-----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, PprjVwf2dqjrxoYBtrmzKI1QqVtZEEzDUCeud8VB2jvY+Dy4DGnL23aVcvaNVenS ZhyyFLxpQxcCHPWa+76myg== 0000940401-97-000010.txt : 19970515 0000940401-97-000010.hdr.sgml : 19970515 ACCESSION NUMBER: 0000940401-97-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 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: 97603335 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, 1997 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 846,088 Shares of Common Stock Outstanding as of March 31, 1997 Part 1 Item 1 BAY AREA BANCSHARES & SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED, IN THOUSANDS)
ASSETS 3/31/97 12/31/96 Cash and due from banks $12,378 $11,011 Federal Funds Sold 9,800 6,850 _______ _______ Cash and cash equivalents 22,178 17,861 Time deposits with other financial institutions 100 100 Investment securities available for sale (market value approximates book value) 2,596 2,588 Investment securities held to maturity (market value of $12,273 in 1997 and $12,203 in 1996) 12,180 12,081 Loans, net of reserve for possible loan losses of $1,540 in 1997 and $1,493 in 1996 67,006 67,012 Loans held for sale 0 723 Premises and equipment,net 758 811 Real estate owned 499 0 Interest receivable and other assets 2,040 2,011 ______ _______ Total assets $107,357 $103,187 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Deposits Demand $25,601 $23,599 Interest-bearing transaction 44,971 44,493 Savings 5,569 5,551 Time 20,436 19,325 ------ ------ Total Deposits 96,577 92,968 Interest payable and other liabilities 1,078 938 Federal funds purchased 0 0 Federal Home Loan Bank advances 0 0 ------ ------ Total liabilities 97,655 93,906 ------ ------ Shareholders' equity: Common stock, no par value: Authorized - 20,000,000 shares; issued & outstanding 4,177 4,143 846,088 in 1997 and 839,638 in 1996 Unrealized (loss) gain on securities held for sale (8) (5) Retained earnings 5,533 5,143 ----- ----- Total shareholders' equity 9,702 9,281 ----- ------- Total liabilities and shareholders' equity $107,357 $103,187 ======= =======
(1) Part 1 Item 1 BAY AREA BANCSHARES & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Three Months Ended Ended 3/31/97 3/31/96 Interest Income: Interest and fees on loans $1,856 1,822 Interest on investment securities 227 205 Interest on federal funds sold 111 37 Interest on time deposits with other financial institutions 1 2 ----- ----- Total Interest Income 2,195 2,066 Interest Expense: ----- ----- Interest on interest-bearing transaction amounts 339 320 Interest on savings deposits 58 56 Interest on time deposits 264 219 Interest on short-term borrowing 0 2 Interest on notes payable and redeemable debentures 0 0 ----- ---- Total Interest Expense 661 597 ----- ----- Net interest income 1,534 1,469 Provision for possible loan losses 40 85 ----- ----- Net interest income after provision for possible loan 1,494 1,384 losses Noninterest income: ----- ----- Service charges on deposit accounts 48 53 Net loss on sales of securities 0 0 Net gain on disposal of assets 0 2 Net gain on sale of loans held for sale 12 150 Other Mortgage Banking Revenue 24 47 ATM network revenue 481 398 Other 21 48 ----- ---- Total noninterest income 586 698 Noninterest expense: ----- ---- Salaries and related benefits 637 716 Occupancy 110 98 Equipment 131 134 Professional fees 46 64 Stationery and supplies 28 33 Other 447 444 ----- ----- Total noninterest expense 1,399 1,489 ----- ----- Income before provision for income taxes 681 593 Provision for income taxes 289 250 ----- ----- Net Income $392 $343 ===== ===== Earnings per share: Average common and equivalent shares outstanding- Primary 960,000 920,000 ======= ======= Average common and equivalent shares outstanding- Fully Diluted 960,000 920,000 ======= ======= Primary Net income per share $0.41 $0.37 ======= ======= Fully Diluted Net income per share $0.41 $0.37 ======= =======
(2) Part 1 Item 1 BAY AREA BANCSHARES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Three Months Three Months Ended Ended 3/31/97 3/31/96 Cash flows from operating activities: Net Income $392 $343 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment 97 108 Provision for possible loan losses 40 85 Net gain loss on sale of assets 0 (2) Funding of loans held for sale (947) (5,732) Proceeds from the sale of loans held for sale 1,682 5,076 Net gain on sale of loans held for sale (12) (150) Net loss on sale of investment securities 0 0 Net ammortization and accretion of investment premiums and 40 15 discounts Net decrease in interest receivable and other assets (29) (37) Net increase in interest payable and other liabilities 140 150 Net (decrease) increase in deferred loan fees (52) 27 ----- ----- Total adjustments 959 (460) ----- ----- Net cash provided by (used in) operating activities 1,351 (117) Cash flows from investing activities: Net decrease in time deposits with other financial institutions 0 3 Proceeds from sale of investment securities 0 0 Proceeds from the maturity of investment securities held to maturity 500 500 Mortgage backed securities principal payments 95 50 Purchase of investment securities held to maturity (754) (722) Purchase of investment securities held for sale 0 0 Net decrease in gross loans (398) (5,945) Proceeds from the sale of Real Estate Owned 0 0 Capital expenditures (44) (69) ----- ------ Net cash used in investing (601) (6,183) activities Cash flows from financing activities: Net increase (decrease) in demand deposits,transaction and 2,498 (116) savings Net increase in time deposits 1,111 1,355 Repayment of Federal Funds Purchased 0 0 Net proceeds of Federal Home Loan Bank advances 0 0 Proceeds from stock warrants and options exercised 34 38 Cash Dividends paid (76) (67) ----- ----- Net cash provided by financing 3,567 1,210 activities ----- ----- Net increase (decrease) in cash and cash equivalents 4,317 (5,090) Cash and cash equivalents,beginning of period 17,861 18,076 ------ ------- Cash and cash equivalents,end of period $22,178 $12,986 ====== ======
There were $499 and $0 in loans transferred to Real Estate Owned in 1997 and 1996 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, 1997, results of operations for the three month period ended March 31, 1997 and the statement of cash flows for the three month period ended March 31, 1997 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, 1996. 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) increased $4.4 million or 14% to $37.1 million over the three month period from December 31, 1996 to March 31, 1997. At year-end, total liquid assets as a percentage of total assets was 31.6%, whereas on March 31, 1997 it had increased to 34.5%. The increase in percentage of liquid assets to total assets was tempered by an increase of $4.2 million or 4.0% in total assets. Cash & due from banks increased $1.4 million over the first three months of 1997 to $12.4 million at March 31, 1997. During the first three months of 1997 cash and due from banks averaged $11.9 million. The portion of the total cash & due from banks representing ATM ("Automatic Teller Machine") network cash inventory has averaged approximately $3.7 million during 1997 and at March 31, 1997 ATM cash was approximately $3.5 million. The increase in total liquid assets, during the first three months of 1997, was a primarily a result of an increase in deposits of $3.6 million or 3.9% and a decrease of $729,000 or 1% in net loans outstanding. Deposits have averaged $95.0 million thus far in 1997 while they averaged $88.1 million during the twelve month period ending December 31, 1996. Gross loans outstanding have averaged $69.4 million thus far in 1997 as compared to $66.2 million averaged throughout 1997. 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 $422,000 in the first three months of 1997 from $10.8 million or 10.3% of total gross assets at December 31, 1996 to $11.2 million or 10.3% of total gross assets at December 31, 1996. Bank capital plus reserves totaled $11.2 million on March 31, 1997 or 10.32% of total adjusted assets as compared to capital plus reserves of $10.8 million or 10.33% of total adjusted assets at December 31, 1996. At March 31, 1996 the Bank maintained a tier one capital ratio of 12.75% and a tier two capital ratio of 14.00% as compared to a tier one capital ratio of 11.86% (5) and a tier two capital ratio of 13.11% at December 31, 1996. 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 1997 and the Company also declared cash dividends to common shareholders of $.09 per share in each of March of 1997. The first quarter dividend represents twenty two consecutive quarterly cash dividends declared by the Parent company to shareholders. Item 2B Results of Operations Results of Operations Consolidated operating profits were $392,000 ($.41 per fully diluted share vs. $.37 in the prior year) for the first quarter of 1996, the highest first quarter in the company's history. This represents a $49,000 or 14.2% increase over the first quarter of 1996 in when net income was $343,000. The increase in first quarter earnings in 1997 versus the first quarter of 1996 is a result of an increase in pretax earnings of $88,000 which is comprised of an increase in net interest income of $64,000, a decrease in loan loss provisions of $45,000, and a decrease in noninterest expense of $90,000; offset in part by a decrease in non interest income of $112,000. The growth in net interest income of 4.4% in the first quarter of 1997 as compared to the first quarter of 1996 is primarily a result of growth in total earning assets in the first quarter of 1997, offset in part by a decrease in net interest margin. Average earning assets in the first three months of 1997 were $92.7 million a $10.8 million or 13.2% increase over the first three months of 1996 when earning assets averaged $81.9 million. The $65,000 increase in net interest margin in the first quarter of 1997 as compared to the first quarter of 1996 was comprised of a $129,000 increase in interest income offset in part by a $64,000 increase in interest expense. Year to date net interest income to total average earning assets (net interest margin) has been 6.62% in the first three months of 1997 as compared to 7.18% in the first three months of 1996. The interest margin compression has been primarily caused by an increase in lower yielding liquid assets. In the first quarter of 1996 the Bank averaged just $2.9 million in Fed Funds Sold while in the first quarter of 1997 the average was $8.0 million. Competition for quality loans and the resulting pricing concessions the Bank has made to grow the loan portfolio also contributed to the compression in net interest margin as the yield on loans was 11.2% in the first quarter of 1996 and 10.7% in the first quarter of 1997. (6) The decrease in loan loss provisions in the first quarter of 1997 of $45,000 as compared to the first quarter of 1996 is primarily a result of the Board's current projection that the Bennet Leasing Assets (book value of $548,000 included in nonaccrual loans at March 31, 1997) will not require further reserves. A proposed settlement is still being reviewed by the Bank's legal counsel and will most likely require certain revisions if it is to be accepted by the Bank. Non performing assets at March 31, 1997 were $1.53 million or 1.43% of total assets and 99% of loan loss reserves. Non performing assets at December 31, 1996 were $1.67 million or 1.61% of total assets and 112% of loan loss reserves. There were no loans charged off during the first three months of 1996 as compared to $68,000 during the first three months of 1996. Loan loss reserves of $1.54 million at March 31, 1997 represent a ratio of 2.23% of gross loans outstanding as compared to a loan loss reserve of $1.49 million or 2.14% of gross loans at December 31, 1996. The reduction in non interest income of $112,000 in the first quarter of 1997 as compared to the first quarter of 1996 was primarily a result of the closing of the Bank's mortgage department in February 1997. Mortgage Department revenues were down $161,000 in the first quarter of 1997 as compared to the first quarter of 1996. The department was closed primarily as a result of intense competition which affected the profit margins for such loans sold in the marketplace. The department never reached its budgeted performance goals or contributed a satisfactory return given the risk of operations or the time that was committed by Bank management. The Bank's ATM revenues were up $83,000 or 21% to $481,000 in the first quarter of 1997 as compared to the first quarter of 1996. The department has contributed $96,000 to pretax profits in 1997 as compared to $36,000 in the first three months of 1996. Non interest expense was down $90,000 or 6.0% primarily as a result of the closing of the Mortgage Department. (7) ITEM 6 (a) Exhibits. 3.1 Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988). 3.2 Amendment to Restated Articles of Incorporation (incorporated by reference to Exhibit 3.2 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989). 3.3 Bylaws of the Company, as amended (incorporated by reference to Exhibit 3.2 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987). 3.4 Amendment to Bylaws of Company (incorporated by reference to Exhibit 3.3 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987). 27 Financial Data Schedule (filed herewith) 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 12, 1997 /s/Robert R. Haight Robert R. Haight President and Chief Executive Officer /s/Anthony J. Gould Anthony J. Gould Chief Accounting Officer 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-31-1997 MAR-31-1997 12,378 100 9,800 0 2,596 12,180 12,173 67,006 1,447 107,357 96,577 0 1,078 0 0 0 4,177 5,525 107,357 1,856 227 112 2,195 661 661 1,534 40 0 1,399 681 681 0 0 392 0.41 0.41 6.62 1,035 312 0 0 1,447 0 7 1,447 1,447 0 0
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