-----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, SIE4/f9yCCANdzOx2OIk4qmuJYaSB1dUbk1fCad56DHuNQ6Ljni6xnkOy7e8OpLe PR1LI62RMMQeMGGgvH2DGA== 0000702147-96-000009.txt : 19961118 0000702147-96-000009.hdr.sgml : 19961118 ACCESSION NUMBER: 0000702147-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SDNB FINANCIAL CORP CENTRAL INDEX KEY: 0000702147 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 953725079 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11117 FILM NUMBER: 96662705 BUSINESS ADDRESS: STREET 1: 1420 KETTNER BLVD CITY: SAN DIEGO STATE: CA ZIP: 92101 BUSINESS PHONE: 6192331234 MAIL ADDRESS: STREET 1: P O BOX 12605 CITY: SAN DIEGO STATE: CA ZIP: 92112-3605 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-11117 SDNB FINANCIAL CORP. (Exact name of Registrant as Specified in its Charter) Incorporated in California - IRS Employer I.D. No. 95-3725079 1420 Kettner Boulevard, San Diego, California 92101 (Address of Principal Executive Office) (Zip Code) Registrant's Telephone Number including area code: 619-233-1234 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 The number of shares of Common Stock outstanding as of the close of business on October 31, 1996: 3,080,609 SDNB FINANCIAL CORP. INDEX PART I FINANCIAL INFORMATION Page Item 1. Financial Statements Consolidated Balance Sheet (unaudited) 1 September 30, 1996 and December 31, 1995 Consolidated Statements of Operations (unaudited) 2 Three and nine months ended September 30, 1996 Three and nine months ended September 30, 1995 Consolidated Statements of Cash Flows (unaudited) 3 Nine months ended September 30, 1996 Nine months ended September 30, 1995 Notes to Consolidated Financial Statements (unaudited) 4 September 30, 1996 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5-12 PART II OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Changes in Securities 13 Item 3. Defaults upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 13 PART I FINANCIAL INFORMATION Item 1. Financial Statements SDNB Financial Corp. and Subsidiaries Consolidated Balance Sheets (unaudited) (In thousands) September 30, December 31, Assets 1996 1995 Cash and due from banks $ 10,659 $ 13,440 Interest bearing deposits in other banks 2,728 2,780 Investment securities held-to-maturity 14,699 7,408 Investment securities available-for-sale 23,484 27,033 Federal funds sold 26,110 24,700 Loans 103,655 92,331 Less allowance for loan losses 1,621 2,002 Net loans 102,034 90,329 Premises and equipment, net 10,638 10,975 Other real estate owned 232 181 Accrued interest receivable and other assets 1,646 1,726 Total assets $ 192,230 $ 178,572 Liabilities and Shareholders' Equity Liabilities: Deposits: Non-interest bearing $ 49,506 $ 49,505 Interest bearing 106,900 90,904 Total deposits 156,406 140,409 Securities sold under agreement to repurchase 10,525 12,934 Accrued interest payable and other liabilities 539 554 Notes payable 7,892 7,989 Total liabilities 175,362 161,886 Shareholders' equity: Common stock 20,314 20,314 Accumulated deficit (3,308) (3,587) Net unrealized holding losses on available-for-sale securities (138) (41) Total shareholders' equity 16,868 16,686 Total liabilities and shareholders' equity $ 192,230 $ 178,572 The accompanying notes are an integral part of the consolidated financial statements. SDNB Financial Corp. and Subsidiaries Consolidated Statements of Operations (unaudited) (In thousands, except amounts per share) 3 months 3 months 9 months 9 months ended ended ended ended 9/30/96 9/30/95 9/30/96 9/30/95 Interest income: Interest and fees on loans $ 2,574 $ 2,609 $ 7,264 $ 7,752 Interest on federal funds sold 361 200 950 573 Interest on investments 545 400 1,524 1,205 Total interest income 3,480 3,209 9,738 9,530 Interest expense: Interest on deposits 950 756 2,633 2,117 Interest on repurchase agreements 59 52 145 193 Interest on notes payable 0 9 0 33 Total interest expense 1,009 817 2,778 2,343 Net interest income 2,471 2,392 6,960 7,187 Provision for loan losses 100 (200) 0 250 Net interest income after provision for loan losses 2,371 2,592 6,960 6,937 Other operating income: Security gains, net 3 0 3 11 Building income 183 245 618 709 Other non-interest income 268 207 764 593 Total other operating income 454 452 1,385 1,313 Other operating expenses: Salaries and employee benefits 1,209 1,033 3,492 2,978 Occupancy 155 120 450 357 Professional fees 178 232 407 564 Building operating expenses 557 622 1,612 1,841 Other non-interest expenses 655 1,001 2,094 2,344 Total other operating expenses 2,754 3,008 8,055 8,084 Income before income tax 71 36 290 166 Income tax 3 2 11 8 Net income $ 68 $ 34 $ 279 $ 158 Net income per share $ 0.02 $ 0.02 $ 0.09 $ 0.08 The accompanying notes are an integral part of the consolidated financial statements. SDNB Financial Corp. and Subsidiaries Consolidated Statements of Cash Flows (unaudited) (In thousands) Nine months ended September 30, 1996 1995 OPERATING ACTIVITIES: Net income $ 279 $ 158 Adjustments to reconcile net income to net cash provided (used) by operating activities: Provision for loan losses 0 250 Provision for depreciation and amortization 685 930 Amortization of investment security discounts (576) (85) Other expense not utilizing cash 102 76 Unearned loan fees 5 148 Taxes refundable (4) (8) Interest receivable and other assets (76) (515) Interest payable and other liabilities (485) 412 Total adjustments (349) 1,208 Net cash provided (used) by operating activities (70) 1,366 INVESTING ACTIVITIES: Proceeds from maturities of held-to-maturity securties 2,000 6,504 Proceeds from called held-to-maturity securities 2,243 395 Proceeds from maturities of available-for-sale 28,750 5,990 Proceeds from called available-for-sale securities 1,000 0 Proceeds from sale of available-for-sale securities 375 3,024 Purchases of held-to-maturity securities (11,353) (2,000) Purchases of available-for-sale securities (25,803) (11,466) Net change in gross loans (12,802) 4,503 Proceeds from OREO properties 1,041 556 Proceeds from sale of premises and equipment 35 25 Purchases of premises and equipment (360) (306) Net cash provided (used) by investing activities (14,874) 7,225 FINANCING ACTIVITIES: Net change in deposits 15,997 (3,628) Net change in short-term borrowings (2,409) (5,630) Payments of long-term borrowings (97) 0 Proceeds from issuance of common stock 0 5,553 Proceeds from exercise of stock options 25 0 Payments for costs associated with issuance of common stock (25) (922) Net cash provided (used) by financing activities 13,491 (4,627) Change in cash and cash equivalents (1,453) 3,964 Cash and cash equivalents at beginning of period 40,920 37,317 Cash and cash equivalents at end of period $39,467 $41,281 For the purpose of the statement of cash flows, the Company considers cash and cash equivalents to be as follows at September 30, 1996 1995 Cash and due from banks $10,629 $14,305 Interest-bearing deposits in other banks 2,728 2,976 Federal funds sold 26,110 24,000 Totals $39,467 $41,281 Supplemental cash flow information for the period ended September 30, 1996 1995 CASH PAID FOR: Interest $3,715 $3,050 Income Taxes $16 $0 Non-cash items: transfer of loans to OREO $1,034 $553 The accompanying notes are an integral part of the consolidated financial statements. SDNB Financial Corp. and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) September 30, 1996 1. In the opinion of Management, the accompanying unaudited interim consolidated financial statements contain all adjustments (which are of a normal recurring nature) necessary to present fairly the financial position as of September 30, 1996, the results of operations for the three and nine months ended September 30, 1996 and 1995, and cash flows for the nine months ended September 30, 1996 and 1995. Certain prior year amounts have been reclassified to conform with the current year presentation. 2. Earnings per share for the three and nine months ended September 30, 1996 and 1995 are based on the following weighted average shares outstanding: Three months ended : September 30, 1996 3,077,528 September 30, 1995 2,092,219 Nine months ended: September 30, 1996 3,075,092 September 30, 1995 1,902,526 3. At September 30, 1996, approximately $15.3 million in securities were pledged to secure deposits and other liabilities. SDNB FINANCIAL CORP. Form 10-Q PART I - FINANCIAL INFORMATION (continued) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW For the past several years, SDNB Financial Corp. (the "Company") and San Diego National Bank (the "Bank") have been adversely affected by a number of factors emanating primarily from the condition of the economy in San Diego. The first nine months of 1996 has seen a cessation of the impact of most of those factors. Loan loss provisions have been exceptionally high over the last several years but a substantial reduction in the amount of classified loans has allowed for a minimal provision in the third quarter of 1996, which offset the recovery of a portion of the previously committed loan loss provisions during the quarter ended March 31, 1996, resulting in no net provision for the nine months ended September 30, 1996. The level of OREO property peaked in 1991 and has been generally declining since that time, therefore reducing losses and expenses in connection therewith. Additionally, the Company had incurred substantial expense in connection with legal fees and the provision for additional costs from the Pioneer Mortgage litigation which was settled late in 1995. The Bank had also suffered from a reduction in the level of the loan portfolio resulting from continuing low loan demand; however, the level of the loan portfolio has increased significantly between December 31, 1995 and September 30, 1996. Discussion of the individual segments of the Company's operations is contained in subsequent sections of this report. LIQUIDITY AND ASSETS/LIABILITY MANAGEMENT By the nature of its commercial/wholesale focus, the Bank has moderate interest-rate risk exposure in a declining-rate environment. This phenomenon can be seen in the "Static Gap Summary" (Table 1). At September 30, 1996, approximately 69% of the Bank's earning assets adjust immediately to changes in interest rates. Within three months, this increases to 78% of earning assets. Consequently, the Bank utilizes deposit liabilities that also adjust relatively quickly. Within the same three-month period, approximately 93% of the Bank's interest- bearing liabilities (mostly deposits) adjust to current rates. The Bank's cumulative gap position at the three month repricing interval has decreased approximately $12.6 million, or 35 percent, from $35.8 million at December 31, 1995 to $23.1 million at September 30, 1996. This change is attributable primarily to a net increase in liabilities of $12.8 million (increase in deposits of $15.2 million less a decrease in securities sold under agreements to repurchase of $2.4 million) offset by a net increase in assets of $0.1 million (an increase in net loans of $8.7 million, in certificates of deposit of $1.9 million and in federal funds purchased of $1.4 million, offset by a decrease in investment securities of $11.8 million.) During February 1995, the Bank entered into an interest rate swap to hedge against the effects on income of falling interest rates. If the prime interest rate falls below eight percent during the life of the contract, the Bank will receive payments amounting to the difference between the then existing prime rate and eight percent on the contract amount of $20 million. These payments continue while the prime interest rate stays below eight percent or until expiration of the contract, February 3, 1998. This contract helps to stabilize the Bank's net interest spread which, absent any hedge, decreases during periods of rapidly falling interest rates. To date, there have been no payments received under this contract. The Bank's liquidity needs are projected by comparing anticipated funding needs against current resources and anticipated deposit growth. Any current surplus of funds is invested to maximize income while maintaining safety and providing for future liquidity. During the nine months ended September 30, 1996, cash and cash equivalents decreased $1.5 million. Approximately $14.9 million cash was used by investing activities. The two major components were net purchases of $2.8 million of securities ($37.2 million of purchases offset by maturities of $34.4 million) and increase in gross loans of $12.8 million. Financing activities provided $13.5 million, (increase in deposits of $16 million offset by a decrease in repurchase agreements of $2.4 million). Liquidity is provided on a daily basis by federal funds sold and on a longer-term basis by the structuring of the Bank's investment portfolio to provide a steady stream of maturing issues. Additionally, the Bank may raise additional funds from time to time through money desk operations or via the sale of loans to another institution. The Bank has never purchased high-yield securities or participated in highly-leveraged transactions. CAPITAL RESOURCES The Comptroller of the Currency ("Comptroller") has established a framework for supervisory requirements of national banks based upon capital ratios. Based upon this framework, a bank's capitalization is defined as well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized or critically capitalized. Under the Comptroller's framework, a bank is well capitalized if its ratios are greater than or equal to 6% and 10% for tier 1 capital and risk weighted capital, respectively. The Federal Reserve Board ("Reserve Board"), as the regulatory body of the Company, has capital ratio requirements. Under the Reserve Board's Capital Adequacy Guidelines, all bank holding companies should meet a minimum ratio of qualifying total capital to weighted-risk assets of 8 percent, of which at least 4.0 percentage points should be in the form of tier 1 capital. The Reserve Board and the Comptroller have also imposed a leverage standard to supplement their risk based ratios. This leverage standard focuses on a banking institution's ratio of Tier 1 capital to average total assets adjusted for goodwill and other certain items. Under these guidelines, banking institutions that meet certain criteria, including excellent asset quality, high liquidity, low interest rate exposure and good earnings, and have received the highest regulatory rating must maintain a ratio of Tier 1 capital to total assets of at least 3%. Institutions not meeting this criteria, as well as institutions with supervisory, financial or operational weaknesses, along with those experiencing or anticipating significant growth are expected to maintain a Tier 1 capital to total assets ratio equal to at least 4% to 5%. As reflected in the following table, the capital and leverage ratios of the Company as of September 30, 1996 and December 31, 1995 exceeded the fully phased-in regulatory risk-based capital adequacy guidelines and the leverage standard. As also reflected, at both dates the Bank exceeded the capital and leverage ratios for a "well capitalized" institution. Capital Components and Ratios (dollars in thousands) September 30, 1996 December 31,1995 Company Bank Company Bank Capital Components Tier 1 Capital $17,005 $14,412 $16,726 $13,656 Total Capital 18,626 15,912 18,218 15,017 Risk-weighted assets and off-balance sheet instruments 130,002 119,904 117,967 107,310 Regulatory Capital Tier 1 risk-based: Actual 13.08% 12.02% 14.18% 12.73% Required 4.00 6.00 4.00 6.00 Excess 9.08% 6.02% 10.18% 6.73% Total risk-based: Actual 14.33% 13.27% 15.44% 13.99% Required 8.00 10.00 8.00 10.00 Excess 6.33% 3.27% 7.44% 3.99% Leverage: Actual. 9.11% 8.06% 9.37% 8.43% Required 5.00 5.00 5.00 5.00 Excess 4.11% 3.06% 4.37% 3.43% Funds available for the payment of dividends by the Company would be obtained from the Bank. There are legal limitations on the ability of the Bank to provide funds for the Company. Under federal banking law, dividends declared by the Bank in any calendar year may not, without the approval of the Comptroller of the Currency, exceed its net income, as defined, for that year combined with its retained net income for the preceding two years. At September 30, 1996, the Bank had available for dividends to the Company approximately $2,120,000 without approval of the Comptroller. Federal banking law also restricts the Bank from extending credit to the Company in excess of 10% of capital stock and surplus, as defined, of the Bank. Any such extensions of credit are subject to strict collateral requirements. The Company and the Federal Reserve Bank of San Francisco ("Reserve Bank") entered into an agreement on November 20, 1992, pursuant to which the Company was required to obtain the approval of the Reserve Bank prior to the declaration of any cash dividends. Such agreement and requirement were terminated by the Reserve Bank in September, 1996. The Agreement and Plan of Merger between the Company and FBOP Corporation (see Part II Item 5), however, precludes declaration of any dividends prior to the closing of the transaction. INVESTMENT SECURITIES During the first nine months of 1996, the gross unrealized losses in the available-for-sale category increased from $41,000 to $138,000 and in the held-to-maturity category from $75,000 to $117,000. Management continues to believe that there is sufficient liquidity and available sources of liquidity to allow all such securities (which are fully guaranteed by United States Government instrumentalities as to principal) to mature and thus avoid realization of any material amount of the presently unrealized losses. NET INTEREST INCOME/NET INTEREST MARGIN The following is a comparison of the net interest spread between the first nine months of 1996 and the same period of 1995. 1996 1995 Yield on average earning assets (taxable equivalent) 8.24% 9.37% Cost of funds 2.35% 2.29% Net interest spread 5.89% 7.08% In addition to interest rates, changes in the volumes of assets and liabilities also affect net interest income. The volume/rate variance analysis (Table 2) shows the change in net interest income that is attributable to changes in volume versus changes in rates. As reflected in Table 2, the comparison of net interest income between the first nine months of 1996 and the similar period of 1995 was impacted by the significant decrease in the prime interest rate (8.28% average in 1996 vs. 8.86% average in 1995) coupled with a shift in an increased proportion of lower earning investments as opposed to higher earning loans. LOANS AND ALLOWANCE AND PROVISION FOR LOAN LOSSES A summary of the activity in the allowance for loan loss is as follows: (In thousands) Nine months ended September 30, 1996 1995 Balance at beginning of period $2,002 $2,148 Provision charged to operating expenses 0 250 Loans charged off (406) (600) Recoveries 25 335 Balance at end of period $1,621 $2,133 Management employs a 'migration analysis method' to establish the required amount of loan loss allowance. This process tracks realized loan losses back through the prior two years to estimate loss exposure on the classified and unclassified loan portfolios. Additionally, loss experience is tracked in pools of loans with similar characteristics to estimate the loss exposure unique to various loan types. The measured loss exposure is then applied to the current loan portfolio and further adjusted for 'qualitative factors'. This method of establishing loan loss reserves complies with the policies of the Office of the Comptroller of the Currency as reflected in Banking Circular 201, revised, dated February 20, 1992, and in Banking Bulletin 93-60, dated December 21, 1993. The Company began testing this new method during 1992 and comparing its results to results reached by the previously existing procedures employed by the Company. The test proved that the two methods were comparable, and the Company adopted the new migration analysis method during 1993. Accordingly, the Company believes its method for establishing the loan loss allowance is sound. But no method, however valid, can consistently predict future events with complete accuracy. In recent years, several factors used by the Bank to establish loan loss allowances have been subject to considerable volatility, and this in turn has affected the volatility of nonperforming loans, charge-offs, and the coverage ratio. In addition, the Bank's method of reporting, particularly its conservative listing of loans as nonperforming, is not always an accurate indicator of actual future losses. These issues are explained in greater detail below. The economy in San Diego had suffered a sharp downturn in past years, particularly in the real estate market. The Bank is a community bank with a relatively small loan portfolio comprised of mostly commercial/real estate loans that tend to be individually larger in amount than loans made by retail banks. As a result of these and other factors, the Bank can experience large swings in nonperforming loans, charge-offs, and the coverage ratio when one or a few loans are transferred from one category to another. These factors are not reasons for changing a valid method of determining loan loss allowances and are not always accurate predictors of losses, but they do have short-term effect on those allowances and related reported figures. The volatility of "non-performing" loans is illustrated in the following chart: ASSETS REPORTED AS NONPERFORMING (In thousands) At At At September 30, December 31, September 30, 1996 1995 1995 CURRENT AND NONCURRENT Non-accrual loans $4,367 $6,969 $3,720 Restructured loans (still accruing) 2,076 1,364 1,370 Loans 90 days past due 1,232 93 981 7,675 8,426 6,071 Other real estate owned 232 181 181 Total $ 7,907 $8,607 $6,252 NONCURRENT Non-accrual loans $3,848 $3,160 $467 Restructured loans (still accruing) 0 0 0 Loans 90 days past due 1,232 93 981 5,080 3,253 1,448 Other real estate owned 232 181 181 Total $5,312 $3,434 $1,629 Loans reported as nonperforming but which are current, as a percentage of total loans reported as nonperforming 33% 61% 76% OTHER OPERATING INCOME Building income declined in 1996 due to renegotiation of some tenant leases during 1995 and temporary vacancies in 1996. Virtually all vacant space has been rerented by October, 1996. Other non-interest income increased in 1996 when bank service charges increased as a result of lower earnings credit allowed on customer account balances and by fees generated by the Bank's new International Department. OTHER OPERATING EXPENSES Salaries and employee benefits and occupancy expense increased between 1995 and 1996 primarily because of the opening of the Bank's South Bay office and International Department late in 1995. Professional fees and other non-interest expenses declined in 1996 because both three and nine month periods of 1995 include attorneys fees and settlement costs in connection with litigation against the Bank. Building operating expenses declined in 1996 largely due to refinancing of the building late in 1995 which reduced interest paid to non-consolidated creditors. SUBSIDIARY DATA San Diego National Bank The Bank earned $281,000 and $757,000 for the three and nine months ended September 30, 1996 respectively, compared to $233,000 and $784,000, respectively, for the same periods of 1995. The return on average assets (ROA) for the nine month periods was .60% and .70%, respectively. The return on equity (ROE) for the six month periods was 7.23% and 8.59% respectively. The reasons for the change in Bank earnings have been enumerated on the preceding pages. San Diego National Bank Building Joint Venture Three months ended Nine months ended September 30 September 30 1996 1995 1996 1995 Pre-consolidation gross building revenues $458,000 $497,000 $1,446,000 $1,447,000 Pre-consolidation, pre-tax loss 237,000 194,000 573,000 572,000 Depreciation and amortization expense 131,000 151,000 407,000 437,000 Table 1 San Diego National Bank Static Gap Summary September 30, 1996 (In thousands) Immediately Non-rate Adjustable 1 Day 3 6 Sensitive Or 1 Day Through Through Through And Over Maturity 3 Months 6 Months 12 Months 12 Months Total Loans 90,716 2,486 2,662 2,688 5,103 103,655 Investment securities - 10,744 8,389 11,219 7,719 38,071 Certificates of deposit in other banks - 1,881 399 50 - 2,330 Federal funds sold 26,110 - - - - 26,110 Total interest earning assets 116,826 15,111 11,450 13,957 12,822 170,166 Non-interest earning assets - - - - 11,768 11,768 Total assets 116,826 15,111 11,450 13,957 24,590 181,934 Deposits: Savings, NOW accounts and money markets 74,305 - - - - 74,305 Time deposits - 23,972 4,858 3,450 509 32,789 Total deposits 74,305 23,972 4,858 3,450 509 107,094 Securities sold under agreement to repurchase 10,525 - - - - 10,525 Total interest bearing liabilities 84,830 23,972 4,858 3,450 509 117,619 Non-interest bearing liabilities - - - - 50,040 50,040 Shareholders' equity - - - - 14,275 14,275 Total liabilities and shareholders' equity 84,830 23,972 4,858 3,450 64,824 181,934 Interest rate sensitivity gap 31,996 (8,861) 6,592 10,507 (40,234) Cumulative interest rate sensitivity gap 31,996 23,135 29,727 40,234 -
Table 2 SDNB Financial Corp. Volume/Rate Variance Analysis Nine months ended September 30, 1996 and 1995 (In thousands) 1996 compared to 1995 Volume Rate Total Increase(decrease) in interest on earning assets: Commercial loans $ 75 $ (282) $ (207) Real estate loans (55) (333) (388) Installment loans 117 (10) 107 Ready Money 0 0 0 Total loans 137 (625) (488) U.S. Treasury securities 437 6 443 Securities of government agencies (105) 42 (63) State and political obligations (66) (51) (117) Other securities 12 (5) 7 Total investment securities 278 (8) 270 Interest-bearing deposits in other banks 25 (14) 11 Federal funds sold 457 (80) 377 Total interest income change 897 (727) 170 Increase(decrease) in interest paid on liabilities: Savings accounts (17) 0 (17) NOW accounts (7) (24) (31) Super NOW accounts 2 (8) (6) Money market accounts (71) (76) (147) Executive money market accounts 224 (6) 218 Total savings deposits 131 (114) 17 Time deposits under $100,000 266 20 286 Time deposits of $100,000 or above 179 34 213 Total time deposits 445 54 499 Federal funds purchased and securities sold under agreement to repurchase (46) (2) (48) Short-term debt (84) (84) (168) Long-term debt (146) 136 (10) Total interest expense change 300 (10) 290 Net change in net interest income $ 597 $ (717) $ (120) 1) Interest income on state and political obligations has been adjusted for tax effect at current rates. Interest expense on short- and long-term debt is included in Building Operating Expenses in the Consolidated Statement of Earnings. 2) Change in interest income or expense can be attributed to (a) changes in volume (change in volume times old rate), (b) changes in rates (change in rate times old volume), and (c) changes in rate/volume (change in rate times the change in volume). The rate/volume variances are allocated proportionally between the rate and volume variances based on their absolute values. PART II - OTHER INFORMATION ITEM 1 Legal Proceedings None ITEM 2 Changes in Securities None ITEM 3 Defaults Upon Senior Securities None ITEM 4 Submission of Matters to a Vote of Security Holders None ITEM 5 Other Information On July 15, 1996, SDNB Financial Corp. announced it had entered into an Agreement and Plan of Merger with FBOP Acquisition Company and FBOP Corporation. Pursuant to the terms of that Agreement, which is subject to shareholder and regulatory approval, shareholders of the Company will receive cash for their shares and the Company would cease to exist. ITEM 6 Exhibits and Reports on Form 8-K A. Exhibits (listed by number corresponding to the Exhibit Table of Item 601 of Regulation S-K) 27 Financial Data Schedule (submitted only in electronic format and omitted from paper copies pursuant to Paragraph (c) (v) of Regulation S-K (17 CFR 220.601(c) (v)) and Note 2 to Paragraph (c) (1) (vi) of Regulation S-K (17 CFR 229.601(c) (1) (vi)). B. Reports on Form 8-K A report on Form 8-K was filed on July 22, 1996 describing the Agreement and Plan of merger disclosed in Item 5, above. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: November 12, 1996 SDNB FINANCIAL CORP. By:/S/ HOWARD W. BROTMAN Howard W. Brotman, duly authorized officer and Chief Financial Officer EX-27 2
9 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM-10Q FOR THE PERIOD ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 3-MOS 9-MOS DEC-31-1996 DEC-31-1996 SEP-30-1996 SEP-30-1996 10659 10659 2728 2728 26110 26110 0 0 23484 23484 14699 14699 14583 14583 103655 103655 1621 1621 192230 192230 156406 156406 10525 10525 539 539 7892 7892 0 0 0 0 20314 20314 (3308) (3308) 192230 192230 2574 7264 545 1524 361 950 3480 9738 950 2633 1009 2778 2471 6960 100 0 3 3 2754 8055 71 290 71 290 0 0 0 0 68 279 0.02 0.09 0.02 0.09 5.39 5.39 4367 4367 1232 1232 2076 2076 0 0 1519 2002 6 406 8 25 1621 1621 1138 1138 0 0 482 482
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