0000729502-95-000014.txt : 19950815 0000729502-95-000014.hdr.sgml : 19950815 ACCESSION NUMBER: 0000729502-95-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST FINANCIAL BANCORP /CA/ CENTRAL INDEX KEY: 0000729502 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 942822858 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12499 FILM NUMBER: 95563648 BUSINESS ADDRESS: STREET 1: 701 S HAM LN CITY: LODI STATE: CA ZIP: 95242 BUSINESS PHONE: 2093672000 MAIL ADDRESS: STREET 1: 701 S HAM LANE CITY: LODI STATE: CA ZIP: 95242 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 1995 Commission File Number : 0-12499 First Financial Bancorp (Exact name of registrant as specified in its charter) California (State or other jurisdiction of incorporation or organization) 94-28222858 (I.R.S. Employer Identification No.) 701 South Ham Lane, Lodi, California 95242 (Address of principal executive offices) (209)-367-2000 (Registrant's telephone number, including area code) NA (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. [ X ] Yes [ ] No As of June 30, 1995, there were 1,306,971 shares of Common Stock, no par value, outstanding. FIRST FINANCIAL BANCORP FORM 10-Q FOR THE QUARTER ENDED JUNE 30 1995 TABLE OF CONTENTS
Page PART I Item 1. Financial Statements 1 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 4 PART II Item 1. Legal Proceedings 7 Item 2. Changes in Securities 7 Item 3. Defaults Upon Senior Securities 7 Item 4. Submission of Matters to a Vote of Security Holders 7 Item 5. Other Information 7 Item 6. Exhibits and Reports on Form 8-K 8
ITEM 1. FINANCIAL STATEMENTS FIRST FINANCIAL BANCORP AND SUBSIDIARY Consolidated Balance Sheets (in thousands)
6/30/95 12/31/94 ASSETS Cash and due from banks $ 3,944 $ 5,199 Federal funds sold 2,600 2,000 Investment securities: Held-to-maturity securities (at amortized cost, market value of $2,173 and $2,118 at 6/30/95 and 12/31/94) 2,038 2,038 Available-for-sale securities, at fair value 23,905 31,062 Total Investments 25,943 33,100 Loans 57,605 56,939 Less: Allowance for loan losses 1,021 1,127 Net loans 56,584 55,812 Bank premises and equipment, net 6,528 6,640 Accrued interest receivable 1,219 1,103 Other assets 1,209 1,313 Total Assets $98,027 $105,167 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits Noninterest bearing $ 6,751 $ 8,415 Interest bearing 76,803 81,564 Total deposits 83,554 89,979 Accrued interest payable 344 300 Other liabilities 236 1,660 Note payable 2,602 2,618 Total liabilities 86,736 94,557 Stockholders' equity: Common stock - no par value; authorized 9,000,000 shares, issued and outstanding in 1995 and 1994, 1,306,971 and, 1,306,296 shares 7,314 7,310 Retained earnings 3,825 3,412 Net unrealized holding gains on available-for sale securities 152 (112) Total stockholders' equity 11,291 10,610 Total Liabilities and Stockholders' Equity $98,027 $105,167
Page 1 FIRST FINANCIAL BANCORP AND SUBSIDIARY Consolidated Statements of Income (in thousands except per share amounts)
Three months ended June 30 Six months ended June 30 1995 1994 1995 1994 Interest income: Loans, including fees $1,560 $1,491 $3,093 $2,853 Investment securities: Taxable 312 226 663 425 Exempt from Federal taxes 92 92 183 185 Federal funds sold 38 22 75 59 Deposits in banks and other interest income 0 1 0 2 Total interest income 2,002 1,832 4,014 3,524 Interest expense: Deposit accounts 703 606 1,357 1,201 Other 70 70 140 141 Total interest expense 773 676 1,497 1,342 Net interest income 1,229 1,156 2,517 2,182 Provision for loan losses 15 39 35 74 Net interest income after provision for loan losses 1,214 1,117 2,482 2,108 Noninterest income: Service charges 132 139 261 285 Premiums and fees from SBA and mortgage operations 98 102 170 248 Miscellaneous 9 13 21 27 Total noninterest income 239 254 452 560 Noninterest expense: Salaries and employee benefits 533 560 1,082 1,119 Occupancy 102 99 199 193 Equipment 93 96 191 189 Other 350 389 755 774 Total noninterest expense 1,078 1,144 2,227 2,275 Income before provision for income taxes 375 227 707 393 Provision for income taxes 131 54 229 104 Net income $ 244 $ 173 478 289 Earnings per share: Primary $ 0.19 $ 0.13 $0.37 $ 0.22 Fully diluted $ 0.19 $ 0.13 $0.36 $ 0.22
Page 2 FIRST FINANCIAL BANCORP AND SUBSIDIARY Consolidated Statements of Cash Flows (in thousands) Six Months Ended June 30
1995 1994 Cash flows from operating activities: Net income $ 478 $ 289 Adjustments to reconcile net income to net cash provided by operating activities: (Decrease) increase in loans held for sale (4) 437 Increase in deferred loan income 12 48 Loss on sale of other real estate owned 0 3 Depreciation and amortization 213 218 Provision for loan losses 35 74 Provision for deferred taxes 126 (11) Increase in accrued interest receivable (116) (145) Increase (decrease) in accrued interest payable 44 ( 33) Decrease in other liabilities (532) ( 102) (Increase) decrease in other assets ( 81) 85 Net cash provided by operating activities 175 863 Cash flows from investing activities: Proceeds from maturity of held-to- maturity securities 0 46 Proceeds from maturity of available- for-sale securities 13,451 8,828 Purchases of available-for-sale securities (6,841) (6,673) Increase in loans made to customers ( 837) (801) Proceeds from sale of other real estate 0 338 Purchase of bank premises and equipment ( 101) ( 51) Net cash provided by investing activities 5,672 1,687 Cash flows from financing activities: Net decrease in deposits (6,425) (1,493) Payments on note payable ( 16) ( 15) Dividends paid (65) ( 131) Proceeds from issuance of common stock 4 0 Net cash used in financing activities (6,502) (1,639) Net (decrease) increase in cash and cash equivalents ( 655) 911 Cash and cash equivalents at beginning of period 7,199 6,424 Cash and cash equivalents at end of period $6,544 $7,335
Page 3 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION Changes in Financial Condition Consolidated assets at June 30, 1995 were below the level at December 31, 1994 by $7.1 million, or 7%. The reduced level is attributable to a net decrease in deposits of $6.4 million, or 7%, and the payment of $1 million to settle 1994 securities purchases with 1995 settlement dates. The decline in deposits is principally seasonal in nature and results primarily from agricultural activity. Net investment security maturities of $7.1 million provided the necessary liquidity to fund the deposit reduction. The allowance for loan losses as a percentage of gross loans outstanding is 1.77% at June 30, 1995 compared to 1.98% at December 31, 1994. Nonaccrual loans as a percentage of total loans increased to 2.45% at June 30, 1995, up from 1.34% at December 31, 1994. The nonaccrual coverage of the allowance for loan losses decreased to .72% times at June 30, 1995 from 1.47 times at December 31, 1994. Total portfolio delinquency at June 30, 1995 stood at 4.64% compared to 2.71% at December 31, 1994. The increased level of non accrual loans is not indicative of overall portfolio deterioration. Additions to nonaccrual loans resulted from a small number of loans with specific isolated weaknesses, and adequate reserves have been provided for those loans at June 30, 1995. The increased delinquency rate is largely a function of loan renewals that had not been processed prior to June 30, 1995. The following table depicts activity in the allowance for loan losses and allocation of reserves for and at the six and twelve months ended June 30, 1995 and December 31, 1994, respectively. ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES 6/30/95 12/31/94 Balance at beginning of period 1,127 924 Charge-offs: Commercial 156 98 Consumer 56 77 Total charge-offs 212 175 Recoveries: Commercial 57 37 Consumer 14 18 Total recoveries 71 55 Net charge-offs 141 120 Additions charged to operations 35 323 Balance at end of period 1,021 1,127 Ratio of net charge-offs to average loans outstanding .25 .20 Allocation of the Allowance for Loan Losses 6/30/95 6/30/95 12/31/94 12/31/94 Loan Category Amount % of Loans Amount % of Loans Commercial 369 57.24% 376 78.25% Real estate 51 38.56% 121 17.12% Consumer 2 4.20% 4 4.63% Unallocated 599 N/A 626 N/A Totals 1,021 100% 1,127 100% The adoption and application of the Financial Accounting Standards Board's Statement of Financial Accounting Standard (SFAS) No. 114, Accounting by Creditors for Impairment of a Loan, as amended by Statement No. 118, Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures (SFAS 114), does not have a material impact on the basis of presentation for the aforementioned tables. Page 4 Consolidated equity increased to $11.29 million or 11.5% of total assets at June 30, 1995 compared to $10.61 million or 10.09% of total assets at December 31,1994. The valuation account related to investment securities available for sale increased to a $152 thousand addition to capital at June 30, 1995 from a $112 thousand deduction from capital at December 31, 1994. The increase in the investment valuation account reflects the market appreciation of investment securities related to the general decline in interest rates that occurred between December 31, 1994 and June 30, 1995. The capital position of the Company's subsidiary, Bank of Lodi, NA, also increased. The total risk-based capital ratio was 13.54% at June 30, 1995 versus 12.73% at December 31, 1994. The Bank's leverage capital ratio was 9.05% at June 30, 1995 versus 7.89% at December 31, 1994. Changes in Results of Operations Six Months Ended June 30, 1995: Net income for the six months ended June 30, 1995 was $478 thousand and represented an increase of $189 thousand, or 65%, over the comparable prior year period. Net interest income for the six months ended June 30, 1995 was $335 thousand, or 15% above the comparable prior year period and is the net result of the following principle changes in volumes and yields. Average earning assets increased by .35% and average earning asset funding decreased by .8% over the comparable prior year period, resulting in a benefit to net interest income of $23 thousand. A 74 basis point increase in the net interest margin resulted in a $419 thousand increase in net interest income over the comparable prior year period. Average loans outstanding declined by approximately 7% relative to the prior year period. Average noninterest bearing deposits and certificates of deposit increased by approximately 32% and 6%, respectively, while average interest bearing demand deposits declined by approximately 12%. The change in the loan and deposit mix reduced net interest income by $108 thousand in relation to the comparable prior year period. The loan loss provision for the six months ended June 30, 1995 was $35 thousand, or 53%, below the comparable prior year total. See the Changes in Financial Condition portion of Management's Discussion and Analysis for a discussion of the loan portfolio and changes in the allowance for loan losses. Noninterest income for the six months ended June 30, 1995 was $108 thousand, or 19%, below the comparable prior year period. The majority of the decrease is due to a $86 thousand, or 31%, decrease in SBA and mortgage income. Although the number of SBA loan sales originated is comparable to that of the prior year period, the average balance of new loans originated is lower than that of the prior year, resulting in lower premiums earned. Mortgage loan volume is down approximately 30% from that of the comparable prior year period, reflecting stagnant purchase and refinance conditions in the local residential real estate market. Page 5 Noninterest expenses for the six months ended June 30, 1995 decreased from the comparable prior year level by $48 thousand or 2%. The most significant component of the reduction in noninterest expense was a $37 thousand, or 3% decrease in salary and benefit expenses due to lower staffing levels during 1995. The decrease in other operating expenses are principally a result of widespread reductions in administrative costs. Three Months Ended June 30, 1995: Net income for the three months ended June 30, 1995 was $244 thousand, or $.19 per share. The earnings represent an increase of 41% over the $173 thousand, or $.13 per share, earned for the quarter ended June 30, 1994 and 4.3% over the $234 thousand, or $.18 per share, earned for the quarter ended March 31, 1995. Return on average assets and average equity increased to .99% and 8.9%, respectively, compared to .69% and 6.3%, respectively, for the comparable prior year quarter. Net interest income for the second quarter of 1995 increased by 6% over the comparable prior year quarter and is the net result of the following principle changes in volumes and yields. Although average earning assets declined by 1.5%, the related decline of $10 thousand in net interest income was offset by a $136 thousand benefit from a 42 basis point increase in net interest margin. Average loans outstanding declined by approximately 7% relative to the prior year quarter. Average noninterest bearing deposits and certificates of deposit increased by approximately 26% and 7%, respectively, while average interest bearing demand deposits declined by approximately 16%. The impact of loan and deposit mix changes was a decline in net interest income of $53 thousand compared to the comparable prior year quarter. Noninterest income and noninterest expense for the quarter ended June 30, 1995 both declined by 6%. SBA and mortgage income declined by $4 thousand, or 4%. Service charge income fell by $7 thousand, or 5%, principally as a result of declining returned check volumes. Salaries and benefits were reduced by $27 thousand, or 5%, while other noninterest expenses were reduced by $39 thousand, or 10%. The reduction in salaries and benefits was the result of lower staffing and related benefit levels, while the reduction in other noninterest expenses reflects widespread reductions in administrative costs and lower legal and professional expenditures. The provision for loan losses declined by $24 thousand, or 62%, as loan loss recoveries limited the need for credit loss provisions. Basis of Presentation First Financial Bancorp is the holding company for the Bank of Lodi, N.A.. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of financial position as of the dates indicated and results of operations for the periods shown. All material intercompany accounts and transactions have been eliminated in consolidation. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts. The results for the six months ended June 30, 1995 are not necessarily indicative of the results which may be expected for the year ended December 31, 1995. The unaudited consolidated financial statements presented herein should be read in conjunction with the consolidated financial statements and notes included in the 1994 Annual Report to Shareholders. Page 6 PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not Applicable. ITEM 2. CHANGES IN SECURITIES Not Applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's Annual Meeting of Shareholders was held on April 25, 1995. The purpose of the meeting was to elect the Company's board of directors and approve an amendment to the 1991 Director Stock Option Plan. The following directors were elected based upon the votes cast as indicated:
Votes Votes Votes Director "for" "against" "withheld" Bozant Katzakian 769,857 0 26,494 Angelo J. Anagnos 769,416 0 26,935 Daniel R. Anderson 769,725 0 26,626 Raymond H. Coldani 769,725 0 26,626 Benjamin R. Goehring 769,593 0 26,758 Michael D. Ramsey 769,725 0 26,626 Frank M. Sasaki 769,857 0 26,494 Weldon D. Schumacher 769,593 0 26,758 Dennis R. Swanson 769,196 0 27,155
The amendment to the 1991 Director Stock Option Plan was approved based upon the following votes cast as indicated: For: 716,512 Against: 29,889 Abstain: 49,950 There were 1,306,446 shares issued and outstanding as of the record date, March 1, 1995. ITEM 5. OTHER INFORMATION Not applicable. Page 7 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS
Exhibit Number 2 Not applicable. 4 Registrant's current Bylaws. 10 Amendment No. 1 to the 1991 Director Stock Option Plan filed as Post Effective Amendment No. 1 to Form S8 Registration Statement (File Number 3340954). 11 Primary and fully diluted earnings per common and common equivalent share are calculated by dividing net income by the weighted-average number of common and common share equivalents outstanding during the period. Stock options are considered common share equivalents for this calculation. Weighted average shares used in the computation of primary and fully diluted earnings per share were 1,312,955 and 1,316,182, respectively for the quarter ended June 30, 1995. Weighted average shares used in the computation of both primary and fully diluted earnings per share were 1,306,007 for the quarter ended June 30, 1994. 15 Not applicable. 16 Not applicable. 18 Not applicable. 19 Not applicable. 20 Not applicable. 23 Not applicable. 24 Not applicable. 25 Not applicable. 27 Financial Data Schedule (filed electronically). 28 Not applicable.
(b) REPORTS ON FORM 8-K On July 31, 1995, the company filed a Form 8-K dated July 31, 1995 regarding earnings for the second quarter of 1995 and the declaration of a cash dividend. Page 8 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. FIRST FINANCIAL BANCORP /s/ David M. Philipp David M. Philipp Senior Vice-President Chief Financial Officer Corporate Secretary Dated May 15, 1995 Page 9 EX-27 2
9 6-MOS DEC-31-1995 JUN-30-1995 3,944,000 76,803,000 2,600,000 0 0 25,682,000 26,079,000 57,605,000 1,021,000 98,027,000 83,554,000 344,000 236,000 2,602,000 7,314,000 0 0 0 98,027,000 3,093,000 846,000 75,000 4,014,000 1,357,000 1,497,000 2,517,000 35,000 0 2,227,000 707,000 707,000 0 0 478,000 .37 .36 .058 1,414,000 12,000 0 0 1,127,000 212,000 71,000 1,021,000 1,021,000 0 0