-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MzYIig0gA+HSM+W+pxjgLpFpOtNe4JpzACe+C+zTI7f0yQEiY0wT8rpBvu+y/gRd QMHK7+oK+8qTpepZAs0mfw== 0000930661-00-001230.txt : 20000515 0000930661-00-001230.hdr.sgml : 20000515 ACCESSION NUMBER: 0000930661-00-001230 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST STATE BANCORPORATION CENTRAL INDEX KEY: 0000897861 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 850366665 STATE OF INCORPORATION: NM FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12487 FILM NUMBER: 628236 BUSINESS ADDRESS: STREET 1: 7900 JEFFERSON NE CITY: ALBUQUERQUE STATE: NM ZIP: 87109 BUSINESS PHONE: 5052417500 MAIL ADDRESS: STREET 1: 7900 JEFFERSON NE CITY: ALBUQUERQUE STATE: NM ZIP: 87190 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q. -QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (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, 2000. 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 22-25144 FIRST STATE BANCORPORATION (Exact name of registrant as specified in its charter) NEW MEXICO 85-0366665 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 7900 JEFFERSON NE ALBUQUERQUE, NEW MEXICO 87109 (Address of principal executive offices) (Zip Code) (505) 241-7500 (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: 5,170,926 shares of common stock, no par value, outstanding as of May 5, 2000. FIRST STATE BANCORPORATION AND SUBSIDIARY Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements 1 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Item 3. Quantitative and Qualitative Disclosures About Market Risk 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities and Use of Proceeds None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K 8 SIGNATURES 8 PART I - FINANCIAL INFORMATION Item 1. Financial Statements First State Bancorporation and Subsidiary Consolidated Condensed Balance Sheets (unaudited)
March 31, December 31, Assets 2000 1999 ------ ------------ ------------ Cash and due from banks $ 31,036,401 $ 22,725,861 Federal funds sold 13,275,000 -- ------------ ------------ Total cash and cash equivalents 44,311,401 22,725,861 Investment securities: Held to maturity (at amortized cost, market value of $39,382,698 at March 31, 2000, and $22,490,690 at December 31, 1999) 39,515,832 22,590,081 Available for sale (at market, amortized cost of $83,874,150 at March 31, 2000, and $74,227,391 at December 31, 1999) 81,965,329 72,211,289 ------------ ------------ Total investments 121,481,161 94,801,370 ------------ ------------ Loans and leases net of unearned interest 394,158,042 428,637,703 Less allowance for loan and lease losses 5,439,987 5,386,622 ------------ ------------ Net loans and leases 388,718,055 423,251,081 Premises and equipment 13,204,283 15,060,722 Accrued interest receivable 3,376,888 3,062,575 Other real estate owned 1,994,283 1,917,126 Goodwill, net 543,212 569,264 Other assets 6,741,856 5,495,565 ------------ ------------ Total assets $580,371,139 $566,883,564 ============ ============ Liabilities and Stockholders' Equity ------------------------------------ Liabilities: Deposits: Non-interest-bearing $ 93,341,337 $ 89,303,965 Interest-bearing 377,387,135 374,231,608 ------------ ------------ Total deposits 470,728,472 463,535,573 Securities sold under agreements to repurchase 47,860,668 38,927,736 Other liabilities 5,388,747 8,842,326 Long-term debt 11,139,106 11,150,902 ------------ ------------ Total liabilities 535,116,993 522,456,537 Stockholders' equity: Preferred stock, no par value, 1,000,000 shares authorized, none issued or outstanding Common stock, no par value, 20,000,000 shares authorized, issued and outstanding 5,167,152 at March 31, 2000 and 5,158,846 at December 31, 1999 29,562,189 29,459,807 Treasury Stock, at cost (304,100 shares at March 31, 2000 and 228,750 at December 31, 1999) (3,917,481) (3,012,031) Retained earnings 20,869,260 19,309,878 Unrealized loss on investment securities available for sale (1,259,822) (1,330,627) ------------ ------------ Total stockholders' equity 45,254,146 44,427,027 ------------ ------------ Total liabilities and stockholders' equity $580,371,139 $566,883,564 ============ ============ Book value per share $9.31 $9.03 ============ ============ Tangible book value per share $9.19 $8.91 ============ ============
See accompanying notes to unaudited consolidated condensed financial statements. 1 First State Bancorporation and Subsidiary Consolidated Condensed Statements of Operations For the three months ended March 31, 2000 and 1999 (unaudited)
Three months Three months Ended Ended March 31, March 31, 2000 1999 ------------ ------------ Interest Income: Interest and fees on loans and leases $10,354,830 $8,276,280 Interest on investment securities: Taxable 1,450,372 1,425,443 Nontaxable 51,739 58,411 Federal funds sold 54,466 61,037 ------------ ------------ Total interest income 11,911,407 9,821,171 ------------ ------------ Interest expense: Deposits 3,619,736 2,863,076 Short-term borrowings 541,214 424,110 Long-term debt and capital lease 186,066 27,678 ------------ ------------ Total interest expense 4,347,016 3,314,864 ------------ ------------ Net interest income before provision for loan and lease losses 7,564,391 6,506,307 Provision for loan and lease losses 625,002 744,400 ------------ ------------ Net interest income after provision for loan and lease losses 6,939,389 5,761,907 ------------ ------------ Other Income: Service charges on deposit accounts 570,729 469,300 Other banking service fees 101,115 90,048 Credit card transaction fees 510,461 317,390 Operating lease income 105,055 160,043 Loss on sale of investment securities (333,142) -- Gain on sale of Leasing Division 879,078 -- Other 312,642 271,204 ------------ ------------ Total other income 2,145,938 1,307,985 ------------ ------------ Other expenses: Salaries and employee benefits 2,911,125 2,542,740 Occupancy 785,775 587,936 Data Processing 283,500 239,748 Credit card interchange 262,682 178,978 Equipment 464,436 380,934 Leased equipment depreciation 70,241 152,924 Legal, accounting, and consulting 195,644 147,179 Marketing 241,622 232,162 Other real estate owned expenses 15,285 43,561 Amortization of goodwill 26,051 26,051 Other 1,157,867 812,342 ------------ ------------ Total other expenses 6,414,228 5,344,555 ------------ ------------ Income before income taxes 2,671,099 1,725,337 Income tax expense 913,526 628,215 ------------ ------------ Net income $ 1,757,573 $ 1,097,122 ============ ============ Basic earnings per share $0.36 $0.21 ============ ============ Diluted earnings per share $0.35 $0.21 ============ ============ Dividends per common share $0.06 $0.05 ============ ============
See accompanying notes to unaudited consolidated condensed financial statements. 2 FIRST STATE BANCORPORATION AND SUBSIDIARY Consolidated Condensed Statements of Comprehensive Income For the three months ended March 31, 2000 and 1999
Three month ended Three months ended March 31, March 31, 2000 1999 ----------------- ------------------ Net income $1,757,573 $1,097,122 Other comprehensive income net of tax: Unrealized holding losses on securities available for sale arising during period (149,068) (283,018) Less: reclassification adjustment for losses included in net income 219,873 -- ----------------- ------------------ Total comprehensive income $1,828,378 $ 814,104 ================= ==================
See accompanying notes to unaudited consolidated condensed financial statements 3 First State Bancorporation and Subsidiary Consolidated Condensed Statements of Cash Flows For the three months ended March 31, 2000 and 1999 (unaudited)
2000 1999 ------------- ------------- Operating activities: Net Income $ 1,757,573 $ 1,097,122 ------------- ------------- Adjustments to reconcile net income to cash provided by operations: Provisions for loan and lease losses 625,002 744,400 Provision for decline in value of other real estate owned - 28,722 Depreciation and amortization 184,040 408,208 Losses on sales of investment securities 333,142 - Gain of sale of Leasing Division (879,078) - Increase in accrued interest receivable (314,313) (377,980) Increase in other assets, net (1,246,291) (325,926) Increase in other liabilities, net 1,508,145 739,256 ------------- ------------- Total adjustments 210,647 1,216,680 ------------- ------------- Net cash provided by operating activities 1,968,220 2,313,802 ------------- ------------- Cash flows from investing activities: Net increase in loans (27,780,072) (24,975,175) Proceeds from the sale of Leases 64,427,001 - Early payoff of Operating Leases - 559,333 Purchases of investment securities available for sale (21,943,800) (18,527,700) Maturities of investment securities available for sale 24,464 9,950,000 Purchases of investment securities held to maturity (99,182,108) (89,100,000) Maturities of investment securities held to maturity 82,500,000 118,600,000 Sale of investment securities available for sale 11,936,858 - Purchases of premises and equipment (760,556) (123,114) Sales of premises and equipment 125,038 543,177 Payments received on loans classified as other real estate owned 119,443 1,173 ------------- ------------- Net cash used in investing activities 9,466,268 (3,072,306) ------------- ------------- Cash flows from financing activities: Net increase in interest-bearing deposits 3,155,527 4,544,935 Net increase in non-interest-bearing deposits 4,037,372 4,698,179 Net increase in securities sold under repurchase agreements 8,932,932 10,907,444 Payments on long-term debt (11,796) (10,800) Federal Funds purchased, net (4,900,000) - Common stock issued 102,382 107,074 Dividends paid (259,915) (239,731) Purchase of Treasury stock (905,450) - ------------- ------------- Net Cash provided by financing activities 10,151,052 20,007,101 ------------- ------------- Increase in cash and cash equivalents 21,585,540 19,248,597 Cash and cash equivalents at beginning of period 22,725,861 18,093,685 ------------- ------------- Cash and cash equivalents at end of period $ 44,311,401 $ 37,342,282 ============= ============= Supplemental disclosure of noncash investing and financing activities: Additions to other real estate owned in settlement of loans $ 196,600 $ 1,538,338 ============= =============
See accompanying notes to unaudited consolidated condensed financial statement 4 First State Bancorporation and Subsidiary Notes to Consolidated Condensed Financial Statements (Unaudited) 1. Consolidated Condensed Financial Statements The accompanying consolidated condensed financial statements are unaudited and include the accounts of First State Bancorporation (the "Company") and its subsidiary, First State Bank of Taos (100% owned). All significant intercompany accounts and transactions have been eliminated. Information contained in the consolidated condensed financial statements and notes thereto of the Company should be read in conjunction with the Company's consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. The consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and instructions to Form 10-Q. 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 only of normally recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2000, are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. 2. Earnings per Common Share Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("FAS 128") requires the computation of basic earnings per share and diluted earnings per share. Basic earnings per share is computed by dividing income available to common stockholders (the numerator) by the weighted-average number of common shares outstanding during the period (the denominator). Diluted earnings per share is calculated by increasing the basic earning per share denominator by the number of additional common shares that would have been outstanding if dilutive potential common shares for options, warrants, and convertible securities had been issued and increasing the basic earnings per share numerator by the after tax amount of interest and amortization associated with the convertible debentures. The following is a reconciliation of the numerators and denominators of basic and diluted earnings per share for the three months ended March 31:
2000 1999 --------------------------------------- ------------------------------------------ Income Shares Per Share Income Shares Per (Numerator) (Denominator) Amount (Numerator) (Denominator) Share Amount ----------- ---------------- ----------- ----------- --------------- ------------- Basic EPS: Net income available to common stockholders $1,757,573 4,923,928 $0.36 $1,097,122 5,134,710 $0.21 ======== ======== Effect of dilutive securities: Options 120,522 120,629 --------- --------- Diluted EPS: Net income available to common stockholders plus interest and amortization on convertible debentures $1,757,573 5,044,450 $0.35 $1,097,122 5,255,339 $0.21 ========== ========= ======== ========== ========= ========
5 3. Sale of Leasing Division On March 1, 2000, the Company closed the sale of its subsidiary bank's commercial leasing division. The sale resulted in $63.7 million of leases being sold. The gain on the sale amounted to approximately $879,000, net of transaction costs. The proceeds from the sale were used to purchase investment securities, fund loan demand, and reduce short-term borrowings. 4. Treasury Stock The Company's Board of Directors has authorized management to purchase up to 525,000 shares of its common stock. To date, management has purchased 304,100 shares including 75,350 shares totaling $905,450 during the first quarter of 2000. Management intends to purchase additional shares in the amount of which will be determined by cash available for dividends from the subsidiary bank. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Consolidated Condensed Balance Sheets The Company's total assets increased by $13.5 million from $566.8 million as of December 31, 1999, to $580.4 million as of March 31, 2000, due to increasing market share and economic growth in the Company's market areas. For the first three months of 2000, net loans decreased by $34.6 million from $423.3 million to $388.7 million, while investment securities increased by $26.7 million from $94.8 million to $121.5 million. On March 1, 2000, the Company closed the sale of its subsidiary bank's commercial leasing division. The sale resulted in $63.7 million of leases being sold. The gain on the sale amounted to approximately $879,000, net of transaction costs. The proceeds from the sale were used to purchase investment securities, fund loan demand, and reduce short- term borrowings. Excluding the sale of the leasing division, total commercial loans increased by approximately $6.3 million, real estate loans increased by approximately $25.8 million. Deposits, which are the Company's main source of funds for loans, investments and federal funds sold, increased by $7.2 million from $463.5 million as of December 31, 1999, to $470.7 million as of March 31, 2000. Non-interest-bearing deposits increased by $4.0 million and interest-bearing deposits increased by $3.2 million. For the first three months of 2000, securities sold under agreements to repurchase increased $9.0 million. Consolidated Results of Operations For the Three Months Ended March 31, 2000 Net income for the Company for the three months ended March 31, 2000, was $1.8 million, an increase of $660,000 or 60.2% from $1.1 million for the same period of 1999. The Company's annualized return on average assets was 1.24% for the first quarter of 2000, compared to 0.90% for the same period of 1999. The provision for loan losses was $625,000 for the first quarter of 2000, compared to $744,400 for the first quarter of 1999. Net charge-offs for the first quarter of 2000 were $572,000 compared to $675,000 for the first quarter of 1999. The allowance for loan losses to total loans was 1.38% and the allowance for loan losses to non-performing loans was 136% at March 31, 2000, compared to allowance for loan losses to total loans of 1.10% and the allowance for loan losses to non-performing assets to total assets of 111% at March 31, 1999. Total non-performing assets to total assets were 1.03% at March 31,2000, compared to 1.12% at March 31, 1999. Management provides for loan losses based upon its judgements concerning the adequacy of the allowance for loan losses considering such factors as loan growth, delinquency trends, previous charge-off experience, and local and national economic conditions. The net interest income before the provision loan loss increased $1.1 million to $7.6 million for the first quarter of 2000 compared to $6.5 million for the first quarter of 1999. This increase was composed of a $2.1 million increase in total interest income off-set by a $1.0 million increase in total interest expense. The increase in interest income was composed of an increase of $1.4 million due to increased average interest earning assets of $65.1 million and $700,000 due to a 0.53% increase in the yield on average interest earning assets. The increase in total interest expense was $600,000 due to a $61.3 million in average interest bearing liabilities and $400,000 due to a 0.45% increase in the cost of interest bearing liabilities. 6 Leases of $63.7 million with an approximate yield of 8.42% were sold with the Leasing Division. The proceeds from the sale of the leasing division were used to purchase $32.8 million in investment securities with a weighted average yield of approximately 7.38% and to reduce short-term borrowings with a balance at closing of $20.6 million with an approximate interest cost of 5.76%. During the quarter securities with a weighted average yield of 5.23% were sold and reinvested in similar securities with a weighted average yield of 7.33%. In the second quarter of 2000 management intends to reduce long-term borrowings of $10 million with an approximate interest cost of 6.31%. The recent increases in interest rate precipitated by the Federal Reserve Board's increases in the discount rate have increased the yield on interest earnings assets and have caused management to increase rates paid on deposits. The impact on the net interest margin of additional increases in interest rates will be significantly determined by the competitive environment for deposits. Total non-interest income increased by $800,000 to $2.1 million for the three months ended March 31, 2000, compared to $1.3 million for the same period of 1999. Included in total other income was a $879,000 gain on the sale of the leasing division, a loss of $333,000 on securities sold, and $105,000 of operating lease income. The loss on the sale of securities was a result of management selling securities and reinvesting in similar securities with higher yields. The $105,000 of operating lease income will not be reoccurring as the underlying leases were sold in the leasing division transaction. Not including these items total other income was $1.5 million compared to $1.1 million for the quarters ended March 31, 2000 and 1999, respectively. Approximately $118,000 of this increase was due to fees generated by the Company's mortgage division which was opened in September of 1999. Total non-interest expense increased by $1.1 to $6.4 million for the first quarter of 2000, compared to $5.3 million for the same period of 1999. This increase was due partially to $267,000 in non-interest expenses in the Company's mortgage division and $94,500 as a result of the opening of the Belen branch in January 2000. Non-interest expense also includes $225,800 of expenses which will be eliminated as a result of the sale of the leasing division. The remainder of the growth in non-interest expense was primarily a result of the Company's overall growth. Allowance for Loan and Lease Losses and Non-Performing Assets The following tables set forth the Allowance for Loan and Lease Losses and Non- Performing assets.
(Dollars in thousands) ALLOWANCE FOR LOAN AND LEASE LOSSES: March 31, 2000 December 31, 1999 March 31,1999 -------------- ----------------- ------------- Balance beginning of Period $5,387 $3,875 $3,875 Provision for loan and lease losses 625 3,075 744 Net charge-offs 572 1,563 675 -------------- ----------------- ------------- Balance end of period $5,440 $5,387 $3,944 -------------- ----------------- ------------- Allowance for loan and lease losses to total loans and leases 1.38% 1.26% 1.10% Allowance for loan and lease losses to non-performing loans and leases 1.36% 1.92% 111% NON-PERFORMING ASSETS: March 31, 2000 December 31, 1999 March 31,1999 -------------- ----------------- ------------- Accruing loans - 90 days past due $4 $84 $89 Non-accrual loans 3,992 2,725 3,459 Restructured loans -- -- -- -------------- ----------------- ------------- Total non-performing loans 3,996 2,809 3,548 Other real estate owned 1,994 1,917 2,206 -------------- ----------------- ------------- Total non-performing assets $5,990 $4,726 $5,754 ============== ================= ============= Potential problem loans and leases $4,274 $5,133 $4,620 ============== ================= ============= Total non-performing assets to total assets 1.03% 0.83% 1.12%
7 Liquidity and Capital Expenditures The Company's primary sources of funds are customer deposits, loan repayments, and maturities of investment securities. The Company has additional sources of liquidity in the form of borrowings. Borrowings include federal funds purchased, securities sold under repurchase agreements and borrowings from the Federal Home Loan Bank. Forward-Looking Statements Statements which are forward-looking are not historical facts, and involve risks and uncertainties that could cause the Company's results to differ materially from those in any forward-looking statements. These risks include the possible loss of key personnel, need for additional capital should the Company experience faster than anticipated growth, changes in economic conditions, interest rate risk, factors which could affect the Company's ability to compete in its trade areas, changes in regulations and governmental policies, and the risks described in the Company's Securities and Exchange Commission filings. Item 3. Quantitative and Qualitative Disclosures About Market Risk There has been no material change in the Company's market risk profile from the information disclosed in the Company's Form 10-K for the year ended December 31, 1999. Item 6. Exhibits and Reports on Form 8-K Exhibit 27 Financial Data Schedule Reports of Form 8-K On March 14, 2000 the Company filed a report on Form 8-K under Item 2 which describes the Companys sale of its leasing division on March 1, 2000. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FIRST STATE BANCORPORATION Date: May 11, 2000 By: Michael R. Stanford ---------------------------------------------------------------------------- Michael R. Stanford, President & Chief Executive Officer Date: May 11, 2000 By: H. Patrick Dee ---------------------------------------------------------------------------- H. Patrick Dee, Executive Vice President & Chief Operating Officer Date: May 11 ,2000 By: Brian C. Reinhardt ---------------------------------------------------------------------------- Brian C. Reinhardt, Executive Vice President and Chief Financial Officer
8 EX-27 2 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 31,036,401 0 13,275,000 0 81,965,329 39,515,832 39,382,698 394,158,042 5,439,987 580,371,139 470,728,472 47,860,668 5,388,747 11,139,106 0 0 46,513,968 (1,259,822) 580,371,139 10,354,830 1,502,111 54,466 11,911,407 3,619,736 4,347,016 7,564,391 625,002 0 6,414,228 2,671,099 1,757,573 0 0 1,757,573 0.36 0.35 5.74 3,991,659 4,319 0 4,273,657 5,386,622 668,038 96,402 5,439,987 5,439,987 0 0
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