-----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, Htrl8GIjA1rdkEG+BVNFlSt4kNg5qxRF/LGdW3lbVNgP/l8/Qme6Z/QQLZHUbmS8 3dybgiMUs9h8/Ra7zyHGkg== 0000702700-95-000006.txt : 19951119 0000702700-95-000006.hdr.sgml : 19951119 ACCESSION NUMBER: 0000702700-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95590054 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 09/30/95 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 September 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 NOVEMBER 4, 1995 Common Stock 1,030,972 Page 1 of 20 pages PART I - FINANCIAL INFORMATION Item 1. Consolidated Condensed Financial Statements SARATOGA BANCORP AND SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEETS
September 30, December 31, 1995 1994* (Unaudited) ASSETS Cash and due from banks $3,211,000 $6,514,000 Federal funds sold 14,000,000 3,500,000 Short-term interest bearing deposits in other banks - 250,000 Total cash and equivalents 17,211,000 10,264,000 Investments available for sale 12,730,000 14,810,000 Investment held to maturity 22,078,000 23,963,000 Loans, net 33,909,000 32,803,000 Other real estate owned 1,735,000 1,717,000 Premises and equipment 2,030,000 2,195,000 Other assets 1,765,000 1,784,000 TOTAL ASSETS $91,458,000 $87,536,000 =========== =========== LIABILITIES Deposits: Non-interest bearing $16,530,000 $19,555,000 Interest bearing 55,601,000 54,317,000 Total deposits 72,131,000 73,872,000 Federal funds purchased - 1,500,000 Other borrowings 7,586,000 2,000,000 Accrued expenses and other liabilities 1,199,000 537,000 TOTAL LIABILITIES 80,916,000 77,909,000 SHAREHOLDERS' EQUITY Common stock, no par value; Authorized: 20,000,000 shares; Issued and outstanding: 1,030,972 shares 4,427,000 4,427,000 Retained earnings 6,497,000 6,019,000 Unrealized loss on investments available for sale (382,000) (819,000) SHAREHOLDERS' EQUITY 10,542,000 9,627,000 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $91,458,000 $87,536,000 =========== =========== *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 Nine Months Ended September 30, September 30, 1995 1994 1995 1994 INTEREST INCOME: Loans $ 950,000 $792,000 $2,801,000 $2,504,000 Investment securities 572,000 500,000 1,814,000 1,294,000 Federal funds sold 134,000 63,000 215,000 178,000 Total interest income 1,656,000 1,355,000 4,830,000 3,976,000 INTEREST EXPENSE: Deposits 640,000 485,000 1,822,000 1,398,000 Other 94,000 3,000 228,000 6,000 Total interest expense 734,000 488,000 2,050,000 1,404,000 NET INTEREST INCOME 922,000 867,000 2,780,000 2,572,000 Provision (credit) for credit losses - (75,000) - (481,000) Net interest income after provision (credit) for credit losses 922,000 942,000 2,780,000 3,053,000 Other income 182,000 102,000 505,000 306,000 Other expense 793,000 793,000 2,316,000 2,598,000 INCOME BEFORE INCOME TAXES 311,000 251,000 969,000 761,000 Provision for income taxes 125,000 86,000 388,000 261,000 NET INCOME $186,000 $165,000 $581,000 $500,000 ========== ========== ========== ========== NET INCOME PER COMMON AND EQUIVALENT SHARE $0.17 $0.15 $0.54 $0.45 ========== ========== ========== ========== See notes to consolidated condensed financial statements.
SARATOGA BANCORP AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1995 1994 OPERATIONS: Net income $581,000 $500,000 Adjustments to reconcile net income to net cash provided by (used in)operating activities: Provision(credit) for credit losses - (481,000) Depreciation and amortization 204,000 106,000 Provision for OREO losses 35,000 325,000 Other, net 693,000 (863,000) Net cash provided by (used in)operating activities 1,513,000 (413,000) INVESTING ACTIVITIES: Proceeds from sale of investments available for sale 2,624,000 2,161,000 Proceeds from maturities of investments held to maturity 4,537,000 396,000 Purchase of investment securities (2,639,000) (9,302,000) Proceeds from maturities of longer term deposits in other banks - 694,000 Net (increase) decrease in loans (1,788,000) 3,623,000 Purchases of premises and equipment (39,000) (46,000) Proceeds from sale of OREO 735,000 529,000 Increase in other assets (238,000) - Net cash provided by investing activities 3,192,000 (1,945,000) FINANCING ACTIVITIES: Net (decrease) increase in deposits (1,741,000) 3,691,000 Repurchase of common stock - (832,000) Cash dividend paid (103,000) - Increase in other borrowings 5,586,000 - Decrease in federal funds purchased (1,500,000) (2,000,000) Net cash provided by financing activities 2,242,000 859,000 NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 6,947,000 (1,499,000) Cash and equivalents at beginning of period 10,264,000 11,292,000 Cash and equivalents at end of period $17,211,000 $9,793,000 =========== =========== 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 1,075,230 shares and 1,060,254 shares for the three and nine month periods ended September 30, 1995 (1,098,906 shares and 1,130,791 shares for the comparable periods in 1994). 3. For the nine months ended September 30, 1995 and 1994, cash paid for taxes was $75,000 and $665,000, respectively. For the nine months ended September 30, 1995 and 1994, cash paid for interest was $1,763,000 and $1,400,000, 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 1, 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 loan 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 September 30, 1995, total assets were $91,458,000, a 4.4% increase from $87,536,000 at December 31, 1994. Net loans increased $1,106,000 (3.4%) from $32,803,000 at December 31, 1994 to $33,909,000 at September 30, 1995. The increase was primarily in the longer term real estate loan portfolio. Total deposits decreased $1,741,000 (2.4%) from $73,872,000 at year-end 1994 to $72,131,000 at September 30, 1995. Net income for the third quarter of 1995 was $186,000 or $.17 per share compared to $165,000 ($.15 per share) for the comparable period in 1994. Net income for the first nine months of 1995 was $581,000 or $.54 per share compared to $500,000 or $.45 per share for the comparable period in 1994. The increase in income resulted primarily from an increase in the volume of earning assets and a gain on sale of Other Real Estate Owned (OREO), 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 - --------------------- THIRD QUARTER OF 1995 AND 1994 - ------------------------------ An analysis of the results of operations of the Company for the third quarter of 1995 compared to the third 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 September 30, 1995 1994 Average Average Average Average Balance Interest Yield(1) Balance Interest Yield(1) (In thousands, except percentages) Assets: Earning assets: Loans (2) $34,371 $ 950 11.1% $30,703 $ 792 10.5% Investment securities 35,882 572 6.4% 27,336 500 7.3% Federal funds sold 9,336 134 5.7% 11,952 63 2.1% Total interest earning assets 79,589 1,656 8.3% 69,361 1,355 7.8% Cash and due from banks 3,584 4,726 Other assets (3) 5,232 5,360 $88,405 $79,447 ======= ======= Liabilities and Shareholders' Equity: Interest-bearing liabilities: Demand deposits $28,637 218 3.0% $29,140 207 2.8% Time deposits 27,675 422 6.1% 23,295 278 4.8% Other borrowings 5,088 94 7.4% 261 3 4.6% Total interest- bearing liabilities 61,400 734 4.8% 52,676 488 3.7% Demand deposits 15,509 16,244 Other liabilities 1,015 720 Total liabilities 77,924 69,640 Shareholders' equity 10,481 9,807 $88,405 $79,447 ======= ======= Net interest income and margin $922 4.6% $867 5.0% ====== ====== (1) Annualized. (2) Loan interest income included loan fee income of $86,000 and $109,000 for the quarters ended September 30, 1995 and 1994, respectively. (3) Includes the average allowance for credit losses of $768,000 and $950,000 and deferred loan fees of $242,000 and $224,000 for the quarters ended September 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 third quarter of 1995 the Bank did not provide any additional provision for credit losses. During the third quarter of 1994 the Bank reversed $75,000 from the allowance for credit losses. There were $9,000 in loans charged-off and $13,000 in recoveries in the third quarter of 1995, as compared to $129,000 in loans charged-off and $4,000 in recoveries in the third quarter of 1994. At September 30, 1995, the allowance for credit losses was $766,000 or 2.2% of total loans, compared to $738,000 or 2.2% at December 31, 1994. There were no nonaccrual loans at September 30, 1995 ($707,000 at December 31, 1994). At September 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 September 30, 1995 in the amount of $196,000 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 September 30, 1995, there were six potential problem loans having a combined principal balance of $1,226,000 ($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. OREO totalled $1,735,000 at September 30, 1995 ($1,717,000 at December 31, 1994). OREO consisted of a single family residence and a 12 lot subdivision 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:
September 30, 1995 December 31, 1994 Nonperforming loans: Past due 90 days or more $ - $ - Nonaccrual - 707,000 Total - 707,000 Other real estate owned 1,735,000 1,717,000 Total nonperforming loans and other real estate owned $1,735,000 $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 Bank's loan portfolio, which includes approximately $23,000,000 in real estate loans representing approximately 66% of the portfolio, could be adversely affected if California economic conditions and the real estate market in the Bank's market area were to weaken. The effect of such events, although uncertain at this time, could 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 $102,000 in the third quarter of 1994 to $182,000 in the third quarter of 1995. This increase is primarily attributable to a gain on sale of OREO of $55,000, rental income on OREO property and a gain on sale of securities of $10,000. Noninterest expense - ------------------- Other expenses were $793,000 in the third quarter of 1994 and 1995. As a percentage of average earning assets, other expenses for the third quarter, on an annualized basis, decreased from 4.6% in 1994 to 4.0% in 1995. During the third quarter of 1995 the Company received a refund of $43,000 as part of the recapitalization of the Bank Insurance Fund, as compared to assessment expense of $39,000 for the third quarter of 1995. Based upon the current risk assessment rate system, the refund and the Bank's current level of deposits, the Bank estimates that its annual non-interest assessment expense will decrease during 1995. NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 - --------------------------------------------- An analysis of the results of operations of the Company for the nine month period ended September 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:
Nine months ended September 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) $33,596 $2,801 11.1% $32,931 $2,504 10.1% Investment securities 37,689 1,814 6.4% 30,782 1,294 5.6% Federal funds sold 5,022 215 5.7% 6,304 178 3.8% Total interest earning assets 76,307 4,830 8.4% 70,017 3,976 7.6% Cash and due from banks 3,631 4,541 Other assets (3) 5,315 4,008 $85,253 $78,566 ======= ======= Liabilities and Shareholders' Equity: Interest-bearing liabilities: Demand deposits $28,534 644 3.0% $27,988 461 2.2% Time deposits 26,789 1,178 5.9% 23,333 937 5.4% Other borrowings 3,981 228 7.6% 190 6 4.2% Total interest- bearing liabilities 59,304 2,050 4.6% 51,511 1,404 3.6% Demand deposits 14,930 16,196 Other liabilities 906 688 Total liabilities 75,140 68,395 Shareholders' equity 10,113 10,171 $85,253 $78,566 ======= ======= Net interest income and margin $2,780 4.9% $2,572 4.9% ====== ====== (1) Annualized. (2) Loan interest income included loan fee income of $245,000 and $316,000 for the nine months ended September 30, 1995 and 1994, respectively. (3) Includes the average allowance for loan losses of $768,000 and $1,072,000, and deferred loan fees of $232,000 and $216,000 for the nine months ended September 30, 1995 and 1994, respectively.
Provision for credit losses - --------------------------- During the first nine months of 1995, the Bank did not provide any additional funds to the provision for credit losses. During the first nine months of 1994, the Bank reversed $481,000 from the allowance for credit losses. There were $45,000 in loans charged off and $73,000 in recoveries for the nine months ending September 30, 1995, compared to $63,000 charged off and $67,000 in recoveries for the first nine 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 $306,000 in 1994 to $505,000 in 1995. The increase is primarily attributable to a gain on sale of securities of $42,000, rental income on OREO property of $104,000 and a gain on sale of OREO of $55,000. Noninterest expense - ------------------- Other expenses have decreased from $2,598,000 in 1994 to $2,316,000 in 1995 due primarily to a decrease of $290,000 in the amount added to the reserve for OREO losses. As a percentage of average earning assets, other expenses, on an annualized basis, decreased from 4.9% in 1994 to 4.0% 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 September 30, 1995 liquid assets as a percentage of deposits were 42% (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 $8.0 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 September 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 September 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 $14,000 - - - - $14,000 Municipal securities - $200 $ 165 $ 2,613 $772 3,750 U.S. Treasury and agency securities 4,488 - 5,682 9,531 10,038 29,739 FRB stock - - - - 1,319 1,319 Loans 23,366 $ 1,013 1,003 6,935 2,590 34,907 ------- ------- ------- ------- ------- ------- Total earning assets $41,854 $ 1,213 $ 6,850 $19,079 $14,719 $83,715 ------- ------- ------- ------- ------- ------- Interest bearing demand deposits 23,368 - - - - 23,368 Savings accounts 4,442 - - - - 4,442 Time certificates of deposit of $100,000 or more 4,001 $1,591 $1,752 $2,292 - 9,636 Other time deposits 6,491 1,521 4,038 6,105 - 18,155 Other borrowings - 2,000 1,570 275 $3,741 7,586 ------ ------ ------ ------ ------ ------ Total interest bearing liabilities $38,302 $5,112 $ 7,360 $ 8,672 $3,741 $63,187 Interest rate sensitivity gap $ 3,552 $(3,899) $ (510) $10,407 $10,978 $20,528 ======= ======= ======= ======= ======= ======= Cumulative interest rate sensitivity gap $ 3,552 $ (347) $ (857) $ 9,950 $20,528 ======= ======= ======== ======= ======= Interest rate sensitivity gap ratio 1.09% 0.24% 0.93% 2.20% N/A Cumulative interest rate sensitivity gap ratio 1.09% 0.99% 0.98% 1.16% 1.41% 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 September 30, 1995, the Company's total risk- based capital ratio was approximately 22.6% (approximately 22.2% 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 September 30, 1995 and the year ended December 31, 1994. September 30, 1995 December 31, 1994 ------------------ ----------------- Leverage ratio 11.7% 12.2% Tier 1 capital ratio 21.4% 20.9% Total risk-based capital ratio 22.6% 22.2% On December 19, 1991, the President signed the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"). FDICIA, among other matters, substantially revised banking regulations and established a framework for determination of capital adequacy of financial institutions. Under 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. 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 Not applicable Item 5. Other Information Not applicable Item 6. Exhibits and Reports on Form 8-K (a) (3) Exhibits 27.1 Financial Data Schedules 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 Date: November 10, 1995 ------------------------- Mary Page Rourke, Treasurer (Principal Financial and Accounting Officer) INDEX TO EXHIBITS Sequentially Numbered Number Exhibits Page 27.1 Financial Data Schedule 20 EX-27 2
9 1000 9-MOS DEC-31-1995 SEP-30-1995 3211 0 14000 0 12730 20759 20806 33909 766 91458 72131 3570 1199 4016 4427 0 0 6115 91458 2801 1814 215 4830 1822 228 2050 0 11 2316 969 581 0 0 581 .55 .54 8.4 0 0 196 1226 738 45 73 766 433 0 333
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