-----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, GrSDPpB1aXRfc6esFeYPxjH0X+xR/JQtfMwGA6SHNDNkWj5ReevkjGn2bw4GDTzj /K2tkhD/UwGj9CH/RSewLg== 0000898430-95-002325.txt : 19951119 0000898430-95-002325.hdr.sgml : 19951119 ACCESSION NUMBER: 0000898430-95-002325 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALIFORNIA COMMERCIAL BANKSHARES CENTRAL INDEX KEY: 0000704886 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 953819471 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-78788 FILM NUMBER: 95591252 BUSINESS ADDRESS: STREET 1: 4100 NEWPORT PLACE CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 7148632300 MAIL ADDRESS: STREET 1: 4100 NEWPORT PLACE CITY: NEWPORT BEACH STATE: CA ZIP: 92660 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 - ------------------------------------------------------------------------------ FORM 10 - Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF ----- THE SECURITIES EXCHANGE ACT OF 1934. FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 ------------------ COMMISSION FILE NUMBER 2-78788 ------- CALIFORNIA COMMERCIAL BANKSHARES - ------------------------------------------------------------------------------ CALIFORNIA 95-3819471 - ------------------------------------------------------------------------------ (STATE OF OTHER JURISDICTION OF (IRS EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 4100 NEWPORT PLACE, NEWPORT BEACH, CA 92660 - ------------------------------------------------------------------------------ (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER (714) 863-2300 -------------- - ------------------------------------------------------------------------------ FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR IF CHANGED FROM LAST REPORT INDICATE BY CHECK (X) WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OF 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 ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS: INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE 2,423,000. ---------- 1 CALIFORNIA COMMERCIAL BANKSHARES INDEX PART 1. FINANCIAL INFORMATION - ------------------------------------------------------------------------------ ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED CONDENSED STATEMENTS OF INCOME FOR THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994. CONSOLIDATED CONDENSED BALANCE SHEETS SEPTEMBER 30, 1995 AND DECEMBER 31, 1994. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, SEPTEMBER 30, 1995. ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 2 CALIFORNIA COMMERCIAL BANKSHARES AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (000'S OMITTED) (UNAUDITED)
NINE MONTHS ENDED THREE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 ------------------- ------------------- INTEREST AND FEE INCOME: LOANS AND LEASES 15,459 13,428 5,240 4,487 INVESTMENT SECURITIES 2,390 2,894 851 1,135 FEDERAL FUNDS SOLD 834 412 415 150 ------ ------ ----- ----- TOTAL INTEREST AND FEE INCOME 18,683 16,734 6,506 5,772 INTEREST EXPENSE: DEPOSITS 5,192 4,498 1,832 1,517 SECURITIES SOLD UNDER AGREEMENT TO REPURCHASE 8 6 0 4 NOTE PAYABLE 146 164 51 56 ------ ------ ----- ----- TOTAL INTEREST EXPENSE 5,346 4,668 1,883 1,577 NET INTEREST INCOME 13,337 12,066 4,623 4,195 PROVISION FOR LOAN / LEASE LOSSES 1,300 2,665 300 1,045 NET INTEREST INCOME AFTER PROVISION FOR LOAN / LEASE LOSSES 12,037 9,401 4,323 3,150 OTHER INCOME: ESCROW FEES 177 233 91 47 SERVICE CHARGES 712 717 236 253 OTHER INCOME 773 614 324 232 ------ ------ ----- ----- TOTAL OTHER INCOME 1,662 1,564 651 532 OTHER EXPENSES: SALARIES AND EMPLOYEE BENEFITS 5,413 4,852 1,710 1,483 OCCUPANCY, FURNITURE AND EQUIPMENT 1,517 1,450 486 480 DATA PROCESSING 195 222 56 78 SUPPLIES 236 192 68 66 REGULATORY ASSESSMENTS 553 697 59 201 LEGAL FEES 759 478 344 167 LOSSES AND EXPENSES ON OREO 1,967 953 1,106 365 SECURITIES LOSSES 72 OTHER 1,748 1,481 609 531 ------ ------ ----- ----- TOTAL OTHER EXPENSES 12,460 10,325 4,438 3,371 INCOME BEFORE INCOME TAXES 1,239 640 536 311 INCOME TAXES 494 225 214 110 NET INCOME 745 415 322 201 EARNINGS PER COMMON SHARE $ 0.30 $ 0.17 $0.13 $0.08
3 CALIFORNIA COMMERCIAL BANKSHARES CONSOLIDATED CONDENSED BALANCE SHEETS (000'S OMITTED)
SEPTEMBER 30 DECEMBER 31 1995 1994 ------------ ----------- ASSETS CASH AND DUE FROM BANKS NON INTEREST BEARING $ 24,039 $ 21,069 INTEREST BEARING 246 INVESTMENT SECURITIES - AVAILABLE FOR SALE 70,248 72,075 FEDERAL FUNDS SOLD 27,000 2,000 LOANS, NET OF UNEARNED INTEREST: COMMERCIAL 78,512 82,600 REAL ESTATE - CONSTRUCTION 32,546 29,792 REAL ESTATE - EQUITY LINE 7,424 8,691 REAL ESTATE - MORTGAGE 66,231 66,102 INSTALLMENT AND OTHER 11,694 10,845 LEASE CONTRACTS RECEIVABLE 3,248 36,152 -------- -------- 199,655 201,645 LESS: DEFERRED LOAN FEES & COSTS (758) (782) -------- -------- 198,897 200,863 LESS: RESERVE FOR LOAN LOSS (4,455) (5,660) -------- -------- TOTAL LOANS, NET 194,442 195,203 -------- -------- REAL ESTATE OWNED 4,906 2,676 BANK PREMISES, FURNITURE & EQUIPMENT 1,081 988 ACCRUED INTEREST RECEIVABLE 2,479 2,846 DEFERRED INCOME TAXES 1,400 1,400 PREPAID EXPENSES AND OTHER ASSETS 1,662 2,162 -------- -------- TOTAL ASSETS $327,257 $300,665 ======== ======== LIABILITIES AND SHAREHOLDERS EQUITY DEPOSITS: DEMAND DEPOSIT NON INTEREST BEARING $109,087 $ 98,733 INTEREST BEARING 69,178 79,695 SAVINGS DEPOSITS 50,168 40,504 TIME CERTIFICATES $100,000 AND OVER 38,631 28,896 OTHER TIME DEPOSITS 33,704 29,561 -------- -------- TOTAL DEPOSITS 300,768 277,389 NOTE PAYABLE 2,351 2,351 INTEREST PAYABLE 203 149 OTHER LIABILITIES 2,178 1,048 SHAREHOLDERS EQUITY: CAPITAL STOCK - AUTHORIZED 10,000,000 SHARES; ISSUED AND OUTSTANDING 2,425,000 IN 1994 AND 1995 10,790 10,782 PAID IN CAPITAL 475 475 RETAINED EARNINGS 10,534 9,789 UNREALIZED GAIN (LOSS) ON INVESTMENT SECURITIES AVAILABLE FOR SALE (NET OF TAX) ( 42) (1,318) -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 327,257 300,665 ======== ========
4 CALIFORNIA COMMERCIAL BANKSHARES CONSOLIDATED STATEMENT OF CASH FLOW FOR THE NINE MONTHS ENDED SEPTEMBER 30 (000'S OMITTED) (UNAUDITED)
1995 1994 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME 745 415 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: DEPRECIATION AND AMORTIZATION 351 444 NET AMORT. OF SECURITY DISCOUNTS AND PREMIUMS 654 571 PROVISION FOR LOAN AND LEASE LOSSES 1,300 2,665 PROVISION FOR LOSSES ON OTHER REAL ESTATE OWNED 453 246 LOSS (GAIN) ON SALE OF INVESTMENT SECURITIES 72 (7) LOSS (GAIN) ON SALE OF PROPERTY (12) (12) WRITEDOWNS AND LOSS ON SALE OF OTHER - REAL ESTATE OWNED 522 160 DECREASE (INCREASE) IN ACCRUED INTEREST RECEIVABLE 367 171 DECREASE (INCREASE) IN OTHER ASSETS (186) 719 NET INCREASE (DECREASE) IN INTEREST AND ACCRUED COMPENSATION PAYABLE, AND OTHER LIABILITIES 1,182 (610) ------- ------- TOTAL ADJUSTMENTS 4,703 4,347 ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 5,448 4,762 CASH FLOWS FROM INVESTING ACTIVITIES: PROCEEDS FROM MATURITY OF INVESTMENT SECURITIES 8,190 19,566 PURCHASE OF INVESTMENT SECURITIES (26,141) (62,320) PROCEEDS FROM SALE OF INVESTMENT SECURITIES 21,016 48,965 NET DECREASE (INCREASE) IN LOANS AND LEASES (7,753) 3,997 INCREASE / (DECREASE) IN DEFERRED LOAN FEES (24) 33 INCREASE / (DECREASE) IN UNEARNED LEASE INCOME (108) 24 RECOVERIES OF LOANS AND LEASES CHARGED OFF 388 772 PURCHASES OF PROPERTY (458) (155) PROCEEDS FROM SALE OF PROPERTY 26 16 PROCEEDS FROM SALE OF OTHER REAL ESTATE OWNED 3,753 4,553 ADDITIONS TO REAL ESTATE OWNED (80) ------- ------- NET CASH USED IN INVESTING ACTIVITIES (1,111) 15,371 CASH FLOWS FROM FINANCING ACTIVITIES: NET INCREASE / (DECREASE) IN DEPOSITS 23,379 (23,429) INCREASE / (DECREASE) IN SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE 4,994 PROCEEDS FROM EXERCISE OF COMMON STOCK OPTIONS 8 0 PAYDOWN ON CAPITAL NOTE 0 ------- ------- NET CASH PROVIDED BY FINANCING ACTIVITIES 23,387 (18,435) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 27,724 1,698 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 23,315 26,781 ------- ------- CASH AND CASH EQUIVALENTS ON SEPTEMBER 30, 1995 51,039 28,479 ======= =======
5 CALIFORNIA COMMERCIAL BANKSHARES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS: - ----------------------------------------------------- NOTE 1 - BASIS OF PRESENTATION THE ACCOMPANYING UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR INTERIM FINANCIAL INFORMATION AND WITH THE INSTRUCTIONS TO FORM 10-Q AND RULE 10-01 OF REGULATION S-X. ACCORDINGLY, THEY DO NOT INCLUDE ALL OF THE INFORMATION AND FOOTNOTES REQUIRED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES FOR COMPLETE FINANCIAL STATEMENTS. IN THE OPINION OF MANAGEMENT, ALL ADJUSTMENTS (CONSISTING OF NORMAL RECURRING ACCRUALS) CONSIDERED NECESSARY FOR A FAIR PRESENTATION HAVE BEEN INCLUDED. OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS THAT MAY BE EXPECTED FOR THE YEAR ENDED DECEMBER 31, 1996. NOTE 2 - EARNINGS PER SHARE WERE COMPUTED BASED ON THE FOLLOWING WEIGHTED AVERAGE OUTSTANDING SHARES: NINE MONTHS ENDED SEPTEMBER 30, 1995..........2,490,000 NINE MONTHS ENDED SEPTEMBER 30, 1994..........2,423,000 6 CALIFORNIA COMMERCIAL BANKSHARES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THE PURPOSE OF THIS DISCUSSION IS TO PROVIDE ADDITIONAL INFORMATION ABOUT THE COMPANY'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS WHICH IS NOT OTHERWISE APPARENT FROM THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THIS INTERIM REPORT. SINCE THE BANKING SUBSIDIARY REPRESENTS MOST OF THE COMPANY'S ACTIVITY AND INVESTMENT, THE FOLLOWING DISCUSSION RELATES PRIMARILY TO THE FINANCIAL CONDITION AND OPERATIONS OF THE BANK. IT SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND THE NOTES THERETO. THE FOLLOWING CHART SHOWS COMPARATIVE DATA FOR SELECTED ITEMS OF THE FINANCIAL STATEMENTS:
AVERAGES FOR THE THREE MONTHS ENDED PERCENT SEPTEMBER 30 SEPTEMBER 30 INCREASE/ 1995 1994 (DECREASE) ------------ ------------ ---------- (IN THOUSANDS) TOTAL ASSETS: $321,415 $325,953 ( 1.39) INVESTMENT SECURITIES: 63,581 87,212 (27.10) FED FUNDS SOLD: 28,492 12,845 121.81 GROSS LOANS: 200,388 196,674 1.89 TOTAL DEPOSITS: 295,578 300,440 ( 1.62) INTEREST BEARING DEPOSITS 191,562 188,603 1.57 OTHER INTEREST BEARING LIABILITIES: 2,351 2,795 (15.89)
AVERAGES FOR THE NINE MONTHS ENDED PERCENT SEPTEMBER 30 SEPTEMBER 30 INCREASE/ 1995 1994 (DECREASE) ------------ ------------ ---------- (IN THOUSANDS) TOTAL ASSETS: $305,391 $322,139 ( 5.20) INVESTMENT SECURITIES: 59,210 77,838 (23.93) FED FUNDS SOLD: 19,104 15,199 25.69 GROSS LOANS: 200,938 202,855 ( .95) TOTAL DEPOSITS: 279,214 297,023 ( 6.00) INTEREST BEARING DEPOSITS 183,195 194,938 ( 6.02) OTHER INTEREST BEARING LIABILITIES: 2,600 2,534 2.60
7 THE RELATIVELY SMALL DECREASE IN AVERAGE ASSETS AVERAGE LOANS AND AVERAGE DEPOSITS REFLECTS COMPANY'S CONTINUING EMPHASIS ON IMPROVING ASSET QUALITY AND COLLECTING LOANS. DURING THIS PERIOD THE COMPANY ALSO CONCENTRATED ON REPLACING HIGHER COST TIME DEPOSITS WITH CORE DEMAND AND SAVINGS DEPOSITS. THE FOLLOWING TABLE SHOWS AVERAGE EARNING ASSETS AND INTEREST BEARING LIABILITIES AND THEIR RELATIVE COST AND YIELD WITHOUT LOAN FEES AND LOAN COSTS. FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1995 1994 -------- -------- PERCENT INCREASE/ YIELD AMT YLD AMT YLD (DECREASE) DIFF -------- ---- -------- ---- ----- (IN THOUSANDS) AVERAGE EARNING ASSETS $292,461 8.48 $296,746 7.51 (1.44) .97 AVERAGE INTEREST BEARING LIABILITIES $193,913 3.85 $191,398 3.27 1.31 .58
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1995 1994 -------- -------- PERCENT INCREASE/ YIELD AMT YLD AMT YLD (DECREASE) DIFF -------- ---- -------- ---- ----- (IN THOUSANDS) AVERAGE EARNING ASSETS $279,252 8.59 $295,892 7.31 (5.62) 1.28 AVERAGE INTEREST BEARING LIABILITIES $185,795 3.83 $197,472 3.16 (5.91) .67
ACCORDING TO COMPANY POLICY LOANS PAST DUE 90 DAYS OR MORE AS TO INTEREST OR PRINCIPAL PAYMENTS ARE PLACED ON NON-ACCRUAL. LOANS ACCOUNTED FOR ON A NON- ACCRUAL BASIS AMOUNTED TO $7,698,000 ON SEPTEMBER 30, 1995 AS COMPARED TO $15,208,000 ON SEPTEMBER 30, 1994. OTHER REAL ESTATE OWNED TOTALED $4,906,000 ON SEPTEMBER 30, 1995 AS COMPARED TO $4,852,000 ON SEPTEMBER 30, 1994. THE COMPANY FOLLOWS SFAS 114 WITH RESPECT TO IMPAIRED LOANS WHICH STATES - "A LOAN IS IMPAIRED WHEN, BASED ON CURRENT FINANCIAL 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...ALL AMOUNTS DUE ACCORDING TO THE CONTRACTUAL TERMS MEANS THAT BOTH THE CONTRACTUAL INTEREST PAYMENTS 8 AND THE CONTRACTUAL PRINCIPAL PAYMENTS OF A LOAN WILL BE COLLECTED AS SCHEDULED IN THE LOAN AGREEMENT." (SEE ACCOUNTING PRONOUNCEMENTS) A LOAN IS NOT CONSIDERED IMPAIRED DURING A PERIOD OF DELAY IN PAYMENT IF THE COMPANY EXPECTS TO COLLECT ALL AMOUNTS DUE INCLUDING INTEREST ACCRUED AT THE CONTRACTUAL INTEREST RATE FOR THE PERIOD OF DELAY. SIX MONTHS IS THE MAXIMUM PERIOD OF DELAY ALLOWED BEFORE A LOAN IS CONSIDERED IMPAIRED. AS OF SEPTEMBER 30, 1995 THE AGGREGATE AMOUNT OF IMPAIRED LOANS MEASURED UNDER PRESENT VALUE METHOD AND FAIR VALUE METHODS WERE $5,878,000 AND $4,827,000 RESPECTIVELY. THE FOLLOWING LOANS ARE EXEMPT FORM SFAS 114 DUE TO THEIR CHARACTERISTICS AS SMALLER BALANCE HOMOGENEOUS LOANS; CREDIT CARD LOANS, LEASES, OVERDRAFT PROTECTION LOANS AND CONSUMER LOANS. RISK IN THESE LOANS IS ACCOUNTED FOR BY APPLYING AN HISTORIC LOSS PERCENTAGE TO THE LOAN POOL. DIFFERENCE BETWEEN NONACCRUAL AND IMPAIRED LOANS: NON ACCRUAL LOANS - THESE LOANS ARE ON NON ACCRUAL FOR USUALLY ONE OF TWO REASONS; 1) THE LOAN IS PAST DUE IN INTEREST OR PRINCIPAL PAYMENTS FOR 90 DAYS OR MORE BUT SUFFICIENT COLLATERAL IS HELD TO OFFSET ANY POTENTIAL LOSS, OR 2) FULL PAYMENT OF ALL PRINCIPAL PLUS INTEREST IS DOUBTFUL. IMPAIRED LOAN - A LOAN CAN BE IMPAIRED ALSO FOR TWO REASONS; 1) A RESTRUCTURE OF THE ORIGINAL NOTE HAS OCCURRED RESULTING IN A REDUCED INTEREST RATE. THEN THE LOAN IS CONSIDERED IMPAIRED DUE TO PRESENT VALUE CALCULATIONS, OR 2) FULL COLLECTION OF ALL PRINCIPAL AND INTEREST AS CURRENTLY SCHEDULED IS NOT EXPECTED. THE COMPANY'S POLICY WITH RESPECT TO THE RECOGNITION OF INTEREST INCOME FOR IMPAIRED LOANS IS TO RECOGNIZE THE INCOME ON ACCRUAL BASIS FOR ONLY THOSE LOANS THAT ARE NOT AN NONACCRUAL. IF THE LOAN IS ON NONACCRUAL THE INCOME IS GENERALLY NOT RECOGNIZED AS INCOME HOWEVER, APPLIED AS REDUCTION TO THE PRINCIPAL. INCOME MAY BE RECOGNIZED ON A CASH BASIS ON NONACCRUAL ONLY IF THE NET PRINCIPAL BALANCE IS ADEQUATELY COVERED BY COLLATERAL AND HAS SHOWN MINIMUM OF SIX MONTHS PERFORMANCE TO CURRENT PROGRAM. ACCORDING TO COMPANY POLICY A LOAN THAT IS NOT PERFORMING OR HAS BEEN NON PERFORMING FOR OVER 90 DAYS IS CHARGED OFF UNLESS SUFFICIENT COLLATERAL IS HELD TO OFFSET THE LOSS AMOUNT. IF COLLATERAL IS HELD, THEN APPROPRIATE MEASURES SHOULD BE TAKEN TO OBTAIN POSSESSION OF THE COLLATERAL FOR IMMEDIATE SALE. THIS POLICY APPLIES TO ALL TYPES OF LOANS INCLUDING IMPAIRED LOANS. 9 THE FOLLOWING TABLE SHOWS THE TOTAL CHARGE OFFS, RECOVERIES AND THE NET RESULT FOR THE THREE MONTHS AND NINE ENDED SEPTEMBER 30, 1995 AND 1994.
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 1995 1994 1995 1994 ----- ----- ----- ----- CHARGE OFFS 1,095 2,460 2,893 5,634 RECOVERIES 250 333 387 772 NET CHARGE OFFS (RECOVERIES) 845 2,127 2,506 4,862
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995 THE COMPANY ADDED $300,000 AND $1,300,000 RESPECTIVELY TO ITS RESERVE WHICH COMPARES WITH $1,045,000 AND $2,665,000 FOR THE SAME PERIODS IN 1994. THE RESERVE BALANCE AS OF SEPTEMBER 30, 1995 WAS $4,455,000 WHICH WAS 2.23% OF TOTAL LOANS AND LEASES WHICH COMPARES WITH $5,025,000 AND 2.56%, RESPECTIVELY, ON SEPTEMBER 30, 1994. RESULTS OF OPERATIONS INTEREST INCOME AND INTEREST EXPENSE - ------------------------------------ THE COMPANY'S PRIMARY SOURCE OF REVENUE IS INTEREST INCOME. THE NET YIELD WITHOUT THE LOAN FEES ON INTEREST EARNING ASSETS INCREASED TO 5.93% AND 6.04% FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1995 FROM 5.40% AND 5.20% FOR THE SAME PERIODS OF 1994. THE NET INTEREST INCOME WITHOUT THE LOAN FEES INCREASED FROM $4,038,000 AND $11,515,000 FOR THE THREE AND NINE MONTHS ENDING SEPTEMBER 30, 1994 TO $4,368,000 AND $12,667,000 FOR THE SAME PERIODS OF 1995. THIS WAS LARGELY DUE TO IMPROVED SPREADS IN INTEREST EARNINGS. THE AVERAGE YIELD ON EARNING ASSETS INCREASED BY .97% FROM 7.51% IN THE THIRD QUARTER OF 1994 TO 8.48% IN 1995 AND BY 1.28% FROM 7.31% FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1994 TO 8.59% FOR THE SAME PERIOD OF 1995. THE AVERAGE INTEREST RATE PAID ON INTEREST BEARING LIABILITIES INCREASED BY .58% FROM 3.27% IN THE SECOND QUARTER OF 1994 TO 3.85% IN 1995 AND BY .67% FROM 3.16% FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1994 TO 3.83% FOR THE SAME PERIODS OF 1995. THE FOLLOWING TABLE SHOWS THE AVERAGE BALANCES OF INTEREST EARNING ASSETS AND INTEREST BEARING LIABILITIES AND INTEREST EARNED AND PAID ON THOSE BALANCES. 10 THREE MONTHS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994 ------------------ ------------------ AVERAGE INTEREST AVERAGE INTEREST ASSETS BALANCE INTEREST RATE BALANCE INTEREST RATE SECURITIES 63,581 850 5.31 87,212 1,141 5.19 FED FUNDS 28,492 415 5.78 12,860 145 4.47 LOANS 200,388 4,986 9.87 196,674 4,328 8.73 ------- ------ ---- ------- ------ ---- TOTAL 292,461 6,251 8.48 296,746 5,614 7.51 ------- ------ ---- ------- ------ ---- LIABILITIES SAVINGS 124,115 856 2.74 121,189 803 2.63 TIME 67,448 976 5.74 67,414 713 4.19 OTHER 2,351 51 8.66 2,795 608 .57 ------- ------ ---- ------- ------ ---- TOTAL 193,913 1,883 3.85 191,398 1,576 3.27 ------- ------ ---- ------- ------ ---- NET INTEREST INCOME 4,368 4,038 YIELD ON EARNING ASSETS 5.93 5.40
NINE MONTHS ENDED
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994 ------------------ ------------------ AVERAGE INTEREST AVERAGE INTEREST ASSETS BALANCE INTEREST RATE BALANCE INTEREST RATE SECURITIES 59,210 2,390 5.38 77,838 2,899 4.98 FED FUNDS 19,104 834 5.82 15,199 407 3.58 LOANS 200,938 14,790 9.80 202,855 12,877 8.49 ------- ------ ---- ------- ------ ---- TOTAL 279,252 18,014 8.59 295,892 16,183 7.31 ------- ------ ---- ------- ------ ---- LIABILITIES SAVINGS 121,316 2,548 2.80 120,029 2,273 2.53 TIME 61,879 2,645 5.69 74,909 2,224 3.97 OTHER 2,600 154 7.88 2,534 171 9.01 ------- ------ ---- ------- ------ ---- TOTAL 185,795 5,346 3.83 197,472 4,668 3.16 ------- ------ ---- ------- ------ ---- NET INTEREST INCOME 12,667 11,515 YIELD ON EARNING ASSETS 6.04 5.20
11 OTHER INCOME AND OTHER EXPENSES - NON-INTEREST INCOME INCREASED BY $119,000 TO - ------------------------------- $651,000 IN THE THIRD QUARTER OF 1995 FROM $532,000 IN THE THIRD QUARTER OF 1994. FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1995, THE NON-INTEREST INCOME INCREASED BY $98,000 TO $1,662,000 COMPARED TO $1,564,000 FOR THE SAME PERIOD A YEAR AGO. THE DECLINE WAS LARGELY IN THE FOLLOWING CATEGORIES: 1. ESCROW FEES DECREASED BY $56,000 FROM $233,000 FOR THE NINE MONTHS OF 1994 TO $177,000 IN 1995. FOR THE THREE MONTHS ENDING SEPTEMBER 30, 1995 THE ESCROW FEE INCOME INCREASED BY $44,000 TO $91,000 IN 1995 FROM $47,000 IN 1994. THE INCREASE IS DUE TO ADDITION TO THE STAFF IN ESCROW DEPARTMENT AND INCREASED MARKETING EFFORTS. 2. DURING FIRST QUARTER OF 1995 THE COMPANY SOLD SOME SECURITIES IN THE AMOUNT OF APPROXIMATELY $21,000,000 AT A LOSS OF $72,000. THESE SECURITIES WERE ORIGINALLY PURCHASED WITH VERY SHORT MATURITIES TO MEET A PROJECTED CASH OUTFLOW DURING THE FIRST QUARTER OF 1995. 3. OTHER INCOME INCREASED BY $92,000 TO $324,000 FOR THE THIRD QUARTER OF 1995 COMPARED TO $232,000 OF 1994 AND BY $159,000 TO $773,000 FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1995 COMPARED TO $614,000 FOR THE SAME PERIOD OF 1994. THE INCOME WAS LARGELY DUE TO RENTAL INCOME ON OTHER REAL ESTATE OWNED WHICH AMOUNTED TO $60,000 FOR THE THIRD QUARTER AND $122,000 FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1995. THE RENTAL INCOME FOR THE SAME PERIODS OF 1994 WAS $15,000 AND $32,000 RESPECTIVELY. NON-INTEREST EXPENSE INCREASED BY $1,067,000 FROM $3,371,000 IN THE THIRD QUARTER OF 1994 TO $4,438,000 IN 1995. FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1995 THE EXPENSE INCREASED BY $2,135,000 FROM $10,325,000 IN 1994 TO $12,460,000 IN 1995. FOLLOWING IS A SUMMARY OF INCREASE IN VARIOUS CATEGORIES OF NON- INTEREST EXPENSE FOR THE THIRD QUARTER OF 1995 AND NINE MONTH ENDING SEPTEMBER 30, 1995 COMPARED TO THE SAME PERIODS OF 1994.
NINE MONTHS THREE MONTHS SALARIES & BENEFITS $ 561,000 $ 227,000 OCCUPANCY, FURNITURE & EQ. 65,000 4,000 DATE PROCESSING (28,000) (22,000) SUPPLIES 44,000 2,000 LEGAL FEES 281,000 98,000 REGULATORY ASSESSMENTS (144,000) (63,000) LOSSES (GAIN) ON OREO 1,009,000 736,000 OTHER 347,000 85,000 ---------- ---------- TOTAL $2,135,000 $1,067,000
12 THE MAJOR INCREASES WERE IN THE CATEGORIES OF SALARIES AND BENEFITS WHICH WAS DUE TO ADDITION TO THE STAFF TO MEET THE PROJECTED FUTURE GROWTH, AND LEGAL FEES AND LOSSES ON OREO WHICH CONTINUES TO REMAIN HIGH AS THE BANK CONTINUES TO RESOLVE PROBLEM LOANS AND DISPOSE OF FORECLOSURE PROPERTIES. ACCOUNTING PRONOUNCEMENTS - ------------------------- IN MAY 1993, THE FINANCIAL ACCOUNTING STANDARDS BOARD ("FASB") ISSUED STATEMENT ON FINANCIAL ACCOUNTING STANDARDS NO. 114 ("SFAS 114"), "ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN" AS AMENDED BY SFAS 118, "ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN-INCOME RECOGNITION AND DISCLOSURES". UNDER THE PROVISIONS OF SFAS 114, A LOAN IS CONSIDERED IMPAIRED WHEN, BASED ON 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. SFAS 114, AS AMENDED, REQUIRES CREDITORS TO MEASURE IMPAIRMENT OF A LOAN BASED ON THE PRESENT VALUE OF EXPECTED FUTURE CASH FLOWS DISCOUNTED AT THE LOAN'S EFFECTIVE INTEREST RATE. IF THE MEASURE OF THE IMPAIRED LOAN IS LESS THAN THE RECORDED INVESTMENT IN THE LOAN, A CREDITOR WILL RECOGNIZE AN IMPAIRMENT BY CREATING A VALUATION ALLOWANCE WITH A CORRESPONDING CHARGE TO BAD DEBT EXPENSE. THIS STATEMENT ALSO APPLIES TO RESTRUCTURED LOANS AND ELIMINATES THE REQUIREMENT TO CLASSIFY LOANS THAT ARE IN-SUBSTANCE FORECLOSURES AS FORECLOSED ASSETS EXCEPT FOR LOANS WHERE THE CREDITOR HAS PHYSICAL POSSESSION OF THE UNDERLYING COLLATERAL, BUT NOT LEGAL TITLE. THE COMPANY ADOPTED SFAS 114 EFFECTIVE JANUARY 1, 1995. THE COMPANY DOES NOT BELIEVE ADOPTION OF THIS STATEMENT WILL HAVE A MATERIAL IMPACT ON ITS RESULTS OF OPERATIONS OR FINANCIAL POSITION. CAPITAL RESOURCES - ----------------- IT IS THE COMPANY'S POLICY TO ALWAYS MAINTAIN ADEQUATE LIQUIDITY IN CASH, FEDERAL FUNDS AND IN READILY MARKETABLE GOVERNMENT SECURITIES. THE COMPANY'S TOTAL LIQUID ASSETS ON SEPTEMBER 30, 1995 WERE: CASH AND DUE FROM BANKS $24,039,000, FEDERAL FUNDS SOLD $27,000,000, AND INVESTMENT SECURITIES FREE OF COLLATERAL $70,313,000; TOTALING $121,352,000 OR 37% OF TOTAL ASSETS. ADDITIONALLY, THE MAJORITY OF THE COMPANY'S LOANS ARE ON A SHORT TERM BASIS, MATURING IN APPROXIMATELY ONE YEAR, WHICH, COMBINED WITH LINES OF CREDIT WITH CORRESPONDENT BANKS, PROVIDES ADDITIONAL LIQUIDITY. 13 IN DECEMBER 1988, THE COMPANY OBTAINED A $3,000,000 TERM LOAN FROM ANOTHER FINANCIAL INSTITUTION FOR THE PURPOSE OF PROVIDING ADDITIONAL CAPITAL TO THE BANK. THE CREDIT AGREEMENT FOR THIS LOAN WAS AMENDED PURSUANT TO A SECOND AMENDMENT TO THE CREDIT AGREEMENT DATED AUGUST 25, 1994. THE LOAN, AS AMENDED, BEARS INTEREST AT A FLUCTUATING RATE PER ANNUM EQUAL TO .75% IN EXCESS OF THE LENDER'S REFERENCE RATE (9.00% AT MARCH 31, 1995). INTEREST IS PAYABLE MONTHLY ON THE UNPAID PRINCIPAL BALANCE OF THE LOAN. PRINCIPAL IS TO BE REPAID ON JANUARY 1, 1997. THE SECOND AMENDMENT WAIVES ALL FINANCIAL COVENANTS RELATING TO THE TERM LOAN. AT JUNE 30, 1995 AND 1994, $2,351,000 REMAINED OUTSTANDING ON THE LOAN. THE SECOND AMENDMENT IS SUPPORTED BY A SUPPORT AGREEMENT BETWEEN A SHAREHOLDER OF THE COMPANY AND THE COMPANY, WHEREBY THE SHAREHOLDER HAS GUARANTEED THE PAYMENT OF THE LOAN. TO COMPENSATE THE SHAREHOLDER FOR SIGNING THE SUPPORT AGREEMENT, THE COMPANY SIGNED A HOLDING COMPANY SUPPORT AGREEMENT WHEREBY THE COMPANY: (1) HAS PAID THE SHAREHOLDER A STANDBY FEE OF $23,500, (2) WILL PAY A STANDBY FEE EQUAL TO ONE PERCENT OF THE UNPAID PRINCIPAL AMOUNT OF THE TERM LOAN ON EACH ANNIVERSARY DATE OF THE CLOSING DATE OF THE HOLDING COMPANY SUPPORT AGREEMENT (3) WILL ISSUE TO THE SHAREHOLDER ON OR PRIOR TO MARCH 31, 1997 WARRANTS TO PURCHASE 25,000 SHARES OF COMMON STOCK OF THE COMPANY AT AN EXERCISE PRICE PER SHARE EQUAL TO 80% OF THE BOOK VALUE PER SHARE OF THE COMPANY ON DECEMBER 31, 1996. ON DECEMBER 31, 1990, NEW RISK BASED CAPITAL REQUIREMENTS BECAME EFFECTIVE. UNDER THE REQUIREMENTS, HOLDING COMPANIES AND BANKS ARE REQUIRED CURRENTLY TO MAINTAIN MINIMUM RATIOS OF TOTAL CAPITAL AND "CORE" (TIER 1) CAPITAL TO RISK- WEIGHTED ASSETS; HOWEVER, UNDER THE TERMS OF ITS FORMAL AGREEMENT WITH THE COMPTROLLER, THE BANK IS REQUIRED TO MAINTAIN CAPITAL IN EXCESS OF THIS MINIMUM REQUIREMENT. THE REGULATORY CAPITAL REQUIREMENTS, CAPITAL REQUIREMENTS UNDER THE FORMAL AGREEMENT AND THE BANK AND COMPANY'S ACTUAL CAPITAL RATIOS ARE SHOWN IN THE FOLLOWING TABLE AS OF THE DATES INDICATED: 14
AT SEPTEMBER 30, 1995 1994 -------------------------------------------- --------------------------------------------- EXCESS EXCESS PER EXCESS TO PER EXCESS TO MINIMUM FORMAL TO FORMAL MINIMUM FORMAL TO FORMAL STATU- AGREE- STATU- AGREE- STATU- AGREE- STATU- AGREE- TORY MENT ACTUAL TORY MENT TORY MENT ACTUAL TORY MENT - --------------------------------------------------------------------------------------------------------------------------- FOR THE BANK RISK-BASED CAPITAL: TIER 1 4.00% N/A 10.29% 6.29% N/A 4.00% N/A 10.38% 6.38% N/A TOTAL RISK-BASED 8.00% 9.00% 11.54% 3.54% 2.54% 8.00% 9.00% 11.63% 3.63% 2.63% TIER 1 LEVERAGE RATIO(1) 4.00% 6.00% 7.15% 3.15% 1.15% 4.00% 6.00% 7.21% 3.21% 1.21% FOR THE COMPANY RISK-BASED CAPITAL: TIER 1 4.00% N/A 9.51% 5.51% N/A 4.00% N/A 9.62% 5.62% N/A TOTAL RISK-BASED 8.00% N/A 10.75% 2.75% N/A 8.00% N/A 10.86% 2.86% N/A TIER 1 LEVERAGE RATIO 4.00% N/A 6.66% 2.66% N/A 4.00% N/A 6.73% 2.73% N/A
_______________ (1) IN SOME CIRCUMSTANCES THIS MINIMUM RATIO MAY BE 3%. AS OF SEPTEMBER 30, 1995 AND 1994, THE BANK AND THE COMPANY WERE IN COMPLIANCE WITH STATUTORY RISK-BASED CAPITAL REQUIREMENTS AND THE BANK WAS IN COMPLIANCE WITH THE MORE STRINGENT CAPITAL REQUIREMENTS IMPOSED BY THE FORMAL AGREEMENT. 15 CALIFORNIA COMMERCIAL BANKSHARES SIGNATURES: PURSUANT TO THE REQUIREMENTS OF THE SECURITIES AND EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. CALIFORNIA COMMERCIAL BANKSHARES (REGISTRANT) DATE: NOVEMBER 10, 1995 /s/ WILLIAM H. JACOBY -------------------- ---------------------------- WILLIAM H. JACOBY PRESIDENT DATE: NOVEMBER 10, 1995 /s/ ABDUL S. MEMON -------------------- ---------------------------- ABDUL S. MEMON CHIEF FINANCIAL OFFICER 16 EX-27 2 FDS
9 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 24,039 0 27,000 0 70,248 0 0 198,897 4,455 327,257 300,768 0 2,381 2,351 10,790 0 0 10,967 327,257 15,459 2,390 834 18,683 5,192 5,346 13,337 1,300 (72) 12,388 1,239 1,239 0 0 745 .30 .30 5.93 7,751 0 1,739 10,705 5,660 2,893 388 4,455 2,431 0 2,024
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