-----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, Tk9mx3kuKVaBUaxeRrvMsJS6Pb6XS6jtP2pnNAm32DsCQiLfBNpYJTvvEr//ImZn GMTW672/DhI3xKG03RL+CQ== 0000892569-95-000220.txt : 19950516 0000892569-95-000220.hdr.sgml : 19950516 ACCESSION NUMBER: 0000892569-95-000220 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: FOOTHILL INDEPENDENT BANCORP CENTRAL INDEX KEY: 0000718903 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 953815805 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11337 FILM NUMBER: 95538449 BUSINESS ADDRESS: STREET 1: 510 S GRAND AVE CITY: GLENDORA STATE: CA ZIP: 91741 BUSINESS PHONE: 9095999351 MAIL ADDRESS: STREET 1: 510 S. GRAND AVENUE CITY: GLENDORA STATE: CA ZIP: 91741 10-Q 1 FOOTHILL INDEPENDENT BANCORP -- FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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 0-11337 ------------- FOOTHILL INDEPENDENT BANCORP ----------------------------------------------------------- (Exact name of Registrant as specified in its charter) CALIFORNIA 95-3815805 - -------------------------------------------------------------------------------- (State or other jurisdiction (I.R.S. Employer Identification of incorporation or organization) Number) 510 SOUTH GRAND AVENUE, GLENDORA, CALIFORNIA 91741 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (818) 963-8551 OR (909) 599-9351 ---------------------------------- (Registrant's telephone number, including area code) 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 XX 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. 3,931,103 shares of Common Stock as of May 10, 1995 Page 1 of 15 pages 2 FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
March 31, December 31, ASSETS 1995 1994 ------ ----------- ----------- Cash and due from banks $ 27,764,001 $ 29,218,006 Federal Funds Sold 23,600,000 7,450,000 ------------ ------------ Total Cash and Cash Equivalents 51,364,001 36,668,006 ------------ ------------ Interest bearing deposits at other banks 1,287,000 1,188,000 ------------ ------------ Investment securities held to maturity (approximate market value $14,872,498 in 1995 and $20,191,254 in 1994) U.S. Treasury 10,988,342 16,454,851 U.S. Government agencies 1,497,748 996,104 Municipal agencies 2,507,822 2,759,135 Other Securities 250,000 250,000 ------------ ------------ Total Investment Securities held to maturity 15,243,912 20,460,090 ------------ ------------ Investment securities available for sale 15,096,243 10,517,101 ------------ ------------ Loans, net of unearned discount and prepaid points and fees 240,515,492 245,289,323 Direct Lease Financing 3,436,742 3,726,697 Less reserve for possible loan and lease losses (3,608,208) (3,145,193) ------------ ------------ Total Loans & Leases, net 240,344,026 245,870,827 ------------ ------------ Bank premises and equipment 6,588,937 6,626,777 Accrued interest 2,340,654 2,393,707 Other real estate owned, net of allowance for possible losses of $1,085,503 in 1995 and $515,503 in 1994 5,269,995 2,469,469 Cash surrender value of life insurance 2,921,989 2,862,019 Prepaid expenses 712,464 527,170 Deferred income taxes 1,103,663 1,103,663 Other assets 960,569 574,830 ------------ ------------ TOTAL ASSETS $343,233,453 $331,261,659 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Deposits Demand deposits $ 78,469,730 $ 77,385,387 Savings and NOW deposits 83,606,016 78,966,296 Money market deposits 43,677,968 41,954,406 Time deposits in denominations of $100,000 or more 47,492,156 51,294,361 Other time deposits 59,988,442 51,621,654 ------------ ------------ Total deposits 313,234,312 301,222,104 Accrued employee benefits 992,562 992,955 Accrued interest and other liabilities 919,230 1,930,236 Long-term debt 236,284 245,098 ------------ ------------ Total Liabilities 315,382,388 304,390,393 ------------ ------------ Stockholders' Equity Unrealized gain (loss) on marketable equity securities (356,716) (399,610) Unrealized gain (loss) on securities available for sale 12,978 (4,240) Stock dividend to be distributed 2,941,925 0 Contributed capital Capital stock - authorized 12,500,000 shares without par value; issued and outstanding 3,566,005 shares in 1995 and 3,547,565 in 1994 7,578,589 7,439,924 Additional Paid-in Capital 455,997 455,997 Retained Earnings 17,218,292 19,379,195 ------------ ------------ Total Stockholders' Equity 27,851,065 26,871,266 ------------ ------------ Total Liabilities and Stockholders' Equity $343,233,453 $331,261,659 ============ ============
See accompanying notes to financial statements Page 2 of 15 pages 3 FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended March 31, 1995 1994 ---------- ----------- INTEREST INCOME Interest and fees on loans $7,035,096 $5,272,193 Interest on investment securities U.S. Treasury 174,576 304,579 Obligations of other U.S. government agencies 181,453 61,809 Municipal agencies 23,037 20,797 Other Securities 34,267 34,560 Interest on deposits 16,941 14,420 Interest on Federal Funds sold 254,150 65,101 Lease financing income 49,219 48,846 ---------- ---------- Total Interest Income 7,768,739 5,822,305 ---------- ---------- INTEREST EXPENSE Interest on savings & NOW deposits 309,874 269,432 Interest on money market deposits 280,658 219,831 Interest on time deposits in denominations of $100,000 or more 602,478 427,762 Interest on other time deposits 665,231 347,656 Interest on borrowings 18,637 9,973 ---------- ---------- Total Interest Expense 1,876,878 1,274,654 ---------- ---------- Net Interest Income 5,891,861 4,547,651 PROVISION FOR LOAN AND LEASE LOSSES 630,000 128,650 ---------- ---------- Net Interest Income After Provisions for Loan and Lease Losses 5,261,861 4,419,001 ---------- ---------- OTHER INCOME Fees and service charges 1,071,182 982,591 Other 163,461 137,600 ---------- ---------- Total other income 1,234,643 1,120,191 ---------- ---------- OTHER EXPENSES Salaries and benefits 2,273,719 2,149,899 Occupancy expenses, net of revenue of $30,546 in 1995 and $23,265 in 1994 441,141 308,319 Furniture and equipment expenses 314,457 300,136 Other operating expenses (Note 2) 2,204,890 1,750,321 ---------- ---------- Total other expenses 5,234,207 4,508,675 ---------- ---------- INCOME BEFORE INCOME TAXES 1,262,297 1,030,517 ---------- ---------- INCOME TAXES Current payable 481,275 355,855 Deferred 0 (5,355) ---------- ---------- Total income taxes 481,275 350,500 ---------- ---------- NET INCOME $ 781,022 $ 680,017 ========== ========== EARNINGS PER SHARE OF COMMON STOCK $0.22 $0.19 (Note 3) ========== ==========
See accompanying notes to financial statements Page 3 of 15 pages 4 FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1995 AND 1994
VALUATION NUMBER OF ADDITIONAL ALLOWANCE SHARES CAPITAL PAID-IN RETAINED FOR OUTSTANDING STOCK CAPITAL EARNINGS INVESTMENTS TOTAL ----------- ---------- ---------- ----------- ----------- ----------- BALANCE, December 31, 1993 3,531,460 $7,334,623 $455,997 $17,323,727 $(155,297) $24,959,050 As previously reported Prior year correction 17,732 (17,732) - --------- ---------- -------- ----------- --------- ----------- BALANCE, January 1, 1994 3,531,460 $7,334,623 $455,997 $17,341,459 $(173,029) $24,959,050 Cash dividend declared (353,776) (353,776) Exercise of stock options 6,300 33,000 33,000 Net income for three months 680,017 680,017 Change in net unrealized loss on marketable equity securities (115,225) (115,225) --------- ---------- -------- ----------- --------- ----------- BALANCE, March 31, 1994 3,537,760 $7,367,623 $455,997 $17,667,700 $(288,254) $25,203,066 ========= ========== ======== =========== ========= =========== BALANCE, January 1, 1995 3,547,565 $7,439,924 $455,997 $19,379,195 $(403,850) $26,871,266 10% stock dividend declared 2,941,925 (2,941,925) - Exercise of stock options 6,300 39,000 39,000 Common stock issued under employer benefit and dividend reinvestment plans 12,140 99,665 99,665 Net income for the three months 781,022 781,022 Net unrealized loss on marketable equity securities available for sale 42,894 42,894 Change in net unrealized loss on securities available for sale 17,218 17,218 --------- ----------- -------- ----------- --------- ----------- BALANCE, March 31, 1995 3,566,005 $10,520,514 $455,997 $17,218,292 $(343,738) $27,851,065 ========= =========== ======== =========== ========= ===========
See accompanying notes to financial statements Page 4 of 15 pages 5 FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1995 AND 1994
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1995 1994 - ------------------------------------------------ ------------ ------------ Cash Flows From Operating Activities: Interest and fees received $ 7,716,905 $ 5,645,012 Service fees and other income received 1,099,092 1,002,352 Financing revenue received under leases 49,219 34,560 Interest paid (1,961,733) (1,212,492) Cash paid to suppliers and employees (6,003,524) (4,070,810) Income taxes paid (415,968) (409,715) ------------ ------------ Net Cash Provided by Operating Activities 483,991 988,907 ------------ ------------ Cash Flows From Investing Activities: Proceeds from maturity of investment securities 11,840,000 5,221,563 Purchase of investment securities (11,077,524) (3,694,173) Proceeds from maturity of deposits in Other financial institutions 297,000 1,090,000 Purchase of deposits in other financial institutions (396,000) (692,975) Net (increase) decrease in credit card and revolving credit receivables 87,125 (37,030) Recoveries on loans previously written off 101,366 32,216 Net (increase) decrease in loans 4,418,355 (10,819,323) Net (increase) decrease in leases 337,901 (150,086) Capital expenditures (2,812,696) (2,431,725) Proceeds from sale of property, plant and equipment 75,581 24,638 ------------ ------------ Net Cash Used in Investing Activities 2,871,108 (11,456,895) ------------ ------------ Cash Flows From Financing Activities: Net increase (decrease) in demand deposits, NOW accounts, savings accunts, and money market deposits 7,442,678 5,033,334 Net increase (decrease) in certificates of deposit with maturities of three months or less (9,371,283) (4,469,842) Net increase (decrease) in certificates of deposit with maturities of more than three months 13,935,866 14,778,960 Proceeds from sale of stock options 39,000 33,000 Proceeds from dividend reinvestment 99,665 0 Principal payment on long term debt (8,814) (195,478) Dividends paid (354,757) (357,399) ------------ ------------ Net Cash Provided by Financing Activities 11,782,356 14,822,575 ------------ ------------ Net Increase (Decrease) in Cash and Cash Equivalents 15,137,455 4,354,587 Cash and Cash Equivalents at Beginning of Year 36,668,006 25,694,366 ------------ ------------ Cash and Cash Equivalents at March 31, 1995 & 1994 $ 51,805,461 $ 30,048,953 ============ ============
See accompanying notes to financial statements Page 5 of 15 pages 6 FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED MARCH 31, 1995 AND 1994 RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
1995 1994 --------- --------- Net Income $ 781,022 $ 680,017 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Depreciation and amortization 50,009 204,402 Provision for possible credit losses 630,000 128,650 (Gain) loss on disposition of property, plant & equipment (75,581) (13,038) (Increase) decrease in taxes payable 65,307 (59,215) (Increase) decrease in other assets (177,518) 179,800 Increase (decrease) in interest receivable (2,615) (142,733) (Increase) decrease in interest payable (84,855) 62,162 Increase (decrease) in fees and other receivables (59,970) (45,982) (Increase) decrease in accrued expenses and other liabilities (611,808) (5,156) Gain on sale of investments and other assets (30,000) 0 --------- --------- Total Adjustments (297,031) 308,890 --------- --------- Net Cash Provided by Operating Activities $ 483,991 $ 988,907 ========= =========
DISCLOSURE OF ACCOUNTING POLICY For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and Federal funds sold. Generally, Federal funds are purchased and sold for one-day periods. See accompanying notes to financial statements Page 6 of 15 pages 7 FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) MARCH 31, 1995 AND 1994 NOTE #1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. 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 considered necessary for a fair statement of the results for the interim periods presented have been included. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1994. The results of operations for the three month period ended March 31, 1995 are not necessarily indicative of the results to be expected for the full year. NOTE #2 - OTHER EXPENSES The following is a breakdown of other expenses for the three months ended March 31, 1995 and 1994.
Three Months Ended March 31, -------------------------------- 1995 1994 ---------- ---------- Data processing $ 217,723 $ 228,607 Marketing expenses 116,846 117,645 Office supplies, postage and telephone 234,519 178,797 Bank insurance & Assessment 289,376 271,376 Professional expenses 259,243 200,334 Provision for OREO loss 570,000 383,210 Other expenses 517,183 370,352 -------------------------------- Total Other Expenses $2,204,890 $1,750,321 ================================
NOTE #3 - EARNINGS PER SHARE Earnings per share are based upon the weighted average number of shares outstanding during each period. Stock options have been excluded from the computation of earnings per share, as their effect is immaterial. The weighted average number of shares used to compute earnings per share was 3,555,986 in 1995 and 3,536,547 in 1994. Page 7 of 15 pages 8 Notes to Condensed Consolidated Financial Statements (continued) NOTE #4 - INCOME TAXES The Bank adopted Statement No. 109 of the Financial Accounting Standards Board, Accounting for Income Taxes, commencing January 1, 1993. This new statement supersedes Statement No. 96 and among other things, changes the criteria for the recognition and measurement of deferred tax assets. This adoption does not create a material change in the financial statements of the Bank or the Company. NOTE #5 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS Financial Accounting Standards Board Statement 107 is effective for financial statements for fiscal years ending after December 15, 1992. The Statement considers the fair value of financial instruments for both assets and liabilities. The following methods and assumptions were used to estimate the fair value of financial instruments. Investment Securities For U.S. Government and U.S. Agency securities, fair values are based on market prices. For other investment securities, fair value equals quoted market price if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities as the basis for a pricing matrix. Loans The fair value for loans with variable interest rates is the carrying amount. The fair value of fixed rate loans is derived by calculating the discounted value of the future cash flows expected to be received by the various homogeneous catagories of loans. All loans have been adjusted to reflect changes in credit risk. Deposits The fair value of demand deposits, savings deposits, savings accounts and NOW accounts is defined as the amounts payable on demand at March 31, 1994. The fair value of fixed maturity certificates of deposit is estimated based on the discounted value of the future cash flows expected to be paid on the deposits. Notes Payable Rates currently available to the Bank for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt. Page 8 of 15 pages 9 Notes to Condensed Consolidated Financial Statements (continued) Note #5 - Disclosures about Fair Value of Financial Instruments (Continued) Commitments to Extend Credit and Standby Letter of Credit The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the parties involved. For fixed-rate loan commitments, fair value also considered the difference between current levels of interest rates and committed rates. The fair value of guarantees and letters of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with parties involved at March 31, 1995. The estimated fair value of the Bank's financial instruments are as follows:
March 31, 1995 -------------- Carrying Amount Fair Value --------------- ------------ Financial Assets Cash $ 52,651,001 $ 52,651,001 Investment securities 30,090,155 29,968,741 Real estate loans 97,459,428 97,460,189 Installment loans 13,384,232 13,383,924 Commercial loans 130,741,166 130,739,454 Direct lease financing 3,423,784 3,423,382 Financial Liabilities Deposits 313,234,312 313,398,312 Long term debt 236,284 236,284 Unrecognized Financial Intruments Commitments to extend credit 53,478,012 53,478,012 Standby letters of credit 1,848,676 1,848,676
Page 9 of 15 pages. 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS General Foothill Independent Bancorp (the "Company") is a one-bank holding company. Its principal asset is the common stock of, and its principal operations are conducted by, Foothill Independent Bank, a California state chartered bank (the "Bank"). The Bank accounts for substantially all of the Company's revenues and income. Results of Operations Net Interest Income. Net interest income is the principal determinant of a bank's income. Net interest income represents the difference or "margin" between the interest earned on interest-earning assets, such as loans and investment securities, and the interest paid on interest-bearing liabilities, principally deposits. The Bank's net interest income for the three months ended March 31, 1995 increased by $1,344,000 or 30.0% as compared to the three months ended March 31, 1994, primarily as a result of a $1,763,000 increase in interest and fees earned on loans, which was only partially offset by a $602,000 increase in interest paid on deposits. The increase in interest and fees earned on loans was primarily attributable to an increase in the volume of outstanding loans and, to a lesser extent, increases in interest rates. The increase in interest expense in the three months ended March 31, 1995 was attributable primarily to (i) an increase in the average volume of deposits outstanding during the quarter, as compared to the same quarter of 1994, including an increase in the average volume of outstanding time deposits, which generally bear interest at higher rates than savings deposits, and (ii) an increase in the rates of interest paid on interest-bearing liabilities, principally deposits, as a result of increases in market rates of interest due primarily to credit-tightening actions taken by the Board of Governors of the Federal Reserve System in response to concerns about inflation. The increases in the volume of, and in interest rates paid on, interest-bearing deposits resulted in a decline in the Bank's net interest margin (i.e., net interest income expressed as a percentage of interest income) to 75.8% for the quarter ended March 31, 1995 from 78.1% in the same period of 1994. Provision for Possible Loan Losses. The Bank follows the practice of maintaining a reserve (the "Loan Loss Reserve" or the "Reserve") for possible losses on loans or leases that occur from time to time as a incidental part of the banking business. Write-offs of loans and leases (essentially reductions in the carrying values of non-performing loans or leases due to possible losses on their ultimate recovery) are charged against the Reserve and the Reserve is adjusted periodically to reflect changes in the volume of outstanding loans and leases and increases in the risk of potential losses due to deterioration in the condition of borrowers or in the value of collateral securing outstanding loans or in general economic conditions. Additions to the Loan Loss Reserve are made through a charge against income referred to as the "Provision for Loan and Lease Losses." A higher Provision for Loan and Lease Losses was made in the first quarter of 1995, than was made in the same quarter of 1994, because of an increase in the volume of loans outstanding during the first quarter of 1995, as compared to the same quarter of 1994, and the lingering effects of the economic recession that impacted southern California during the past three years which has adversely affected the ability of some borrowers to repay 10 of 15 Pages 11 their loans and has continued to depress the value of real properties securing some of the Bank's non-performing loans. Despite these conditions, loan write-offs during the quarter ended March 31, 1995 aggregated $268,000, which is eleven hundredths of one percent (0.11%) of the Bank's average volume of loans and leases outstanding during such quarter. This compares to loan write-offs of $180,000, which was nine hundredths of one percent (0.09%) of the average volume of loans and leases outstanding, during the quarter ended March 31, 1994. Other Income. Other income increased by $114,000 or 10.2% in the quarter ended March 31, 1995, as compared to the same quarter of 1994. That was primarily due to a $89,000 increase in fees and charges generated primarily from deposit account activity and appraisal and other ancillary services provided to Bank customers. Other Expense. Other expense, consisting primarily of (i) salaries and other employee expenses, (ii) occupancy expenses, (iii) furniture and equipment expenses, and (iv) insurance, assessments and other operating and miscellaneous expenses, increased by approximately $726,000 or 16.1% during the three month period ended March 31, 1994. This increase in Other Expense was attributable primarily to internal growth in the Bank's operations subsequent to the first quarter of 1994. During the second quarter of 1994, the Bank opened a new and larger banking office in Covina, California to replace its West Covina banking office, and in the first quarter of 1995 opened a new banking office in Glendale, California. The Bank also hired additional personnel to staff those offices. As a result, occupancy expense, salaries and other employee expenses and other miscellaneous expenses were higher in the first quarter of 1995 than in the same quarter of 1994. Also contributing to the increase in Other Expense was an increase of $187,000 in the Bank's reserve for possible losses on future dispositions of real properties acquired on foreclosures of defaulted loans. However, as a percentage of operating income (Net Interest Income plus Other Income), Other Expense was lower in the first quarter of 1995 than in the same quarter of 1994. The higher provision for income taxes in the three months ended March 31, 1995, as compared to the provision for income taxes in the same three months of 1994, is due to the increase in pre-tax income and an increase in the Company's overall tax rate to approximately 38% due to a reduction in the proportion of the Bank's interest income that is exempt from Federal income taxes. Financial Condition and Liquidity Between January 1, 1995 and March 31, 1995, the Company's total assets increased by approximately $11,972,000 or 3.6%. The Company continued to have adequate cash resources with approximately $29,051,000 of cash held on deposit at other financial institutions, $30,340,000 of investment securities and $23,600,000 in federal funds sold at March 31, 1995. The average volume of loans and leases outstanding during the three months ended March 31, 1995 was approximately 24.3% higher than for the same period in 1994. During the quarter ended March 31, 1995, the average volume of time deposits in denominations greater than $100,000 was approximately $13,764,000 higher than the average volume of those deposits during the quarter ended March 31, 1994. Generally, TCD's in denominations over $100,000 are of a short-term duration and are quite sensitive to changes in interest rates. As a result, reliance on these types of deposits can pose risks for banking 11 of 15 Pages 12 institutions. To reduce such risks, the Bank has made it a policy to seek such deposits primarily from existing customers in its local market areas and not to rely unduly on "brokered" deposits, which tend to be more interest-sensitive and volatile. In March 1994, the Bank did acquire $8,560,000 of TCD's in denominations greater than $100,000, of which $5,130,000 will mature in March 1997 and the remaining $3,430,000 will mature in March 1999. In January 1995, the Bank acquired an additional $2,500,000 of TCD's in denominations greater than $100,000 which will mature in January 1998. The decision to acquire these deposits was made to fix the cost of funds in anticipation of increasing interest rates and to provide a source of additional funds for anticipated withdrawals of short term TCD's over $100,000. In the first quarter of 1995, the Board of Directors decided to discontinue payment of cash dividends in order to retain internally generated funds to support internal growth of the Bank. In addition to the opening a new banking office in Glendale, California, the Bank has filed applications for necessary regulatory approvals to open new banking offices later this year in the cities of Chino and Corona, California. The Board of Directors intends to consider, in the latter part of 1995, whether to resume cash dividends. It is not possible to predict at this time whether cash dividends will be resumed, however, as that will depend on a number of factors, including the Company's earnings and the growth of the Company's assets in 1995 and whether opportunities for further growth will may arise in the future. During the quarter ended March 31, 1995, the Company did declare a 10% stock dividend on the Company's outstanding shares, which was paid on May 1, 1995. Primarily as a result of the increase in earnings in the first quarter and the retention of internally generated funds, the Company's total shareholders equity increased by $980,000 to $27,851,000 at March 31, 1995 as compared to $26,871,000 at December 31, 1994 and the Bank's tier 1 capital ratio (shareholders' equity-to-total average assets) rose to 8.04% at March 31, 1995 as compared to 7.77% at December 31, 1994, which is above minimum bank regulatory requirements applicable to the Bank of 5%. Federal bank regulations also require federally insured banks to meet a "risk-based capital ratio" of 8%. Under those regulations, a bank's assets are weighted according to certain risk formulas; and, the higher the risk profile of a bank's assets, the greater the amount of capital that is required to meet the risk-based capital ratio. An asset that poses no risk, such as a U.S. government security, is weighted at 0% and requires no capital; whereas, a commercial loan or lease is weighted at 100% and requires 100% of the capital requirement (i.e., 8%). Based upon the formulas set forth in the risk-based capital regulations, the Bank's ratio of capital to risk-based assets at March 31, 1995 was 11.25%, which is well in excess of the minimum ratio required by these regulations. ITEM 6, EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits: 27. Financial Data Schedule (B) Reports on Form 8-K: None. 12 of 15 Pages 13 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. Date: May 10, 1995 FOOTHILL INDEPENDENT BANCORP By: /s/ CAROL ANN GRAF --------------------------------- CAROL ANN GRAF First Vice President Chief Financial Officer Assistant Secretary 13 of 15 Pages 14 INDEX TO EXHIBITS
Sequentially Exhibit Numbered Page - ------- ------------- Exhibit 27. Financial Data Schedule 15
14 of 15 Pages EX-27 2 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTIANS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE REGISTRANT'S BALANCE SHEET AS OF MARCH 31, 1995 AND THE STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH BALANCE SHEET AND STATEMENT OF INCOME AND THE NOTES THERETO. U.S. DOLLARS 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 1 27,764 1,287 23,600 0 15,096 15,244 14,872 243,952 3,608 343,233 313,234 0 919 236 10,977 0 0 16,872 343,233 7,084 685 0 7,769 1,857 1,877 5,892 630 0 5,234 1,262 781 0 0 781 .22 .22 0 0 0 0 0 0 0 0 0 0 0 0
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