-----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, IZZhzG/KBpiFOz4+b+VRq7KOERAczyRgECmGG9VjoraS7rA1E5Nq2xC++QSJgJdk FCVZ5OictGTMuJ1DpasPgw== 0000912057-95-003858.txt : 19950531 0000912057-95-003858.hdr.sgml : 19950531 ACCESSION NUMBER: 0000912057-95-003858 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARBOR BANCORP / CENTRAL INDEX KEY: 0000708193 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 953764395 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-79912 FILM NUMBER: 95539404 BUSINESS ADDRESS: STREET 1: 11 GOLDEN SHORE CITY: LONG BEACH STATE: CA ZIP: 90802 BUSINESS PHONE: 3104911111 MAIL ADDRESS: STREET 1: 11 GOLDEN SHORE STREET 2: P O BOX 2040 CITY: LONG BEACH STATE: CA ZIP: 90802 FORMER COMPANY: FORMER CONFORMED NAME: HARBOR BANCORP / DATE OF NAME CHANGE: 19940520 FORMER COMPANY: FORMER CONFORMED NAME: HARBOR BANCORP DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarter ended March 31, 1995 ------------------------- [ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transitions period from to -------- -------------- Commission file number 2-79912 ------------------------- HARBOR BANCORP - - -------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) California 95-3764395 - - ------------------------------------- --------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11 Golden Shore Long Beach, CA 90802 - - -------------------------------------------------------------------------------- (Address of principal executive offices) (310) 491-1111 - - -------------------------------------------------------------------------------- (Issuer's telephone number) Not applicable - - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter periods 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 ---------- ---------- Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes No Other N/A ------ ------ -------- State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common stock, no par value - 1,348,021 shares as of May 10, 1995 - - ------------------------------------------------------------------------------- HARBOR BANCORP AND SUBSIDIARIES INDEX PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements (Unaudited) Condensed consolidated balance sheets - March 31, 1995 and December 31, 1994 Condensed consolidated statements of income - three months ended March 31, 1995 and 1994 Condensed consolidated statements of cash flows - three months ended March 31, 1995 and 1994 Notes to condensed consolidated financial statements - March 31, 1995 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION ITEM 1. Legal Proceedings ITEM 2. Changes in Securities ITEM 3. Defaults Upon Service Securities ITEM 4. Submission of Matter to a Vote of Security Holders ITEM 5. Other Information ITEM 6. Exhibits and Reports on Form 8-K PART III. SIGNATURES ITEM I: FINANCIAL INFORMATION HARBOR BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31, ------------- ------------- 1995 1994 (Unaudited) (000's omitted) --------------------------- ASSETS ------ Cash and due from banks $ 16,025 $ 16,377 Federal funds sold and securities purchased under resale agreements 18,500 5,000 ------- ------- Cash and cash equivalents 34,525 21,377 Time certificates of deposit 495 495 Investment securities (market value of $9,391,639 in 1995 and $9,298,038 in 1994) 9,561 9,673 Available for sale securities 19,568 25,146 Loans 111,679 114,850 Less allowance for possible loan losses 3,053 3,224 ------- ------- Net loans 108,626 111,626 Bank premises and equipment: Land 159 159 Buildings and improvements 4,011 4,008 Furniture, fixtures and equipment 3,028 3,014 ------- ------- 7,198 7,181 Less accumulated depreciation and amortization 5,470 5,385 ------- ------- 1,728 1,796 Other real estate 1,367 2,814 Accrued interest receivable 932 972 Other assets 2,358 2,566 ------- ------- Total assets $179,160 $176,465 ======= =======
(Continued) HARBOR BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
March 31, December 31, 1995 1994 (Unaudited) (000's omitted) --------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Deposits: Interest bearing $ 88,789 $ 89,963 Noninterest bearing 75,922 72,149 ------- ------- Total deposits 164,711 162,112 Accrued expenses and other liabilities 875 1,218 ------- ------- Total liabilities 165,586 163,330 Commitments and contingencies 0 0 Stockholders' equity: Common stock, no par value; 5,000,000 shares authorized; issued and out- standing, 1,348,021 shares in 1995 and 1,348,021 shares in 1994 13,258 13,258 Retained earnings 442 143 Net unrealized securities losses (126) (266) ------- ------- Total stockholders' equity 13,574 13,135 ------- ------- Total liabilities and stockholders' equity $179,160 $176,465 ======= =======
See notes to unaudited consolidated financial statements. HARBOR BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended March 31, (000's omitted, except per share data) 1995 1994 ---- ---- Interest income: Interest and fees on loans $ 2,724 $ 2,669 Interest on U.S. government and agency obligations 478 299 Interest on obligations of states and political subdivisions 5 6 Interest on other investments 11 22 Interest on federal funds sold and securities purchased under agreements to resale 72 107 ------ ------ Total interest income 3,290 3,103 Interest expense: Interest on deposits 610 454 Interest on borrowed funds 36 19 ------ ------ Total interest expense 646 473 ------ ------ Net interest income 2,644 2,630 Provision for possible loan losses 25 0 ------ ------ Net interest income after provision for possible loan losses 2,619 2,630 Other operating income: Service charges on deposit accounts 216 230 Loan servicing fees and other fees and charges 39 85 Gain (loss) on sale of securities 1 0 ------ ------ Total other operating income 256 315
(Continued) HARBOR BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Continued)
Three Months Ended March 31, (000's omitted, except per share data) 1995 1994 ---- ---- Noninterest expense: Salaries, wages and employee benefits 858 846 Occupancy expenses 522 512 Equipment expenses 81 83 Data processing expenses 150 171 Other operating expenses 787 911 ------ ------ Total noninterest expense 2,398 2,523 ------ ------ Income before taxes based on income 477 422 Provision for taxes based on income 179 189 ------ ------ Net income $ 298 $ 233 ====== ====== Earnings per share $ 0.23 $ 0.18 ====== ======
See notes to unaudited consolidated financial statements. HARBOR BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, (000's omitted) 1995 1994 ---- ---- Operating activities: Net income $ 298 $ 233 Adjustments to reconcile net income to net cash provided by operating activities: Provision for depreciation and amortization 130 134 Provision for possible loan losses 25 0 (Increase) in interest receivable 39 (40) Increase (decrease) in interest payable (38) (17) Other (357) (645) ------- ------ Net cash provided by operating activities 97 (335) Investing activities: Proceeds from maturities, sales and calls of investment securities 6,045 25,991 Purchases of investment securities 0 (14,824) Net (increase) in short- term securities 0 0 Net (increase) in loans 2,975 (471) Capital expenditures (16) (42) Other real estate 1,447 272 ------- ------ Net cash used in investing activities 10,451 10,926
(Continued) HARBOR BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
Three Months Ended March 31, (000's omitted) 1995 1994 ---- ---- Financing activities: Net increase in commercial and other demand deposits, savings and money market deposits and certificates of deposit 2,600 2,685 ------ ------ Net cash provided by financing activities 2,600 2,685 Increase in cash and cash equivalents 13,148 13,276 Cash and cash equivalents at beginning of period 21,377 21,871 ------ ------ Cash and cash equivalents at end of period $34,525 $35,147 ====== ======
See notes to unaudited consolidated financial statements. HARBOR BANCORP AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) March 31, 1995 1. Summary of Significant Accounting Policies: 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 three month period ended March 31, 1995 are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. Certain reclassifications have been made in the 1994 financial statements to conform to the presentations used in 1995. The balance sheet on December 31, 1994 has been derived from the audited financial statements at that date. The accompanying notes are an integral part of these financial statements. PRINCIPLES OF CONSOLIDATION Harbor Bancorp ("HB") was formed on July 23, 1982. The unaudited condensed consolidated financial statements include all the accounts of HB and its wholly-owned subsidiaries, Harbor Bank and Harbor Bank Properties. All intercompany accounts and transactions have been eliminated. INVESTMENT SECURITIES Investment securities - securities which the Company has the ability and intent to hold until maturity - are stated at cost adjusted for amortization of premiums and accretion of discounts. Securities available for sale are carried at market value with unrealized gains or losses recorded as a separate component of stockholders' equity. The adjusted cost of the specific security sold is used to compute gain or loss on the sale of investment securities. ALLOWANCE FOR POSSIBLE LOAN LOSSES The allowance for possible loan losses represents management's recognition of the quality of the loan portfolio. The allowance is maintained at a level considered to be adequate for potential loan losses based on management's assessment of various factors affecting the loan portfolio, which includes a review of problem loans, business conditions and the overall quality of the loan portfolio. The allowance is increased by the provision for possible loan losses charged to operations and reduced by loans charged off to the allowance, net of recoveries. OTHER REAL ESTATE Other real estate is stated at the lower of cost or market. BANK PREMISES AND EQUIPMENT Bank premises and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets which range from 10 to 30 years for buildings and improvements and 3 to 10 years for furniture, fixtures and equipment. EARNINGS PER SHARE Earnings per share was computed by dividing net income by the weighted average number of common stock and common stock equivalents (stock options) outstanding during each period. The number of shares used in the per share calculations for the periods ended March 31, 1995 and 1994 were 1,348,021 and 1,348,021 respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS During the first three months of 1995, Harbor Bancorp ("Company") experienced satisfactory earnings and growth performance as planned based upon the Company's expectation of the economic recovery period in Southern California. The purpose of the following discussion is to focus on the above mentioned performance standards and other information about the Company's financial condition and results of operations which is not otherwise apparent from the consolidated financial statements included in this quarterly report. Reference should be made to those statements and the condensed financial data presented herein for an understanding of the following discussion and analysis. FINANCIAL CONDITION During the first three months of 1995, the Company experienced an net increase in liquid assets. Cash and cash equivalents increased $13,148,000 from $21,377,000 at December 31, 1994 to $34,525,000 at March 31, 1995. Available for sale securities declined $5,578,000, or 22.18%, from $25,146,000 at December 31, 1994 to $19,568,000 at March 31, 1995. This net increase in liquid assets is primarily a result of not reinvesting available for sale securities at maturity, but in maintaining liquidity in the form of short term and overnight investments in anticipation of growth in loan volume in the remainder of 1995 . During the first quarter of 1995, loan volume declined slightly with loans at $111,679,000 at March 31, 1995 compared to loans at $114,850,000 at December 31, 1994. The decline in loan totals is primarily a result of loan payoffs. Total assets of the Company increased modestly from December 31, 1994 to March 31, 1995 with assets at $176,465,000 and $179,160,000, respectively. Effective January 1, 1995, the Company adopted the provisions of Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan" ("SFAS 114"). Under SFAS 114, impaired loans subject to the Statement are required to be measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. A loan is impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due, contractual interest and principal, according to the contractual terms of the loan agreement. As of March 31, 1995, the Bank had $6,632,123 in impaired loans. The Bank allocated $884,881 in allowance for loan and lease losses to impaired loans at March 31, 1995. Substantially all of the Company's deposits are local, core deposits. The Company does not have any out-of-area brokered deposits included in the deposit base. Total deposits increased $2,599,000, or 1.6%, for the first quarter of 1995. The primary component of this increase is noninterest bearing deposits which increased $3,773,000, or 5.23%, from $72,149,000 at December 31, 1994 to $75,922,000 at March 31, 1995. On December 31, 1993, the Bank underwent examinations conducted concurrently by the Federal Deposit Insurance Corporation and the State Banking Department. As a result of this exam, the Bank signed a Memorandum of Understanding with the Federal Deposit Insurance Company dated August 3, 1994. The Bank agreed to take certain actions under the Memorandum including the following: maintaining capital requirements; reducing classified assets in accordance with the reduction schedule; revise, adopt and implement policy and procedures; and review and maintain an adequate allowance for loan losses. The Bank believes it is currently in compliance with the FDIC Memorandum. LIQUIDITY AND INTEREST RATE SENSITIVITY MANAGEMENT The primary functions of asset/liability management are to assure adequate liquidity and maintain an appropriate balance between interest sensitive earning assets and interest bearing liabilities. Liquidity management involves the ability to meet the cash flow requirements of customers who may be either depositors wanting to withdraw funds or borrowers who may need assurance that sufficient funds will be available to meet their credit needs. Interest rate sensitivity management seeks to avoid fluctuating interest margins and to enhance consistent growth of net interest income through periods of changing interest rates. Historically, the overall liquidity of the Company has been enhanced by a significant aggregate amount of core deposits. As described in the analysis of financial condition, the Bank has not relied on large-denomination time deposits. To meet short-term liquidity needs, the Bank has maintained adequate balances in federal funds sold, certificates of deposits with other financial institutions and investment securities having maturities of five years or less. Liquid assets (cash, federal funds sold and securities purchased under agreements to resale, deposits in other financial institutions and investment securities) as a percent of total deposits are 39% and 35% as of March 31, 1995 and December 31, 1994, respectively. The Bank's goal is to maintain federal funds sold at $5 to $7 million dollars on an average with minimum daily investments monitored closely. Deposits with other institutions and securities purchased under agreements to resale will be maintained as alternative short-term investment products. Management's intention is to maintain an investment portfolio which contributes an adequate rate of return with minimal market or credit risk. Interest rate sensitivity varies with different types of interest-earning assets and interest-bearing liabilities. Harbor Bank intends to maintain interest-earning assets, comprised primarily of both loans and investments, and interest-bearing liabilities, comprised primarily of deposits, maturing or repricing evenly in order to eliminate any impact from interest rate changes. In this way, both assets and liabilities can be substantially repriced simultaneously with interest rate changes. RESULTS OF OPERATIONS The Company reported net income of $298,000, or $0.23 per share, for the three months ended March 31, 1995, compared to net income of $233,000, or $0.18 per share, for the same period in 1994. Net interest income is an effective measurement of how well Management has balanced the Company's interest rate sensitive assets and liabilities as well as optimizing the allocation of resources. Net interest income of $2,644,000 for the three months ended March 31, 1995, remained relatively stable compared to $2,630,000 for the for the same period of 1994. Although interest earning assets declined $10,917,000, or 6.4%, from $170,720,000 at March 31, 1994 to $159,803,000 at March 31, 1995, net interest income remained relatively stable due to rising interest rates. The provision for possible loan losses increased $25,000 for the three months ended March 31, 1995 compared to the same period in 1994. The increase in the provision for possible loan losses is primarily a result of the Company's commitment to maintain an allowance for loan and lease losses at a level sufficient based upon the quality of the loan portfolio. During the first three months of 1995, the Company maintained expenses consistent with the same quarter of 1994. The Company began to focus on noninterest expense control in 1989 and, today, continues to emphasize and enforce strict cost control procedures. As a result of this continued effort, total noninterest expense decreased $125,000 during the three months ended March 31, 1995 compared to the same period in 1994 with most of the decrease in the area of professional fees and data processing expense. RISK ELEMENTS The policy of Harbor Bank is that all loans that are past due for ninety (90) days must be placed on a non-accrual status. In addition, loans in which it is probable that full collection of principal will not occur are placed on non- accrual status. At March 31, 1995, loans on non-accrual status were $5,379,000, or 4.8%, compared to $5,739,511, or 5.0%, of total loans on non-accrual status at December 31, 1994. Accruing loans which are contractually past due ninety (90) days or more were $6,000 at March 31, 1995 compared to $97,000 at December 31, 1994. At March 31, 1995, the management was not aware of information regarding performing loans which would cause them to have serious doubts as to the ability of the borrowers to comply with loan repayment terms, nor are they aware of any trends which might have a material impact on future operating results. HARBOR BANCORP AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Due to the nature of their business, the Company, the Bank, and their subsidiaries are subject to legal action threatened or filed which arise from the normal course of their business. Management believes that the eventual outcome of all currently pending legal proceedings against the Bank will not be material to the Company's or the Bank's financial position or results of operations. ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SERVICE SECURITIES None ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None EX-27 2 EXHIBIT 27
9 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 16,025 495 18,500 0 19,568 9,561 9,392 111,679 3,053 179,160 164,711 0 875 0 0 0 13,258 316 13,574 2,724 494 72 3,290 646 646 2,644 25 1 2,398 477 477 0 0 298 0.23 0 0 5,379 6 4,742 0 3,224 199 3 3,053 3,053 0 0
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