-----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, KjDvipJHskHyn2el8b09I9ZNb/tX0Z3y8K2U5NBHrS2h6gETkexZTyvSXG+5etPI LjwHGwmSD0gadsQV2QaMqQ== 0000940401-97-000012.txt : 19970815 0000940401-97-000012.hdr.sgml : 19970815 ACCESSION NUMBER: 0000940401-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 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: 97660087 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 June 30, 1997 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 883,399 Shares of Common Stock Outstanding as of June 30, 1997 Part 1 Item 1 BAY AREA BANCSHARES & SUBSIDIARIES CONSOLIDATED BALANCE SHEET (UNAUDITED, IN THOUSANDS)
6/30/97 12/31/96 ASSETS Cash and due from banks $10,039 $11,011 Federal Funds Sold 1,600 6,850 Cash and cash equivalents 11,639 17,861 Time deposits with other financial institutions 0 100 Investment securities available for sale (market value approximates book value) 2,095 2,588 Investment securities held to maturity (market value of $13,459 in 1997 and $12,203 in 1996) 13,324 12,081 Loans, net of reserve for possible loan losses of $1,593 in 1997 and $1,493 in 1996 79,175 67,012 Loans held for sale 0 723 Premises and equipment,net 721 811 Real estate owned 0 0 Interest receivable and other assets 1,962 2,011 Total assets $108,916 $103,187 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Demand $25,231 $ 23,599 Interest-bearing transaction 45,568 44,493 Savings 5,846 5,551 Time 21,681 19,325 Total Deposits 98,326 92,968 Interest payable and other liabilities 414 938 Federal funds purchased 0 0 Federal Home Loan Bank advances 0 0 Total liabilities 98,740 93,906 Sharehoders' equity: Common stock, no par value: Authorized - 20,000,000 shares; issued & outstanding 4,354 4,143 883,339 in 1997 and 839,638 in 1996 Unrealized (loss) gain on securities held for sale (8) (5) Retained earnings 5,830 5,143 Total shareholders' equity 10,176 9,281 Total liabilities and shareholders' equity $108,916 $103,187
(1) Part 1 Item 1 BAY AREA BANCSHARES & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Three Months Ended Ended 6/30/97 6/30/96 Interest Income: Interest and fees on loans $1,990 1,792 Interest on investment securities 253 195 Interest on federal funds sold 92 69 Interest on time deposits with other financial institutions 1 1 Total Interest Income 2,336 2,057 Interest Expense: Interest on interest-bearing transaction amounts 349 324 Interest on savings deposits 59 56 Interest on time deposits 287 245 Interest on short-term borrowing 0 7 Interest on notes payable and redeemable debentures 0 0 Total Interest Expense 695 632 Net interest income 1,641 1,425 Provision for possible loan losses 80 150 Net interest income after provision for possible loan loss 1,561 1,275 Noninterest income: Service charges on deposit accounts 50 54 Net loss on sales of securities 0 0 Net gain on disposal of assets 0 0 Net gain on sale of loans held for sale 0 158 Other Mortgage Banking Revenue 51 45 ATM network revenue 514 445 Other 28 27 Total noninterest income 643 729 Noninterest expense: Salaries and related benefits 519 654 Occupancy 122 97 Equipment 104 134 Professional fees 67 49 Stationery and supplies 30 31 Other 599 442 Total noninterest expense 1,441 1,407 Income before provision for income taxes 763 597 Provision for income taxes 312 250 Net Income $451 $347 Earnings per share: Average common and equivalent shares outstanding- Primary 960,000 945,000 Average common and equivalent shares outstanding-Fully Diluted 960,000 945,000 Primary Net income per share $0.47 $0.37 Fully Diluted Net income per share $0.47 $0.37
(2) Part 1 Item 1 BAY AREA BANCSHARES & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Six Months Six Months Ended Ended 6/30/97 6/30/96 Interest Income: Interest and fees on loans $3,846 3,614 Interest on investment securities 480 400 Interest on federal funds sold 203 106 Interest on time deposits with other financial institutions 2 3 - - Total Interest Income 4,531 4,123 Interest Expense: - - Interest on interest-bearing transaction amounts 688 644 Interest on savings deposits 117 112 Interest on time deposits 551 464 Interest on short-term borrowing 0 9 Interest on notes payable and redeemable debentures 0 0 - - Total Interest Expense 1,356 1,229 - - Net interest income 3,175 2,894 Provision for possible loan losses 120 235 - - Net interest income after provision for possible loan loss 3,055 2,659 Noninterest income: - - Service charges on deposit accounts 98 106 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 12 308 Other Mortgage Banking Revenue 75 92 ATM network revenue 995 842 Other 49 75 - - Total noninterest income 1,229 1,425 Noninterest expense: - - Salaries and related benefits 1,156 1,369 Occupancy 232 195 Equipment 235 268 Professional fees 113 113 Stationery and supplies 58 64 Other 1,046 886 - - Total noninterest expense 2,840 2,895 - - Income before provision for income taxes 1,444 1,189 Provision for income taxes 601 500 - - Net Income $843 $689 Earnings per share: Average common and equivalent shares outstanding- Primary 960,000 945,000 Average common and equivalent shares outstanding- Fully Diluted 960,000 945,000 Primary Net income per share $0.88 $0.73 Fully Diluted Net income per share $0.88 $0.73
(3) Part 1 Item 1 BAY AREA BANCSHARES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Six Months Six Months Ended Ended 6/30/97 6/30/96 Cash flows from operating activities: Net Income $843 $689 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment 216 221 Provision for possible loan losses 140 235 Net gain loss on sale of assets 0 (2) Funding of loans held for sale (947) (8,948) Proceeds from the sale of loans held for sale 1,682 8,661 Net gain on sale of loans held for sale (12) (308) Net loss on sale of investment securities 0 0 Net ammortization and accretion of investment premiums and discounts 8 31 Net decrease in interest receivable and other assets 49 46 Net increase in interest payable and other liabilities (524) (48) Net (decrease) increase in deferred loan fees (97) 0 Total adjustments 515 (112) Net cash provided by (used in) operating activities 1,358 577 Cash flows from investing activities: Net decrease in time deposits with other financial institutions 100 3 Proceeds from sale of investment securities 0 0 Proceeds from the maturity of investment securities held to maturity 1,715 1,170 Mortgage backed securities principal payments 256 748 Purchase of investment securities held to maturity (2,741) (2,183) Purchase of investment securities held for sale 0 0 Net decrease in gross loans (12,197) (3,463) Proceeds from the sale of Real Estate Owned 0 0 Capital expenditures (126) (102) Net cash used in investing activit (12,993) (3,827) Cash flows from financing activities: Net increase (decrease) in demand deposits,transaction and savings 3,002 1,508 Net increase in time deposits 2,356 2,965 Repayment of Federal Funds Purchased 0 (1,000) Net proceeds of Federal Home Loan Bank advances 0 500 Proceeds from stock warrants and options exercised 211 62 Cash Dividends paid (156) (134) Net cash provided by financing actities 5,413 3,901 Net increase (decrease) in cash and cash equivalents (6,222) 651 Cash and cash equivalents,beginning of period 17,861 18,076 Cash and cash equivalents,end of period $11,639 $18,727
There were $499 and $0 in loans transferred to Real Estate Owned in 1997 and 1996 respectively. (4) 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 June 30, 1997, results of operations for the three and six month periods ended June 30, 1997 and the statement of cash flows for the six month period ended June 30, 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. (5) 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 $5.6 million or 17% to $32.6 million over the six month period from December 31, 1996 to June 30, 1997. At year-end, total liquid assets as a percentage of total assets was 31.6%, whereas on June 30, 1997 it had decreased to 24.8%. Cash & due from banks decreased $972,000 over the first six months of 1997 to $10.0 million at June 30, 1997. During the first six months of 1997 cash and due from banks averaged $11.6 million. The portion of the total cash & due from banks representing ATM ("Automatic Teller Machine") network cash inventory has averaged approximately $3.6 million during 1997 and at June 30, 1997 ATM cash was approximately $3.1 million. The decrease in total liquid assets, during the first six months of 1997, was a primarily a result of an increase in gross loans of $11.4 million or 16.8%, offset in part by an increase in deposits of $5.4 million or 5.8%. Deposits have averaged $96.3 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 $71.7 million thus far in 1997 as compared to $66.2 million averaged throughout 1996. 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 $949,000 in the first six months of 1997 from $10.8 million or 10.3% of total gross assets at December 31, 1996 to $11.8 million or 10.6% of total gross assets at June 30, 1997. Bank capital plus reserves totaled $11.5 million on June 30, 1997 or 10.4% of total adjusted assets as compared to capital plus reserves of $10.8 million or 10.3% of total adjusted assets at December 31, 1996. At June 30, 1997 the Bank maintained a tier one capital ratio of 11.62% and a tier two capital ratio of 12.87% as compared to a tier one capital ratio of 11.86% (6) and a tier two capital ratio of 13.11% at December 31, 1996. On May 27,1997 the Company announced it had adopted a stock repurchase plan to repurchase up to 5% of the Company's outstanding stock or $500,000 (whichever is less). The company did repurchase 3,000 shares in the open market in July at a price of approximately $21.00 per share. 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 $225,000 in dividends to the Parent company in the first six months of 1997 and the Company also declared cash dividends to common shareholders of $.09 per share in March and June of 1997. The second quarter dividend represents twenty three consecutive quarterly cash dividends declared by the Parent company to shareholders. Item 2B Results of Operations Results of Operations Consolidated operating profits were $451,000 ($.47 per fully diluted share vs. $.37 in the prior year) for the second quarter of 1997, the highest second quarter earnings in the Company's history. This represents a $104,000 or 29.9% increase over the second quarter of 1996 in when net income was $347,000. Consolidated operating profits were $843,000 ($.88 per fully diluted share vs. $.73 in the prior year) for the first six months of 1997, the highest first half of earnings in the Company's history. This represents a $154,000 or 22.4% increase over the first half of 1996 in which net income was $689,000. The increase in second quarter earnings in 1997 versus the second quarter of 1996 is a result of an increase in pretax earnings of $166,000 which is comprised of an increase in net interest income of $216,000 and a decrease in loan loss provisions of $70,000, offset in part by a decrease in noninterest income of $86,000 and an increase in non interest expense of $34,000. The increase in earnings for the first six months of 1997 versus the first six months of 1996 is a result of an increase in pretax earnings of $255,000 which is comprised of an increase in net interest income of $281,000 and a decrease in loan loss provisions of $115,000 and a decrease in noninterest expense of $55,000, offset in part by a decrease in noninterest income of $196,000. The growth in net interest income of 15.1% in the second quarter of 1997 and 9.7% in the first six months of 1997 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 second quarter of 1997 were $96.2 million, a $10.1 million or 11.8% increase over the second quarter of 1996 when earning assets averaged $86.1 million. Net interest margin in the second quarter of 1997 was approximately 6.82% as compared to 7.55% in the second quarter of 1996. (7) Average earning assets in the first six months of 1997 were $94.4 million, a $10.5 million or 12.5% increase over the first six months of 1996 when earning assets averaged $83.9 million. Net interest margin in the first six months of 1997 was approximately 6.72% as compared to 6.89% in the first half of 1996. Yields on earning assets rose in the second quarter of 1997 to 9.71% as compared to 9.56% in the second quarter of 1996. Yields on earning assets are down in the first six months of 1997 to 9.60% as compared to 9.82% in the first six months of 1996. The decrease in loan loss provisions throughout 1997, despite the 16.8% growth in loans outstanding since December 31, 1996, is a result of improved loan portfolio performance and the Board's current judgement that the Bennet Leasing Assets (book value of $548,000 included in nonaccrual loans at June 30, 1997) would not require further reserves. A settlement was indeed reached in July of 1997. The Bank received a payment of approximately $465,000 and expects additional payments of approximately $200,000 pursuant to the agreement. The Bank ultimately expects to recover approximately $117,000 of the $318,000 written off in 1996. Non performing assets at June 30, 1997 (adjusted for the Bennet funding settlement in July) were $816,000 or .74% of total assets and 51% of loan loss reserves. Non performing assets at December 31, 1996 were $1.67 million (including Bennet) or 1.61% of total assets and 112% of loan loss reserves.There were $42,000 in loans charged off during the first six months of 1997 as compared to $68,000 during the first six months of 1996. Loan loss reserves of $1.59 million at June 30, 1997 represent a ratio of 1.96% 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 $86,000 in the second quarter of 1997 and $196,000 in the first half of 1997 was a result of the closing of the Bank's mortgage department in February 1997. 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 $69,000 or 15.5% for the second quarter and $153,000 or 18% for the first half of 1997 as compared to the same periods in 1996. The department has contributed $148,000 to pretax profits in the first six months of 1997 as compared to $93,000 in the first six months of 1996. Non interest expense was up $34,000 in the second quarter but still down $55,000 in the first six months of 1997 as compared to 1996 primarily as a result of the closing of the Mortgage Department. (8) Part 2, Item 4 (a) The 1997 Annual Meeting of the Shareholders of the Registrant was held on May 20, 1997. (b) The following table shows the votes for, against or withheld, and the broker nonvotes as to each candidate for director. Each candidate was elected.
Name Votes For Votes Against or Withheld Broker Nonvotes Mario A. Biagi 654,209 11.803 0 John O. Brooks 655,809 10,203 0 Gary S. Goss 665,942 70 0 Robert R. Haight 653,109 12,903 0 Stanley A. Kangas 643,029 22,983 0 David J. Macdonald 655,530 10,483 0 Thorwald A. Madsen 653,109 12,903 0 Dennis W. Royer 643,029 22,983 0
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). (9) 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: August 11, 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 JUN-30-1997 10,039 0 1,600 0 2,095 13,324 13,459 79,175 1,593 108,916 98,326 0 414 0 0 0 4,354 5,822 108,916 1,990 253 93 2,336 695 695 1,641 80 0 1,441 763 763 0 0 451 0.47 0.47 9.71 1,281 173 0 0 1,593 42 22 1,593 1,593 0 0
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