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, 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
(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, 2000, was: 5,910,029
<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, 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 six
month periods ended June 30, 2000.
Changes in Financial Condition
During the six-month period ended June 30, 2000, deposits increased $125.5
million or 33.1% to $504.1 million compared with $378.6 million at December 31,
1999. The increase in deposits is the result of increases in demand deposits,
savings deposits, other time deposits, and time certificates of deposit over
$100,000 being partially offset by a small decrease in Interest-bearing demand
deposits. During the same period, total loans, excluding loans held for sale,
increased $150.1 million or 66.3% to $376.4 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 family and multi-family
residential loans and commercial and agriculture loans, and to a much lesser
degree in the commercial, industrial and agricultural loan, state and political
subdivision loans and other loan portfolios. The increase was partially offset
by decreases in, the consumer loan, and the lease financing loan portfolios.
Loans held for sale decreased $2.1 million or 100.0% to $0.00 million compared
with $2.1 million at December 31, 1999. The increase in deposits and loans is
attributable to both internal growth (deposits $21.0 million, loans $40.4
million) and the result of the Capitol Thrift and Loan acquisition (deposits
$104.5 million, loans $109.7 million).
At June 30, 2000, deposits had increased $213.5 million or 73.5% from $290.6
million at June 30, 1999. Total loans, excluding loans held for sale, had
increased $175.4 million or 87.3% from $201.0 million at June 30, 1999. The
increase in deposits and loans is attributable to internal growth (deposits
$109.0 million, loans $65.7 million) and the result of the Capitol Thrift and
Loan acquisition (deposits $104.5 million, loans $109.7 million).
Investment securities decreased $11.8 million or 10.2% to $103.6 million at June
30, 2000 compared with $115.4 million at December 31, 1999 and federal funds
sold increased $6.5 million or 30.3% to $27.9 million compared with $21.4
million at December 31, 1999. The decrease in investment securities was the
result of increased internal loan demand. The increase in federal funds sold was
the result of a planned build-up of federal funds for liquidity purposes at
Capitol Thrift and Loan and an aggressive deposit generation program at Capitol
Valley Bank in anticipation of increased loan demand.
At June 30, 2000, investments had increased $35.2 million or 51.4% from
$68.4million at June 30, 1999. The increase in investments is mainly
attributable to the acquisition of the deposits from the Burre Center and Ukiah
Branches of Cal Fed in August of 1999. Federal funds sold had increased $17.4
million or 165.7% from $10.5 million to $27.9 million. The increase in federal
funds sold was the result of a planned build-up of federal funds for liquidity
<PAGE>3
purposes at Capitol Thrift and Loan and an aggressive deposit generation program
at Capitol Valley Bank in anticipation of increased loan demand.
During the six month period ending June 30, 2000, as a result of the Capitol
Thrift & Loan acquisition, past due and non-accrual loans increased $3.0 million
or 100.0% to $6.0 million (1.0% 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 June 30, 2000 was 1.6% of loans and leases compared with 1.5% at
December 31, 1999.
At June 30, 2000, mainly as a result of the Capitol Thrift & Loan acquisition,
past due and non-accrual loans had increased $3.9 million or 185.7% from $2.1
million at June 30, 1999. The Company's allowance for loan losses at June 30,
2000 was 1.6% of total loans and leases, which compared with 1.6% at June 30,
1999.
Earnings Summary
Net income for the six months ended June 30, 2000 increased $745,000 to
$2,839,000 or $0.51 per share (diluted $0.47), compared with net income of
$2,094,000 or $0.42 per share (diluted $0.39) in the same period a year ago. The
increase can be attributed to increases in total interest income of $7,175,000
or 62.4%, non-interest income of $5,052,000 or 59.3% and Bancorp financial
services income of $119,000 or 71.3%. These increases were offset by
non-interest expense of $6,739,000 or 52.0%, increases in interest expense of
$3,728,000 or 104.1%, provision for loan losses of $744,000 or 147.0%, realized
loss on securities of $56,000 or 311.1% and taxes of $334,000 or 32.6%.
Net income for the three months ended June 30, 2000 increased $578,000 to
$1,675,000 or $0.30 per share (diluted $0.28 per share), compared with net
income of $1,097,000 or $0.22 per share (diluted $0.20 per share) in the same
three month period a year ago. This increase of $578,000 can be accounted for by
increases in total interest income ($5,095,000 or 88.1%), non-interest income
($2,322,000 or 49.5%), and Bancorp financial services income ($109,000 or
123.9%). These increases were offset by increases in non-interest expense
($3,363,000 or 48.2%), interest expense ($2,727,000 or 152.4%), loan loss
provision ($505,000 or 268.6%) realized loss on securities ($36,000 or 150.0%)
and taxes ($317,000 or 64.8%).
Net Interest Income
Total interest income increased $7,175,000 or 62.4% for the six months ended
June 30, 2000, compared with the prior year. During the same period, interest
expense increased $3,728,000 or 104.1%. Net interest income for the six months
ended June 30, 2000 was $11.4 million and $7.9 million for the period ended June
30, 1999. Average loans and leases as a percentage of average earning assets was
68.5% during the six months ended June 30, 2000, compared to 68.1% a year
earlier. The average balance of other earning assets as a percentage of average
earning assets was 31.5% during the six months ended June 30, 2000, compared
with 31.9% a year earlier.
Total interest income increased $5,095,000 or 88.1% for the three months ended
June 30, 2000, and interest expense increased $2,727,000 or 152.4% compared with
the same three-month period in the prior year. Net interest income for the three
months ended June 30, 2000 was $6,361,000 and $3,993,000 for the three months
ended June 30, 1999. The increase in interest income is accounted for by
increases in interest and fees on loans ($4,106,000), interest and dividends on
securities ($777,000), federal funds sold ($220,000) and a decrease in interest
on deposits in banks ($8,000). The increase in interest expense is attributable
to increases in interest on time deposits of $100,000 or more, ($1,300,000) and
interest on other borrowings ($185,000), interest on savings deposits
($345,000), all other time deposits ($891,000) and interest on demand deposits
($6,000).
<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 six month period ended June 30, 2000 of $1,250,000 compared to $506,000 for
the same period in 1999. Loans charged off during the six-month period totaled
$498,000 in 1999 and $531,000 in 1999. Recoveries in the same period were
$46,000 in 1999 and $259,000 in 1999. The reduction in loans charged off in 2000
compared to 1999 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, 2000 of $693,000 compared with $188,000 in the same
period in 1999. Loans charged off during the three-month period totaled $369,000
in 2000 and $221,000 in 1999. Recoveries in the same period were $26,000 in 2000
and $227,000 in 1999.
Non-Interest Income
Non-interest income consists of gain/loss on sale of investments, 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,
2000, income from these sources increased $5.0 million or 58.8% to $13.5
million, compared with $8.5 million in 1999. The increase was accounted for by
increases in Merchant BankCard Department income ($4.9 million), service charges
on deposits ($0.3 million) and key-man insurance income ($0.1 million), offset
by a decrease in Lease Department income ($0.3 million).
In the three months ended June 30, 2000, non-interest income was $7.0 million;
an increase of $2.3 million or 48.9% compared with $4.7 million for the same
period in 1999. The increase is attributable primarily to increases in Merchant
Bankcard Department income ($5.6 million), service charges on deposits ($0.8
million), key-man insurance ($0.1 million), investment department income ($0.1
million), gain on sale of loans ($0.1 million) and Lease Department income ($0.3
million).
Non-Interest Expense
During the six months ended June 30, 2000 non-interest expenses increased $6.7
million or 51.5% to $19.7 million, compared with $13.0 million for the same
period in 1999. The increase is attributable to increased personnel expenses
($2.2 million), occupancy expense ($0.4 million), and other non interest
expenses ($4.1 million) which includes increases in Merchant Bankcard Department
expense ($3.8 million), core deposit intangible expense ($0.2 million), and
board related expense ($0.1 million)
During the three months ended in June 30, 2000, non-interest expense was $10.3
million an increase of $3.3 million of 47.1%, compared with $7.0 million for the
same period in 1999. The increase is attributable to increased personnel
expenses ($1.3 million), occupancy expense ($0.2 million), and other non
interest expenses ($1.8 million) which includes increases in Merchant Bankcard
Department expense ($1.6 million) core deposit intangible expense ($0.1
million), and board related expense ($0.1 million).
<PAGE>5
Number of Employees
At June 30, 2000 the Company had 406 full-time equivalent employees, compared to
286 full-time equivalent employees at the same period a year earlier.
In the three months ended June 30, 2000 the number of full-time equivalent
employees increased by 33 compared with 30 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 June 30, 2000.
REQUIRED COMPANY'S
MINIMUM ACTUAL
-------- ---------
TIER 1 6.00 10.58
TOTAL CAPITAL 10.00 11.83
LEVERAGE 5.00 8.55
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 $1,359,000 for the six months ended June 30,
2000, compared to $1,025,000 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, 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 deposits, was 24.1% at June 30, 2000,
33.2% at March 31, 2000 and 25.0% at June 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 June 30, 2000. These estimates are based on the
existing repricing schedule (see repricing table) as well as consideration of
<PAGE>6
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, 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 June 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 Shareholder
Change in (In thousands Equity
Interest Rates pre-tax) (pre-tax) % of EVE
-------------- ------------- --------------- --------
+2% $414 0.9% (11%)
+1% $218 0.5% (5%)
-1% ($132) (0.3%) 5%
-2% ($300) (0.7%) 11%
The following table sets forth the repricing opportunities for the assets and
liabilities of the Company at June 30, 2000. Assets and Liabilities are
classified by the earliest possible repricing date or maturity, whichever comes
first.
<TABLE>
<CAPTION>
REPRICING IN
--------------------------------------------------------------------
Five
Three One Years
Less Than Through Through Three Through Over
(In thousands) Three Twelve Three Through Fifteen Fifteen Non-Interest
Months Months Years Five Years Years Years Bearing Total
--------- ------- ------- ---------- -------- ------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Net Loans 119,370 45,887 69,419 54,819 58,652 28,289 376,436
Investment Securities 2,614 9,699 44,713 16,934 24,760 3,802 102,522
Federal Funds Sold 27,855 27,855
FHLB Stock 1,048 1,048
Interest-bearing deposits
with banks 117 99 216
Non-interest earning assets 67,234 67,234
---------------------------------------------------------------------------------------------
TOTAL ASSETS 149,956 55,685 114,132 71,753 83,412 32,091 68,282 575,311
=============================================================================================
<PAGE>7
REPRICING IN
--------------------------------------------------------------------
Five
Three One Years
Less Than Through Through Three Through Over
(In thousands) Three Twelve Three Through Fifteen Fifteen Non-Interest
Months Months Years Five Years Years Years Bearing Total
--------- ------- ------- ---------- -------- ------- ------------ -------
LIABILITIES:
Non-interest-bearing deposits 127,955 127,955
Interest-bearing deposits 199,708 142,141 28,873 5,422 376,144
Borrowings 3,023 5,073 213 8,271 16,580
Other liabilities 10,364 10,364
Stockholders' equity 44,268 44,268
---------------------------------------------------------------------------------------------
Total liabilities and
stockholders' equity 202,731 147,214 29,086 13,693 0 0 182,587 575,311
=============================================================================================
Interest rate sensitivity gap -52,775 -91,529 85,046 58,060 83,412 32,091
Cumulative interest rate
sensitivity gap -52,775 -144,304 -59,258 -1,198 82,214 114,305
</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 through which 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. Humboldt Bank intends to vigorously defend itself in these
matters.
<PAGE>9
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 17, 2000, a Proxy Statement of Humboldt Bancorp was mailed to
shareholders of record as of March 31, 2000 by the Board of Directors soliciting
proxies for use at the Annual Meeting of Shareholders to be held on May 18,
2000. At the meeting, the shareholders were asked to elect management's nominees
for Directors (13), and to ratify the appointment of Richardson and Company as
independent certified accountants. The results of the voting are as follows:
PROPOSAL #1 - Election of Directors
FOR ALL
NOMINEES ABSTAIN AGAINST
Ronald F. Angell 4,484,112 Shares 19,010 Shares -0-
Marguerite Dalianes 4,488,957 Shares 14,165 Shares -0-
Gary L. Evans 4,448,602 Shares 54,520 Shares -0-
Lawrence Francesconi 4,309,759 Shares 193,363 Shares -0-
Clayton R. Janssen 4,488,847 Shares 14,275 Shares -0-
James O. Johnson 4,488,957 Shares 14,165 Shares -0-
Theodore S. Mason 4,485,384 Shares 17,738 Shares -0-
John C. McBeth 4,487,085 Shares 16,037 Shares -0-
Michael L. Renner 4,481,867 Shares 21,255 Shares -0-
Jerry L. Thomas 4,311,947 Shares 191,175 Shares -0-
Edythe E. Vaissade 4,318,080 Shares 185,042 Shares -0-
Thomas W. Weborg 4,490,231 Shares 12,891 Shares -0-
John R. Winzler 4,480,890 Shares 22,232 Shares -0-
PROPOSAL #2 - Ratify the appointment of Richardson and Company as Independent
Certified Accountants
FOR: 4,215,945 Shares
AGAINST: 46,383 Shares
ABSTAIN: 240,794 Shares
ITEM 5 - Other Information
On June 22, 1999, Humboldt Bancorp entered into a merger agreement to acquire
Global Bancorp, and its wholly-owned operating subsidiary Capitol Thrift and
Loan, a California industrial loan corporation. Capitol Thrift has 10 branches
located within California and focuses primarily on consumer mortgage and
commercial real estate lending. The acquisition of Global Bancorp was subject to
several conditions, including approval of the merger by the shareholders of
Global Bancorp, regulatory approval, and sale of common stock through a public
offering. The acquisition of Global Bancorp was consummated on April 7, 2000 and
Capitol Thrift and Loan became a subsidiary of Humboldt Bancorp.
<PAGE>10
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
<PAGE>11
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 11, 2000 HUMBOLDT BANCORP
Alan J. Smyth
Senior Vice President and
Chief Financial Officer
Theodore S. Mason
President and Chief Executive Officer
<PAGE>12
Humboldt Bancorp and Subsidiaries
Notes to Consolidated Financial Statements
June 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 June 30, 2000 and results of operations for the three and 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 1999 Annual Report on Form 10-K. The results
of operations for the six months ended June 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, Capitol
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 $4.2 million at
June 30, 2000 compared to $4.6 million at June 30, 1999.
Note 4 - 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, 2000 was 5,582,040
and for the period ending June 30, 1999 was 4,967,213.
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, 2000 was 6,038,255 and for the period ending June 30,
1999 was 5,432,388.
<PAGE>13
HUMBOLDT BANCORP AND SUBSIDIARIES CONSOLIDATED CONSOLIDATED
CONSOLIDATED BALANCE SHEETS UNAUDITED AUDITED
(IN THOUSANDS OF DOLLARS) 06-30-00 12-31-99
ASSETS:
Cash and Due From Banks 33,381 31,339
Interest Bearing Deposits in Banks 216 20
Federal Funds Sold 27,855 21,375
Investment Securities (At fair value) 103,570 115,360
Loans Held For Sale -0- 2,147
LOANS
Real Estate-Construction and Land Development 29,156 22,118
Real Estate-Commercial and Agriculture 205,379 99,053
Real Estate-Family and Multifamily Residential 76,924 43,038
Commercial, Industrial and Agriculture 43,599 39,295
Lease Financing 14,744 17,202
Consumer Loans 5,354 5,394
State and Political Subdivisions 2,101 707
Other 1,560 509
378,817 227,316
Less: Deferred Loan Fees (2,381) (987)
TOTAL LOANS 376,436 226,329
Less: Allowance for Credit Losses (6,155) (3,354)
NET LOANS 370,281 222,975
Premises and Equipment (net) 10,045 9,750
OREO 816 120
Investment in Associated Companies 5,390 4,104
Intangible Assets 3,622 3,812
Other Assets 20,135 12,647
TOTAL ASSETS 575,311 423,649
LIABILITIES
Deposits:
Demand 127,955 110,523
Demand-Interest Bearing 60,738 63,547
Time - $1000,000 and over 90,241 68,061
Other Time 178,255 103,966
Savings 46,910 32,533
504,099 378,630
Borrowed Funds 16,580 5,316
Other Liabilities 10,364 5,564
531,043 389,510
SHAREHOLDERS' EQUITY
Common stock, no par value; 50,000,000 shares
authorized, 5,910,029 shares in 2000 and
4,532,831 in 1999, issued and outstanding 41,316 28,405
Retained Earnings 3,518 6,088
Unrealized Gain/Loss (566) (354)
TOTAL SHAREHOLDERS' EQUITY 44,268 34,139
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 575,311 423,649
NOTE: See notes to consolidated financial statements.
<PAGE>14
HUMBOLDT BANCORP AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For The Three Months Ended June 30, 2000 and 1999
(In Thousands of Dollars)
UNAUDITED UNAUDITED
June 30, 2000 June 30, 1999
INTEREST INCOME
Interest and Fees on Loans 8,735 4,629
Interest on Deposits in Banks 15 23
Interest and Dividends on Securities 1,747 970
Interest on Federal Funds Sold 380 160
Total Interest Income 10,877 5,782
INTEREST EXPENSE
Interest on Demand Deposits 51 45
Interest on Other Savings Deposits 595 250
Interest on Time Deposits $100,000+ 1,913 613
Interest on all Other Time Deposits 1,691 800
Interest on Other Borrowings 266 81
Total Interest Expense 4,516 1,789
Net Interest Income 6,361 3,993
Provision for Loan Losses 693 188
NON INTEREST INCOME
Service Charges on Deposit Accounts 801 621
Other Fee Income 5,629 3,411
All Other Non-Interest Income 585 661
Total Non-Interest Income 7,015 4,693
Realized Loss on Securities (60) (24)
NON INTEREST EXPENSE
Salaries and Employee Benefits 4,231 2,917
Premises and Fixed Asset Expense 913 676
Other Non-Interest Expense 5,195 3,383
Total Non-Interest Expense 10,339 6,976
INCOME BEFORE TAXES 2,284 1,498
Applicable Income Taxes 806 489
Bancorp Financial Services Income 197 88
NET INCOME 1,675 1,097
COMPREHENSIVE INCOME.
CHANGE IN UNREALIZED HOLDING GAINS/
LOSSES FOR PERIOD (58) (442)
COMPREHENSIVE INCOME 1,617 655
NET INCOME PER SHARE $0.30 $0.22
NET INCOME PER SHARE ASSUMING DILUTION $0.28 $0.20
<PAGE>15
HUMBOLDT BANCORP AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For The Six Months Ended June 30, 2000 and 1999
(In Thousands of Dollars)
UNAUDITED UNAUDITED
June 30, 2000 June 30, 1999
INTEREST INCOME
Interest and Fees on Loans 14,460 9,266
Interest on Deposits in Banks 33 62
Interest and Dividends on Securities 3,467 1,905
Interest on Federal Funds Sold 721 273
Total Interest Income 18,681 11,506
INTEREST EXPENSE
Interest on Demand Deposits 105 85
Interest on Other Savings Deposits 1,001 509
Interest on Time Deposits $100,000+ 2,856 1,207
Interest on all Other Time Deposits 2,988 1,634
Interest on Other Borrowings 359 146
Total Interest Expense 7,309 3,581
Net Interest Income 11,372 7,925
Provision for Loan Losses 1,250 506
NON INTEREST INCOME
Service Charges on Deposit Accounts 1,421 1,163
Other Fee Income 11,088 6,208
All Other Non-Interest Income 1,056 1,142
Total Non-Interest Income 13,565 8,513
Realized Loss on Securities (74) (18)
NON INTEREST EXPENSE
Salaries and Employee Benefits 7,717 5,570
Premises and Fixed Asset Expense 1,743 1,285
Other Non-Interest Expense 10,241 6,107
Total Non-Interest Expense 19,701 12,962
INCOME BEFORE TAXES 3,912 2,952
Applicable Income Taxes 1,359 1,025
Bancorp Financial Services Income 286 167
NET INCOME 2,839 2,094
COMPREHENSIVE INCOME.
CHANGE IN UNREALIZED HOLDING GAINS/
LOSSES FOR PERIOD (212) (373)
COMPREHENSIVE INCOME 2,627 1,721
NET INCOME PER SHARE $0.51 $0.42
NET INCOME PER SHARE ASSUMING DILUTION $0.47 $0.39
<PAGE>16
HUMBOLDT BANCORP AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2000 and 1999
(In Thousands of Dollars)
<TABLE>
<CAPTION>
CONSOLIDATED CONSOLIDATED
UNAUDITED UNAUDITED
June 30, 2000 June 30, 1999
<S> <C> <C>
OPERATING ACTIVITIES
Net Income - Adjustments to reconcile net income
to net cash provided by operating activities: 2,839 2,094
Provision for Loan Loss 1,258 506
Depreciation 730 696
Amortization and Other 404 675
(Gain)/Loss on Sale of Securities 74 18
Equity in Income of Associated Company (286) (167)
Net Change in Other Assets (4,784) (631)
Net Change in Other Liabilities 622 580
Net Change in Loans Held for Sale 2,147 7,677
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,004 11,448
INVESTING ACTIVITIES
Net Change in Interest-bearing Deposits in Banks (196) 3,000
Federal Funds Sold (Net) 20 (8,284)
Securities Held to Maturity
Investment Purchases (160) 0
Proceeds from Maturities of Investments 0 0
Proceeds from Sale of Investments 0 0
Securities Available For Sale
Investment Purchases (10,674) (10,333)
Proceeds From Maturities of Investments 10,764 17,702
Proceeds From Sale of Investments 11,987 739
Net Change in Loans (42,928) (19,862)
Purchase of Premises and Equipment (2,633) (1,394)
Investment in Associated Company (1,000) (1,242)
Purchase of subsidiary (10,923) 0
Proceeds from sale of other real estate 1,525 0
NET CASH USED FOR INVESTING ACTIVITIES (44,218) (19,674)
FINANCING ACTIVITIES
Net Change in Deposits 27,490 6,641
Payments on Borrowed Funds (2,046) (42)
Proceeds from Borrowed Funds 10,310 1,300
Stock Sale & Options Exercised 7,502 215
NET CASH PROVIDED BY FINANCING ACTIVITIES 43,256 8,114
NET CHANGE IN CASH AND CASH EQUIVALENTS 2,042 (112)
28,626
Cash and Due From Banks at Beginning of Period 31,339
CASH AND DUE FROM BANKS AT END OF PERIOD 33,381 28,514
SUPPLEMENTAL DISCLOSURES
Cash Paid During the Period For: Interest 7,332 3,616
Income Taxes 2,920 1,835
NON-CASH TRANSACTIONS
Unrealized Holding (Gains)losses on Securities 255 (373)
Deferred Income Taxes on Unrealized Holding
Losses on Securities (43) 267
Stock Dividend 6,025 0
Loans Transferred to REO 249 0
</TABLE>
