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
For the quarterly period ended: June 30, 1999
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
(Issuer'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 common stock outstanding at June 30, 1999, was: 4,514,731
<PAGE>2
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 Operation.
The business operation of the Company is conducted through its wholly owned
subsidaries, Humboldt Bank and Capitol Valley Bank, and a 50% interest with
Tehema Bank in Bancorp Financial Services, a company making automobile and small
ticket leasing loans. The following discussion presented on a consolidated
basis, analyzes the financial condition and results of operations of the Company
for the six month period ended June 30, 1999.
Changes in Financial Condition
During the six-month period ended June 30, 1999, deposits increased $6.6 million
or 2.3% to $290.6 million compare with $284.0 million at December 31, 1998. The
increase in deposits is the result of increases in demand deposits, savings
deposits, and time certificates of deposit over $100,000 being partially offset
by a small decrease, in other time deposits. During the same period, total loans
increased $19.6 million or 10.8% to $201.0 million compared with $181.4 million
at December 31, 1998. The increase in loans is primarily the result of increases
in the real estate loan portfolio, particularly family and multi-family
residential loans, and to a much lesser degree in the commercial, industrial and
agricultural loan, and other loan portfolios. The increase was partially offset
by decreases in the state and political subdivision loan, the consumer loan, and
the lease financing loan portfolios. Loans held for sale decreased $7.7 million
or 100.0% to $0.00 million compared with $7.7 million at December 31, 1998. The
increase in deposits and loans is attributable to internal growth and is not the
result of acquisitions.
At June 30, 1999, deposits had increased $21.5 million or 8.0% from $269.1
million at June 30, 1998. Total loans had increased $27.9 million or 16.2% from
$173.1 million at June 30, 1998. The increase in deposits and loans is
attributable to internal growth and is not the result of acquisitions.
Investment securities decreased $9.4 million or 12.1% to $68.4 million at June
30, 1999 compared with $77.8 million at December 31, 1998 and federal funds sold
increased $8.3 million or 368.2% to $10.5 million compared with $2.3 million at
December 31, 1998. The decrease in investment securities was the result of
increased loan demand. The increase in federal funds sold was the result of a
planned build-up of federal funds for liquidity purposes.
At June 30, 1999, investments had decreased $4.6 million or 6.3% from $73.0
million at June 30, 1998. The decrease in investments is attributable to loans
increasing more than deposits and to an increase in federal funds sold.
During the six month period ending June 30, 1999, past due and non-accrual loans
decreased $0.7 million or 25.0% to $2.1 million (0.6% of total assets), compared
with $2.8 million (0.9% of total assets) at December 31, 1998. The Company's
allowance for loan losses at June 30, 1999 was 1.6% of loans and leases compared
with 1.7% at December 31, 1998.
<PAGE>3
At June 30, 1999, past due and non-accrual loans had increased $0.3 million or
16.7% from $1.8 million at June 30, 1998. The Company's allowance for loan
losses at June 30, 1999 was 1.6% of total loans and leases, which compared with
1.5% at June 30, 1998.
Earnings Summary
Net income for the six months ended June 30, 1999 increased $391,000 to
$2,094,000 or $0.46 per share (diluted $0.42), compared with net income of
$1,703,000 or $0.39 per share (diluted $0.35) in the same period a year ago. The
increase can be attributed to increases in non-interest income of $3,303,000 or
63.4%. Bancorp financial services income of $140,000 or 518.5%, decreases in
interest expense of $326,000 or 8.3%, provision for loan losses of $518,000 or
50.6%, interest income of $227,000 or 1.9% and taxes of $30,000 or 2.8% and by
increases in non-interest expense of $3,681,000 or 39.7% and an increase in
realized loss on securities of $18,000 or 100.0%
Net income for the three months ended June 30, 1999 increased $269,000 to
$1,097,000 or $0.24 per share (diluted $0.22 per share), compared with net
income of $828,000 or $0.19 per share (diluted $0.17 per share) in the same
three month period a year ago. This increase of $269,000 can be accounted for by
increases in non-interest income ($1,884,000 or 67.1%), and Bancorp financial
services income ($61,000 or 225.9%), decreases in interest expense ($147,000 or
7.6%). Loan loss provision ($327,000 or 63.5%) and taxes ($17,000 or 3.4%) and
increases in realized loss on securities ($24,000 or 100%) and non-interest
expense ($2,009,000 or 40.5%) and a decrease in interest income ($134,000 or
2.3%)
Net Interest Income
Total interest income decreased $227,000 or 1.9% for the six months ended June
30, 1999, compared with the prior year. During the same period, interest expense
decreased $326,000 or 8.3%. Net interest income for the six months ended June
30, 1999 was $7.9 million and $7.8 million for the period ended June 30, 1998.
Average loans and leases as a percentage of average earning assets was 68.1%
during the six months ended June 30, 1999, compared to 65.0% a year earlier. The
average balance of other earning assets as a percentage of average earning
assets was 31.9% during the six months ended June 30, 1999, compared with 35.0%
a year earlier.
Total interest income decreased $134,000 or 2.3% for the three months ended June
30, 1999, and interest expense decreased $147,000 or 7.6% compared with the same
three-month period in the prior year. Net interest income for the three months
ended June 30, 1999 was $4.0 million and $4.0 million for the three months ended
June 30, 1998. The decrease in interest income is accounted for by small
increases in interest and Fees on loans ($37,000) and federal funds sold
($21,000), offset by small decreases in interest on deposits in banks ($23,000)
and interest and dividends on securities ($169,000). The small decrease in
interest expense is attributable to increases in interest on time deposits of
$100,000 or more, ($15,000) and interest on other borrowings ($36,000), offset
by decreases in interest on savings deposits ($51,000), all other time deposits
($143,000) and interest on demand deposits ($4,000).
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 a provision to the allowance for loan losses for
<PAGE>4
the six month period ended June 30, 1999 of $506,000 compared to $1,024,000 for
the same period in 1998. Loans charged off during the six-month period totaled
$531,000 in 1999 and $866,000 in 1998. Recoveries in the same period were
$259,000 in 1999 and $107,000 in 1998. The reduction in loans charged off in
1999 compared to 1998 is primarily due to a planned scaling back of the
Company's credit card issuing operations.
The Company recorded a provision to the allowance for loan losses for the three
month period ended June 30, 1999 of $188,000 compared with $515,000 in the same
period in 1998. Loans charged off during the three-month period totaled $221,000
in 1999 and $521,000 in 1998. Recoveries in the same period were $227,000 in
1999 and $75,000 in 1998.
Non-Interest Income
Non-interest income consists of gain/loss on sale of loans and fixed assets,
service charges on deposit accounts and other service charges, commissions and
fees including Lease Department, Merchant BankCard Department and Issuing
BankCard Department income. During the six months ended June 30, 1999, income
from these sources increased $3.3 million or 63.4% to $8.5 million, compared
with $5.2 million in 1998. The increase was accounted for by increases in
Merchant BankCard Department income ($3.2 million), service charges on deposits
($0.1 million) and gain on sale of loans ($0.3 million), offset by decreases in
Issuing BankCard Department income ($0.3 million), and Lease Department income
($0.1 million).
In the three months ended June 30, 1999, non-interest income was $4.7 million;
an increase of $1.9 million or 67.9% compared with $2.8 million for the same
period in 1998. The increase is attributable primarily to increases in Merchant
Bankcard Department income ($1.8 million), service charges on deposits ($0.1
million), and other non-interest income ($0.3 million) and decreases in Issuing
Bank Card Department income ($0.2 million) and Lease Department income ($0.1
million).
Non-Interest Expense
During the six months ended June 30, 1999 non-interest expenses increased $3.7
million or 39.7% to $13.0 million, compared with $9.3 million for the same
period in 1998. The increase is attributable to increased personnel expenses
($1.2 million), and other non interest expenses ($2.5 million) which include
increases in Merchant Bankcard Department expense ($2.1 million), outside
consulting expense ($0.1 million), telephone expense ($0.1 million), and
organizational expense ($0.2 million)
During the three months ended in June 30, 1999, non-interest expense was $7.0
million an increase of $2.0 million of 40.0%, compared with $5.0 million for the
same period in 1998. The increase is attributable to increased personnel
expenses ($0.7 million), and other non interest expenses ($1.3 million) which
includes increases in Merchant Bankcard Department expense ($1.2 million) and
organizational costs ($0.2 million), and decreases in other outside services
($0.1 million).
Number of Employees
At June 30, 1999, the Company had 286 full-time equivalent employees, compared
to 248 full-time equivalent employees at the same period a year earlier.
In the three months ended June 30, 1999 the number of full-time equivalent
employees increased by 30 compared with 25 in the same three months period in
1998.
<PAGE>5
Year 2000 Issue
General
The Company formed a committee of senior company personnel in late 1997 to
address the issue of computer programs and embedded computer chips being unable
to distinguish between the year 1900 and the year 2000. The committee meets on a
regular basis to evaluate, review progress, and make recommendations on the
various phases of the Year 2000 project. The Company is satisfied with the
progress made to date and is on track to complete the project in time for the
Year 2000 date change.
Project
The Company-wide project is divided into seven major phases
1. The Awareness Phase
2. The Assessment Phase
3. The Vendor, Customer and Employee Notification Phase
4. The Vendor and Customer Response Review Phase
5. The Testing Phase
6. The Contingency Phase
7. The Renovation Phase
The Awareness Phase consisted of gaining executive level support for the
resources necessary to perform compliance work, for establishing a Year 2000
project team and for developing an overall strategy that encompassed the
in-house core system, out-sourced systems, vendors, customers, and suppliers
including correspondents. The Awareness Phases is fully completed.
The Assessment Phase consisted of assessing the size, scope, and complexity of
the problem, detailing the magnitude of the effort necessary to address the Year
2000 project and the preparation of a Year 2000 action plan. This phase
identified all hardware, software, network, ATM and various other processing
platforms, and customers and vendor interdependencies affected by the year
2000-date change. The assessment went beyond informational systems to include
environmental systems that are dependent on embedded microchips such as security
systems, elevators and vaults. The Assessment Phase is fully completed.
The Vendor, Customer, and Employee Notification Phase consisted of the
following:
1. The mailing of letters to critical vendors requesting information on their
Year 2000 compliance plans and readiness.
2. The mailing of letters to and personal contact with major customers (with
special emphasis given key loan customers), to ascertain their awareness,
preparations and compliance plans relative to the Year 2000 problem.
3. Company staff members were guest speakers at several service clubs in the
area outlining the Year 2000 problem.
4. Meetings were held with all staff members within the Company to advise them
of the Year 2000 problem, and the steps the Company was taking to ensure
compliance.
<PAGE>6
5. The Bank's Year 2000 Policy statement, as well as other informational items,
has been made available to both customers and other interested parties.
The Vendor, Customer, and Employee Notification Phases is completed. The
Company, however, will continue to keep vendors, customers and employees updated
on its compliance progress and general Year 2000 issues.
The Testing Phase is a multifaceted process that is critical to the Year 2000
project and inherent in each phase of the project plan. This process includes
the testing of incremental changes to hardware and software components. In
addition to testing upgraded components, connections with other systems have
been verified to ensure that internal and external users accept all changes. The
committee is assuring the effective and timely completion of all hardware and
software testing prior to final implementation and has ongoing discussions with
their vendors of their testing efforts. The Company has prepared, and the Board
of Directors has approved, the Company's Year 2000 Test Plan. Test scripts for
all critical applications are complete and have been executed without incident.
The Company's core operating system was unit tested in December 1998, with
initial end-to-end interface testing executed in March 1999 and completed in
June 1999. All critical dates have been tested for the core operating system.
With the exception of a few minor unrelated and explainable anomalies, the
system has proven to be compliant. Additional testing of critical interfaces to
the Company's core system was completed by the end of June 1999. As well,
several of the organization's ancillary systems have been tested without
incident. The Company has completed the necessary testing as required by its
regulatory agencies. Additional "comfort" testing is ongoing and the Company
intends to continue testing through the rest of 1999 and into the Year 2000
(Leap Year). The additional testing will cover any upgrades to existing systems,
as well as any new hardware or software the Company implements prior to the end
of the year.
The Contingency Phase consists of a comprehensive plan to address remediation
and business resumption functions that rely on mission critical systems. An
updated version of the Contingency Plan, which contains an overview of the
organization's contingency testing and training plans, was completed by June 30,
1999 and is being submitted to the Board of Directors for review and approval on
July 15, 1999. The Company anticipates that the Contingency Plan will be a
living document, which will be continuously updated as necessary throughout
1999.
The Renovation Phase will consist of renovating, replacing and retiring
non-compliant systems, as well as evaluating Year 2000 code enhancements,
hardware and software upgrades, system replacements and other associated
changes. The Company anticipates that the Renovation Phase will continue
throughout the remainder of 1999.
Costs
The total cost associated with required modifications to become Year 2000
compliant is not expected to be material to the Company's financial position.
The estimated total cost of the Year 2000 project is approximately $500,000.00.
A minimal amount, other than time of the committee members, has been expended on
the Year 2000 project as of June 1999. The Company is also expensing and
reserving $10,000.00 a month for possible loan losses caused by Year 2000
problems. This reserve will be approximately $225,000.00 at December 31, 1999.
Risks
The failure to correct material Year 2000 problems could result in the
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
<PAGE>7
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from
uncertainty of the Year 2000 readiness of third party suppliers and customers,
the Company is unable to specifically determine at this time whether the
consequences of Year 2000 failures will have a material impact on the Company's
results of operations, liquidity or financial condition. However, its ongoing
Year 2000 efforts are expected to significantly reduce the Company's level of
uncertainty about the Year 2000 problem and, in particular, about the Year 2000
compliance and readiness of its critical vendors. The Company believes that,
with implementation of new business systems, if necessary, and the completion of
the project as scheduled, the possibility of significant interruptions of normal
operations should be reduced to a minimum.
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, 1999.
REQUIRED COMPANY'S
MINIMUM ACTUAL
TIER 1 6.00 11.98
TOTAL CAPITAL 10.00 13.23
LEVERAGE 5.00 8.67
Future growth and earnings retention, as currently projected by management, is
expected to provide for the maintenance of capital ratios in conformity with the
requirements.
Income Taxes
The provision for income taxes was $1,025,000 for the six months ended June 30,
1999, compared to $1,055,000 in the same period a year earlier. The provision is
classified as current tax liability for interim reporting purposes. The tax rate
was 34.7% for the six months ended June 30, 1999, compared to 38.6% for the same
period in 1998.
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 Company's primary liquidity ratio, which
is the ratio of liquid assets to total deposits, was 25.0% at June 30, 1999,
28.7% at March 31, 1999 and 28.7% at June 30, 1998.
Asset/Liability Management
The Company's Asset and Liability Committee ("ALCO") meets on a quarterly basis
and monitors the impact of changing interest rates on the Company's earnings and
economic value. The Company uses a simulation model to estimate the change in
<PAGE>8
the Company's net interest margin (NIM) for various rate scenarios. The Company
uses a combined net present value and going-concern model to calculate economic
risk.
Interest Rate Risk. The table below shows the potential change in NIM (before
taxes) if rates change as of June 30, 1999. These estimates are based on the
existing repricing schedule (see repricing table) as well as consideration of
convexity when rates change (e.g., mortgage-backed securities cash flow
changes). The Company's NIM increases if rates rise, and declines if rates fall.
The cause of this slight exposure to declining rates is due to the Company's
concentration of short-term and rate sensitive loans as of June 30, 1999.
Economic Risk. The Company also measures the potential change in the net present
value of the Company's net existing assets and liabilities if rates change (the
"economic value of equity" or "EVE"). The table below also shows the EVE. The
EVE is determined by valuing the Company assets and liabilities as of June 30,
1999, using a present value cash flow calculation as if the Company is
liquidated. The EVE declines when rates increase because there are more fixed
rate assets than liabilities. However, the Company's NIM earnings would also
increase as rates increased (from the interest rate risk) and this benefit would
offset the decline in EVE.
% Change in NIM
Change in NIM to Shareholder
Change in (In thousands Equity
Interest Rates pre-tax) (pre-tax) % of EVE
- -------------- -------- --------- --------
+2% $660 2.3% (9%)
+1% $346 1.2% (5%)
-1% ($375) (1.3%) 5%
-2% ($783) (2.7%) 9%
The following table sets forth the repricing opportunities for the assets
and liabilities of the Company at June 30, 1999. Assets and Liabilities are
classified by the earliest possible repricing date or maturity, whichever comes
first.
REPRICING IN
-------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Three One Five Years
Less Than Through Through Three Through Over Non-
Three Twelve Three Through Fifteen Fifteen Interest
(In thousands) Months Months Years Five Years Years Years Bearing Total
------ ------ ----- ---------- ----- ----- ------- ---------
ASSETS:
Net Loans 83,708 13,341 27,636 40,134 21,837 14,350 201,006
Investment Securities 0 12,732 23,635 10,052 15,751 5,272 67,442
Federal Funds Sold 10,534 10,534
FHLB Stock 952 952
Interest-bearing
deposits with banks 20 20
Non-interest earning assets 50,435 50,435
------ -------- --------- --------- -------- ------- -------- -------
TOTAL ASSETS 94,262 26,073 51,271 50,186 37,588 19,622 51,387 330,389
====== ======== ========= ========= ======== ======= ======== =======
</TABLE>
<PAGE>9
REPRICING IN
-------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Three One Five Years
Less Than Through Through Three Through Over Non-
Three Twelve Three Through Fifteen Fifteen Interest
(In thousands) Months Months Years Five Years Years Years Bearing Total
------ ------ ----- ---------- ----- ----- ------- -------
LIABILITIES:
Non-interest-bearing deposits 102,261 102,261
Interest-bearing deposits 123,735 52,643 10,208 1,761 188,347
Borrowings 22 68 199 4,371 4,660
Other liabilities 5,338 5,338
Stockholders' equity 29,783 29,783
--------- --------- -------- -------- --------- -------- --------- -------
Total liabilities and
stockholders' equity 123,757 52,711 10,407 6,132 0 0 137,382 330,389
========= ======== ======== ======== ======== ======= ========= =======
Interest rate sensitivity
gap -29,495 -26,638 40,864 44,054 37,588 19,622
Cumulative interest rate
sensitivity gap -29,495 -56,133 -15,269 28,785 66,373 85,995
</TABLE>
ITEM 3 QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT RISKS
See Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation - Asset/Liability Management.
<PAGE>10
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
On December 7, 1998, the case of Freeman, et al. V. Citibank (South Dakota) NA,
et al.,Civil Action No. CV- 98-RRA-3029S, was filed in the United States
District Court, Northern District of Alabama, Northern Division. This case is a
purported class action brought on behalf of Mr. Freeman and others similarly
situated (VISA credit cardholders issued by Citibank (South Dakota), hereinafter
"Citibank"), against Citibank and VISA International (herein "VISA") to (i)
enjoin the collection of debts charged to Citibank Visa cards for gambling at
Internet casino websites; (ii) have Internet casino gambling declared unlawful;
and (iii) recover all payments including principal, interest and penalties,
received by Citibank and Visa related to such debts. Mr. Freeman is alleging
that Citibank and Visa were facilitating, participating in and profiting from
gambling by allowing Mr. Freeman to use his Citibank Visa card to purchase
"e-cash" at a website owned and operated by a company called Cryptologic, Inc.
which he accessed from an online casino operation called InterCasino. Mr.
Freeman proceeded to play the game of blackjack with his e-cash and lost $30.
The action alleges violation of the federal Wire Act and the federal
Racketeering Influenced and Corrupt Organizations Act ("RICO"). Mr. Freeman is
seeking treble damages pursuant to RICO, punitive damages and attorney's fees,
in addition to compensatory damages and declaratory relief. VISA has made a
motion to dismiss the Freeman case and Citibank has pending a motion to compel
arbitration.
Humboldt Bank provides merchant processing for Cryptologic's credit card
operations, and on April 21, 1999, Citibank sent a letter to Humboldt Bank
seeking indemnity for the Freeman action pursuant to VISA regulations. Humboldt
Bank and VISA have had preliminary discussions regarding this matter, but
Humboldt Bank has not yet formally responded to Citibank's letter. The Freeman
action is in its preliminary stages and the outcome at this time cannot be
determined. In the event it is ultimately determined that Humboldt Bank is
obligated to indemnify VISA, Humboldt Bank intends to seek indemnity against
Cryptologic and creditcards.com, the company which through its independent
marketing efforts presented Cryptologic's application for merchants services to
Humboldt Bank.
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 16, 1999, a Proxy Statement of Humboldt Bancorp was mailed to
shareholders of record as of March 31, 1999 by the Board of Directors soliciting
proxies for use at the Annual Meeting of Shareholders to be held on May 20,
1999. At the meeting, the shareholders were asked to elect management's nominees
for Directors (12), to ratify the appointment of Richardson and Company as
independent certified accountants and to adopt amendments to the Amended
Humboldt Bancorp Stock Option Plan. The results of the voting are as follows:
<PAGE>11
PROPOSAL #1 - Election of Directors
<TABLE>
<S> <C> <C> <C>
WITHHOLD
FOR ALL FROM
NOMINEES ALL NOMINEES AGAINST
---------------- ------------- ------------
Ronald F. Angell 1,405,900 Shares -0- -0-
Marguerite Dalianes 1,405,900 Shares -0- -0-
Gary L. Evans 1,405,900 Shares -0- -0-
Lawrence Francesconi 1,404,974 Shares -0- 926 Shares
Clayton R. Janssen 1,405,900 Shares -0- -0-
James O. Johnson 1,405,900 Shares -0- -0-
Theodore S. Mason 1,405,900 Shares -0- -0-
John McBeth 1,405,900 Shares -0- -0-
Michael Renner 1,405,878 Shares -0- 22 Shares
Jerry L. Thomas 1,405,900 Shares -0- -0-
Edythe E. Vaissade 1,356,182 Shares -0- 49,718 Shares
John R. Winzler 1,405,900 Shares -0- -0-
</TABLE>
PROPOSAL #2 - Ratify the appointment of Richardson and Company as Independent
Certified Accountants
FOR: 1,388,721 Shares
AGAINST: 2,229 Shares
ABSTAIN: 14,950 Shares
PROPOSAL #3 - To adopt amendments to the Amended Humboldt Bancorp Stock Option
Plan (the Amended Option Plan)
FOR: 1,236,290 Shares
AGAINST: 107,485 Shares
ABSTAIN: 62,125 Shares
ITEM 5 - Other Information -
(a) On April 7, 1999, Humboldt Bank entered into a purchase
agreement to acquire two branch offices located at 959 Myrtle
Avenue, Eureka, CA 95501 and 607 South State Street, Ukiah, CA
95482 from California Federal Savings Bank. Under the terms of
the purchase agreement, Humboldt Bank will acquire all of the
assets relating to California Federal's Eureka and Ukiah branch
offices including cash, loans, real property, contracts and
intangible assets and assumed deposits and other liabilities
relating to the branches. The purchase price for the two branches
is equal to approximately 3.25% of the aggregate deposits
acquired by Humboldt Bank. Total loans and deposits to be
acquired by Humboldt Bank are estimated to be approximately $0.2
million and $73.7 million. It is anticipated that the acquisition
will be completed on August 27, 1999.
(b) Pursuant to an "Agreement And Plan Of Reorganization And
Merger" entered into as of June 22, 1999 (the "Merger
Agreement"), Humboldt Bancorp, a California bank holding company
will acquire both Global Bancorp, a California bank holding
company headquartered in Napa, California, and its wholly-owned
<PAGE>12
subsidiary Capitol Thrift & Loan association ("Capitol Thrift").
Capitol Thrift is a California licensed industrial loan company.
The acquisition will be effected by the merger of both Global
Bancorp and Capitol Thrift into Humboldt Bank, a wholly
owned subsidiary of Humboldt Bancorp. Following the merger,
Humboldt Bank will be the sole surviving corporation. It is
anticipated that the business of Capitol Thrift will be operated
as a division of Humboldt Bank.
The total consideration to be paid for the acquisition
will be $16,500,000, comprised of the following: (i) $9,000,000
is cash; (ii) approximately $2,000,000 in Humboldt common
stock computed by the total amount of shareholders' equity in
Global Bancorp, less $9,000,000 to be paid in cash and merger
expenses of $100,000; and (iii) the balance of approximately
$5,500,000 in the form of a Humboldt Bank promissory note,
payable in full on January 30, 2002, to accrue interest at 8%
per annum, and subject to certain adjustments for loan
losses and expenses as identified in the Merger Agreement.
Pursuant to the Merger Agreement, up to $2,000,000 of the
promissory note may be paid at maturity in the form of Humboldt
common stock at the election of the holders of the promissory
note. Among other conditions before the merger may be
consummated, it must be approved by the shareholders of Global
Bancorp, and by both the Federal Deposit Insurance Corporation
and the California Department of Financial Institutions. In
addition, as a condition to the consummation of the merger,
Humboldt Bancorp is required to raise additional funds through
the sale of its common stock.
(c) On May 6, 1999, the Humboldt Bancorp's Board of Directors
declared a five for two stock split to shareholders of record as
of June 1, 1999. The stock split was complete on June 30, 1999
and reference to earnings per share in this report reflect the
stock split.
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
<PAGE>13
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.
Date: August 5, 1999 HUMBOLDT BANCORP
/s/ ALAN J. SMYTH
--------------------------------
Alan J. Smyth
Senior Vice President and Chief
Financial Officer
/s/ THEODORE S. MASON
-------------------------------
Theodore S. Mason
President and Chief Executive
Officer
<PAGE>14
Humboldt Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 1999
(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
Subsidiaries at June 30, 1999 and 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 1998 Annual Report on Form 10-K. The results
of operations for the six months ended June 30, 1999 are not necessarily
indicative of the operating results through December 31, 1999.
Note 2 - New Accounting Policies
On March 31, 1998, the Company adopted SFAS No. 130 "Reporting Comprehensive
Income." This statement establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements. This Statement requires
that all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. This Statement
does not require a specific format for that financial statement but requires
that an enterprise display an amount representing total comprehensive income for
the period in that financial statement.
Comprehensive income is defined as "the change in equity [net assets] of a
business enterprise during a period from transactions and other events and
circumstances from nonowner sources. It includes all changes in equity during a
period except those resulting from investments by owners and distributions to
owners." The Company's only item of comprehensive income at this time is the
change in unrealized gains on securities available for sale, net of applicable
deferred income taxes.
This Statement is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comparative purposes is required.
Note 3 - Consolidation
The consolidated financial statements include the accounts of Humboldt Bancorp
and its wholly owned subsidiaries, Humboldt Bank and Capitol Valley Bank and 50%
in Bancorp Financial Services. All material intercompany accounts and
transactions have been eliminated in consolidation.
Note 4 - Commitments
The Company has outstanding performance letters of credit of $4.6 million at
June 30, 1999 compared to $8.6 million at June 30, 1998.
<PAGE>15
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, 1999 was 4,514,731
and for the period ending June 30, 1998 was 4,403,525.
Net income per share (diluted) is calculated by using the weighted average
common shares (diluted) outstanding. The weighted average number of common
shares (diluted) used in computing the net income per common share (diluted) for
the period ending June 30, 1999 was 4,933,723 and for the period ending June 30,
1998 was 4,875,403.
<PAGE>16
<TABLE>
<S> <C> <C>
HUMBOLDT BANCORP AND SUBSIDIARIES CONSOLIDATED CONSOLIDATED
CONSOLIDATED BALANCE SHEETS UNAUDITED AUDITED
(IN THOUSANDS OF DOLLARS) 06-30-99 12-31-98
- ---------------------------------------------------------------- ------------------- -------------------
ASSETS:
- ---------------------------------------------------------------- ------------------- -------------------
Cash and Due From Banks 28,514 28,626
- ---------------------------------------------------------------- ------------------- -------------------
Interest Bearing Deposits in Banks 20 3,020
- ---------------------------------------------------------------- ------------------- -------------------
Federal Funds Sold 10,534 2,250
- ---------------------------------------------------------------- ------------------- -------------------
Investment Securities (At fair value of $68,394 and
$77,802 respectively) 68,394 77,802
- ---------------------------------------------------------------- ------------------- -------------------
Loans Held For Sale -0- 7,677
- ---------------------------------------------------------------- ------------------- -------------------
LOANS
- ---------------------------------------------------------------- ------------------- -------------------
Real Estate-Construction and Land Development 23,194 20,667
- ---------------------------------------------------------------- ------------------- -------------------
Real Estate-Commercial and Agriculture 87,435 80,197
- ---------------------------------------------------------------- ------------------- -------------------
Real Estate-Family and Multifamily Residential 41,171 27,549
- ---------------------------------------------------------------- ------------------- -------------------
Commercial, Industrial and Agriculture 34,699 33,981
- ---------------------------------------------------------------- ------------------- -------------------
Lease Financing 7,851 9,867
- ---------------------------------------------------------------- ------------------- -------------------
Consumer Loans 5,713 7,782
- ---------------------------------------------------------------- ------------------- -------------------
State and Political Subdivisions 646 1,512
- ---------------------------------------------------------------- ------------------- -------------------
Other 1,098 585
- ---------------------------------------------------------------- ------------------- -------------------
201,807 182,140
- ---------------------------------------------------------------- ------------------- -------------------
Less: Deferred Loan Fees (801) (724)
- ---------------------------------------------------------------- ------------------- -------------------
TOTAL LOANS 201,006 181,416
- ---------------------------------------------------------------- ------------------- -------------------
Less: Allowance for Credit Losses (3,289) (3,055)
- ---------------------------------------------------------------- ------------------- -------------------
NET LOANS 197,717 178,361
- ---------------------------------------------------------------- ------------------- -------------------
Premises and Equipment (net) 8,648 7,950
- ---------------------------------------------------------------- ------------------- -------------------
OREO 175 175
- ---------------------------------------------------------------- ------------------- -------------------
Investment in Associated Companies 2,448 2,281
- ---------------------------------------------------------------- ------------------- -------------------
Intangible Assets 1,726 1,760
- ---------------------------------------------------------------- ------------------- -------------------
Other Assets 12,213 10,073
- ---------------------------------------------------------------- ------------------- -------------------
TOTAL ASSETS 330,389 319,975
- ---------------------------------------------------------------- ------------------- -------------------
LIABILITIES
- ---------------------------------------------------------------- ------------------- -------------------
Deposits:
- ---------------------------------------------------------------- ------------------- -------------------
Demand 102,261 96,884
- ---------------------------------------------------------------- ------------------- -------------------
Demand-Interest Bearing 52,370 50,090
- ---------------------------------------------------------------- ------------------- -------------------
Time - $1000,000 and over 48,274 46,355
- ---------------------------------------------------------------- ------------------- -------------------
Other Time 68,185 69,478
- ---------------------------------------------------------------- ------------------- -------------------
Savings 19,518 21,160
- ---------------------------------------------------------------- ------------------- -------------------
290,608 283,967
- ---------------------------------------------------------------- ------------------- -------------------
Borrowed Funds 4,660 4,758
- ---------------------------------------------------------------- ------------------- -------------------
Other Liabilities 5,338 3,402
- ---------------------------------------------------------------- ------------------- -------------------
300,606 292,127
- ---------------------------------------------------------------- ------------------- -------------------
SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------- ------------------- -------------------
Preferred stock, no par value; 1,000,000 shares authorized,
none issued
- ---------------------------------------------------------------- ------------------- -------------------
Common stock, no par value; 20,000,000 shares authorized,
4,532,831 shares in 1999 and 1,787,954 in 1998, issued and
outstanding 25,798 25,580
- ---------------------------------------------------------------- ------------------- -------------------
Retained Earnings 3,574 1,485
- ---------------------------------------------------------------- ------------------- -------------------
Additional Paid in Capital 298 297
- ---------------------------------------------------------------- ------------------- -------------------
Unrealized Gain/Loss 113 486
- ---------------------------------------------------------------- ------------------- -------------------
TOTAL SHAREHOLDERS' EQUITY 29,783 27,848
- ---------------------------------------------------------------- ------------------- -------------------
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 330,389 319,975
- ---------------------------------------------------------------- ------------------- -------------------
</TABLE>
NOTE: Humboldt Bancorp became effective January 2, 1996. Capitol Valley Bank,
Roseville, CA opened March 3 1999.
See notes to consolidated financial statements.
<PAGE>17
<TABLE>
<S> <C> <C>
HUMBOLDT BANCORP AND SUBSIDIARIES
STATEMENT OF INCOME AND COMPREHENSIVE INCOME UNAUDITED UNAUDITED
For The Three Months Ended June 30, 1999 and 1998 June 30, 1999 June 30, 1998
(In Thousands of Dollars)
- ---------------------------------------------------------------- ------------------- -------------------
INTEREST INCOME
- ---------------------------------------------------------------- ------------------- -------------------
Interest and Fees on Loans 4,629 4,592
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Deposits in Banks 23 46
- ---------------------------------------------------------------- ------------------- -------------------
Interest and Dividends on Securities 970 1,139
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Federal Funds Sold 160 139
- ---------------------------------------------------------------- ------------------- -------------------
Total Interest Income 5,782 5,916
- ---------------------------------------------------------------- ------------------- -------------------
INTEREST EXPENSE
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Demand Deposits 45 49
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Other Savings Deposits 250 301
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Time Deposits $100,000+ 613 598
- ---------------------------------------------------------------- ------------------- -------------------
Interest on all Other Time Deposits 800 943
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Other Borrowings 81 45
- ---------------------------------------------------------------- ------------------- -------------------
Total Interest Expense 1,789 1,936
- ---------------------------------------------------------------- ------------------- -------------------
Net Interest Income 3,993 3,980
- ---------------------------------------------------------------- ------------------- -------------------
Provision for Loan Losses 188 515
- ---------------------------------------------------------------- ------------------- -------------------
NON INTEREST INCOME
- ---------------------------------------------------------------- ------------------- -------------------
Service Charges on Deposit Accounts 621 494
- ---------------------------------------------------------------- ------------------- -------------------
Other Fee Income 3,411 1,968
- ---------------------------------------------------------------- ------------------- -------------------
All Other Non-Interest Income 661 347
- ---------------------------------------------------------------- ------------------- -------------------
Total Non-Interest Income 4,693 2,809
- ---------------------------------------------------------------- ------------------- -------------------
Realized Gain/Loss on Securities (24) 0
- ---------------------------------------------------------------- ------------------- -------------------
NON INTEREST EXPENSE
- ---------------------------------------------------------------- ------------------- -------------------
Salaries and Employee Benefits 2,917 2,252
- ---------------------------------------------------------------- ------------------- -------------------
Premises and Fixed Asset Expense 676 692
- ---------------------------------------------------------------- ------------------- -------------------
Other Non-Interest Expense 3,383 2,023
- ---------------------------------------------------------------- ------------------- -------------------
Total Non-Interest Expense 6,976 4,967
- ---------------------------------------------------------------- ------------------- -------------------
INCOME BEFORE TAXES 1,498 1,307
- ---------------------------------------------------------------- ------------------- -------------------
Applicable Income Taxes 489 506
Bancorp Financial Services Income 88 27
- ---------------------------------------------------------------- ------------------- -------------------
NET INCOME 1,097 828
- ---------------------------------------------------------------- ------------------- -------------------
COMPREHENSIVE INCOME.
CHANGE IN UNREALIZED HOLDING GAINS FOR PERIOD (442) (263)
- ---------------------------------------------------------------- ------------------- -------------------
COMPREHENSIVE INCOME 655 565
- ---------------------------------------------------------------- ------------------- -------------------
NET INCOME PER SHARE $0.24 $0.19
- ---------------------------------------------------------------- ------------------- -------------------
NET INCOME PER SHARE ASSUMING DILUTION $0.22 $0.17
- ---------------------------------------------------------------- ------------------- -------------------
</TABLE>
<PAGE>18
<TABLE>
<S> <C> <C>
HUMBOLDT BANCORP AND SUBSIDIARIES
STATEMENT OF INCOME AND COMPREHENSIVE INCOME UNAUDITED UNAUDITED
For The Six Months Ended June 30, 1999 and 1998 June 30, 1999 June 30, 1998
(In Thousands of Dollars)
- ---------------------------------------------------------------- ------------------- -------------------
INTEREST INCOME
- ---------------------------------------------------------------- ------------------- -------------------
Interest and Fees on Loans 9,266 9,064
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Deposits in Banks 62 88
- ---------------------------------------------------------------- ------------------- -------------------
Interest and Dividends on Securities 1,905 2,352
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Federal Funds Sold 273 229
- ---------------------------------------------------------------- ------------------- -------------------
Total Interest Income 11,506 11,733
- ---------------------------------------------------------------- ------------------- -------------------
INTEREST EXPENSE
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Demand Deposits 85 101
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Other Savings Deposits 509 689
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Time Deposits $100,000+ 1,207 1,155
- ---------------------------------------------------------------- ------------------- -------------------
Interest on all Other Time Deposits 1,634 1,889
- ---------------------------------------------------------------- ------------------- -------------------
Interest on Other Borrowings 146 73
- ---------------------------------------------------------------- ------------------- -------------------
Total Interest Expense 3,581 3,907
- ---------------------------------------------------------------- ------------------- -------------------
Net Interest Income 7,925 7,826
- ---------------------------------------------------------------- ------------------- -------------------
Provision for Loan Losses 506 1,024
- ---------------------------------------------------------------- ------------------- -------------------
NON INTEREST INCOME
- ---------------------------------------------------------------- ------------------- -------------------
Service Charges on Deposit Accounts 1,163 1,040
- ---------------------------------------------------------------- ------------------- -------------------
Other Fee Income 6,208 3,577
- ---------------------------------------------------------------- ------------------- -------------------
All Other Non-Interest Income 1,142 593
- ---------------------------------------------------------------- ------------------- -------------------
Total Non-Interest Income 8,513 5,210
- ---------------------------------------------------------------- ------------------- -------------------
Realized Gain/Loss on Securities (18) 0
- ---------------------------------------------------------------- ------------------- -------------------
NON INTEREST EXPENSE
- ---------------------------------------------------------------- ------------------- -------------------
Salaries and Employee Benefits 5,570 4,387
- ---------------------------------------------------------------- ------------------- -------------------
Premises and Fixed Asset Expense 1,285 1,303
- ---------------------------------------------------------------- ------------------- -------------------
Other Non-Interest Expense 6,107 3,591
- ---------------------------------------------------------------- ------------------- -------------------
Total Non-Interest Expense 12,962 9,281
- ---------------------------------------------------------------- ------------------- -------------------
INCOME BEFORE TAXES 2,952 2,731
- ---------------------------------------------------------------- ------------------- -------------------
Applicable Income Taxes 1,025 1,055
Bancorp Financial Services Income 167 27
- ---------------------------------------------------------------- ------------------- -------------------
NET INCOME 2,094 1,703
- ---------------------------------------------------------------- ------------------- -------------------
COMPREHENSIVE INCOME.
CHANGE IN UNREALIZED HOLDING GAINS FOR PERIOD (373) (429)
- ---------------------------------------------------------------- ------------------- -------------------
COMPREHENSIVE INCOME 1,721 1,274
- ---------------------------------------------------------------- ------------------- -------------------
NET INCOME PER SHARE $0.46 $0.39
- ---------------------------------------------------------------- ------------------- -------------------
NET INCOME PER SHARE ASSUMING DILUTION $0.42 $0.35
- ---------------------------------------------------------------- ------------------- -------------------
</TABLE>
<PAGE>19
<TABLE>
<S> <C> <C>
HUMBOLDT BANCORP STATEMENT OF CASH FLOWS CONSOLIDATED CONSOLIDATED
For the Six Months Ended June 30, 1999 and 1998 UNAUDITED UNAUDITED
(In Thousands of Dollars) June 30, 1999 June 30, 1998
- ------------------------------------------------------------ ------------------- -------------------
OPERATING ACTIVITIES
- ------------------------------------------------------------ --------------------- ---------------------
Net Income - Adjustments to reconcile net income to
net cash provided by operating activities: 2,094 1,703
- ------------------------------------------------------------ --------------------- ---------------------
Provision for Loan Loss 506 1,024
- ------------------------------------------------------------ --------------------- ---------------------
Depreciation 696 724
- ------------------------------------------------------------ --------------------- ---------------------
Amortization and Other 675 799
- ------------------------------------------------------------ --------------------- ---------------------
(Gain)/Loss on Sale of Securities 18 0
- ------------------------------------------------------------ --------------------- ---------------------
Equity in Income of Associated Company (167) (90)
- ------------------------------------------------------------ --------------------- ---------------------
Net Change in Other Assets (631) (648)
- ------------------------------------------------------------ --------------------- ---------------------
Net Change in Other Liabilities 580 393
- ------------------------------------------------------------ --------------------- ---------------------
Net Change in Loans Held for Sale 7,677 (2,228)
- ------------------------------------------------------------ --------------------- ---------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 11,448 1,677
- ------------------------------------------------------------ --------------------- ---------------------
INVESTING ACTIVITIES
- ------------------------------------------------------------ --------------------- ---------------------
Net Change in Interest-bearing Deposits in Banks 3,000 0
- ------------------------------------------------------------ --------------------- ---------------------
Federal Funds Sold (Net) (8,284) (7,230)
- ----------------------------------------------------------- --------------------- ---------------------
Securities Held to Maturity
- ------------------------------------------------------------ --------------------- ---------------------
Investment Purchases 0 0
- ------------------------------------------------------------ --------------------- ---------------------
Proceeds from Maturities of Investments 0 0
- ------------------------------------------------------------ --------------------- ---------------------
Proceeds from Sale of Investments 0 0
- ------------------------------------------------------------ --------------------- ---------------------
Securities Available For Sale
- ------------------------------------------------------------ --------------------- ---------------------
Investment Purchases (10,333) (7,713)
- ------------------------------------------------------------ --------------------- ---------------------
Proceeds From Maturities of Investments 17,702 13,129
- ------------------------------------------------------------ --------------------- ---------------------
Proceeds From Sale of Investments 739 446
- ------------------------------------------------------------ --------------------- ---------------------
Net Change in Loans (19,862) (14,182)
- ------------------------------------------------------------ --------------------- ---------------------
Purchase of Premises and Equipment (1,394) (3,774)
- ------------------------------------------------------------ --------------------- ---------------------
Premium Paid of Deposits Purchases 0 0
- ------------------------------------------------------------ --------------------- ---------------------
Investment in Associated Company (1,242) 0
- ------------------------------------------------------------ --------------------- ---------------------
NET CASH USED FOR INVESTING ACTIVITIES (19,674) (19,324)
- ------------------------------------------------------------ --------------------- ---------------------
FINANCING ACTIVITIES
- ------------------------------------------------------------ --------------------- ---------------------
Net Change in Deposits 6,641 13,929
- ------------------------------------------------------------ --------------------- ---------------------
Proceeds from Borrowed Funds 1,300 1,700
- ------------------------------------------------------------ --------------------- ---------------------
Payments of Borrowed Funds (42) (17)
- ------------------------------------------------------------ --------------------- ---------------------
Stock Options Exercised 218 275
- ------------------------------------------------------------ --------------------- ---------------------
Fractional Shares Purchases (3) (8)
- ------------------------------------------------------------ --------------------- ---------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 8,114 15,879
- ------------------------------------------------------------ --------------------- ---------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (112) (1,768)
- ------------------------------------------------------------ --------------------- ---------------------
Cash and Due From Banks at Beginning of Period 28,626 21,442
- ------------------------------------------------------------ --------------------- ---------------------
CASH AND DUE FROM BANKS AT END OF PERIOD 28,514 19,674
- ------------------------------------------------------------ --------------------- ---------------------
SUPPLEMENTAL DISCLOSURES
- ------------------------------------------------------------ --------------------- ---------------------
Cash Paid During the Period For: Interest 3,616 3,903
- ------------------------------------------------------------ --------------------- ---------------------
Income Taxes 1,835 1,705
- ------------------------------------------------------------ --------------------- ---------------------
NON-CASH TRANSACTIONS
- ------------------------------------------------------------ --------------------- ---------------------
Unrealized Holding (Gains)losses on Securities (373) (429)
- ------------------------------------------------------------ --------------------- ---------------------
Deferred Income Taxes on Unrealized Holding Losses on
Securities 267 306
- ------------------------------------------------------------ --------------------- ---------------------
Deposit Liabilities Assumed in Exchange for Assets Acquired
in Connection with Purchase of Branches 0 0
- ------------------------------------------------------------ --------------------- ---------------------
Stock Dividend 0 4,723
- ------------------------------------------------------------ --------------------- ---------------------
Loans Transferred to REO 0 201
- ------------------------------------------------------------ --------------------- ---------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE 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>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 28,514
<INT-BEARING-DEPOSITS> 20
<FED-FUNDS-SOLD> 10,543
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 68,394
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 201,006
<ALLOWANCE> (3,289)
<TOTAL-ASSETS> 330,389
<DEPOSITS> 290,608
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5,338
<LONG-TERM> 4,660
0
0
<COMMON> 25,798
<OTHER-SE> 3,985
<TOTAL-LIABILITIES-AND-EQUITY> 330,389
<INTEREST-LOAN> 9,266
<INTEREST-INVEST> 1,905
<INTEREST-OTHER> 335
<INTEREST-TOTAL> 11,506
<INTEREST-DEPOSIT> 3,435
<INTEREST-EXPENSE> 3,581
<INTEREST-INCOME-NET> 7,925
<LOAN-LOSSES> 506
<SECURITIES-GAINS> (18)
<EXPENSE-OTHER> 12,962
<INCOME-PRETAX> 2,952
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,094
<EPS-BASIC> 0.46
<EPS-DILUTED> 0.42
<YIELD-ACTUAL> 6.02
<LOANS-NON> 1,060
<LOANS-PAST> 113
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,055
<CHARGE-OFFS> (531)
<RECOVERIES> 259
<ALLOWANCE-CLOSE> 3,289
<ALLOWANCE-DOMESTIC> 509
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,780
</TABLE>
