-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GL5UoqRJw2fXNdw47v0u6vWK/UEK9S0qcrqXVSKg8pkF4QvgcFOdOdQRyhQSZR4W sNN+T2Br7Ea3wstXrob3SQ== 0000702700-95-000004.txt : 19950814 0000702700-95-000004.hdr.sgml : 19950814 ACCESSION NUMBER: 0000702700-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SARATOGA BANCORP CENTRAL INDEX KEY: 0000702700 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 942817587 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-77519-LA FILM NUMBER: 95561422 BUSINESS ADDRESS: STREET 1: 12000 SARATOGA SUNNYVALE RD CITY: SARATOGA STATE: CA ZIP: 95070 BUSINESS PHONE: 4089731111 10-Q 1 10-Q FOR PERIOD ENDED 06/30/95 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 June 30, 1995 or Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to __________ Commission file number 2-77519-LA SARATOGA BANCORP (Exact name of registrant as specified in its charter) California 94-2817587 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 12000 Saratoga-Sunnyvale Road Saratoga, California 95070 (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (408) 973-1111 NONE (Former name, former address and former fiscal year, if changed since last report) 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. CLASS SHARES OUTSTANDING AT AUGUST 4, 1995 Common Stock 1,030,972 Page 1 of 21 pages PART I - FINANCIAL INFORMATION Item 1. Consolidated Condensed Financial Statements SARATOGA BANCORP AND SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEETS
June 30, December 31, 1995 1994* (Unaudited) ASSETS *Derived from the December 31, 1994 audited balance sheet included in the Company's 1994 Annual Report on Form 10-K. See notes to consolidated condensed financial statements.
SARATOGA BANCORP AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 INTEREST INCOME: Loans $ 944,000 $837,000 $1,851,000 $1,712,000 Investment securities 611,000 386,000 1,242,000 794,000 Federal funds sold 48,000 82,000 81,000 115,000 Total interest income 1,603,000 1,305,000 3,174,000 2,621,000 INTEREST EXPENSE: Deposits 608,000 464,000 1,182,000 913,000 Other 79,000 2,000 134,000 3,000 Total interest expense 687,000 466,000 1,316,000 916,000 NET INTEREST INCOME 916,000 839,000 1,858,000 1,705,000 Provision for credit losses - (196,000) - (396,000) Net interest income after provision for credit losses 916,000 1,035,000 1,858,000 2,101,000 Other income 222,000 101,000 323,000 204,000 Other expense 803,000 906,000 1,523,000 1,795,000 INCOME BEFORE INCOME TAXES 335,000 230,000 658,000 510,000 Provision for income taxes 134,000 79,000 263,000 175,000 NET INCOME $201,000 $151,000 $395,000 $335,000 ========== ========== ========== ========== NET INCOME PER COMMON AND EQUIVALENT SHARE $0.19 $0.14 $0.37 $0.29 ========== ========== ========== ========== See notes to consolidated condensed financial statements.
SARATOGA BANCORP AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, 1995 1994 OPERATIONS: Net income $395,000 $335,000 Adjustments to reconcile net income to net cash provided by (used by)operating activities: Provision(credit) for credit losses - (396,000) Depreciation and amortization 137,000 71,000 Provision for OREO losses 35,000 260,000 Other, net 378,000 (925,000) Net cash provided by (used in)operating activities 945,000 (655,000) INVESTING ACTIVITIES: Proceeds from sale of investments available for sale 2,624,000 2,161,000 Proceeds from maturities of investments held to maturity 279,000 155,000 Purchase of investment securities (387,000) (1,000,000) Proceeds from maturities of longer term deposits in other banks - 397,000 Net (increase) decrease in loans (2,187,000) 1,635,000 Purchases of premises and equipment (26,000) (6,000) Proceeds from sale of OREO - 529,000 Increase in other assets (238,000) - Net cash provided by investing activities 65,000 3,871,000 FINANCING ACTIVITIES: Net (decrease) increase in deposits (3,593,000) 4,295,000 Repurchase of common stock - (670,000) Cash dividend paid (52,000) - Increase in other borrowings 2,251,000 - Decrease in federal funds purchased (1,500,000) (2,000,000) Net cash provided by financing activities (2,894,000) 1,625,000 NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS (1,884,000) 4,841,000 Cash and equivalents at beginning of period 10,264,000 11,292,000 Cash and equivalents at end of period $8,380,000 $16,133,000 =========== =========== See notes to consolidated condensed financial statements.
SARATOGA BANCORP AND SUBSIDIARY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. The unaudited consolidated condensed financial statements reflect all adjustments (which include only normal recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the periods presented. The results for the periods are not necessarily indicative of the results to be expected for the full fiscal year. 2. Per share amounts are calculated using the weighted average shares outstanding plus the dilutive effect of shares issuable under stock options. The number of shares used to compute income per share was 1,058,326 shares and 1,058,695 shares for the three and six month periods ended June 30, 1995 (1,111,544 shares and 1,138,544 shares for the comparable periods in 1994). 3. For the six months ended June 30, 1995 and 1994, cash paid for taxes was $75,000 and $525,000, respectively. For the six months ended June 30, 1995 and 1994, cash paid for interest was $1,144,000 and $900,000, respectively. 4. In May, 1993, the FASB issued SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 became effective in the first quarter of 1994 and requires the Company to classify debt and equity securities into one of three categories at acquisition: held-to-maturity, trading or available-for-sale. Investments in debt securities shall be classified as held-to-maturity and measured at amortized cost only if the Company has the positive intent and ability to hold such securities to maturity. All other investments in debt and equity securities that have readily determinable fair values shall be classified either as trading securities, which are bought and held principally for the purpose of selling them in the near term and are carried at market value with a corresponding recognition of unrealized holding gain or loss in results of operations, or as available-for-sale securities, which are all other securities and are carried at market value with a corresponding recognition of the unrealized holding gain or loss as a net amount in a separate component of shareholders' equity until realized. 5. On January 31, 1995, the Company adopted SFAS Statement No. 114, "Accounting by Creditors for Impairment of a Loan." This standard was further modified by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan----Income Recognition and Disclosures." SFAS No. 114 and 118 require the Company to measure impaired loans based upon the present value of expected future cash flows discounted at the loan's effective interest rate, except as a practical expedient, a creditor may measure impairment based on a loan's observable market price, or the fair value of the collateral if the loan is collateral-dependent. A loans is impaired when, based upon current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. Applying the provisions of these statements did not have a material effect on the Company's financial position or results of operations. SARATOGA BANCORP AND SUBSIDIARY Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Summary of financial results - ---------------------------- At June 30, 1995, total assets were $85,769,000, a 2.0% decrease from $87,536,000 at December 31, 1994. Net loans increased $1,431,000 (4.4%) from $32,803,000 at December 31, 1994 to $34,234,000 at June 30, 1995. The increase was primarily in the longer term real estate loan portfolio. Total deposits decreased $3,593,000 (4.9%) from $73,872,000 at year end 1994 to $70,279,000 at June 30, 1995. Net income for the second quarter of 1995 was $201,000 or $.19 per share compared to $151,000 ($.14 per share) for the comparable period in 1994. Net income for the first six months of 1995 was $395,000 or $.37 per share compared to $335,000 or $.29 per share for the comparable period in 1994. The increase in income resulted primarily from an increase in the volume and yield of earning assets and a reduction in provisions for OREO losses, offset in part by an increase in interest expense due to the increased volume of interest-bearing liabilities and a credit provision to the reserve for credit losses in 1994. RESULTS OF OPERATIONS - --------------------- SECOND QUARTER OF 1995 AND 1994 - ------------------------------- An analysis of the results of operations of the Company for the second quarter of 1995 compared to the second quarter of 1994 is presented below: Net interest income - ------------------- Net interest income, the difference between interest earned on loans and investments and interest paid on deposits, is the principal component of the Bank's earnings. The components of net interest income are as follows:
Three months ended June 30, 1995 1994 Average Average Average Average Balance Interest Yield(1) Balance Interest Yield(1) (In thousands, except percentages) Assets: Earning assets: Loans (2) $33,776 $ 944 11.2% $34,499 $ 837 9.7% Investment securities 38,450 611 6.4% 28,814 394 5.5% Federal funds sold 3,296 48 5.8% 7,670 74 3.9% Total interest earning assets 75,522 1,603 8.5% 70,983 1,305 7.4% Cash and due from banks 3,328 4,707 Other assets (3) 5,366 3,526 $84,216 $79,216 ======= ======= Liabilities and Shareholders' Equity: Interest-bearing liabilities: Demand deposits $27,364 202 3.0% $27,697 181 2.6% Time deposits 27,240 406 6.0% 23,835 283 4.7% Other borrowings 4,463 79 7.1% 176 2 4.5% Total interest- bearing liabilities 59,067 687 4.7% 51,708 466 3.6% Demand deposits 14,184 16,375 Other liabilities 946 804 Total liabilities 74,197 68,887 Shareholders' equity 10,019 10,329 $84,216 $79,216 ======= ======= Net interest income and margin $916 4.9% $839 4.7% ====== ====== (1) Annualized. (2) Loan interest income included loan fee income of $78,000 and $93,000 for the quarters ended June 30, 1995 and 1994, respectively. (3) Net of the average allowance for loan losses of $773,000 and $1,079,000 and deferred loan fees of $233,000 and $224,000 for the quarters ended June 30, 1995 and 1994, respectively. Provision for credit losses - --------------------------- The Bank maintains an allowance for possible credit losses which is based, in part, on the Bank's historical loss experience, the impact of forecasted economic conditions within the Bank's market area, and, as applicable, the State of California, the value of the underlying collateral, loan performance and inherent risks in the loan portfolio. The allowance is reduced by charge-offs and increased by provisions for credit losses charged to operating expense and recoveries of previously charged-off loans. During the second quarter of 1995 the Bank did not provide any additional funds to the provision for credit losses. During the second quarter of 1994 the Bank reversed $146,000 from the allowance for credit losses. There were $31,000 in loans charged-off and $8,000 in recoveries in the second quarter of 1995, as compared to $4,000 in loans charged-off and $34,000 in recoveries in the second quarter of 1994. At June 30, 1995, the allowance for credit losses was $765,000 or 2.2% of total loans, compared to $738,000 or 2.2% at December 31, 1994. There were no nonaccrual loans at June 30, 1995 ($707,000 at December 31, 1994). At June 30, 1995 and December 31, 1994, there were no loans past due 90 days or more as to principal or interest and still accruing interest. There was one loan at June 30, 1995 in the amount of $204,000 which was a troubled debt restructuring as defined in Statement of Financial Accounting Standards No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructuring." At June 30, 1995, there were six potential problem loans having a combined principal balance of $971,000 ($1,030,000 at December 31, 1994). Potential problem loans are loans which are generally current as to principal and interest but have been identified by the Company as potential problem loans due either to a decrease in the underlying value of the property securing the credit or some other deterioration in the creditworthiness of the borrower. All of the six loans identified as potential problem loans are secured by real estate and personal property. Other Real Estate Owned totalled $2,404,000 at June 30, 1995 ($1,717,000 at December 31, 1994). Other Real Estate Owned consisted of a single family residence, a commercial building and a 12 lot subdivision all with appraised values in excess of the Bank's carrying values. The Company does not intend to hold the properties but will actively market the properties as market conditions improve. Nonperforming loans and other real estate owned are summarized below:
June 30, 1995 December 31, 1994 Nonperforming loans: Past due 90 days or more $ - $ - Nonaccrual - 707,000 Total - 707,000 Other real estate owned 2,404,000 1,717,000 Total nonperforming loans and other real estate owned $2,404,000 $2,424,000 ========== ==========
Management is of the opinion that the allowance for credit losses is maintained at an adequate level for known and currently anticipated future risks inherent in the loan portfolio. However, the California economy has continued to demonstrate signs of weakness since the third quarter of 1990 and into 1995 and the period covered by this report, and the Bank's loan portfolio, which includes approximately $21,000,000 in real estate loans representing approximately 60% of the portfolio, could be adversely affected if California economic conditions and the real estate market in the Bank's market area continue to weaken. The effect of such events, although uncertain at this time, has resulted, and could continue to result in an increase in the level of nonperforming loans and OREO and the level of the allowance for loan losses which could adversely affect the Company's and the Bank's future growth and profitability. Noninterest income - ------------------ Other income consists of service charges on deposit accounts, income from assets acquired for lease and fees for other miscellaneous services. Total other income increased from $101,000 in the second quarter of 1994 to $222,000 in the second quarter of 1994. This increase is primarily attributable to a gain on sale of securities of $32,000 and rental income on OREO property of $90,000. Noninterest expense - ------------------- Other expenses decreased from $906,000 in the second quarter of 1994 to $804,000 in the second quarter of 1995. The decrease is primarily attributable to a $161,000 loss on sale of securities realized in the second quarter of 1994. As a percentage of average earning assets, other expenses for the second quarter, on an annualized basis, decreased from 4.8% in 1994 to 4.3% in 1995. The FDIC adopted a regulation pursuant to Section 302 (a) of the Federal Deposit Insurance Corporation Improvement Act of 1991, effective on November 2, 1993, amending its regulations on insurance assessments to, among other matters, adopt a recapitalization schedule for the Bank Insurance Fund and establish a transitional risk-based insurance system to replace the uniform assessment rate system previously applicable to insured financial institution members of the Bank Insurance Fund. The annual assessment rate for each insured institution continued at the rate of $0.23 per $100 of deposits through year end December 31, 1992. Commencing January 1, 1993, the assessment rate was based upon a risk assessment schedule with rates ranging from $0.23 to $0.31 per $100 of deposits. On June 25, 1993, the FDIC adopted a permanent risk-based insurance system without substantial modification. FDIC premiums were $39,000 or 4.9% of non-interest expense, for the second quarter of 1995, as compared to $59,000 or 6.5% for the second quarter of 1994. Based upon the risk assessment rate system and the Bank's current level of deposits, the Bank estimates that its annual non-interest assessment expense will not increase materially during 1995. The Company and the Bank cannot predict whether additional increases in assessment rates may continue as part of the recapitalization of the Bank Insurance Fund. The effect of any such increases in assessments will be to increase the noninterest expense of the Company and the Bank. SIX MONTHS ENDED JUNE 30, 1995 AND 1994 - --------------------------------------- An analysis of the results of operations of the Company for the six month period ended June 30, 1995 compared to the comparable period in 1994 is as follows: Net interest income - ------------------- Net interest income, the difference between interest earned on loans and investments and interest paid on deposits, is the principal component of the Bank's earnings. The components of net interest income are as follows:
Six months ended June 30, 1995 1994 Average Average Average Average Balance Interest Yield(1) Balance Interest Yield(1) (In thousands, except percentages) Assets: (Unaudited) Earning assets: Loans (2) $33,205 $1,851 11.1% $34,928 $1,712 9.8% Investment securities 38,604 1,242 6.4% 29,406 794 5.4% Federal funds sold 2,830 81 5.7% 6,562 115 3.5% Total interest earning assets 74,639 3,174 8.5% 70,896 2,621 7.4% Cash and due from banks 3,655 4,449 Other assets (3) 5,346 3,314 $83,640 $78,659 ======= ======= Liabilities and Shareholders' Equity: Interest-bearing liabilities: Demand deposits $28,469 426 3.0% $27,643 377 2.7% Time deposits 26,338 756 5.7% 23,364 536 4.6% Other borrowings 3 418 134 7.8% 155 3 3.9% Total interest- bearing liabilities 58,225 1,316 4.5% 51,162 916 3.6% Demand deposits 14,630 16,234 Other liabilities 852 802 Total liabilities 73,707 68,198 Shareholders' equity 9,933 10,461 $83,640 $78,659 ======= ======= Net interest income and margin $1,858 5.0% $1,705 4.8% ====== ====== (1) Annualized. (2) Loan interest income included loan fee income of $160,000 and $210,000 for the six months ended June 30 1995 and 1994, respectively. (3) Net of the average allowance for loan losses of $768,000 and $1,134,000, and deferred loan fees of $227,000 and $211,000 for the six months ended June 30, 1995 and 1994, respectively. Provision for credit losses - --------------------------- During the first six months of 1995, the Bank did not provide any additional funds to the provision for credit losses. During the first six months of 1994, the Bank reversed $346,000 from the allowance for credit losses. There were $36,000 in loans charged off and $63,000 in recoveries for the six months ending June 30, 1995, compared to $29,000 charged off and $57,000 in recoveries for the first six months of 1994. Noninterest income - ------------------ Other income consists of service charges on deposit accounts, income on assets acquired for lease and fees for other miscellaneous services. Total other income increased from $203,000 in 1994 to $323,000 in 1995. The increase is primarily attributable to a gain on sale of securities of $32,000 and rental income on OREO property of $90,000. Noninterest expense - ------------------- Other expenses have decreased from $1,795,000 in 1994 to $1,523,000 in 1995 due primarily to a $161,000 loss on sale of securities realized in 1994. As a percentage of average earning assets, other expenses, on an annualized basis, decreased from 4.9% in 1994 to 4.1% in 1995. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The Bank manages its liquidity to provide adequate funds at an acceptable cost to support borrowing requirements and deposit flows of its customers. At June 30, 1995 liquid assets as a percentage of deposits were 31% (34% at December 31, 1994). In addition to cash and due from banks, liquid assets include short-term time deposits with other banks, Federal funds sold and investment securities available for sale. The Bank has $8.9 million in Federal funds lines of credit available with correspondent banks to meet liquidity needs. Management regularly reviews general economic and financial conditions, both external and internal, and determines whether the positions taken with respect to liquidity and interest rate sensitivity continue to be appropriate. The Bank also utilizes a monthly "Gap" report which identifies rate sensitivity over the short- and long-term. The following table sets forth the distribution of repricing opportunities, based on contractual terms, of the Company's earning assets and interest-bearing liabilities at June 30, 1995, the interest rate sensitivity gap (i.e. interest rate sensitive assets less interest rate sensitive liabilities), the cumulative interest rate sensitivity gap, the interest rate sensitivity gap ratio (i.e. interest rate sensitive assets divided by interest rate sensitive liabilities) and the cumulative interest rate sensitivity gap ratio. Based on the contractual terms of its assets and liabilities, the Bank is currently liability sensitive in terms of its short-term exposure to interest rates. In other words, the Bank's liabilities reprice faster than its assets in the short-term.
DISTRIBUTION OF REPRICING OPPORTUNITIES At June 30, 1995 (Dollars in thousands)
After Three After Six After One Within Months But Months But Year But After Three Within Six Within One Within Five Months Months Year Five Years Years Total Federal funds sold $ 5,100 - - - - $ 5,100 Municipal securities - $200 - $ 2,184 $ 718 3,102 U.S. Treasury and agency securities 4,467 - $ 4,686 10,579 13,145 32,877 FRB stock - - - - 786 786 Loans 22,721 $ 1,058 1,396 7,476 2,590 35,241 Total earning assets $32,288 $ 1,258 $ 6,082 $20,239 $17,239 77,106 Interest bearing demand accounts 23,225 - - - - 23,225 Savings accounts 4,983 - - - - 4,983 Time certificates of deposit of $100,000 or more 2,446 $1,810 $2,318 $2,183 - 8,757 Other time deposits 3,776 5,966 2,725 6,448 - 18,915 Other borrowings - - 3,570 288 $393 4,251 Total interest-bearing liabilities 34,430 7,776 $ 8,613 $ 8,919 $393 60,131 Interest rate sensitivity gap $(2,142) $(6,518) $(2,531) $11,320 $16,846 $16,975 ======= ======= ======= ======= ======= ======= Cumulative interest rate sensitivity gap $(2,142) $(8,660) $(11,191) $ 129 $16,975 ======= ======= ======== ======= ======= Interest rate sensitivity gap ratio 0.94% 0.16% 0.71% 2.27% N/A Cumulative interest rate sensitivity gap ratio 0.94% 0.79% 0.78% 1.00% 1.29%
The Company and the Bank are subject to capital adequacy guidelines issued by the Board of Governors of the Federal Reserve System (the "BGFRS") and the Office of the Comptroller of the Currency ("OCC"). The Company and the Bank are required to maintain total capital equal to at least 8% of assets and commitments to extend credit, weighted by risk, of which at least 4% must consist primarily of common equity including retained earnings (Tier 1 capital) and the remainder may consist of subordinated debt, cumulative preferred stock or a limited amount of loan loss reserves. Certain assets and commitments to extend credit present less risk than others and will be assigned to lower risk-weighted categories requiring less capital allocation than the 8% total ratio. For example, cash and government securities are assigned to a 0% risk-weighted category, most home mortgage loans are assigned to a 50% risk-weighted category requiring a 4% capital allocation and commercial loans are assigned to a 100% risk-weighted category requiring an 8% capital allocation. As of June 30, 1995, the Company's total risk-based capital ratio was approximately 22.3% (approximately 21.0% for the Bank) compared to approximately 22.2% (approximately 21.6% for the Bank) at December 31, 1994. The BGFRS adopted a 3% minimum leverage ratio for banking organizations as a supplement to the risk-weighted capital guidelines. The minimum leverage ratio is intended to limit the ability of banking organizations to leverage their equity capital base by increasing assets and liabilities without increasing capital proportionately. The 3% minimum leverage ratio constitutes a minimum ratio for well-run banking organizations. Organizations experiencing or anticipating significant growth or failing to meet certain BGFRS standards will be required to maintain a minimum leverage ratio ranging from 100 to 200 basis points in excess of the 3% ratio. The following table reflects the Company's leverage, Tier 1 and total risk-based capital ratios for the quarter ended June 30, 1995 and the year ended December 31, 1994. June 30, 1995 December 31, 1994 Leverage ratio 12.2% 12.2% Tier 1 capital ratio 21.1% 20.9% Total risk-based capital ratio 22.3% 22.2% On December 19, 1991, the President signed the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). The FDICIA, among other matters, substantially revised banking regulations and established a framework for determination of capital adequacy of financial institutions. Under the FDICIA, financial institutions are placed into one of five capital adequacy catagories as follows: (1) "Well capitalized" - consisting of institutions with a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital ratio of 6% or greater and a leverage ratio of 5% or greater, and the institution is not subject to an order, written agreement, capital directive or prompt corrective action directive; (2) "Adequately capitalized" - consisting of institutions with a total risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital ratio of 4% or greater and a leverage ratio of 4% or greater, and the institution does not meet the definition of a "well capitalized" institution; (3) "Undercapitalized" - consisting of institutions with a total risk-based capital ratio less than 8%, a Tier 1 risk-based capital ratio of less than 4%, or a leverage ratio of less than 4%; (4) "Significantly undercapitalized" - consisting of institutions with a total risk-based capital ratio of less than 6%, a Tier 1 risk-based capital ratio of less than 3%, or a leverage ratio of less than 3%; (5) "Critically undercapitalized" - consisting of an institution with a ratio of tangible equity to total assets that is equal to or less than 2%. Financial institutions classified as undercapitalized or below are subject to various limitations including, among other matters, certain supervisory actions by bank regulatory authorities and restrictions related to (i) growth of assets, (ii) payment of interest on subordinated indebtedness, (iii) payment of dividends or other capital distributions, and (iv) payment of management fees to a parent holding company. The FDICIA requires bank regulatory authorities to initiate corrective action regarding financial institutions which fail to meet minimum capital requirements. Such action may result in orders to, among other matters, augment capital and reduce total assets. Critically undercapitalized financial institutions may also be subject to appointment of a receiver or implementation of a capitalization plan. PART II - OTHER INFORMATION Item 1. Legal Proceedings Not applicable Item 2. Changes in Securities Not applicable Item 3. Defaults upon Senior Securities Not applicable Item 4. Submission of Matters to a Vote of Security Holders The shareholders of Saratoga Bancorp took the following action at the Annual Meeting of Shareholders held on May 25, 1995 at the Corporation's main office located at 12000 Saratoga-Sunnyvale Road, Saratoga, California: 1. Approved the election of management's slate of nominees for director, each of whom were incumbent directors, as follows: Votes For Withheld Victor Aboukhater 641,311 250 Neal A. Cabrinha 641,311 250 Robert G. Egan 641,311 250 William D. Kron 641,311 250 John F. Lynch, III 641,311 250 V. Ronald Mancuso 641,311 250 Richard L. Mount 639,934 1,627 Item 5. Other Information Not applicable Item 6. Exhibits and Reports on Form 8-K (a) (3) Exhibits 27.1 Financial Data Schedules (b) Reports on Form 8-K On June 13, 1995, Registrant filed a Current Report on Form 8-K, dated May 25, 1995 reporting under Item 5 (Other Events) actions taken at the Annual Meeting of Shareholders of Registrant held on May 25, 1995. See Item 4 herein for additional information. 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. SARATOGA BANCORP Mary Page Rourke Date: August 11, 1995 ------------------------- Mary Page Rourke, Treasurer (Principal Financial and Accounting Officer) INDEX TO EXHIBITS Sequentially Numbered Number Exhibits Page 27.1 Financial Data Schedule 21 EX-27 2
9 1000 6-MOS 12-MOS DEC-31-1995 DEC-31-1994 JUN-30-1995 DEC-31-1994 3280 6514 0 250 5100 3500 0 0 13468 14810 23297 23963 23314 22930 34234 32803 765 738 85769 87536 70279 73872 0 1500 874 537 4251 2000 4427 4427 0 0 0 0 5938 5200 85769 87536 1851 1712 1242 794 81 115 3174 2621 1182 913 1316 916 1858 1705 0 (396) 1 (206) 1523 1795 658 510 658 510 0 0 0 0 395 335 .38 .29 .37 .29 8.50 7.40 0 707 0 0 204 209 971 1030 738 1339 36 73 63 108 765 738 366 595 0 0 399 143
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