-----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, SmqauJNALO16PjxSX54p9/M7/8MFFCHnBUN/nUg9rYd2VydTCo1Ye1ESfdNqGPaV hyIQA/Kb8u+qkHn1qdjhyg== 0000892569-95-000405.txt : 19950823 0000892569-95-000405.hdr.sgml : 19950823 ACCESSION NUMBER: 0000892569-95-000405 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: COMBANCORP CENTRAL INDEX KEY: 0000741316 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 953737171 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15984 FILM NUMBER: 95562726 BUSINESS ADDRESS: STREET 1: 6001 E WASHINGTON BLVD CITY: CITY OF COMMERCE STATE: CA ZIP: 90040 BUSINESS PHONE: 2137248800 MAIL ADDRESS: STREET 1: PO BOX 911070 STREET 2: 6001 E WASHINGTON BLVD CITY: CITY OF COMMERCE STATE: CA ZIP: 90091 10-Q 1 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 June 30, 1995 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to ______________ Commission file number: 0-15984 -------------------------------------------------------- COMBANCORP - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-3737171 - -------------------------------------------------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number) 6001 E. Washington Blvd., City of Commerce, CA 90040 - -------------------------------------------------------------------------------------------------------------- (Address of Principal executive offices) (Zip Code)
(213) 724-8800 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of June 30, 1995, there were 565,789 outstanding shares of the issuer's Common Stock, no par value. 2 PART I - FINANCIAL INFORMATION Item 1. Financial Statements CONSOLIDATED BALANCE SHEETS (unaudited)
ASSETS June 30, 1995 December 31, l994 ------------- ----------------- Cash and due from banks - demand $3,149,991 $5,745,356 Federal funds sold 14,100,000 11,605,000 ----------- ----------- Cash and cash equivalents 17,249,991 17,350,356 Interest bearing deposits with financial institutions 9,779,000 8,102,000 Securities held to maturity 120,000 120,000 Securities available for sale 13,367,584 16,830,404 Loans 23,960,243 25,809,010 Deferred loan fees and costs (42,819) (59,280) Unearned discount on acquired loans (126,216) (285,827) Allowance for loan losses (528,746) (498,827) ----------- ----------- Net loans 23,262,462 24,965,076 ----------- ----------- Premises and equipment, net 3,146,769 2,526,677 Other real estate owned 125,922 371,013 Accrued interest receivable and other assets 803,896 922,922 ----------- ----------- Total assets $67,855,624 $71,188,448 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - non-interest bearing $22,587,537 $23,439,082 Savings and other interest bearing accounts 26,734,386 28,870,686 Time, $100,000 and over 3,847,217 4,329,934 Other time 7,925,091 8,259,595 ----------- ----------- Total deposits 61,094,231 64,899,297 Accrued interest payable and other liabilities 423,196 342,524 ----------- ----------- Total liabilities 61,517,428 65,241,821 ----------- ----------- Shareholders' equity: Common stock 4,453,300 4,453,300 Retained earnings 1,811,744 1,609,002 Unrealized gain (loss) on securities available for sale, net 73,152 (115,675) ----------- ----------- Total shareholders' equity 6,338,196 5,946,627 ----------- ----------- Total liabilities and shareholders' equity $67,855,624 $71,188,448 =========== ===========
See accompanying notes to consolidated financial statements. 2 3 CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three months Six months ended June 30, ended June 30, ------------------------ --------------------------- 1995 1994 1995 1994 --------- -------- ----------- ----------- Interest income: Interest on loans $737,384 $576,596 $1,529,201 $1,094,867 Interest on deposits with financial institutions 147,620 68,272 270,792 139,992 Interest on securities 245,651 152,530 500,801 276,272 Interest on Federal funds sold 192,432 71,047 349,252 113,173 --------- -------- ---------- ---------- Total interest income 1,323,087 868,445 2,650,046 1,624,304 Interest expense on deposits 296,888 190,668 577,348 370,680 --------- -------- ---------- ---------- Net interest income 1,026,199 677,777 2,072,698 1,253,624 Provision for loan losses 40,000 55,000 70,000 127,800 --------- -------- ---------- ---------- Net interest income after provision for loan losses 986,199 622,777 2,002,698 1,125,824 --------- -------- ---------- ---------- Other income: Gain (loss) on the sale of OREO (9,824) - (9,824) - Other 161,904 138,900 339,215 274,892 --------- -------- ---------- ---------- Total other income 152,080 138,900 329,391 274,892 --------- -------- ---------- ---------- Other operating expenses: Salaries and employee benefits 357,454 272,949 757,888 562,095 Occupancy expense 90,561 69,166 190,370 135,342 Equipment and utilities expense 61,938 18,245 101,022 43,142 Professional fees 42,420 31,320 89,251 55,153 Advertising expense 18,294 19,743 37,299 28,167 Business promotion 20,471 12,288 35,377 25,773 Supplies and Office expenses 54,955 24,762 90,861 44,708 Data processing 28,708 29,775 69,097 62,545 Other expenses 168,025 115,112 373,735 248,826 --------- -------- ---------- ---------- Total other operating expenses 842,826 593,360 1,744,900 1,205,751 --------- -------- ---------- ---------- Income before income taxes 295,453 168,317 587,189 194,965 Provision for income taxes 121,900 74,200 243,000 83,800 --------- -------- ---------- ---------- Net income $173,553 $94,117 344,189 111,165 ========= ======== ========== ========== Per share: Net income $0.31 $0.17 $0.61 $0.20 ========= ======== ========== ========== Dividends - - $0.25 $0.09 ========= ======== ========== ==========
See accompanying notes to consolidated financial statements 3 4 CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
Period ended June 30, 1995 1994 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $344,189 $111,165 CASH FLOWS FROM OPERATING ACTIVITIES Adjustments to reconcile net income to net cash provided by operating activities Loss on sale of premises and equipment and other real estate owned 9,824 48,836 Depreciation and amortization 106,085 68,926 Write down of other real estate owned 20,000 - Provision for possible loan losses 70,000 127,800 Amortization of deferred loan fees (37,815) (43,078) Net accretion of discount on securities (171,887) (163,453) Accretion of unearned discount on acquired loans (143,940) (29,852) Net increase in accrued income receivable and other assets 9,294 55,028 Increase in taxes payable 51,689 85,647 Net (decrease) in accrued interest payable and other liabilities (23,989) (10,165) ----------- ---------- Net cash provided by (used in) operating activities 233,450 250,854 ----------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Net (increase) decrease in interest bearing deposits with other financial institutions (1,677,000) 265,874 Proceeds from sale of other real estate owned 361,189 - Proceeds from maturities and calls of securities 7,901,902 20,659,716 Purchases of securities (3,944,143) (21,624,006) Loan principal collections, net 1,668,447 1,181,297 Purchases of premises and equipment (697,697) (791,476) ----------- ---------- Net cash provided by investing 3,612,698 (308,595) ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in deposits (3,805,066) 2,061,090 Dividends paid (141,447) - ----------- ---------- Net cash provided by financing activities (3,946,513) 2,061,090 ----------- ---------- Increase in cash and cash equivalents (100,365) 2,003,349 ----------- ---------- CASH AND CASH EQUIVALENTS Beginning of year 17,350,356 7,324,373 ----------- ---------- End of year $17,249,991 $9,327,722 =========== ==========
See accompanying notes to consolidated financial statements 4 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1995 (unaudited) Note 1. Basis of Presentation The accounting and reporting policies of the Company and its subsidiary are in accordance with generally accepted accounting principles and conform to general practices within the banking industry. The financial statements are prepared on the accrual basis of accounting with all significant income and expense items accrued at the respective statement dates. The financial statements include the accounts of the Company and its wholly-owned subsidiary, Commerce National Bank (the "Bank"). All material intercompany accounts and transactions have been eliminated. In management's opinion, the accompanying financial statements reflect all material adjustments (consisting only of normal recurring accruals) necessary to a fair statement of the results for the interim periods presented. The results for the interim period ended June 30, 1995, are not necessarily indicative of the results which will be reported for the entire year. Note 2. Income Per Share Income per share is computed using the weighted average number of shares of common stock and common stock equivalents outstanding. Stock options are considered to be common stock equivalents, except when their effect would be antidilutive or immaterial. The weighted average number of shares used to compute income per share was 565,789 for each period presented. Note 3. Reserve for Possible Loan Losses On January 1, 1995, the Bank adopted FASB Statement No. 114, Accounting by Creditors for Impairment of a Loan, as amended by FASB Statement No. 118. There was no material effect on the Bank's financial statements. Statement No. 114 generally requires impaired loans to be measured on the present value of expected future cash flows discounted at the loan's effective interest rate or, as an 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 it is probable the creditor will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. At June 30, 1995, the Bank has classified $570,000 of its loans as impaired with a specific loss reserve of $93,950. There was no impact on the financial statements as a result of the adoption of Statement No. 114 as the existing allowance was adequate for this reserve. 5 6 Note 4. Securities Available for Sale Effective January 1, 1995, the Bank adopted FASB Statement No. 119, Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments, which requires the Bank to make disclosures about the purposes of the investment in derivative financial instruments and about how the instruments are reported in financial statements. At June 30, 1995, the Bank had no material derivative financial instruments. Note 5. Availability of Funds From Bank Under Federal banking law, dividends declared by the Bank in any calendar year may not, without the approval of the Comptroller of the Currency, exceed the Bank's net income, as defined, for that year combined with its retained net income for the preceding two years. Federal banking law restricts the Bank from extending credit to the Company in excess of 10 percent of the Bank's capital stock and surplus, as defined. Any such extensions of credit are subject to strict collateral requirements. 6 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition The Company's consolidated balance sheet at June 30, 1995 reflected a decrease of 4.7% and 5.9% in total assets and deposits, respectively, from December 31, 1994. As a result of continued slow loan demand, the Bank experienced a decrease of 7.2% in gross loans during this period. The components of the changes in loans are as follows:
Decrease over December 31, 1994 ----------------- Commercial loans (3.8%) Real estate - construction (4.4%) Real estate - primarily loans for acquisition or improvement of owner occupied offices and industrial property (14.6%) Real estate - mortgage loans acquired (1.2%) Installment loans (1.4%)
On August 26, 1994, the Bank, as part of a consortium, entered into an Insured Deposit Purchase and Assumption Agreement with the Federal Deposit Insurance Corporation ("FDIC") for the purchase and assumption of certain assets and liabilities of Capital Bank. The Bank purchased $674,000 of cash assets and assumed deposits of $22,536,000 which included approximately $2 million of uninsured deposits payable to the FDIC for a premium of $185,000, including expenses, which is being amortized over 7 years on the straight line method. The $2 million uninsured deposits were wired to the FDIC on June 29, 1995. The Bank has retained approximately $12,800,000 of the deposits as of June 30, 1995. The components of the deposits purchased are as follows:
June 30, 1995 August 26, 1994 (approximate) --------------- ------------- Demand deposits $8,200,638 $5,230,783 Interest-bearing deposits 4,915,937 3,661,566 Time certificates of deposit 5,667,724 2,082,999 Savings deposits 3,697,787 1,777,191 Accrued interest payable 53,476 19,242 ----------- ----------- Total $22,535,562 $12,771,781 =========== ===========
7 8 In addition, the Bank obtained a month-to-month lease on the Downey Branch facility with an option to purchase. On May 23, 1995, the Bank exercised its option to purchase the Downey Branch facility for $650,000, which was the primary factor in the 24.5% increase in premises and equipment when compared to December 31, 1994. As part of the transaction, the Bank separately purchased approximately $7,784,000 of face value loans, net of participations sold of $2,035,000, from various pools of loans. The commercial loans were purchased at a discount of $332,000 and the real estate loans at a discount of $203,000. These discounts are being amortized over the remaining contractual terms of the loans purchased. As of June 30, 1995, the Bank has approximately $4,400,000 in acquired net loans outstanding attributable to this transaction. The components of the loans purchased are as follows:
June 30, 1995 August 26, 1994 (approximate) --------------- ------------- Commercial loans $3,222,676 $2,565,805 Real Estate - primarily for acquisition or $2,124,541 1,373,638 improvement of owner occupied offices and industrial properties Installment loans 401,599 436,594 ---------- ---------- Total $5,748,816 $4,376,037 ========== ==========
At June 30, 1995, the loan to deposit ratio was 39.2%, compared to 39.8% at December 31, 1994. Non-performing loans (i.e, those past due 90 days and/or on non-accrual) at June 30, 1995, amounted to approximately $574,000, as compared to approximately $397,000 at December 31, 1994, a 44.6% increase. Non-performing loans at June 30, 1995 consisted of the following: one loan totaling approximately $104,000 is secured by commercial real estate; one (1) loan totaling approximately $98,000 which is secured by UCC filings on equipment and which management believes provides adequate security to the Bank; one (1) loan in the amount of $150,000 which is secured by approximately $200,000 in receivables (this loan was purchased from the FDIC); one (1) loan in the amount of approximately $202,000 which is unsecured. The balance of non-performing loans consists of an installment loan and credit card receivables. At July 31, 1995, the Bank received notice of a Bankruptcy filing on a commercial loan (secured by receivables )in the amount of $200,000. This loan is now considered non-performing but is not reflected on June 30, 1995 totals. Other Real Estate Owned ("OREO") at June 30, 1995 decreased from $371,000 at December 31, 1994 to $125,900 at June 30, 1995, reflecting the sale of the commercial property held at December 31, 1994 which was sold at a loss of approximately $9,800 and an addition of one parcel in the amount of $145,900 which was written down to approximately $125,900 to reflect current fair value. 8 9
ASSETS QUALITY RATIOS: June 30, 1995 December 31, 1994 ------------- ----------------- Non-performing loans to gross loans 2.4% 1.5% Non-performing loans and OREO to assets 1.0% 1.1%
The allowance and provision for possible loan losses is a general reserve established by management to absorb potential losses inherent in the entire loan portfolio. The level and rate of additions to the allowance for loan losses are based on a continuing analysis of the loan portfolio and at June 30, 1995, reflected an amount which in management's judgment was adequate for known and inherent losses. In evaluating the adequacy of the allowance, management gives consideration to economic prospects and net worth of individual borrowers and guarantors, collateral evaluation, the nature and amount of loans subject to adverse classification, the total size and mix of the loan portfolio and such other factors that deserve recognition. The allowance for loan losses, aggregated $528,746 at June 30, 1995, or 2.2% of outstanding loans as compared to $498,827, or 1.9% of outstanding loans at December 31, 1994. During the same period, the allowance for loan losses as a percentage of non-performing loans was 92.1% and 79.6%, respectively. Funds not required for lending activities at June 30, 1995 were invested in U. S. Treasury and Agency securities, investment grade corporate bonds, municipal bonds, interest-bearing deposits with other financial institutions and Federal funds sold. Federal funds sold and interest-bearing deposits with other financial institutions increased by approximately $2.5 million and $1.7 million, respectively, while securities available for sale decreased by approximately $3.5 million. Securities maturing were invested in Federal funds and/or interest bearing deposits due to the fact that they were yielding rates equal to, or better than, those available on other securities. The net unrealized gain on securities available for sale, net of deferred taxes, included in shareholders' equity increased to $73,152 at June 30, 1995 from a net loss of ($115,675) at December 31, 1994, reflecting the decline in yields during the first six months of 1995, which increased the market value of these securities from December 31, 1994. Results of Operations Net income for the three months and six months ended June 30, 1995 was $173,553, or $.31 per share, and $344,189 or $.61 per share, respectively, compared to $94,117 or $.17 earnings per share and $111,165 or $.20 per share, reported in the comparable periods last year. Approximately $106,000, or $.19 per share, and approximately $206,000, or $.36 per share, respectively, were attributable to the establishment of the Downey branch resulting from the August 26, 1994 transaction. Net interest income for the three month and six month periods ended June 30, 1995 increased approximately 51.4% and 65.3% over the comparable periods in 1994 due primarily to the increase in total average earning assets of 31.2% and 28.1% for the respective periods. Of the 51.4% and 65.3% increase in net interest income, 18.9% and 22.7%, respectively, are attributable to the establishment of the Downey branch. Average loans increased 15.8% and 12.1% when compared to the three and six month periods in 9 10 1994, while other average interest bearing assets consisting of securities and time certificates of deposits with other institutions increased 43.4% and 41.1% during the respective periods. Interest expense increased approximately 55.7% for the three month and six month periods ended June 30, 1995 over the comparable periods in 1994 due to the increase in average interest bearing deposits of 32.1% and 29.7% for the respective periods. The annualized net interest margin on average earning assets was 6.3% and 5.4% for the three months ended June 30, 1995 and 1994, respectively, and was 6.6% and 5.1% for the six months ended June 30, 1995 and 1994, respectively. The provision for loan losses decreased $15,000, or 27.3%, during the three month period and $57,800, or 45.2%, during the six month period ending June 30, 1995, compared to the respective periods in 1994. This reflects management's improved assessment of the potential risks in the loan portfolio, the adequacy of the underlying collateral, collectibility, and the experience of past loan losses. For analytical purposes, as part of the overall estimate of the allowance for loan losses, management attributes a portion of the allowance to each category in the loan portfolio. However, this does not imply that any part of the allowance is segregated for, or allocated to, any particular loan or group of loans. The allowance is available to absorb all loan losses originating from the loan portfolio. Other income increased approximately 16.6% and 19.8% during the three month and six month periods ending June 30, 1995 compared to the respective periods in 1994 due primarily to service charges attributable to the increase of deposit accounts due to the deposits acquired in the August, 1994 transaction. Other operating expenses increased approximately 42.0% and 44.7% for the three month and six month periods ending June 30, 1995 compared to the respective periods in 1994. These increases were primarily due to the following: 31.0% and 34.8% increase in salaries and employee benefits due to the acquisition and staffing of the Bank's Downey Branch and the related costs; 30.9% and 40.7% attributable to occupancy expense related to the accrued rent liability to the FDIC pending the purchase of the Downey building; 239.5% and 134.2% in equipment expense related primarily to the upgrade in hardware and software related to the conversion to a new data processing system and to installation of a wide/local area network; 121.9% and 103.2% in stationery and supplies also attributable to the establishment of the Downey branch and the conversion new data processing system; and the 46% and 50.2% increase in other expenses due primarily to the increased FDIC assessment for the acquired deposits related to the Downey Branch. Other operating expenses as a percentage of total interest income was 63.7% and 65.8% during the three month and six month periods ending June 30, 1995 compared to 68.3% and 74.2% during comparable periods in 1994, respectively. Total other operating expense as a percentage of total average assets was 1.1% and 2.4% during the three month and six month periods ending June 30, 1995 compared to 1.1% and 2.2% during 1994's comparable periods, respectively. Liquidity and Interest Rate Sensitivity At June 30, 1995, total earning assets were $61.3 million, or 90.4% of total assets. The Company's liquid assets were $31.5 million and consisted of cash and due from 10 11 banks, interest-bearing deposits with financial institutions, unpledged securities maturing within one year and Federal funds sold. The liquidity ratio (i.e., liquid assets to total deposits) was stable at 51.5% compared to 56.2% at December 31, 1994. Except for commitments to lend in the amount of approximately $6.1 million at June 30, 1995, which are expected to be funded by deposits, the Company has no material unrecorded commitments for funds. Interest-bearing deposits with financial institutions at June 30, 1995 consisted exclusively of time certificates of deposit, of which 99% mature within one year. The Company's securities consisted primarily of U.S. treasury and agency obligations, corporate bonds, and bank qualified municipal bonds, which were readily marketable. At June 30, 1995, the market value of these was more than their book value by approximately $126,100. Securities totaling $400,000 were pledged to secure Treasury Tax and Loan deposits. The Company's loan portfolio also was relatively liquid with approximately 78.1% of the outstanding loans maturing within one year and/or sensitive to changes in interest rates. The Company believes that its position with respect to interest rate fluctuations is favorable, in that the majority of the Company's loans bear a floating rate of interest and the majority of its investments have short maturities. At June 30, 1995, the Company was in an asset sensitive position in its 90 day gap, (i.e., the difference between assets and liabilities that reprice in that period as a percentage of total assets) was 6% and its cumulative gap was 34%. Generally, an asset sensitive position will result in enhanced earnings in a rising interest rate environment and declining earnings in a falling interest rate environment because larger volumes of assets than liabilities will reprice. Conversely, a liability sensitive position will be detrimental to earnings in a rising interest rate environment and will enhance earnings in a falling interest rate environment. The Asset and Liability Maturity Repricing Schedule below sets forth the distribution of Repricing opportunities for the Company's interest earning assets and liabilities, the interest sensitivity gap and the ratio of cumulative gap to total assets. 11 12 Interest Sensitivity Period (IN THOUSANDS)
over over over 3 months 6 months 1 year 3 months through through through over or less 6 months 1 year 5 years 5 years Total -------- -------- -------- ------- ------- ------- Interest Earning Assets: Federal funds sold $14,100 $ - $ - $ - $ - $14,100 Securities 1,387 1,971 1,594 7,769 767 13,488 Deposits with other institutions 3,547 2,575 3,557 100 - 9,779 Loans 16,748 6,441 1,331 3,868 1,369 23,960 ------- ------ ------ ------- ------- ------- TOTAL $35,872 $5,190 $6,482 $11,737 $ 2,136 $61,327 ======= ====== ====== ======= ======= ======= Interest Bearing Liabilities: Time Deposits: a) TCD's less than $100M $ 3,706 $1,697 $2,108 $ 414 $ - $ 7,925 b) TCD's $100M and over 1,559 988 1,200 100 - 3,847 Savings 9,679 - - - - 9,679 Money Market 8,891 - - - - 8,891 Now Accounts 8,164 - - - - 8,164 ------- ------ ------ ------- ------- ------- TOTAL $31,999 $2,685 $3,308 $ 514 $ - $38,506 ======= ====== ====== ======= ======= ======= Interest Sensitivity Gap: Interval $ 3,783 $2,505 $3,174 $11,223 $ 2,136 Cumulative $ 3,783 $6,288 $9,462 $20,685 $22,821 $22,821 ======= ====== ====== ======= ======= ======= Ratio of cumulative gap to total assets 6% 9% 14% 30% 34% 34%
At June 30, 1995, the Company was entitled to borrow on a collateralized basis at the discount window at the Federal Reserve Bank of San Francisco. In addition, the Bank has available a Federal funds line of credit in the amount of $1 million with one of its correspondent banks. Capital Resources The Company is currently exempt from the Federal Reserve Board's risk-based capital guidelines because consolidated assets are under $150 million. However, the Bank is subject to the risk-based capital guidelines adopted by the Office of the Comptroller of the Currency. These guidelines require the Bank to maintain a minimum ratio of total capital-to-risk-weighted assets of 8% (of which at least 4% must consist of Tier I capital), and a leverage ratio of at least 3%. At June 30, 1995, the Bank had a total capital-to-risk-weighted assets ratio of 18.8%, with a Tier I capital ratio of 17.5%, and a leverage ratio of 8.6%. Currently, the Company and the Bank exclude the impact of the net unrealized gains (loss) on securities available for sale, net of deferred taxes in their regulatory capital ratios. During the last two years, capital has been generated through the retention of earnings. 12 13 Recent Accounting Developments In December 1991, the FASB issued Statement No. 107, Disclosures about Fair Value of Financial Instruments. Statement 107 requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. The disclosures include the methods and assumptions used to estimate the fair value if quoted market prices are not used. Statement 107 will first be required for the Company's fiscal year that ends December 31, 1995. On January 1, 1995, the Bank adopted FASB Statement No. 114, Accounting by Creditors for Impairment of a Loan, as amended by FASB Statement No. 118. There are no material effect on the Bank's financial statements. Statement No. 114 generally requires impaired loans to be measured on the present value of expected future cash flows discounted at the loan's effective interest rate or, as an 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 it is probable the creditor will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. At June 30, 1995, the Bank has classified $570,000 of its loans as impaired with a specific loss reserve of $93,950. There was no impact on the financial statements as a result of the adoption of Statement No. 114 as the existing allowance was adequate for this reserve. Effective January 1, 1995, the Bank adopted FASB Statement No. 119, Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments, which requires the Bank to make disclosures about the purposes of the investment in derivative financial instruments and about how the instruments are reported in financial statements. At June 30, 1995, the Bank had no material derivative financial instruments. 13 14 PART II. OTHER INFORMATION Items 1 - 3. Inapplicable Item 4. At the registrant's annual meeting of shareholders held on May 10, 1995, the following individuals were elected to the Board of Directors of the registrant: Richard F. Demerjian, Robert L. Glover, Jack Minasian, James C. Oppenheim, Phillip J. Pace, Richard J. Strayer, Esther G. Wilson Item 5. Inapplicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (27) Financial Data Schedule (b) Reports on Form 8-K The registrant filed no reports on Form 8-K during the quarter ended June 30, 1995. 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. COMBANCORP Date: August 11, 1995 By: /s/ RICHARD F. DEMERJIAN -------------------------- Richard F. Demerjian Chief Executive Officer Date: August 11, 1995 By: /s/ ESTHER G. WILSON -------------------------- Esther G. Wilson Chief Financial Officer 14 EX-27 2 FINANCIAL DATA SCHEDULE
9 3-MOS DEC-31-1994 APR-01-1995 JUN-30-1995 3,149,991 9,779,000 14,100,000 0 13,367,584 120,000 0 23,960,243 528,746 67,855,624 61,094,231 0 423,196 0 4,453,300 0 0 1,811,744 67,855,624 737,384 585,703 0 1,323,087 296,888 296,888 1,026,199 40,000 0 842,826 295,453 295,453 0 0 173,553 0.31 0.31 0 0 0 0 0 0 0 0 0 0 0 0
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