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: September 30, 2000
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
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(Address of principal executive offices)
95501
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(Zip Code)
(707) 445-3233
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(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 September 30, 2000, was: 5,916,343
<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
subsidiaries, Humboldt Bank and Capitol Valley Bank, Capitol Thrift and Loan
(which was acquired on April 7, 2000), and a 50% interest 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 three month and nine
month periods ended September 30, 2000.
Changes in Financial Condition
During the nine-month period ended September 30, 2000, deposits increased $138.3
million or 36.5% to $516.9 million compared with $378.6 million at December 31,
1999. The increase in deposits is the result of increases in all types of
deposits. During the same period, total loans (excluding loans held for sale)
increased $162.9 million or 72.0% to $389.2 million compared with $226.3 million
at December 31, 1999. The increase in loans is primarily the result of increases
in the real estate loan portfolio, particularly commercial and agricultural
loans and family and multi-family residential loans, and to a lesser degree
construction and land development loans as well as commercial, industrial and
agricultural loan, state and political subdivision loans and other loans. The
increase was partially offset by decreases in lease financing loans and to a
lesser degree in consumer loans. Loans held for sale decreased $2.1 million or
100.0% to $0.0 million compared with $2.1 million at December 31, 1999. The
increase in loans and deposits is attributable to both internal growth (loans
$52.1 million, deposits $31.7 million) and the result of the Capitol Thrift and
Loan acquisition (loans $110.8 million, deposits $106.6 million).
At September 30, 1999, deposits had increased $98.5 million or 35.5% from $277.3
million at September 30, 1998. Total loans had increased $22.7 million or 12.4%
from $183.6 million at September 30, 1998. The increase in deposits is
attributable to both internal growth ($27.6 million) and the retention of
deposits acquired from two branches of Cal-Fed Bank ($70.9 million). The
increase in loans is attributable to internal growth and is not the result of
acquisitions.
Investment securities decreased $15.0 million or 13.0% to $100.4 million at
September 30, 2000, compared with $115.4 million at December 31, 1999, and
federal funds sold increased $14.0 million or 65.4% to $35.4 million compared
with $21.4 million at December 31, 1999. The decrease in investment securities
was mainly the result increased internal loan demand. The increase in federal
funds sold was the result of a planned build-up of federal funds at Capitol
Thrift and Loan, an aggressive deposit generation program at Capitol Valley Bank
in anticipation of increased loan activity, which was partially offset by a
decrease in federal funds sold at Humboldt Bank due to increased loan demand.
At September 30, 1999, investments had increased $26.8 million or 33.8% from
$79.4 million at September 30, 1998. The increase in investments is mainly
attributable to the investment of funds received from the Cal-Fed branch
acquisitions.
<PAGE>3
During the nine month period ending September 30, 2000, past due and non-accrual
loans, as a result of the Capitol Thrift and Loan acquisition, increased $1.5
million or 50.0% to $4.5 million (0.8% of total assets), compared with $3.0
million (0.7% of total assets) at December 31, 1999. The Company's allowance for
loan losses at September 30, 1999, was 1.6% of loans and leases compared with
1.5% at December 31, 1999.
During the nine month period ending September 30, 1999, past due and non-accrual
loans decreased $0.6 million or 21.4% to $2.2 million (0.5% 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 September 30, 1999, was 1.6% of loans and
leases compared with 1.6% at December 31, 1998.
Earnings Summary
Net income for the nine months ended September 30, 2000, increased $1.8 million
to $5.0 million or $0.88 per share (diluted $0.82), compared with net income of
$3.2 million or $0.64 per share (diluted $0.58) in the same period a year ago.
The increase can be attributed to increases in interest income of $12.8 million
or 71.9%, and non-interest income of $7.1 million or 52.2%, offset by increases
in interest expense of $6.8 million or 121.4%, provision for loan losses of $0.9
million or 128.6%, and taxes of $0.9 or 60.0%, and non-interest expense of $9.5
million or 46.1%.
Net income for the three months ended September 30, 2000, increased $1.1 million
to $2.2 million or $0.38 per share (diluted $0.36 per share), compared with net
income of $1.1 million or $0.22 per share (diluted $0.20 per share) in the same
three month period a year ago. This increase of $1.1 million can be accounted
for by increases in interest income ($5.7 million or 90.5%), and non-interest
income ($2.1 million or 41.2%) off-set by increases in interest expense ($3.1
million or 147.6%), non-interest expense ($2.8 million or 36.8%), loan loss
provision ($0.2 million or 100.0%) and taxes ($0.6 million or 120.0%).
Net Interest Income
Total interest income increased $12.8 million or 71.9% for the nine months ended
September 30, 2000, compared with the prior year. During the same period,
interest expense increased $6.8 million or 121.4%. Net interest income for the
nine months ended September 30, 2000, was $18.3 million and $12.2 million for
the nine months ended September 30, 1999. Average loans and leases as a
percentage of average earning assets was 70.5% during the nine months ended
September 30, 2000, compared to 66.7% a year earlier. The average balance of
other earning assets as a percentage of average earning assets was 29.5% during
the nine months ended September 30, 2000, compared with 33.3% a year earlier.
Total interest income increased $5.7 million or 90.5% for the three months ended
September 30, 2000, and interest expense increased $3.1 million or 147.6%
compared with the same three-month period in the prior year. Net interest income
for the three months ended September 30, 2000, was $6.9 million and $4.3 million
for the three months ended September 30, 1999. The increase in interest income
is accounted for by increases in federal funds sold ($0.2 million), interest and
dividends on securities ($0.7 million) and interest and fees on loans ($4.8
million). The increase in interest expense is attributable to increases in
interest on savings deposits ($2.2 million), all other time deposits ($0.5
million), interest on other borrowings ($0.3 million) and interest on time
deposits of $100,000 or more, ($0.1 million).
<PAGE>4
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
the nine month period ended September 30, 2000, of $1.6 million compared to $0.7
million for the same period in 1999. Loans charged off during the nine-month
period totaled $0.9 million in 2000 and $0.8 million in 1999. Recoveries in the
same period were $89,000 in 2000 and $308,000 in 1999. The increase in the loan
loss provision in 2000 is the result of the acquisition of Capitol Thrift and
Loan.
The Company recorded a provision to the allowance for loan losses for the three
month period ended September 30, 2000, of $0.4 million compared with $0.2
million in the same period in 1999. Loans charged off during the three-month
period totaled $0.4 million in 2000 and $0.3 million in 1999. Recoveries in the
same period were $43,000 in 2000 and $50,000 in 1999.
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 nine months ended September 30, 2000,
income from these sources increased $7.1 million or 52.2% to $20.7 million,
compared with $13.6 million in 1999. The increase was accounted for by increases
in Merchant BankCard Department income ($6.6 million), service charges on
deposits ($0.5 million), and other income ($0.5 million), offset by decreases in
Issuing BankCard Department income ($0.1 million), and Lease Department income
($0.4 million).
In the three months ended September 30, 2000, non-interest income was $7.1
million; an increase of $2.0 million or 39.2% compared with $5.1 million for the
same period in 1999. The increase is attributable primarily to increases in
Merchant Bankcard Department income ($1.8 million), service charges on deposits
($0.2 million), and other non-interest income ($0.1 million) and decreases in
Lease Department income ($0.1 million).
Non-Interest Expense
During the nine months ended September 30, 2000, non-interest expenses increased
$9.5 million or 46.1% to $30.1 million, compared with $20.6 million for the same
period in 1999. The increase is attributable to increased personnel expenses
($3.5 million), premises expense ($0.6 million) and other non interest expenses
($5.4 million) which include increases in Merchant Bankcard Department expense
($4.8 million), outside consulting expense ($0.1 million), core deposit
intangible expense ($0.2 million), board related expense ($0.1 million),
non-local travel expense ($0.1 million) and other outside service expense ($0.1
million)
During the three months ended in September 30, 2000, non-interest expense was
$10.4 million an increase of $2.8 million of 36.8%, compared with $7.6 million
for the same period in 1999. The increase is attributable to increased personnel
expenses ($1.3 million), premises expense ($0.2) and other non interest expenses
($1.3 million) which includes increases in Merchant Bankcard Department expense
($1.0 million), outside consulting expense ($0.1 million), other outside service
expense ($0.1 million), and core deposit intangible expense ($0.1 million).
<PAGE>5
Number of Employees
At September 30, 2000, the Company had 399 full-time equivalent employees,
compared to 319 full-time equivalent employees at the same period a year
earlier.
In the three months ended September 30, 2000, the number of full-time equivalent
employees decreased by 7 compared with an increase of 33 in the same three
months period in 1999.
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 September 30, 2000.
REQUIRED COMPANY'S
MINIMUM ACTUAL
---------- -----------
TIER 1 6.00 10.56
TOTAL CAPITAL 10.00 11.81
LEVERAGE 5.00 8.58
Future growth and earnings retention, as currently anticipated 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 $2.5 million for the nine months ended
September 30, 2000, compared to $1.5 in the same period a year earlier. The
provision is classified as current tax liability for interim reporting purposes.
The tax rate was 34.8% for the nine months ended September 30, 2000, compared to
34.7% for the same period in 1999.
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 assets, was 23.8% at September 30, 24.1%
at June 30, and 33.2% at March 31, 2000 respectively and 38.2% at September 30,
1999.
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
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 September 30, 2000. 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.
<PAGE>6
The cause of the exposure to declining rates in the one-year period is due to
the Company's concentration of short-term and rate sensitive loans as of
September 30, 2000.
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 September
30, 2000, 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
Change in (In thousands Shareholder Equity
Interest Rates pre-tax) (pre-tax) % of EVE
---------------- -------------------- ---------------------- ---------------
+2% $ 818 1.7% (15%)
+1% $ 417 0.9% ( 7%)
-1% ($ 462) (1.0%) 7%
-2% ($1,128) (2.4%) 15%
The following table sets forth the repricing opportunities for the
assets and liabilities of the Company at September 30, 2000. Assets and
Liabilities are classified by the earliest possible repricing date or maturity,
whichever comes first.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
REPRICING IN
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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 $ 124,723 $ 42,398 $ 75,355 $ 56,671 $ 61,367 $ 28,654 $389,168
Investment Securities 412 8,357 49,004 13,227 24,829 3,519 99,348
Federal Funds Sold 35,395 35,395
FHLB Stock $ 1,073 1,073
Interest-bearing deposits with banks 45 99 144
Non-interest earning assets 67,097 67,097
--------- --------- ---------- ---------- ------- ----------- ------- --------
TOTAL ASSETS $ 160,575 $ 50,854 $124,359 $ 69,898 $ 86,196 $ 32,173 $ 68,170 $592,225
========= ========= ========== ========== ======== =========== ======= ========
LIABILITIES:
Non-interest-bearing deposits $132,724 $132,724
Interest-bearing deposits $ 192,570 $153,866 $ 33,083 $ 4,682 384,201
<PAGE>7
REPRICING IN
--------------------------------------------------------------------------------------
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
--------- --------- ---------- ---------- -------- ----------- ------- --------
Borrowings 3,024 5,172 217 8,251 16,664
Other liabilities 11,651 11,651
Stockholders' equity 46,985 46,985
--------- --------- ---------- ---------- ------- ----------- ------- --------
Total liabilities and stockholders' equity $ 195,594 $159,038 $ 33,300 $ 12,933 0 0 $191,360 $592,225
========= ========= ========== ========== ======== =========== ======= ========
Interest rate sensitivity gap $ -35,019 $-108,184 $ 91,059 $ 56,965 $ 86,196 $ 32,173
Cumulative interest rate sensitivity gap $ -35,019 $-143,203 $-52,144 $ 4,821 $ 91,017 $123,190
</TABLE>
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Refer to item 2 above.
<PAGE>8
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
(A) On May 17, 2000, the case of Lawrence Bradley vs Visa International
Service Association and Travelers Bank USA Corp. (Civil Action No. C 00-01777
SBA), was filed in the United States District Court, Northern District of
California, Northern Division. This case is a purported class action brought on
behalf of Mr. Bradley and others similarly situated (VISA credit cardholders
issued by Travelers Bank, hereinafter "Travelers" although the Company believes
the plaintiff means Citibank), against Travelers and VISA International (herein
"VISA") to (i) enjoin the collection of debts charged to Traveler's 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 Travelers and Visa related to such debts. Mr. Bradley
is alleging that Travelers and Visa were facilitating, participating in and
profiting from gambling by allowing Mr. Bradley to use his Travelers Visa card
to purchase "e-cash" at a website owned and operated by Cryptologic, Inc. and
Intersafe Global which he accessed from seven online casino operations. Mr.
Bradley proceeded to participate in certain games with his e-cash and allegedly
lost in the aggregate $7,048. The action alleges violation of the federal Wire
Act and the federal Racketeering Influenced and Corrupt Organizations Act
("RICO"). Mr. Bradley is seeking treble damages pursuant to RICO, punitive
damages and attorney's fees, in addition to compensatory damages and declaratory
relief.
Humboldt Bank provides merchant processing for Cryptologic and
Intersafe Global's credit card operations, and on July 3, 2000, Citibank sent a
letter to Humboldt Bank seeking indemnity for the Bradley action pursuant to
VISA regulations. Humboldt Bank and Citibank have had preliminary discussions
regarding this matter, but Humboldt Bank has not yet formally responded to
Citibank's letter. The Bradley action is in its preliminary stages and the
outcome at this time cannot be determined. The Bradley action is very similar to
another action entitled Freeman, et al. V. Citibank (South Dakota) NA, et al.,
filed in the Northern District of Alabama, Northern Division previously reported
by the company in prior filings with the commission. In the event it is
ultimately determined that Humboldt Bank is obligated to indemnify Citibank,
Humboldt Bank intends to seek indemnity against Cryptologic, Intersafe Global
and creditcards.com, the company which through its independent marketing efforts
presented Cryptologic's and Intersafe Global's application for merchants
services to Humboldt Bank.
(B) On June 23, 2000, Humboldt Bank was served with two lawsuits
entitled Christopher Bradford, et. al, vs Leasecomm Corporation, et. al.,
Commonwealth of Massachusetts, Middlesex, ss. (Superior Court Civil No. 00-2756)
and Frances M. Okougbo, et. al. vs Leasecomm Corporation, et. al., Commonwealth
of Massachusetts, Middlesex, ss. (Superior Court Civil No. 00-2757). These are
purported class action lawsuits in which plaintiffs allege that they were
charged excessive fees by defendants for entering into non cancellable equipment
leases and merchant agreements in connection with establishing a business in
which revenues may be received through credit card payments. In the Bradford and
Okougbo lawsuits, plaintiffs are alleging, among other things, that Cardservice
International, Inc and creditcards.com used deceptive practices to sign
plaintiffs to merchant agreements to establish merchant accounts with Humboldt
Bank and were charged excessive fees. Cardservice International, Inc and
creditcards.com are independent service and marketing organizations that market
Humboldt Bank's merchant services. In the Bradford and Okougbo lawsuits,
plaintiffs are also alleging, that Humboldt Bank was either an agent of
Cardservice International, Inc and creditcards.com or Cardservice International,
Inc and creditcards.com was an agent of Humboldt Bank and that Humboldt Bank
should be jointly and severally liable for any damages. Plaintiffs in the
Bradford and Okougbo lawsuits, are seeking, among other things, a refund of all
monies paid, including costs and interest, and attorney's fees, including
multiple damages. These cases are in their initial stages and Humboldt Bank has
an indemnification agreement with Cardservice International and is seeking
indemnification from creditcards.com.
<PAGE>9
We are also involved in other litigation; the outcome of which, we believe will
not have a material effect on our operations or financial condition.
ITEM 2 - Changes in Securities - 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
(a) Exhibits
2.2 Agreement and Plan of Reorganization and Merger by and
Between Humboldt Bancorp and Tehama Bancorp*
10.19 Humboldt Bancorp Indenture - junior subordinated debt
securities
10.20 Amended and Restated Declaration of Trust for junior
subordinated debt securities
27.1 Financial Data Schedule
* Incorporated by reference to Form 8-K dated September 20, 2000, and filed
September 27, 2000.
(b) Form 8-K dated September 20, 2000, concerning entering into a
definitive agreement and plan of reorganization and merger
between Humboldt Bancorp and Tehama Bancorp.
<PAGE>9
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: November 13, 2000 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>11
Humboldt Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 2000
(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 September 30, 2000 and results of operations for the three and
nine 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 1999 Annual Report on Form 10-K. The results
of operations for the three and nine months ended September 30, 2000 are not
necessarily indicative of the operating results through December 31, 2000.
Note 2 - Consolidation
The consolidated financial statements include the accounts of Humboldt Bancorp
and its wholly-owned subsidiaries, Humboldt Bank, Capitol Valley Bank, Capital
Thrift and Loan, and 50% in Bancorp Financial Services. All material
intercompany accounts and transactions have been eliminated in consolidation.
Note 3 - Commitments
The Company has outstanding performance letters of credit of $2.8 million at
September 30, 2000, compared to $4.6 million at September 30, 1999.
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 September 30, 2000, was
5,701,720 and for the period ending September 30, 1999, was 4,992,488.
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 September 30, 2000, was 6,139,131 and for the period ending
September 30, 1999, was 5,467,763.
<PAGE>12
HUMBOLDT BANCORP AND SUBSIDIARIES CONSOLIDATED CONSOLIDATED
CONSOLIDATED BALANCE SHEETS UNAUDITED AUDITED
(IN THOUSANDS OF DOLLARS) 09-30-00 12-31-99
------------ -------------
ASSETS:
Cash and Due From Banks 29,087 31,339
Interest Bearing Deposits in Banks 144 20
Federal Funds Sold 35,395 21,375
Investment Securities (At fair value) 100,421 115,360
Loans Held For Sale 0 2,147
LOANS
Real Estate-Construction and Land Development 29,678 22,118
Real Estate-Commercial and Agriculture 220,188 99,053
Real Estate-Family and Multifamily Residential 77,606 43,038
Commercial, Industrial and Agriculture 41,452 39,295
Lease Financing 13,044 17,202
Consumer Loans 5,307 5,394
State and Political Subdivisions 2,094 707
Other 2,264 509
391,633 227,316
Less: Deferred Loan Fees (2,465) (987)
TOTAL LOANS 389,168 226,329
Less: Allowance for Credit Losses (6,186) (3,354)
NET LOANS 382,982 222,975
Premises and Equipment (net) 14,854 9,750
OREO 808 120
Intangible Assets 3,483 3,812
Other Assets 19,613 12,647
------------ -------------
TOTAL ASSETS 592,225 423,649
------------ -------------
LIABILITIES
Deposits:
Demand 132,724 110,523
Demand-Interest Bearing 70,459 63,547
Time - $1000,000 and over 85,706 68,061
Other Time 182,952 103,966
Savings 45,084 32,533
516,925 378,630
Borrowed Funds 16,664 5,316
Other Liabilities 11,651 5,564
------------ -------------
545,240 389,510
SHAREHOLDERS' EQUITY
Common stock, no par value; 50,000,000 shares
authorized, 5,916,343 shares in
2000 and 4,721,361 in 1999, issued and outstanding 41,933 28,405
Retained Earnings 5,084 6,088
Unrealized Gain/Loss (32) (354)
------------ -------------
TOTAL SHAREHOLDERS' EQUITY 46,985 34,139
------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 592,225 423,649
============ =============
<PAGE>13
<TABLE>
<S> <C> <C>
HUMBOLDT BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For The Nine Months Ended September 30, 2000 and 1999 UNAUDITED UNAUDITED
(In Thousands of Dollars) September 30, 2000 September 30, 1999
-------------------- ------------------
INTEREST INCOME
Interest and Fees on Loans 24,178 14,136
Interest on Deposits in Banks 42 73
Interest and Dividends on Securities 5,161 2,939
Interest on Federal Funds Sold 1,313 696
-------------------- ------------------
Total Interest Income 30,694 17,844
INTEREST EXPENSE
Interest on Demand Deposits 158 135
Interest on Other Savings Deposits 1,718 821
Interest on Time Deposits $100,000+ 3,599 1,805
Interest on all Other Time Deposits 6,222 2,649
Interest on Other Borrowings 745 225
-------------------- ------------------
Total Interest Expense 12,442 5,635
-------------------- ------------------
Net Interest Income 18,252 12,209
Provision for Loan Losses 1,602 697
NON INTEREST INCOME
Service Charges on Deposit Accounts 2,255 1,805
Other Fee Income 16,816 10,051
All Other Non-Interest Income 1,617 1,729
-------------------- ------------------
Total Non-Interest Income 20,688 13,585
Realized Loss on Securities (89) (93)
NON INTEREST EXPENSE
Salaries and Employee Benefits 12,138 8,659
Premises and Fixed Asset Expense 2,747 2,092
Other Non-Interest Expense 15,235 9,826
-------------------- ------------------
Total Non-Interest Expense 30,120 20,577
-------------------- ------------------
INCOME BEFORE TAXES 7,129 4,427
Applicable Income Taxes (2,481) (1,537)
Bancorp Financial Services Income 372 300
-------------------- ------------------
NET INCOME 5,020 3,190
COMPREHENSIVE INCOME
CHANGE IN UNREALIZED HOLDING GAINS/LOSSES FOR PERIOD 322 (406)
COMPREHENSIVE INCOME 5,342 2,784
NET INCOME PER SHARE $ 0.88 $ 0.64
NET INCOME PER SHARE ASSUMING DILUTION $ 0.82 $ 0.58
</TABLE>
<PAGE>14
<TABLE>
<S> <C> <C>
HUMBOLDT BANCORP AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For The Three Months Ended September 30, 2000 and 1999 UNAUDITED UNAUDITED
(In Thousands of Dollars) September 30, 2000 September 30, 1999
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INTEREST INCOME
Interest and Fees on Loans 9,718 4,870
Interest on Deposits in Banks 9 11
Interest and Dividends on Securities 1,694 1,034
Interest on Federal Funds Sold 592 423
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Total Interest Income 12,013 6,338
INTEREST EXPENSE
Interest on Demand Deposits 53 50
Interest on Other Savings Deposits 2,494 312
Interest on Time Deposits $100,000+ 743 598
Interest on all Other Time Deposits 1,457 1,015
Interest on Other Borrowings 386 79
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Total Interest Expense 5,133 2,054
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Net Interest Income 6,880 4,284
Provision for Loan Losses 352 191
NON INTEREST INCOME
Service Charges on Deposit Accounts 834 642
Other Fee Income 5,728 3,843
All Other Non-Interest Income 561 587
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Total Non-Interest Income 7,123 5,072
Realized Loss on Securities (15) (75)
NON INTEREST EXPENSE
Salaries and Employee Benefits 4,421 3,089
Premises and Fixed Asset Expense 1,004 807
Other Non-Interest Expense 4,994 3,719
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Total Non-Interest Expense 10,419 7,615
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INCOME BEFORE TAXES 3,217 1,475
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Applicable Income Taxes (1,122) (512)
Bancorp Financial Services Income 86 133
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NET INCOME 2,181 1,096
COMPREHENSIVE INCOME
CHANGE IN UNREALIZED HOLDING GAINS/LOSSES FOR PERIOD 534 (33)
COMPREHENSIVE INCOME 2,715 1,063
NET INCOME PER SHARE $ 0.38 $ 0.22
NET INCOME PER SHARE ASSUMING DILUTION $ 0.36 $ 0.20
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HUMBOLDT BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS CONSOLIDATED CONSOLIDATED
For the Nine Months Ended September 30, 2000 and 1999 UNAUDITED UNAUDITED
(In Thousands of Dollars) September 30, 2000 September 30, 1999
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OPERATING ACTIVITIES
Net Income - Adjustments to reconcile
net income to net cash
provided by operating activities: 5,020 3,190
Provision for Loan Loss 1,602 697
Depreciation 1,142 1,115
Amortization and Other 513 977
(Gain)/Loss on Sale of Securities 89 93
Equity in Income of Associated Company (334) (300)
Net Change in Other Assets (6,217) (728)
Net Change in Other Liabilities 1,909 1,142
Net Change in Loans Held for Sale 2,147 6,958
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NET CASH PROVIDED BY OPERATING ACTIVITIES 5,871 13,144
INVESTING ACTIVITIES
Net Change in Interest-bearing Deposits in Bank (124) 3,000
Federal Funds Sold (Net) (7,520) (53,895)
Securities
Investment Purchases (17,423) (57,939)
Proceeds From Maturities of Investments 16,069 23,920
Proceeds From Sale of Investments 17,316 4,000
Net Change in Loans (55,972) (24,715)
Purchases of Premises and Equipment (6,246) (2,586)
Purchase of subsidiary (10,923) 0
Premium paid on deposits purchased 0 (2,355)
Proceeds from Sale of Foreclosed Real Estate 1,533 175
Investment in Associated Company (1,000) (1,242)
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NET CASH USED FOR INVESTING ACTIVITIES (64,290) (111,637)
FINANCING ACTIVITIES
Net change in deposits 40,316 91,848
Net change in borrowings 10,408 1,300
Payments of Borrowed Funds (2,060) (64)
Stock sale and options exercised 7,503 2,184
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NET CASH PROVIDED BY FINANCING ACTIVITIES 56,167 95,268
NET CHANGE IN CASH AND CASH EQUIVALENTS (2,252) (3,225)
Cash and Due From Banks at Beginning of Period 31,339 28,626
CASH AND DUE FROM BANKS AT END OF PERIOD 29,087 25,401
SUPPLEMENTAL DISCLOSURES
Cash Paid During the Period For: Interest 12,297 5,435
Income Taxes 4,020 2,506
NON-CASH TRANSACTIONS
Unrealized Holding (Gains)losses on Securities (553) (406)
Deferred Income Taxes on Unrealized Holding Losses on Securities 231 290
Deposit Liabilities Assumed in Exchange for Assets Acquired in
Connection with Purchase of Branches 0 72,105
Stock Dividend 0 0
Loans Transferred to REO 0 0
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