the continuation of a sluggish local real estate economy. Management has embarked on other lending areas to stimulate loan demand, and continues to explore new avenues for lending. Management believes current liquid assets and current available credit lines are adequate to cover the working capital requirements of the Company and any reasonable needs arising from deposit withdrawals. Capital Consolidated equity capital plus reserves increased $810,300 in the first nine months of 1995 from $8.5 million or 10.46% of total gross assets at December 31, 1994 to $9.3 million or 9.87% of total gross assets at September 30, 1995. Bank capital plus reserves totaled $9.3 million on September 30, 1995 or 9.83% of total adjusted assets as compared to capital plus reserves of $8.5 million or 10.45% of total adjusted assets at December 31, 1994. At September 30, 1995 the Bank maintained a tier one capital ratio of 13.08% and a tier two capital ratio of 14.33%. The Bank's capital level continues to exceed State and Federal Deposit Insurance Corporation requirements and satisfies the Federal Reserve Board's current risk-based capital Guidelines. The Bank has declared $200,000 in dividends to the Parent company in the first nine months of 1995 and the Company also declared a cash dividends to common shareholders of $.07 per share in the first, second, and third quarters. Total dividends declared to shareholders through the first nine months of 1995 are $176,000. The third quarter dividend represents seventeen consecutive quarterly cash dividends declared by the Parent company to shareholders. Item 2B Results of Operations Results of Operations Consolidated operating profits were $362,600 ($.40 per share vs. $.25 in the prior year) for the third quarter of 1995, the highest third quarter in the company's history. This represents a 67% increase over the third quarter of 1994. The third quarter operating profits for 1995 were comprised of Bank earnings of $375,700 and a Parent company loss (excluding bank dividends and undistributed earnings) of $13,100. Consolidated operating profits were $905,800 ($.99 per share vs. $.77 in the prior year) for the first nine months of 1995, a 35.3% increase over the same period in 1994 and the highest nine month results in the Company's history. The first nine months operating profits were comprised of Bank earnings of $953,300 and a Parent company loss (excluding bank dividends and undistributed earnings) of $47,500. The increase in third quarter earnings in 1995 versus the third quarter of 1994 is primarily a result of an increase in net interest income of $223,700, a reduction in loan loss provisions of $60,000 and an increase in non interest income of $273,900, offset by an increase of $226,400 in non interest expense. The increase in earnings for the first nine months of 1995 versus the first nine months of 1994 is primarily a result of an increase in net interest income of $358,200, a reduction in loan loss provisions of $205,000 and an increase in non interest income of $621,400, offset by an increase of $765,400 in non interest expense. The growth in net interest income throughout 1995 is primarily a result of rising interest rates, which resulted in an increase in net interest margin, and growth in average bank earning assets. The $358,200 increase in net interest margin during the first nine months of 1995 was comprised of a $822,200 increase in interest income offset in part by a $464,000 increase in interest expense over the same period in 1994. Earning assets have averaged $73.2 million through September 30, 1995 as compared to $67.0 million over the same period in 1994. Year to date net interest income to total average assets has been 6.34% in the first nine months of 1995 as compared to 5.89% in the first nine months of 1994. The decline in loan loss provisions in the first nine months of 1995 as compared to 1994 is primarily a result of lack of loan growth and improved delinquency ratios in the loan portfolio. Loan loss reserves of $1.46 million at September 30, 1995 represent a ratio of 2.70% of gross loans outstanding. Total nonearning assets, comprised solely of nonaccrual loans, at September 30, 1995 were $310,100 or 21.3% of loan loss reserves, and .34% of total assets. Total nonearning assets at December 31, 1994 were $200,000 or 13.3% of loan loss reserves and .25% of total assets. The $765,400 increase in non interest expense in 1995 can primarily be attributed to the Bank's Electronic Funds Transfer (EFT) department which operates approximately 50 ATM's throughout the state. EFT department expenses were $1,031,100 in the first nine months of 1995 as compared to $562,200 in the first nine months of 1994. EFT department revenues grew from $521,600 in the first nine months of 1994 to $1,124,200 in the first nine months of 1995. The department contributed $102,600 to pretax income in the third quarter of 1995 as compared to a loss of $14,600 in the third quarter of 1994. The department has contributed $101,300 to pretax income thus far in 1995 as compared to a loss of $40,600 in the first nine months of 1994. Revenues are somewhat seasonal, with the highest month being August, but management expects the department to continue to contribute to Bank profitability in the fourth quarter of 1995. The Bank's mortgage department revenues for the first nine months of 1995 totaled $674,900 (which includes $152,100 in interest income) as compared to $594,800 (including $78,700 in interest income) in the first nine months of 1994. Mortgage department expenses have been $606,600 during the first nine months of 1995 resulting in pretax profits of $67,300. Mortgage department expenses in the first nine months of 1994 were $574,200 resulting in pretax profits of $20,600. Part II - Item 6 (a) Exhibit Number Exhibit 3.1 Restated Articles of Incorporation of Company 4* 3.2 Amendment to Restated Articles of Incorporation 5* 3.3 Bylaws of Company, as amended 2* 3.4 Amendment to Bylaws of Company 2* 4.1 Certificate of Determination of Preferred Stock 3* 10.1 # 1983 Non-Qualified Stock Option Plan of the Company 1* 10.2 # Non-Qualified Stock Option Agreement Pursuant to the 1983 Non-Qualified Stock Option Plan of the Company 1* 10.3 Lease Entered Into By and Between Alan B. Miller and Bay Area Bank 7* 10.4 # Employment Agreement Between John O. Brooks, Bay Area Bancshares and Bay Area Bank dated as of September 2, 1992 8* 10.5 # Amendment to 1983 Non-Qualified Stock Option Plan of Company 5* 10.6 Lease Entered Into By and Between Eureka Bank and Bay Area Bank dated dated December 18, 1990 6* 10.7 Promissory Note with Liberty Bank dated November 18, 1992 8* 10.8 # 1993 Stock Option Plan 9* 10.9 # Forms of Stock Option Agreements 9* 10.10 Lease entered into by and between Nine C Corporation and Bay Area Bank dated March 18, 1993 9* 10.11 #Director Emeritus Agreement * 27 Financial Data Schedule (b) Not Applicable *Previously filed. 1 Filed as Exhibits 10.8 and 10.9, respectively, to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1985. 2 Filed as Exhibits 3.2, and 3.3, respectively, to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987. 3 Filed as Exhibits 4.1, to the Company's Current Report on Form 8-K filed September 15, 1988. 4 Filed as Exhibits 3.1, to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988. 5 Filed as Exhibits 3.2 and 10.11, respectively, to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989. 6 Filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990. 7 Filed as Exhibit 10.4 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991. 8 Filed as Exhibits 10.4 and 10.7, respectively, to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992. 9 Filed as Exhibits 10.8, 10.9 and 10.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993. # Management contracts and compensation plans are identified with a number sign ("#"). 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. BAY AREA BANCSHARES Registrant Dated: November 6, 1995 /s/ Robert R. Haight President and Chief Executive Officer /s/ Anthony J. Gould Chief Accounting Officer EX-27 2 FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from the Balance Sheet, and Statement of Income, and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1995 SEP-30-1995 10,470,983 102,728 15,800,000 0 1,510,626 10,206,790 10,244,000 50,254,929 (1,455,500) 92,627,688 83,985,763 0 811,076 0 4,033,059 0 30,000 3,767,790 92,627,688 4,662,524 464,011 393,585 5,520,120 1,618,116 1,618,116 3,902,004 95,000 0 4,188,868 1,551,776 1,551,776 0 0 905,776 .99 .99 7.11 310,077 234,579 0 0 1,505,355 167,462 22,589 1,455,500 1,455,500 0 0
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