-----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, CIVsW+FGdlLfqVD4mLiSMgV75ym0WqXzUXOGDFnOZpErvk7GdgmzHD+8Tt2CpFTU rOAvA2GBdwovMglbl7o1OQ== 0000940401-96-000012.txt : 19960517 0000940401-96-000012.hdr.sgml : 19960517 ACCESSION NUMBER: 0000940401-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 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: 96566219 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 FORM 10-Q 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 March 31, 1996 Commission File Number 2-76003 BAY AREA BANCSHARES California #94-2779021 900 Veterans Blvd., Redwood City, CA 94063 Telephone (415) 367-1600 Theregistrant (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 832,138 Shares of Common Stock Outstanding as of March 31, 1996 Part 1 Item 1 BAY AREA BANCSHARES & SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED, IN THOUSANDS)
ASSETS 3/31/96 12/31/95 - ---------------------------------------------- ---------- --------- Cash and due from banks $9,286 $8,276 Federal Funds Sold 3,700 9,800 ----------- --------- Cash and cash equivalents 12,986 18,076 Time deposits with other financial instituions 100 103 Investment securities available for sale (market value approximates book value) 3,091 3,111 Investment securities held to maturity (market value of $10,387 in 1996 and $10,269 in 1995) 10,292 10,133 Loans, net of reserve for possible loan losses of $1,539 in 1996 and $1,516 in 1995 64,546 59,209 Loans held for sale 1,578 772 Premises and equipment,net 909 948 Real estate owned 0 0 Interest receivable and other assets 1,500 1,463 --------- --------- Total assets $95,002 $93,815 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY - ---------------------------------------------- Deposits Demand $22,737 $22,998 Interest-bearing transaction 39,255 40,480 Savings 5,746 4,376 Time 17,480 16,125 ------------- -------------- Total Deposits 85,218 83,979 Interest payable and other liabilities 908 758 Federal funds purchased 0 1,000 Federal Home Loan Bank advances 500 0 ------------- -------------- Total liabilities 86,626 85,737 ------------- -------------- Sharehoders'equity: Preferred stock, $10 stated value; 6% Series A, convertible and redeemable: Authorized - 10,000,000 shares; issued & outstanding none in 1996 and 1,000 in 1995 0 10 Common stock, no par value: Authorized - 20,000,000 shares; issued & outstanding 4,382 4,053 832,138 in 1996 and 821,829 in 1995 Unrealized (loss) gain on securities held for sale (5) 10 Retained earnings 3,999 4,005 ------------- -------------- Total shareholders' equity 8,376 8,078 ------------- -------------- Total liabilities and shareholders' equity $95,002 $93,815 ============= ==============
(1) Part 1 Item 1 BAY AREA BANCSHARES & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Three Months Ended Ended 3/31/96 3/31/95 Interest Income: ------------- -------------- Interest and fees on loans $ 1,822 $ 1,532 Interest on investment securities 205 141 Interest on federal funds sold 37 66 Interest on time deposits with other financial institutions 2 2 ------------- -------------- Total Interest Income 2,066 1,741 Interest Expense: ------------- -------------- Interest on interest-bearing transaction amounts 320 263 Interest on savings deposits 56 52 Interest on time deposits 219 157 Interest on short-term borrowing 2 0 Interest on notes payable and redeemable debentures 0 0 ------------- -------------- Total Interest Expense 597 472 ------------- -------------- Net interest income 1,469 1,269 Provision for possible loan losses 85 45 ------------- -------------- Net interest income after provision for possible loan losses 1,384 1,224 Noninterest income: ------------- -------------- Service charges on deposit accounts 53 66 Net loss on sales of securities 0 0 Net gain on disposal of assets 2 0 Net gain on sale of loans held for sale 150 99 Other Mortgage Banking Revenue 47 55 ATM network revenue 398 304 Other 48 12 ------------- -------------- Total noninterest income 698 536 Noninterest expense: ------------- -------------- Salaries and related benefits 716 629 Occupancy 98 94 Equipment 134 141 Professional fees 64 57 Stationery and supplies 33 37 Other 444 368 ------------- -------------- Total noninterest expense 1,489 1,326 ------------- -------------- Income before provision for income taxes 593 434 Provision for income taxes 250 176 ------------- -------------- Net Income $ 343 $ 258 Earnings per share: ============= ============== Average common and equivalent shares outstanding 920,000 905,000 ============= ============== Fully Diluted Net income per share $ 0.37 $ 0.29 ============= ==============
(2) Part 1 Item 1 BAY AREA BANCSHARES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Three Months Three Months Ended Ended 3/31/96 3/31/95 Cash flows from operating activities: ------------- -------------- Net Income $ 343 $ 258 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment 108 104 Provision for possible loan losses 85 45 Net gain loss on sale of assets (2) 0 Funding of loans held for sale (5,732) (7,661) Proceeds from the sale of loans held for sale 5,076 7,375 Net gain on sale of loans held for sale (150) (98) Net loss on sale of investment securities 0 0 Net ammortization and accretion of investment premiums and discounts 15 9 Net (increase) decrease in interest receivable and other assets (37) 19 Net increase in interest payable and other liabilities 150 8 Net increase (decrease) in deferred loan fees 27 (69) ------------- -------------- Total adjustments (460) (268) ------------- -------------- Net cash used in operating activities (117) (10) Cash flows from investing activities: Net decrease in time deposits with other financial institutions 3 94 Proceeds from sale of investment securities 0 0 Proceeds from the maturity of investment securities held to maturity 500 1000 Mortgage backed securities principal payments 50 59 Purchase of investment securities held to maturity (722) (1,169) Purchase of investment securities held for sale 0 0 Net (increase) decrease in gross loans (5,945) 1,014 Proceeds from the sale of Real Estate Owned 0 0 Capital expenditures (69) (42) ------------- -------------- Net cash (used in) provided by investing activities (6,183) 956 Cash flows from financing activities: Net (decrease) increase in demand deposits,transaction and savings (116) 2,487 Net increase in time deposits 1,355 373 Proceeds from stock warrants and options exercised 38 13 Cash Dividends paid (67) 0 ------------- ----------- Net cash provided by financing activities 1,210 2,873 ------------- -------------- Net (decrease) increase in cash and cash equivalents (5,090) 3,819 Cash and cash equivalents,beginning of period 18,076 14,761 ------------- -------------- Cash and cash equivalents,end of period 12,986 18,580 ============= ==============
There were no loans transferred to Real Estate Owned in 1996 and 1995 respectively. (3) 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 March 31, 1996, results of operations for the three month period ended March 31, 1996 and the statement of cash flows for the three month period ended March 31, 1996 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, 1995. All references to the "Bank" are in reference to the Company's sole, and wholly owned, subsidiary Bay Area Bank. (4) 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) decreased $4.9 million to $26.5 million over the three month period from December 31, 1995 to March 31, 1996. At year-end, total liquid assets as a percentage of total assets was 33.5% whereas on March 31, 1996 it had decreased to 27.9%. Cash & due from banks increased $1.0 million over the first three months of 1996 to $9.3 million at March 31, 1996. During the first three months of 1996 cash and due from banks averaged $9.2 million. The portion of the total cash & due from banks representing ATM network cash inventory has averaged approximately $2.6 million during 1996 and at March 31, 1996 ATM cash was approximately $2.1 million . At December 31, 1995, there was approximately $2.7 in ATM network cash inventory. The Bank continues to minimize ATM cash wherever possible through more aggressive cash management and the closure of unproductive sites. The decrease in total liquid assets was a result of a increase in total net loans outstanding (including loans held for sale) of $6.1 million (10.2%) to $66.1 million and an increase in deposits of $1.2 million (1.5%) to $85.2 million during the first three months of 1996. Deposits have averaged $82.9 million thus far in 1996 while they averaged $70.2 million during the first quarter of 1995. Gross loans outstanding have averaged $65.2 million thus far in 1996 as compared to $54.1 million averaged in the first quarter of 1995. 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 $321,000 in the three months of 1996 from $9.6 million or 10.06% of total gross assets at December 31, 1995 to $9.9 million or 10.27% of total gross assets at March 31, 1996. Bank capital plus reserves totaled $9.9 million on March 31, 1996 or 10.23% of total adjusted assets as compared to capital plus reserves of $9.6 million or 10.03% of total adjusted assets at December 31, 1995. At March 31, 1996 the Bank maintained a tier one capital ratio of 11.86% and a tier two capital ratio of 13.11%. (5) 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 $50,000 in dividends to the Parent company in the first three months of 1996 and the Company also declared a cash dividend to common shareholders of $.08 per share in March of 1996. The first quarter dividend represents eighteen consecutive quarterly cash dividends declared by the Parent company to shareholders. Item 2B Results of Operations Results of Operations Consolidated operating profits were $343,000 ($.37 per share vs. $.29 in the prior year) for the first quarter of 1996, the highest first quarter in the company's history. This represents a $85,000 or 33% increase over the first quarter of 1995. The first quarter operating profits for 1996 were comprised of Bank earnings of $356,000 and a Parent company loss (excluding bank dividends and undistributed earnings) of $13,000. The increase in first quarter earnings in 1996 versus the first quarter of 1995 is a result of an increase in pretax earnings of $159,000 comprised of: an increase in net interest income of $200,000 an increase in non interest income of $162,000 offset in part by an increase in loan loss provisions of $40,000 and an increase in non interest expense of $163,000. The growth in net interest income of 15.8% in the first quarter of 1996 as compared to the first quarter of 1995 is primarily a result of growth in total earning assets offset in part by a decrease in net interest margin. Average Earning assets in the first quarter of 1996 were $81.8 million a $13.5 million or 20.6% increase over the first quarter of 1995 when earning assets averaged $65.2 million. The $200,000 increase in net interest margin during the first three months of 1996 was comprised of a $325,000 increase in interest income offset in part by a $125,000 increase in interest expense over the same period in 1995. Year to date net interest income to total average earning assets (net interest margin) has been 7.18% in the first three months of 1996 as compared to 7.43% in the first three months of 1995. The increase in loan loss provisions in the first three months of 1996 as compared to 1995 is primarily a result of loan growth of 10.2% and an increase in nonperforming assets. Non performing assets (consisting entirely of nonaccrual loans) at March 31, 1996 were $1.42 million or 2.1% of total gross loans and 92% of loan loss reserves. Non performing assets at March 31, 1995 were $250,000 or .46% of total gross loans and 16% of loan loss reserves. Loan loss reserves of $1.54 million at March 31, 1996 represent a ratio of 2.26% of gross loans outstanding as compared to 2.90% at March 31, 1995. In the first quarter of 1996, the Bank reclassified $662,000 in lease receivables and notes as nonperforming assets and has suspended accruing interest on these assets. These assets consist of approximately 150 lease receivables purchased in 1994 from Bennett Group Funding Inc. ("Bennett") which declared chapter 11 bankruptcy in March of 1996. (6) There have been reports by national news services of alleged fraudulent leases that were written by Bennett. Bay Area Bancshares, however, is not aware that any of its Bennett leases are fraudulent. The Company's current information is that the allegations of fraud are directed at a relatively small percentage of all Bennett leases. The Company expects to have more information on the authenticity of these assets by the filing date of the second quarter 10-Q filing. In the interim the Company believes it to be prudent to reclassify all Bennett assets to nonperforming status until an official accounting is finished by the bankruptcy trustee. The $163,000 increase in non interest expense in 1996 can be attributed to a $70,000 increase in expenses related to the Bank's EFT department and an $67,000 increase expenses related to the Bank's Mortgage Department. The $162,000 increase in noninterest income can primarily be attributed to a $101,000 or 33% increase in EFT revenues and a $49,000 increase in Mortgage department premiums and fees. The Bank's Electronic Funds Transfer (EFT) department operates approximately 50 ATM's throughout the state. The department contributed approximately $36,000 to pretax income in the first quarter of 1996 as compared to a loss of $2,000 in the first quarter of 1995. The Bank's mortgage department revenues for the first three months of 1996 totaled $284,000 (which includes $82,000 in interest income) as compared to $206,000 (including $53,000 in interest income) in the first three months of 1995. Mortgage department expenses have been $264,000 during the first three months of 1996 as compared to $197,000 in the first quarter of 1995. The Mortgage Department's contribution to pretax profits were $20,000 in the first quarter of 1996 as compared to $10,000 in the first quarter of 1995. (7) 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: May 14, 1996 /s/Robert R. Haight /s/Anthony J. Gould - ---------------------- ----------------------- Robert R. Haight Anthony J. Gould President and Chief Chief Accounting Officer Executive Officer (8) EX-27 2 FDS --
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. 1,000 3-MOS DEC-31-1996 MAR-31-1996 9,286 100 3,700 0 3,091 10,292 10,387 66,124 1,539 95,002 85,218 500 908 0 4,382 0 0 3,994 95,002 1,822 205 39 2,066 595 597 1,469 85 0 1,489 593 593 0 0 343 0.37 0.37 7.18 1,422 0 0 0 1,539 68 6 1,539 1,539 0 0
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