SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: JUNE 30, 1996
Commission File Number: 0-27784
HUMBOLDT BANCORP
(Exact name of small business issuer as specified in its charter)
CALIFORNIA 93-1175446
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
701 Fifth Street
Eureka, California
(Address of principal executive offices)
95501
(Zip Code)
(707) 445-3233
(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 twelve 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
Number of shares of common stock outstanding at June 30, 1996 is: 1,392,855
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
The information required by Rule 10-01 of Regulation S-X is attached hereto as
Exhibit A.
ITEM 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
On November 10, 1995, the shareholders of Humboldt Bank (the "Bank") approved
a Plan of Reorganization by and between the Bank, Humboldt Merger Company and
Humboldt Bancorp (the "Company") whereby the Bank became a wholly owned
subsidiary of the Company. The reorganization became effective January 2,
1996. The sole business operation of the Company is conducted through its
wholly owned subsidiary, Humboldt Bank. The following discussion, therefore,
although presented on a consolidated basis, analyzes primarily the financial
condition and results of operations of the Bank for the six month period ended
June 30, 1996. Previously, the Bank filed its periodic reports under the
Securities Exchange Act of 1934 with the Federal Reserve Board.
Changes in Financial Condition
During the six month period ended June 30, 1996, deposits increased $1.3
million or 0.75% to $175.8 million. During the same period, loans increased
$21.1 million or 18.2% to $136.8 million, primarily as a result of an increase
in single-family loans and commercial and farm land loans secured by real
estate. Investment securities decreased $16.8 million or 31.2% to $37.1
million. Excess liquidity during the period was invested in federal funds.
During the six month period ending June 30, 1996, past due loans were $1.8
million (0.9% of total assets), and compares with $1.8 million (0.9% of total
assets) at December 31, 1995. The Bank's allowance for loan losses at June
30, 1996 was 1.6% of total loans, the same as at December 31, 1995.
Earnings Summary
Net income for the six months ended June 30, 1996 was $1,459,000, or $0.96 per
share, compared with net income of $827,000 or $0.57 per share in the same
period a year ago.
Net Interest Income
Total interest income increased $739,000 or 10.2% for the six months ended
June 30, 1996, as compared to the same period during the prior year. For the
six months ended June 30, 1996, interest expense increased $219,000 or 8.8% as
compared to the same period during the prior year. Net interest income for
the six months ended June 30, 1996 was $5,254,000 and $4,734,000 for the six
months ended June 30, 1995. Average loans as a percentage of average earning
assets was 71.0% during the six months ended June 30, 1996, compared to 61.8%
a year earlier. The average balance of lower yielding other earning assets as
a percentage of average earning assets was 29.0% during the six months ended
June 30, 1996, compared to 38.2% a year earlier.
Provision for Loan Losses
The Company maintains its allowance for loan losses at a level considered
appropriate by management to provide for known and inherent risks in the loan
portfolio. This consideration includes an evaluation of various factors
affecting the collectability of loans, including current and projected
economic conditions, past credit experience and a periodic review of the
Company's loan portfolio. The Company recorded an additional provision to the
allowance for loan losses for the six month period ended June 30, 1996 of
$463,000 compared to $365,000 for the same period in 1995. This increase was
mainly due to the substantial increase in loan volume. Loans charged off
during the six month period totaled $191,000 in 1996 and $152,000 in 1995.
Recoveries in the same period were $20,000 in 1996 and $25,000 in 1995.
On January 1, 1995, the Company adopted SFAS No. 114, "Accounting by Creditors
for Impairment of a Loan". The effect of adoption on the Company's financial
statements was not material.
Non-Interest Income
Non-interest income consists of gain on sale of loans and securities, service
charges and other fees related to deposit accounts, SBA and mortgage service
fees, referral fees, safe deposit box rentals, Lease Department income and
fees, Merchant BankCard Department income and fees and miscellaneous other
fees. In the six months ended June 30, 1996, income from these sources was
$2,184,000, an increase of $752,000 from the same period in 1995. The
increase was attributable primarily to increases in Lease and Merchant
BankCard Department income.
Non-Interest Expense
Non-interest expenses increased $846,000 or 19.3% to $5,232,000 for the six
months ended June 30, 1996, compared to the same period in 1995. The increase
was due in part to increased personnel expenses, fixed asset expense and
Merchant BankCard Department expense. During the six months ended June 30,
1996, the Company had a total of 157 full-time equivalent employees, compared
to 132 full-time equivalent employees during the same period a year earlier.
Capital Resources
Management seeks to maintain adequate capital to support anticipated asset
growth and credit risks and to ensure that the Company meets all regulatory
capital requirements.
The Company is required to maintain certain regulatory minimum capital ratios.
The following table outlines these ratios at June 30, 1996:
REQUIRED COMPANY'S ACTUAL
MINIMUM
TIER 1 6% 11.02%
TOTAL CAPITAL 10% 12.27%
LEVERAGE 5% 8.43%
Future growth and earnings retention, as currently projected by management,
are expected to provide for the maintenance of capital ratios in conformance
with the requirements.
Income Taxes
The provision for income taxes was $908,000 for the six months ended June 30,
1996, compared to $588,000 in the same period a year earlier. The provision
is classified as current tax liability for interim reporting purposes. The
tax rate was 38.4% for the six months ended June 30, 1996, compared to 41.6%
for the same period in 1995.
Liquidity
The Company manages its liquidity to ensure that sufficient funds are
available to meet loan commitments and deposit fluctuations. Primary sources
of liquidity include cash and due from bank deposits, unpledged short-term
U.S. Government securities and federal funds sold. The Bank's primary
liquidity ratio, which is the ratio of liquid assets to total deposits, was
24.9% at June 30, 1996, and 28.7% at December 31, 1995.
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
The Company is not involved in any legal proceedings that would have a
material adverse effect on its financial statements.
ITEM 2 - Changes in Securities - NONE
ITEM 3 - Defaults Upon Senior Securities - NONE
ITEM 4 - Submission of Matters to a Vote of Security Holders
On or about April 1, 1996, a Proxy Statement of Humboldt Bancorp was mailed to
shareholders of record as of February 29, 1996 by the Board of Directors
soliciting proxies for use at a Special Meeting of Shareholders to be held on
April 17, 1996. At the meeting the shareholders were asked to approve and
adopt the Humboldt Bancorp Stock Option Plan and Humboldt Bank Director Fee
Plan. Both plans were approved by the Company's shareholders as follows:
Humboldt Bancorp Stock Option Plan, FOR: 628,052; AGAINST: 83,109; ABSTAIN:
6,054; Humboldt Bank Director Fee Plan, FOR: 634,152; AGAINST: 70,084;
ABSTAIN: 12,979.
ITEM 5 - Other Information - NONE
ITEM 6 - Exhibits and Reports on Form 8-K - NONE
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed by the undersigned, thereunto duly authorized.
Date: July 31, 1996 HUMBOLDT BANCORP
Alan J. Smyth
______________________________________
Alan J. Smyth
Senior Vice President & Chief Financial Officer
Theodore S. Mason
______________________________________
Theodore S. Mason
President & Chief Executive Officer
<PAGE>
HUMBOLDT BANCORP AND SUBSIDIARY CONSOLIDATED BANK ONLY
CONSOLIDATED BALANCE SHEETS UNAUDITED AUDITED
(IN THOUSANDS OF DOLLARS) JUNE 30, 1996 DECEMBER 31, 1995
ASSETS:
Cash and Due From Banks 7962.00 7281.00
Interest Bearing Deposits in 1020.00 1120.00
Banks
Federal Funds Sold 2870.00 5470.00
Investment Securities (Market
Value of $37,085 37,085 53,875
and $53,875 respectively)
Loans Held For Sale 926.00 1880.00
LOANS
Commercial, Industrial & 18987.00 16284.00
Agricultural
Real Estate-Commercial and Farm 62208.00 54879.00
Land
Real Estate-Residential 1 to 5 31749.00 21156.00
Real Estate-Construction & Land 16220.00 15874.00
Development
Consumer 3431.00 3396.00
Lease Financing 3303.00 3974.00
Municipal Loans 771.00 0.00
Other 158.00 159.00
136827.00 115722.00
Less: Deferred Loan Fees (783) (616)
TOTAL LOANS 136044.00 115106.00
Less: Allowance For Credit (2,160) (1,868)
Losses
NET LOANS 133884.00 113238.00
Premises and Equipment (net) 5534.00 5009.00
Intangible Assets 1118.00 1305.00
Other Assets 6065.00 4734.00
TOTAL ASSETS 196464.00 193912.00
LIABILITIES (Deposits)
Demand 44544.00 39879.00
Demand-Interest Bearing 36721.00 41543.00
Time - $100,000 and over 24089.00 23230.00
Other Time 54340.00 54098.00
Savings 16135.00 15776.00
175829.00 174526.00
Borrowed Funds 781.00 787.00
Other Liabilities 2142.00 1665.00
178752.00 176978.00
SHAREHOLDERS' EQUITY
Preferred stock, no par value;
1,000,000 shares
authorized, none issued
Common stock, no par value;
1,000,000 shares
authorized, 1,392,855 shares in 17,030 14,851
1996 and
1,266,509 in 1995, issued and
outstanding
Retained Earnings 543.00 1268.00
Unrealized Gain/Loss 139.00 815.00
TOTAL SHAREHOLDERS' EQUITY 17712.00 16934.00
TOTAL LIABILITIES & 196464.00 193912.00
SHAREHOLDERS' EQUITY
NOTE: HUMBOLDT BANCORP BECAME EFFECTIVE JANUARY 2, 1996.
*See notes to consolidated financial statements.
<PAGE>
HUMBOLDT BANCORP
STATEMENT OF OPERATIONS
For the three months ended UNAUDITED UNAUDITED
June 30, 1996 & 1995 JUNE 30, JUNE 30, 1995
(in thousands of dollars) 1996
INTEREST INCOME
Interest and Fees on Loans 3386.00 2737.00
Interest on Deposits in 13.00 17.00
Banks
Interest & Dividends on 551.00 883.00
Securities
Interest on Federal Funds 79.00 120.00
Sold
Total Interest Income: 4029.00 3757.00
INTEREST EXPENSE
Interest on Demand Deposits 42.00 44.00
Interest on Other Savings 263.00 235.00
Deposits
Interest on Time Deposits 297.00 315.00
$100,000+
Interest on All Other Time 727.00 741.00
Deposits
Interest on Other 12.00 13.00
Borrowings
Total Interest Expense: 1341.00 1348.00
Net Interest Income 2688.00 2409.00
Provision For Loan Losses 223.00 200.00
NON-INTEREST INCOME
Service Charges on Deposit 156.00 153.00
Accounts
Other Fee Income 975.00 641.00
All Other Non-interest 17.00 17.00
Income
Total Non-interest Income: 1148.00 811.00
Realized Gain/Loss on 35.00 0.00
Securities
NON-INTEREST EXPENSE
Salaries & Employee 1367.00 1134.00
Benefits
Premises & Fixed Asset 433.00 314.00
Expense
Other Non-interest Expense 910.00 871.00
Total Non-interestExpense: 2710.00 2319.00
INCOME BEFORE TAXES 938.00 701.00
Applicable Income Taxes 344.00 291.00
NET INCOME 594.00 410.00
INCOME PER SHARE $0.33 $0.28
NOTE: HUMBOLDT BANCORP BECAME EFFECTIVE JANUARY 2, 1996.
*See notes to consolidated financial statements
<PAGE>
HUMBOLDT BANCORP
STATEMENT OF OPERATIONS
For the six months ended June UNAUDITED UNAUDITED
30, 1996 & 1995 JUNE 30, 1996 JUNE 30, 1995
(in thousands of dollars)
INTEREST INCOME
Interest and Fees on Loans 6498.00 5374.00
Interest on Deposits in 26.00 30.00
Banks
Interest & Dividends on 1277.00 1572.00
Securities
Interest on Federal Funds 169.00 255.00
Sold
Total Interest Income: 7970.00 7231.00
INTEREST EXPENSE
Interest on Demand Deposits 83.00 81.00
Interest on Other Savings 531.00 463.00
Deposits
Interest on Time Deposits 600.00 578.00
$100,000+
Interest on All Other Time 1478.00 1350.00
Deposits
Interest on Other 24.00 25.00
Borrowings
Total Interest Expense: 2716.00 2497.00
Net Interest Income 5254.00 4734.00
Provision For Loan Losses 463.00 365.00
NON-INTEREST INCOME
Service Charges on Deposit 304.00 280.00
Accounts
Other Fee Income 1818.00 1086.00
All Other Non-interest 62.00 66.00
Income
Total Non-interest Income: 2184.00 1432.00
Realized Gain/Loss on 624.00 0.00
Securities
NON-INTEREST EXPENSE
Salaries & Employee 2659.00 2176.00
Benefits
Premises & Fixed Asset 780.00 586.00
Expense
Other Non-interest Expense 1793.00 1624.00
Total Non-interest Expense: 5232.00 4386.00
INCOME BEFORE TAXES 2367.00 1415.00
Applicable Income Taxes 908.00 588.00
NET INCOME 1459.00 827.00
INCOME PER SHARE $0.96 $0.57
NOTE: HUMBOLDT BANCORP BECAME EFFECTIVE JANUARY 2, 1996
*See notes to consolidated financial statements
HUMBOLDT BANCORP STATEMENT OF CASH CONSOLIDATED BANK ONLY
FLOWS UNAUDITED UNAUDITED
For the six months ended June 30, JUNE 30, 1996 JUNE 30, 1995
1996 & 1995
(in thousands of dollars)
OPERATING ACTIVITIES
Net Income - Adjustments to
reconcile net income to net cash 1,459 827
provided by
operating activities:
Provision for Loan Loss 463.00 365.00
Depreciation 424.00 348.00
Amortization and Other 434.00 139.00
<Gain>/Loss on Sale of Securities <624> 0.00
Net Change in Other Assets <850> <568>
Net Change in Other Liabilities 477.00 477.00
Net Change in Loans Held for Sale 954.00 <489>
NET CASH PROVIDED BY OPERATING 2737.00 1099.00
ACTIVITIES
INVESTING ACTIVITIES
Net Change in Interest-bearing 100.00 107.00
Deposits in Banks
Federal Funds Sold (Net) 2600.00 3520.00
Securities Held-to-Maturity
Investment Purchases 0.00 <7,778>
Proceeds From Maturities of 0.00 2000.00
Investments
Proceeds From Sale of Investments 0.00 0.00
Securities Available-for-Sale
Investment Purchases <9,820> <16,838>
Proceeds From Maturities of 3107.00 4000.00
Investments
Proceeds From Sale of Investments 22725.00 0.00
Net Change in Loans <21,110> <8,387>
Purchase of Premises and Equipment <949> <370>
NET CASH USED FOR INVESTING <3,347> <23,746>
ACTIVITIES
FINANCING ACTIVITIES
Net Change in Deposits 1302.00 24542.00
Payments on Borrowed Funds <6> <6>
Fractional Shares Purchased <5> <3>
NET CASH PROVIDED BY FINANCING 1291.00 24533.00
ACTIVITIES
NET CHANGE IN CASH AND CASH 681.00 1886.00
EQUIVALENTS
Cash and Due From Banks at 7281.00 5726.00
Beginning of Period
CASH AND DUE FROM BANKS AT END OF 7962.00 7612.00
PERIOD
SUPPLEMENTAL DISCLOSURES
Cash Paid During the Period For: 2700.00 2512.00
Interest
1769.00 661.00
Income Taxes
NON-CASH TRANSACTIONS
Unrealized Holding Losses on <1,155> 1188.00
Securities
Deferred Income Taxes on unrealized 480.00 <494>
holding losses on securities
Deposit Liabilities assumed in
exchange for assets acquired in 0 1879
connection with purchase of
branches
Stock Dividend 2184.00 1647.00
<PAGE>
Humboldt Bancorp and Subsidiary
Notes to Consolidated Financial Statements
June 30, 1996
(Unaudited)
Note 1 - Basis of Presentation
In the opinion of Management, the unaudited interim consolidated financial
statements contain all adjustments of a normal recurring nature, which are
necessary to present fairly the financial condition of Humboldt Bancorp and
Subsidiary at June 30, 1996 and the results of operations for the six months
then ended.
Certain information and footnote disclosures presented in the Company's annual
financial statements are not included in these interim financial statements.
Accordingly, the accompanying unaudited interim consolidated financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's 1995 Annual Report on Form 10-KSB.
The results of operations for the six months ended June 30, 1996 are not
necessarily indicative of the operating results through December 31, 1996.
Note 2 - New Accounting Policies
On January 1, 1995, the Company adopted SFAS No. 114, "Accounting by Creditors
for Impairment of a Loan". This statement addresses the accounting and
reporting by creditors for impairment of certain loans. A loan is impaired
when, based upon current information and events, it is probable that a
creditor will be unable to collect all amounts due according to the
contractual terms of the loan agreement. These statements are applicable to
all loans, uncollateralized as well as collateralized, except large groups of
smaller-balance homogeneous loans that are collectively evaluated for
impairment such as consumer installment loans and loans held for sale which
are measured at fair value or at the lower of cost or fair value. Impairment
is measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate, except that as a practical
expedient, the Company measures impairment based on a loan's observable market
price or the fair value of the collateral if the loan is collateral dependent.
Loans are measured for impairment as part of the Company's normal internal
asset review process.
Interest income is recognized on impaired loans in a manner similar to that of
all loans. It is the Company's policy to place loans that are delinquent 90
days or more as to principal or interest on a nonaccrual of interest basis
unless secured and in the process of collection, and to reverse from current
income accrued but uncollected interest. Cash payments subsequently received
on nonaccrual loans are recognized as income only where the future collection
of principal is considered by management to be probable.
At June 30, 1996, the Company's total recorded investment in impaired loans
was $189,207 for which there is a related allowance for credit losses of
$189,207 determined in accordance with these Statements.
The average recorded investment in the impaired loans during the six months
ended June 30, 1996 was $189,207. The related amount of interest income
recognized during the period that such loans were impaired was $3,736 and the
amount of interest income recognized using a cash-basis method of accounting
during the time within the period that the loans were impaired was $3,376.
Note 3 - Consolidation
The consolidated financial statements include the accounts of Humboldt Bancorp
and its wholly-owned subsidiary, Humboldt Bank. All material intercompany
accounts and transactions have been eliminated in consolidation.
Note 4 - Commitments
The Bank has outstanding performance letters of credit of $2,152,000 at June
30, 1996.
Note 5 - Net Income Per Common Share
Net income per share is calculated by using the weighted average common shares
outstanding. The weighted average number of common shares used in computing
the net income per common share for the period ending June 30, 1996 was
1,513,123 and for the period ending June 30, 1995 was 1,459,028.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED
CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER
INTERNALLY GENERATED REPORTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001008554
<NAME> HUMBOLDT BANCORP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,962
<INT-BEARING-DEPOSITS> 1,020
<FED-FUNDS-SOLD> 2,870
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,085
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 37,085
<LOANS> 136,970
<ALLOWANCE> (2,160)
<TOTAL-ASSETS> 196,464
<DEPOSITS> 175,829
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,923
<LONG-TERM> 0
0
0
<COMMON> 17,030
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 20,635
<INTEREST-LOAN> 6,498
<INTEREST-INVEST> 1,277
<INTEREST-OTHER> 195
<INTEREST-TOTAL> 7,970
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 2,716
<INTEREST-INCOME-NET> 5,254
<LOAN-LOSSES> 463
<SECURITIES-GAINS> 624
<EXPENSE-OTHER> 5,232
<INCOME-PRETAX> 2,367
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,459
<EPS-PRIMARY> .96
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 619
<LOANS-PAST> 1,777
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,868
<CHARGE-OFFS> (191)
<RECOVERIES> 20
<ALLOWANCE-CLOSE> 2,160
<ALLOWANCE-DOMESTIC> 906
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,254
</TABLE>
