PAGE 1 OF 27
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ending SEPTEMBER 30, 1996
------------------
Commission file number 0-27856
-------
CALIFORNIA COMMUNITY BANCSHARES CORPORATION
- -----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 68-0366324
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
555 Mason Street, Suite 280, Vacaville, CA 95688-4612
- ------------------------------------------ -------------------
(Address of principal executive offices) (ZIP Code)
(707) 448-1200
- ---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days. YES [ X ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 982,755
Transitional Small Business Disclosure Format (check one): YES [ ] NO [ X ]
PAGE 2 OF 27
INDEX
CALIFORNIA COMMUNITY BANCSHARES CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION 3
Item 1 - Financial Statements 3
Condensed Consolidated Balance Sheets -- 9/30/96 and 12/31/95 3
Condensed Consolidated Statements of Income --
Three Months and Nine Months ended 9/30/96 and 9/30/95 4
Statements of Cash Flows -- Nine Months ended 9/30/96 and 1995 5
Condensed Consolidated Statement of Changes in Shareholders' Equity 6
Notes to Condensed Consolidated Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial Condition
And Results of Operations 7
Overview 7
Condensed Comparative Income Statement --
Three Months and Nine Months ended 9/30/96 and 9/30/95 9
Net Interest Income / Net Interest Margin 10
Analysis of Changes in Net Interest Margin on Average
Earning Assets -- Three Months ended 9/30/96 and 9/30/95 12
Nine Months ended 9/30/96 and 9/30/95 13
Analysis of Volume and Rate Changes on Net Interest Income
and Expense -- Three Months ended 9/30/96 and 9/30/95 14
Nine Months ended 9/30/96 and 9/30/95 15
Provision for Loan Losses 15
Other Operating Income 16
Other Operating Expense 16
Provision for Income Taxes 17
Loans 17
Securities 17
Nonperforming Assets 18
Allowance for Loan Losses 18
Liquidity 19
Equity 19
PART II - OTHER INFORMATION 20
Item 1 - Legal Proceedings 20
Item 2 - Changes in Securities 20
Item 3 - Defaults Upon Senior Securities 20
Item 4 - Submission of Matters to a Vote of Security Holders 20
Item 5 - Other Information 20
Item 6 - Exhibits and Reports of Form 8-K 20
SIGNATURES 20
Index to Exhibits 21
PAGE 3 OF 27
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
California Community Bancshares Corporation
September 30, 1996 and December 31, 1995
(In Thousands, except shares information)(Unaudited)
-------- --------
ASSETS 09/30/96 12/31/95
-------- --------
Cash and due from banks $ 9,909 $ 9,346
Federal funds sold 3,450 1,915
-------- --------
Total cash and cash equivalents 13,359 11,261
Securities:
Securities available-for sale, net of
Unrealized (loss) of $(620) and $(111) 35,445 29,780
-------- --------
Total securities 35,445 29,780
Loans receivable: 113,909 111,124
Less: Allowance for loan losses 1,116 1,158
Deferred loan fees 575 732
-------- --------
Net loans receivable 112,218 109,234
Premises and equipment, net 2,150 2,137
Investments in real estate development ventures 4,513 4,607
Other real estate owned 150 182
Accrued interest receivable and other assets 2,961 2,882
-------- --------
TOTAL ASSETS $170,796 $160,083
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES:
Deposits:
Non interest bearing $ 24,898 $ 21,900
Interest bearing:
Transaction 19,338 19,216
Savings 56,485 54,157
Time:
$100,000 or more 19,927 18,422
Other time 28,862 28,539
-------- --------
Total deposits 149,510 142,234
Repurchase agreements 1,090 665
Other borrowed money 2,650 0
Accrued interest payable and other liabilities 818 897
Convertible subordinated debentures 3,840 4,025
-------- --------
TOTAL LIABILITIES $157,908 $147,821
SHAREHOLDERS' EQUITY
Common stock, $.10 par value, authorized
4,000,000 shares; Outstanding, 982,755
and 966,153 11,013 10,814
Retained earnings 2,235 1,513
Unrealized loss on securities available
for sale (net of tax) ( 360) ( 65)
-------- --------
Total shareholders' equity 12,888 12,262
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $170,796 $160,083
======== ========
- --------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements (Unaudited)
PAGE 4 OF 27
CONDENSED CONSOLIDATED STATEMENTS OF INCOME -
California Community Bancshares Corporation
(In Thousands Except Earnings per Common Share)(Unaudited)
<TABLE>
-------------------- -------------------
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- -------------------
1996 1995 1996 1995
--------- -------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans and Loan Fees $ 2,702 $ 2,652 $ 8,044 $ 7,754
Securities:
Taxable 462 279 1,205 832
Tax Exempt 87 178 273 539
Federal Funds Sold 19 46 73 71
--------- --------- --------- ---------
Total Interest Income $ 3,270 $ 3,155 $ 9,595 $ 9,196
INTEREST EXPENSE:
Time Deposits $100,000 or More $ 263 $ 256 $ 759 $ 615
Other Deposits 948 1,070 2,783 3,181
Federal Funds and Repurchase
Agreements Purchased 13 15 41 61
Other Borrowings 55 0 92 0
Convertible Subordinated Debt 78 89 234 265
--------- --------- --------- ---------
Total Interest Expense 1,357 1,430 3,909 4,122
--------- --------- --------- ---------
NET INTEREST INCOME 1,913 1,725 5,686 5,074
PROVISION FOR LOAN LOSSES 69 91 276 221
--------- --------- --------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,844 1,634 5,410 4,853
--------- --------- --------- ---------
OTHER OPERATING INCOME:
Service Charges on Deposit Accounts 222 210 623 606
Gain/(Loss) Sale of AFS Securities 5 53 8 74
Other Fees and Charges 90 113 407 257
--------- --------- --------- ---------
Total Other Operating Income 317 376 1,038 937
--------- --------- --------- ---------
OTHER OPERATING EXPENSES:
Salaries and Employee Benefits 787 772 2,436 2,275
Occupancy 279 296 835 869
Other 452 407 1,330 1,232
--------- --------- --------- ---------
Total Other Operating Expenses 1,518 1,475 4,601 4,376
--------- --------- --------- ---------
INCOME BEFORE PROVISION INCOME TAXES 643 535 1,847 1,414
PROVISION FOR INCOME TAXES 254 178 711 419
--------- --------- --------- ---------
NET INCOME $ 389 $ 357 $ 1,136 $ 995
========= ========= ========= =========
NET INCOME PER COMMON SHARE:
Primary $ 0.38 $ 0.36 $ 1.12 $ 1.00
========= ========= ========= =========
Fully Diluted $ 0.33 $ 0.31 $ 0.96 $ 0.87
========= ========= ========= =========
Weighted Average Shares Used to
Compute Income Per Common and
Equivalent Shares:
Primary 1,025,539 1,003,875 1,013,305 997,387
Fully Diluted 1,319,841 1,319,562 1,319,841 1,313,073
- ---------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements (Unaudited)
</TABLE>
PAGE 5 OF 27
STATEMENTS OF CASH FLOWS - California Community Bancshares Corporation
Nine Months Ended September 30, 1996 and 1995
(Unaudited)(In Thousands)
<TABLE>
-----------------------
Nine Months Ended
September 30,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,136 $ 995
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 476 444
Provision for Loan Losses 276 221
Net Gain on the Sale of Securities ( 8) ( 74)
Loss (Gain) on the Sale of Premises and Equipment ( 7) 0
Effect of Changes in:
Interest Receivable and Other Assets ( 79) ( 240)
Interest Payable and Other Liabilities ( 79) 72
-------- --------
Net Cash Provided by Operating Activities 1,715 1,418
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of Available-for-sale Securities ( 8,621) ( 14,570)
Proceeds from Sales of Available-for-sale Securities 0 13,261
Proceeds from Maturities, Calls or Repayments of
Available-for-sale Securities 2,598 949
Purchases of Held to Maturity Securities 0 ( 1,457)
Proceeds from Maturity of Held to Maturity Securities 0 1,330
Net Change in Loans Receivable ( 3,260) ( 128)
Proceeds from Sales of Other Real Estate Owned 32 ( 4)
Purchases of Premises and Equipment ( 338) ( 491)
Proceeds from Sales of Premises and Equipment 14 14
Change in Investments in Real Estate Development 7 421
-------- --------
Net Cash Provided (Used) by Investing Activities ( 9,568) ( 675)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Change in Deposits:
Non-interest Bearing 2,998 ( 272)
Interest-bearing 4,278 ( 312)
Net Change in Repurchase Agreements 425 1,954
Proceeds from:
Issuance (Conversion) of Convertible Debt ( 185) 0
Net Change in Other Borrowings 2,650 0
Cash Dividends Paid ( 414) ( 360)
Cash Proceeds from Debenture Conversion 185 0
Cash Proceeds from Stock Options Exercised 14 109
-------- --------
Net Cash Provided by Financing Activities 9,951 1,119
-------- --------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 2,098 1,862
CASH AND CASH EQUIVALENTS:
Beginning of Year 11,261 7,347
-------- --------
End of Period $ 13,359 $ 9,209
======== ========
ADDITIONAL INFORMATION:
Cash Payments
Income Tax Payments $ 513 $ 510
======== ========
Interest Payments $ 4,010 $ 4,149
======== ========
- -----------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements (Unaudited)
</TABLE>
Page 6 of 27
CONDENSED CONSOLIDATED STATEMENT OF IN CHANGES IN SHAREHOLDERS' EQUITY
California Community Bancshares Corporation
(Unaudited)(In Thousands, Except Number of Shares)
<TABLE>
------------------------------------------------------
Common Stock Unrealized
-------------------- Loss on
Investment
Number of Securities Share -
Shares Retained Available holders'
Outstanding Amount Earnings For Sale Equity
----------- ------- -------- ---------- -------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1995 966,153 $10,814 $ 1,513 ($ 65) $12,262
Stock Options Exercised 2,094 14 14
Stock Debentures
Converted 14,508 185 185
Cash Dividend
on Common Stock ( 414) ( 414)
Change in Unrealized
Loss - Investment
Securities AFS ( 295) ( 295)
Net Income,
September 30, 1996 1,136 1,136
----------- ------- ------- ---------- -------
Balance at
September 30, 1996 982,755 $11,013 $ 2,235 ($ 360) $12,888
=========== ======= ======= ========== =======
- ------------------------------------------------------------------------------
See Notes to Condensed Consolidated Financial Statements (Unaudited)
</TABLE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- September 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of California Community Bancshares Corporation (the Company) include the
accounts of the Company and its subsidiary Bank, Continental Pacific Bank.
Significant intercompany items and transactions have been eliminated. Such
financial statements have been prepared in accordance with generally
accepted accounting principles and pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC) and, in Management's opinion,
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of results for such interim periods.
Certain information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting
principals have been omitted pursuant to SEC rules or regulations; however,
the Company believes that the disclosures made are adequate to make the
information presented not misleading. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
annual report on Form 10-KSB for the fiscal year ended December 31, 1995.
Operating results for the interim periods presented are not necessarily
indicative of the results that may be expected for the year ended December 31,
1996.
Page 7 of 27
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
As California Community Bancshares Corporation (the "Company") has not
commenced any business operations independent of Continental Pacific Bank (the
"Bank"), the following discussion pertains primarily to the Bank. Average
balances, including such balances used in calculating certain financial
ratios, are generally comprised of average daily balances for the Company.
OVERVIEW
The company earned $389,000 in the third quarter of 1996 and $1,136,000
for the nine months ended September 30, 1996. The current quarter's income
was 9.0% higher than the $357,000 reported in the same quarter last year
while the 1996 year to date income is 14.2% higher than the $995,000 reported
in the first nine months of 1995. Fully diluted earnings per share for the
current quarter increased to $.33 from $.31 in the third quarter of 1995. Fully
diluted earnings per share for the first nine months of 1996 was $.96 versus
$.87 for the same period last year.
In the first nine months of 1996, net income before taxes increased
$433,000 or 30.6% over the amount generated in the first nine months of 1995.
Net interest income and other operating income improved by 12.1% and 10.8%,
respectively over the same period last year while other operating expenses
increased 5.1%. Net interest income increased by $612,000 as average rates
received on interest earning assets increased while average rates paid on
interest bearing liabilities decreased. Increased average balances in
interest earning assets added significantly to interest income while the
change in mix of average balances of interest-bearing deposits more than
offset increased average balances of borrowed funds reducing interest
expenses. Net interest margin was 5.21% for the first nine months of 1996
compared to 4.79% in the same period the previous year. Other operating
income increased by $101,000 or 10.8% over the figure reported in the same
period last year. Other fees and charges, primarily fees from the sale of
Small Business Administration (SBA) loans and fees from the sale of Mortgage
loans, accounted for a substantial portion of this increase. Other operating
expense increased by $225,000 attributed mainly to a $161,000 increase in
salaries and employee benefits.
Net income before taxes increased $108,000 or 20.2% in the third quarter
of 1996 over the amount reported in the third quarter of 1995. Net interest
income improved by 10.9% over the same quarter's performance last year while
other operating income declined by 15.7% and other operating expenses
increased 2.9%. Net interest income increased by $188,000 as average rates
received on interest earning assets declined by 5 basis points while average
rates paid on interest bearing liabilities declined by 32 basis points.
Increased average balances in interest earning assets added significantly to
interest income while increased average balances of other borrowings slightly
increased interest expenses. Net interest margin was 5.06% in the third
quarter of 1996 compared to 4.76% in the same period the previous year. Other
operating income decreased by $59,000 or 15.7% from the figure reported in the
same quarter last year. Other fees and charges, primarily reduced fees from
the sale of Mortgage loans, accounted for a substantial portion of this
change. Other operating expense increased by $43,000 attributed to a $45,000
increase in legal fees associated with the purchase of a Branch of Tracy
Federal Savings Bank. This transaction will be discussed further under
Subsequent Events.
Page 8 of 27
Assets of the Company totalled $170.8 million at September 30, 1996, a
$10.7 million increase over the 1995 end of year figure. A $7.3 million
increase in deposits and a $2.7 million increase in borrowed funds funded a
$1.5 million increase in Federal Funds Sold, a $5.6 million increase in
investments and a $3.0 million increase in loans.
Return on Average Assets (ROA) was .93% and Return on Average Equity
(ROE) was 12.03% in the first nine months of 1996. For the same period in
1995, these ratios were .84% and 11.84%, respectively.
Return on Average Assets (ROA) was .93% and Return on Average Equity
(ROE) was 12.22% in the third quarter of 1996. For the same period in 1995,
these ratios were .89% and 12.36%, respectively. At September 30, 1996, the
Company had a leverage capital ratio of 7.92%, a Tier 1 risk-based capital
ratio of 10.18% and a total risk-based capital ratio of 13.99%. These compare
to 7.75%, 9.65% and 13.71%, respectively at December 31, 1995.
On May 14, 1996, the Bank entered into a Purchase and Assumption
Agreement (the "Agreement") with Tracy Federal Bank, F.S.B., a Federal Savings
Bank ("Tracy"). The Agreement provides for the Bank to acquire the Concord,
California branch office of Tracy. This acquisition, which was consummated on
October 12, 1996 is consistent with the Company's strategic plan to expand the
Bank's deposit and lending activities into contiguous markets. If the
transaction were consummated as of September 30, 1996, the Bank's deposits and
assets would increase by approximately ten percent (10%) and nine percent
(9%), respectively, from September 30, 1996 levels. Pursuant to the
Agreement, only saving secured loans were purchased by the Bank, and a
4% premium ($610,000) was paid on October 12, 1996 for the branch's adjusted
deposits. Applications seeking approval of the transaction were filed with
the FDIC, the OTS and the California Superintendent of Banks. The transaction
was approved by these regulatory bodies on August 14, 1996, July 23, 1996 and
August 28, 1996, respectively.
The following tables provide a summary of the major elements of income
and expense for the third quarter of 1996 compared with the third quarter of
1995 as well as 1996 year to date income components compared to 1995 year to
date figures.
Page 9 of 27
CONDENSED COMPARATIVE INCOME STATEMENT
California Community Bancshares Corporation
(In Thousands, Except Earnings per Common Share)
<TABLE>
------------------ -------------------
Three Months % Change
Ended September 30, Increase (Decrease)
------------------ -------------------
1996 1995
------ ------
<S> <C> <C> <C>
Interest Income $3,270 $3,155 3.6%
Interest Expense 1,357 1,430 ( 5.1 )
------ ------
Net Interest Income 1,913 1,725 10.9
Provision for Loan Losses 69 91 (24.2)
------ ------
Net Interest Income after
Provision for Loan Losses 1,844 1,634 12.9
Other Operating Income 317 376 (15.7)
Other Operating Expenses 1,518 1,475 2.9
------ ------
Income Before Income Taxes 643 535 20.2
Provision for Income Taxes 254 178 42.7
------ ------
Net Income $ 389 $ 357 9.0
Primary Earnings per Share $ 0.38 $ 0.36 5.6
Fully Diluted Earnings per Share $ 0.33 $ 0.31 6.5%
- -----------------------------------------------------------------------------
</TABLE>
CONDENSED COMPARATIVE INCOME STATEMENT
California Community Bancshares Corporation
(In Thousands, Except Earnings per Common Share)
<TABLE>
------------------ -------------------
Nine Months % Change
Ended September 30, Increase (Decrease)
------------------ -------------------
1996 1995
------ ------
<S> <C> <C> <C>
Interest Income $9,595 $9,196 4.3%
Interest Expense 3,909 4,122 ( 5.2 )
------ ------
Net Interest Income 5,686 5,074 12.1
Provision for Loan Losses 276 221 24.9
------ ------
Net Interest Income after
Provision for Loan Losses 5,410 4,853 11.5
Other Operating Income 1,038 937 10.8
Other Operating Expenses 4,601 4,376 5.1
------ ------
Income Before Income Taxes 1,847 1,414 30.6
Provision for Income Taxes 711 419 69.7
------ ------
Net Income $1,136 $ 995 14.2
Primary Earnings per Share $ 1.12 $ 1.00 12.0
Fully Diluted Earnings per Share $ 0.96 $ 0.87 10.3%
- -----------------------------------------------------------------------------
</TABLE>
Page 10 of 27
NET INTEREST INCOME / NET INTEREST MARGIN
Net interest income represents the excess of interest and fees earned on
interest-earning assets over interest paid on deposits and borrowed funds.
Net interest margin is net interest income expressed as a percentage of
average interest earning assets. Net interest income comprises the major
portions of the Company's revenue.
In the nine months ended September 30, 1996, interest income increased
$399,000 or 4.3% over the same period last year. Higher rates earned on the
loan portfolio combined with increased average loan balances and increased
average total securities balances were the major factors contributing to this
increase. Rates earned on loans averaged 9.70% in the first nine months of
1996, 23 basis points or 2.4% higher than the average of 9.47% in the first
nine months of 1995. Loan balances (Net of Reserve for Loan Losses and
Deferred Fees) averaged $110.8 million in the nine months ended September 30,
1996, $1.3 million higher than average net loan balances of $109.5 in the
first nine months of 1995. Year to date, 1996, total securities (taxable
securities, nontaxable securities and federal funds sold) averaged $35.0
million compared to $32.3 million in the year ago period. Higher loan rates
and loan volume in the current period contributed $290,000 of the above
increase while the remaining $109,000 was derived from higher security
interest income.
In the first nine months of 1996, interest expense declined by $213,000
or 5.2% from the same period last year. Interest paid on time deposits
declined by $34,000 or 1.8% as average time deposit balances increased by $1.0
million offset by a decline in average interest rates paid from 5.36% to
5.14%. Average money management balances on the other hand declined in the
first nine months of 1996 when compared to the same period last year by $1.8
million while the rate paid fell by 57 basis points to 4.47%. This reduction
in average balances and average rate paid on money management accounts
accounted for a $226,000 reduction in interest expense. Increased average
balances of other borrowings offset somewhat by reduced average balances of
Federal Funds Purchased and Subordinated Debentures produced a $37,000
increase in interest expense. Together these changes accounted for 99% of the
change in interest expense.
The combined effect of the increase in interest income and the decrease
in interest expense in the first nine months of 1996 versus the first nine
months of 1995 resulted in an increase of $612,000 in net interest income.
Net interest margin increased 42 basis points from 4.79% to 5.21%.
In the quarter ended September 30, 1996, interest income increased
$115,000 or 3.6% over the same period last year. Higher rates earned on loans
combined with increased average loan balances and increased average total
securities balances were the major factors contributing to this increase.
Rates earned on loans averaged 9.58% in the third quarter of 1996, 6 basis
points or 3.5% higher than the average of 9.52% in the third quarter of 1995.
Loan balances (Net of Reserve for Loan Losses and Deferred Fees) averaged
$112.2 million in the third quarter of 1996, $1.7 million higher than average
net loan balances of $110.5 in the third quarter of 1995. In the current
quarter total securities (taxable securities, nontaxable securities and
federal funds sold) averaged $38.1 million compared to $33.3 million in the
year ago period. Higher loan rates and loan volume in the current quarter
contributed $50,000 of the above increase while the remaining $65,000 was
derived from higher security interest income.
Page 11 of 27
In the third quarter of 1996, interest expense declined by $73,000 or
5.1% from the same period last year. Interest paid on time deposits declined
by $93,000 or 13% as average time deposit balances declined by $1.4 million
and average interest rates paid fell from 5.68% in the third quarter of 1995
to 5.09% in the current quarter. Average money management balances also
declined in the third quarter of 1996 when compared to the same period last
year by $.3 million while the rate paid dropped by 25 basis points to 4.57%.
This reduction in average balances and rate paid on money management accounts
accounted for an additional $29,000 reduction in interest expense. The above
declines in deposit balances were more than offset by a $1.7 million increase
in lower cost NOW accounts, $.9 million increase in savings and money market
accounts and a $2.7 million increase in other borrowings from the Federal Home
Loan Bank. These funds were borrowed at a fixed rate to fund fixed rate loans
for similar terms. These borrowings, which increased interest expense by
$55,000, along with other minor changes in interest expense resulted in the
over all reduction in interest expense of $73,000.
The combined effect of the increase in interest income and the decrease
in interest expense in the third quarter of 1996 versus the third quarter of
1995 resulted in an increase of $188,000 in net interest income. Net interest
margin increased 30 basis points from 4.76% to 5.06%.
The following tables provide summaries of the components of interest
income, interest expense and net interest margins on earning assets for the
three months and nine months ended September 30, 1996 versus the same periods
in 1995.
Page 12 of 27
ANALYSIS OF CHANGES IN NET INTEREST MARGIN ON AVERAGE EARNINGS ASSETS
California Community Bancshares Corporation - (In Thousands)
<TABLE>
Three Months Ended
-----------------------------------------------------
September 30, 1996 September 30, 1995
------------------------ -------------------------
Int. Avg. Int. Avg.
Average Earned Yield Average Earned Yield
Balance(F1)/Paid /Rate Balance(F1)/Paid /Rate
-------- ------ ----- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest Earning Assets
Federal Funds Sold $ 1,511 $ 19 5.00% $ 3,270 $ 46 5.58%
Taxable Investment Sec.(F2) 30,169 462 6.09 17,186 273 6.30
Nontaxable Investment Secr.(F3) 6,427 87 5.38 12,829 184 5.69
Loans, Net (F4)(F5) 112,210 2,702 9.58 110,547 2,652 9.52
-------- ------ ----- -------- ------ -----
Total Interest Earning Assets 150,317 3,270 8.65 143,832 3,155 8.70
Cash and Due from Banks 8,576 8,017
Premises and Equipment, Net 2,106 2,178
Investment in Development
Ventures 4,526 4,642
Accrued Interest Receivable
And Other Assets 1,778 2,104
-------- --------
Total Average Assets $167,303 $160,773
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing Liabilities:
Interest-bearing Now Accounts 19,667 64 1.29 18,027 57 1.25
Savings Deposits and MMDA 17,768 101 2.26 16,920 102 2.39
Money Management 37,176 427 4.57 37,522 456 4.82
Time Deposits 28,458 356 4.98 32,307 455 5.59
Time Deposits over $100,000 19,899 263 5.26 17,441 257 5.85
Federal Funds Purchased 22 0 0.00 111 2 7.15
Security Repurchase Agreements 1,027 13 5.04 902 12 5.28
Other Borrowings 2,650 55 8.26 0 0 0.00
Subordinated Debentures 3,858 78 8.04 4,025 89 8.77
-------- ------ ----- -------- ------ -----
Total Average Interest-
Bearing Liabilities 130,525 1,357 4.14 127,254 1,430 4.46
Noninterest-bearing
Demand Deposits 23,722 21,498
Accrued Interest Payable and
Other Liabilities 334 466
-------- ------ ----- -------- ------ -----
Total Average Liabilities $154,581 $1,357 3.49% $149,218 $1,430 3.80%
======== ========
Total Average Equity 12,722 11,555
Total Average Liabilities and
Shareholders' Equity 167,303 160,773
Net Interest Rate Spread (F6) 4.52% 4.24%
Net Interest Income $1,913 $1,725
Net Interest Margin (F7) 5.06% 4.76%
- -----------------------------------------------------------------------------------------
</TABLE>
(F1) Average balances are computed principally on the basis of daily balances.
(F2) The taxable securities yield is computed by dividing interest income
(annualized on an actual day basis) by average historical cost.
(F3) The tax equivalent yield on the nontaxable investment securities was
7.83% in 1996 and 8.26% in 1995.
(F4) Nonaccrual loans are included
(F5) Interest income on loans includes fees on loans of $48,000 in 1996 and
$152,000 in 1995.
(F6) Net interest rate spread represents the average yield earned on interest-
earning assets less the average rate paid on interest-bearing liabilities
(F7) Net interest margin is computed by dividing net interest income by total
average earning assets.
Page 13 of 27
ANALYSIS OF CHANGES IN NET INTEREST MARGIN ON AVERAGE EARNINGS ASSETS
California Community Bancshares Corporation - (In Thousands)
<TABLE>
Nine Months Ended
-----------------------------------------------------
September 30, 1996 September 30, 1995
------------------------ -------------------------
Int. Avg. Int. Avg.
Average Earned Yield Average Earned Yield
Balance(F1)/Paid /Rate Balance(F1)/Paid /Rate
-------- ------ ----- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest Earning Assets
Federal Funds Sold $ 1,935 $ 73 5.04% $ 1,639 $ 71 5.79%
Taxable Investment Secr.(F2) 26,344 1,205 6.11 17,708 832 6.28
Nontaxable Investment Secr.(F3) 6,745 273 5.41 12,909 539 5.58
Loans, Net (F4)(F5) 110,805 8,044 9.70 109,476 7,754 9.47
-------- ------ ----- -------- ------ -----
Total Interest Earning Assets 145,829 9,595 8.79 141,732 9,196 8.67
Cash and Due from Banks 8,561 7,268
Premises and Equipment, Net 2,158 2,271
Investment in Development
Ventures 4,562 4,674
Accrued Interest Receivable
And Other Assets 1,933 1,831
-------- --------
Total Average Assets $163,043 $157,776
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing Liabilities:
Interest-bearing Now Accounts 19,180 186 1.30 17,846 169 1.27
Savings Deposits and MMDA 17,185 299 2.32 17,535 310 2.36
Money Management 37,450 1,252 4.47 39,234 1,478 5.04
Time Deposits 27,872 1,046 5.01 30,647 1,224 5.34
Time Deposits over $100,000 19,024 759 5.33 15,222 615 5.40
Federal Funds Purchased 106 4 5.04 581 28 6.44
Security Repurchase Agreements 980 37 5.04 820 33 5.38
Other Borrowings 1,628 92 7.55 0 0 0.00
Subordinated Debentures 3,950 234 7.91 4,025 265 8.80
-------- ------ ----- -------- ------ -----
Total Average Interest-
Bearing Liabilities 127,375 3,909 4.10 125,910 4,122 4.38
Noninterest-bearing
Demand Deposits 22,889 20,509
Accrued Interest Payable and
Other Liabilities 188 148
-------- ------ ----- -------- ------ -----
Total Average Liabilities $150,452 $3,909 3.47% $146,567 $4,122 3.76%
======== ========
Total Average Equity 12,591 11,209
Total Average Liabilities and
Shareholders' Equity 163,043 157,776
Net Interest Rate Spread (F6) 4.69% 4.30%
Net Interest Income $5,686 $5,074
Net Interest Margin (F7) 5.21% 4.79%
- -----------------------------------------------------------------------------------------
</TABLE>
(F1) Average balances are computed principally on the basis of daily balances.
(F2) The taxable securities yield is computed by dividing interest income
(annualized on an actual day basis) by average historical cost.
(F3) The tax equivalent yield on the nontaxable investment securities was
7.86% in 1996 and 8.10% in 1995.
(F4) Nonaccrual loans are included
(F5) Interest income on loans includes fees on loans of $344,000 in 1996 and
$392,000 in 1995.
(F6) Net interest rate spread represents the average yield earned on interest-
earning assets less the average rate paid on interest-bearing liabilities
(F7) Net interest margin is computed by dividing net interest income by total
average earning assets.
Page 14 of 27
The tax equivalent yield is calculated by dividing the adjusted yield by
1 minus the Federal Tax Rate. The adjusted yield is determined by subtracting
the tefra penalty from the unadjusted nontaxable investment yield. The tefra
penalty is found by dividing total interest expense (annualized) by average
assets and multiplying the result by 20% (tefra disallowed) and 34% (Federal
Tax Rate).
ANALYSIS OF VOLUME AND RATE CHANGES ON NET INTEREST INCOME AND EXPENSE
California Community Bancshares Corporation - (In Thousands)
<TABLE>
-------------------------------------
Three Months Ended September 30, 1996
over September 30, 1995
-------------------------------------
Increase(decrease) Due to Change in:
-------------------------------------
Volume(F3) Yield/Rate Total
------ ---------- -----
<S> <C> <C> <C>
Federal Funds Sold $( 22) ($ 5) ($ 27)
Taxable Investment Securities 198 ( 9) 189
Nontaxable Investment Securities ( 87) ( 10) ( 97)
Loans, Net (F1)(F2) 33 17 50
------ ---------- -----
Total Interest Income 121 ( 6) 115
Interest-bearing Now Accounts 5 2 7
Savings Deposits and MMDA 5 ( 6) ( 1)
Money Management ( 5) ( 24) ( 29)
Time Deposits ( 50) ( 49) ( 99)
Time Deposits over $100,000 32 ( 26) 6
------ ---------- -----
Total Interest Expense on Deposits ( 14) ( 102) ( 116)
Federal Funds Purchased ( 0) ( 2) ( 2)
Security Repurchase Agreements 2 ( 1) 1
Other Borrowings 55 0 55
Subordinated Debentures ( 4) ( 7) ( 11)
------ ---------- -----
Total Interest Expense 39 ( 112) ( 73)
------ ---------- -----
Net Interest Income $ 82 $ 106 $ 188
====== ========== =====
- -----------------------------------------------------------------------------
</TABLE>
(F1) Nonaccrual loans are included
(F2) Interest income on loans includes fee income on loans of
$48,000 in 1996 and $152,000 in 1995.
(F3) Changes not due solely to rate change have been allocated to volume.
Page 15 of 27
ANALYSIS OF VOLUME AND RATE CHANGES ON NET INTEREST INCOME AND EXPENSE
California Community Bancshares Corporation - (In Thousands)
<TABLE>
-------------------------------------
Nine Months Ended September 30, 1996
over September 30, 1995
-------------------------------------
Increase(decrease) Due to Change in:
-------------------------------------
Volume(F3) Yield/Rate Total
------ ---------- -----
<S> <C> <C> <C>
Federal Funds Sold $ 5 ($ 3) $ 2
Taxable Investment Securities 381 ( 8) 373
Nontaxable Investment Securities ( 260) ( 6) ( 266)
Loans, Net (F1)(F2) 228 62 290
------ ---------- -----
Total Interest Income 353 46 399
Interest-bearing Now Accounts 16 1 17
Savings Deposits and MMDA ( 9) ( 2) ( 11)
Money Management ( 170) ( 56) ( 226)
Time Deposits ( 153) ( 25) ( 178)
Time Deposits over $100,000 147 ( 3) 144
------ ---------- -----
Total Interest Expense on Deposits ( 170) ( 84) ( 254)
Federal Funds Purchased ( 22) ( 2) ( 24)
Security Repurchase Agreements 5 ( 1) 4
Other Borrowings 92 0 92
Subordinated Debentures ( 22) ( 9) ( 31)
------ ---------- -----
Total Interest Expense ( 117) ( 96) ( 213)
------ ---------- -----
Net Interest Income $ 470 $ 142 $ 612
====== ========== =====
- -----------------------------------------------------------------------------
</TABLE>
(F1) Nonaccrual loans are included
(F2) Interest income on loans includes fee income on loans of
$344,000 in 1996 and $392,000 in 1995.
(F3) Changes not due solely to rate change have been allocated to volume.
PROVISION FOR LOAN LOSSES
In the third quarter of 1996, the company provided $69,000 for loan
losses versus $91,000 in the same period last year. This provision increased
the 1996 year to date provision to $276,000 versus $221,000 for the first nine
months of 1995. The provision along with loan growth and net loan charge-offs
reduced the allowance for loan losses to loans receivable at September 30,
1996 to .98% from 1.06% at September 30, 1995 and 1.04% at December 31, 1995.
Management's ongoing evaluation of the loan portfolio includes an analysis of
loan volume, loan mix and the level of nonperforming loans. Since year end
1995 nonperforming loans have declined by $990,000. Through this analysis
management determined that the balance of $1,116,000 in the allowance for loan
losses should be adequate to absorb losses inherent in the loan portfolio.
Page 16 of 27
OTHER OPERATING INCOME
Total other operating income in the third quarter of 1996 declined
$59,000 or 15.7% over the same period last year but increased $101,000 or
10.8% for the first nine months of 1996 over the first nine months of 1995.
Income from service charges on deposit accounts remained somewhat constant at
$623,000 and $606,000 in the first nine months of 1996 and 1995, respectively.
Gain on sale of available for sale securities declined from $74,000 in the
first nine months of 1995 to $8,000 in the first nine months of 1996. The
significant increases occurred in other fees and charges. The sale of SBA
loans generated fee income of $99,000 in the first nine months of 1996 versus
zero the prior year as this is a new activity for the Bank in 1996. Fee
income on the sale of 1-4 family mortgages increased by $23,000 from $97,000
in the first nine months of 1995 to $120,000 in the current year to date
period.
Income from services charges on deposit accounts also remained somewhat
constant at $222,000 and $210,000 in the third quarter of 1996 and 1995,
respectively. Gain on sale of available securities declined from $53,000 in
the third quarter of 1995 to $5,000 in the third quarter of 1996. Other fees
and charges also declined in the current period compared to the same quarter
last year. Fee income on the sale of 1-4 family mortgages decreased by
$30,000 from $48,000 in the third quarter of 1995 to $18,000 in
the current quarter. Fee income from the sale of SBA loans amounted to an
increase by $5,000 in the current quarter and somewhat offset the decline
in mortgage fee income. Together, these changes in fees earned accounted for
most of the $23,000 reduction in other fees and charges. These activities are
expected to continue to generate fee income in the future.
OTHER OPERATING EXPENSE
Other operating expenses for the first nine months of 1996 increased by
$225,000 or 5.1% over the figure reported for the same nine-month period last
year. In the first nine months of 1996 salaries and benefits accounted for
$161,000 of this increase. Approximately $74,000 of this increase was in the
area of officer salaries, due to normal salary increases, the addition of an
officer to oversee the new business manager program and higher loan
commissions paid as a function of higher loan production. Another $15,000 was
due to higher mortgage commissions as mortgage volume and fees increased. The
Bank has a number of bonus programs tied to the net profit of the branches as
well as the overall Bank. With year to date income up 14.2% in the first nine
months of 1996, accrued bonuses accounted for approximately $46,000 of the
increase in salaries. Normal salary increases, increased payroll taxes and
other sundry categories accounted for the remaining increases.
Occupancy expense declined by $34,000 in the first nine months of 1996
compared to the same period the year before. Net rental income from the
company's commercial office building which is deducted from occupancy expense
accounted for $19,000 of this decrease. Other expenses increased by $98,000
mainly due to increased legal and accounting expenses associated to the
formation of the holding company and the potential purchase of a branch in
Contra Costa County.
Other operating expenses increased by $43,000 or 2.9% over the same
quarter last year. In the third quarter of 1996 salaries and benefits
accounted for $15,000 of this increase. Normal salary increases and increased
bonuses and commission contributed to the increase.
Page 17 of 27
Occupancy expense declined by $17,000 in the third quarter of 1996
compared to the same quarter the year before. Net rental income from the
company's commercial office building which is deducted from occupancy expense
accounted for $7,000 of this quarter's decrease. Other expenses increased by
$45,000 mainly due to increased legal expenses associated with the potential
purchase of a branch in Contra Costa County. For the current quarter other
operating expense totalled $1,518,000 or 3.63% of average assets. For the
nine months ended September 30, 1996 this ratio was 3.76%. Management
continually reviews and attempts to minimize these expenses. It is the goal
of the company to reduce the overhead ratio to 3.5%.
PROVISION FOR INCOME TAXES
The Company recorded a $254,000 provision for income taxes in the third
quarter of 1996, which was $76,000 higher than the tax provision recorded in
the same quarter last year. For the first nine months of 1996, the company
provided for $711,000 in income taxes versus $419,000 in the first nine months
of 1995. Taxes were higher in both periods due to higher earnings as well as
lower tax exempt income from tax-exempt securities. The effective tax rate
for the current period was 39.5% and 38.5% for the year to date period versus
33.3% and 29.6% in the same periods last year. The Company does not
anticipate increasing its holding of tax-exempt securities in the near future.
LOANS
As of September 30, 1996, net loan balances had increased by $3.0
million from year end 1995 totals. The composition of loans also changed
significantly in the first nine months of 1996. Construction and land
development loans declined by $2.8 million while equity loans, loans secured
by 1-4 first liens, loans secured by commercial real estate and commercial
and industrial loans increased by $1.7 million, $2.2 million, $1.5 million
and $.7 million, respectively. All other categories had a net decline of
$.3 million. The Bank's largest loan category, real estate mortgage loans
constituted 70.4% of total loans outstanding at December 31, 1995 and 72.4%
at September 30, 1996. Loan growth is an intragal component of improved
earnings. Management is continually marketing its loan products. In the
current competitive market, pricing has become much more flexible while loan
underwriting standards have been maintained.
SECURITIES
At September 30, 1996, securities available-for-sale had a fair market
value of $35,445,000 with an amortized cost basis of $36,065,000. This
represents a $5,665,000 increase from the year end 1995 figure. Short term
U.S. Treasury Bonds accounted for $4.0 million of this increase, while U.S.
Agency Bonds increased $3.6 million and mortgage backed securities issued by
U.S. Agencies declined by $1.2 million. Securities issued by states and
political subdivisions in the United States also declined by .5 million in the
first nine months of 1996. The portfolio at market value now consists of
approximately $4.0 million U.S. Treasuries, $13.5 million U.S. Agency bonds,
$6.5 million in securities issued by states and political subdivision in the
U.S., $11.0 million in mortgage backed securities and $.5 million in Federal
Home Loan Bank stock. Approximately 48% of the debt security portfolio is
floating rate, tied to either the 11th District Cost of Funds Index, the
one-year constant maturity treasury index or prime rate. With an overall
increase in interest rates, September 30, 1996 compared to December 31, 1996,
along with a 19% increase in the AFS security portfolio, the unrealized loss on
securities available for sale increased from $111,000 to $620,000. Although
the tax affected unrealized loss is a component of shareholders equity, this
figure is excluded from the calculation of regulatory capital ratios. The
security portfolio continues to be a good source of both liquidity and income.
Page 18 of 27
NONPERFORMING ASSETS
As shown in the following table, total nonperforming assets have
dramatically improved declining $1,022,000 since year end, and by $1,250,000,
since September 30, 1995. More significantly is the fact that nonaccrual
loans declined by $968,000 while accruing loans past due 90 days decreased by
$12,000. At September 30, 1996, nonperforming assets represented .44% of
total assets while the ratio of allowance for loan losses to nonperforming
loans is 183.86%. Management continues to make a concerted effort to reduce
problem and potential problem loans to reduce risk of loss.
<TABLE>
------------- ------------
September 30, December 31,
1996 1995
------------- ------------
<S> <C> <C>
Nonaccrual Loans $ 81 $ 1,049
Accruing Loans past Due 90 Days or More 66 78
Restructured Loans
(In Compliance with Modified Terms) 460 470
------------- ------------
Total Nonperforming Loans 607 1,597
Other Real Estate Owned 150 182
------------- ------------
Total Nonperforming Assets 757 1,779
============= ============
Total Loans, End of Period 113,909 111,124
Total Assets, End of Period 170,796 160,083
Allowance for Loan Losses $ 1,116 $ 1,158
Nonperforming Loans to Total Loans 0.53% 1.44%
Allowance for Loan Losses to Nonperforming Loans 183.86% 72.51%
Nonperforming Assets to Total Assets 0.44% 1.11%
Allowance for Loan Losses to Nonperforming Assets 147.42% 65.09%
</TABLE>
ALLOWANCE FOR LOAN LOSSES
The Bank maintains its allowance for loan losses at a level considered
by management to be adequate to cover the risk of loss in the loan portfolio
at a particular point in time. This determination includes an evaluation and
analysis of historical experience, current loan mix and volume, as well as
current and projected economic conditions.
The following table presents information concerning the allowance and
provision for loan losses.
<TABLE>
------------- -------------
September 30, September 30,
1996 1995
------------- -------------
<S> <C> <C>
Balance at December 31, 1995 & 1994 $ 1,158 $ 1,108
Provision Charged to Operations 276 221
Loans Charged off 345 159
Recoveries of Loans Previously Charged off 27 8
------------- -------------
Balance, End of Period 1,116 1,178
Total Loans, End of Period $113,909 $111,013
Allowance for Loans Losses to
Loans, End of Period 0.98% 1.06%
</TABLE>
Page 19 of 27
LIQUIDITY
Liquidity is measured by various ratios, The most common being the
liquidity ratio of cash, time deposits in other banks, Federal Funds sold, and
investment securities as compared to total deposits. At September 30, 1996,
this ratio was 32.6%.
The Bank also manages its interest rate sensitivity. The Bank believes
that keeping overall risks at a low level achieves optimal performance. The
objective is to control risks and produce consistent, high quality earnings
independent of fluctuating interest rates. Specifically, for a 1% change in
the federal funds rate, net interest income (NII) should not change by more
than 5% and for a 2% change in the federal funds rate, NII should not change
by more than 10%. The Bank measures its interest rate sensitivity with the
"ALX" asset liability simulation model. The model analyzes the mix and
repricing characteristics of interest rate sensitive assets and liabilities
using multipliers (how interest rates change when Federal Funds rate changes
by 1%) and lags (time it takes for rates to change after Federal Funds rate
changes).
At September 30, 1996, the "ALX" model showed the Bank was moderately
liability sensitive with a NII exposure of $130,000 or 1.7% for a 1% increase
in the Federal Funds rate and a $534,000 or 7% exposure in NII for a 2%
increase.
EQUITY
As a result of the $1,136,000 earned in first nine months of 1996, the
$199,000 sale of common stock from the exercise of stock options and
conversion of debentures and the payment of $414,000 in dividends, the
following capital levels and ratios were obtained as of September 30, 1996.
The following table also includes the regulatory capital minimums to be
considered well capitalized.
<TABLE>
----------------- -------------------
Actual Well-Capitalized
Ratio
----------------- -------------------
<S> <C> <C> <C> <C>
Leverage $ 13,248 7.92% $ 8,365 5.00%
Tier One Risk-based 13,248 10.18 7,809 6.00
Total Risk-based 18,204 13.99 13,015 10.00
Risk Weighted Asset 130,153
Average Total Assets 167,303
</TABLE>
Page 20 of 27
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None of the Corporation, the Bank or Conpac is a party to or the subject
of, or is any of their property the subject of, any material pendng legal
proceedings, other than ordinary routine litigation incidental to the
business of the Corporation.
ITEM 2 - CHANGES IN SECURITIES
The rights of the holders of registered securities have not been
materially modified.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
There has not been any material default in (1) payment of principal,
interest, a sinking or purchase fund installment, or (2) any other material
default not cured within 30 days, regarding any indebtedness exceeding 5% of
the total assets of the registrant or any of its significant subsidiaries.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There has not been any matter submitted to a vote of security holders for
the third quarter ending September 30, 1996.
ITEM 5 - OTHER INFORMATION
SUBSEQUENT EVENTS - as reported on Form 8-K
On October 12, 1996, the Bank consummated the purchase of the Concord
Branch of Tracy Federal Savings Bank. The assets purchased consisted of Cash
on Hand, negative balance transaction accounts, savings secured loans and
corresponding accrued interest, leasehold improvements and personal
property. These assets totalled $210,000. The liabilities assumed consisted
of Branch Deposits and accrued interest of $15,484,000. The consideration
which was 4% of adjusted deposits amounted to $610,000. Of this amount
$550,000 is considered goodwill and will be amortized over 15 years. Due to
the low overall cost structure of this branch the immediate negative impact on
earnings should be minimal. As this branch generates loans, the purchase
should increase overall income.
ITEM 6 - EXHIBITS AND REPORTS OF FORM 8-K
A) Exhibits
See Index to Exhibits on page ___21____ of this Quarterly Report
on Form 10-QSB, which is incorporated herein by reference.
B) Reports on Form 8-K
A Form 8-K was filed by the Corporation on October 25, 1996.
Page 21 of 27
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
No. Exhibit Page
- ------- ----------------------------------------------------- ------------
2.1 Plan of Reorganization and Merger Agreement, dated *
February 22, 1996 are incorporated by reference from
the Corporation's 1995 Annual Report on Form 10-KSB
filed on March 29, 1996.
3.1 Certificate of Incorporation of Registrant, dated *
October 5, 1995 are incorporated by reference from
the Corporation's 1995 Annual Report on Form 10-KSB
filed on March 29, 1996.
3.2 By-laws of Registrant are incorporated by reference *
from the Corporation's 1995 Annual Report on Form
10-KSB filed on March 29, 1996.
4.1 Indenture, dated as of April 16, 1993, between *
Continental Pacific Bank and U.S. Trust Company of
California, N.A. are incorporated by reference from
the Corporation's 1995 Annual Report on Form 10-KSB
filed on March 29, 1996.
4.2 First Supplemental Indenture, dated as of October 20, *
1995, Amending Indenture dated as of April 16, 1993,
between Continental Pacific Bank and U.S. Trust Company
of California, N.A. are incorporated by reference from
the Corporation's 1995 Annual Report on Form 10-KSB
filed on March 29, 1996.
4.3 Second Supplemental Indenture, dated as of February 29, *
1996, Amending Indenture dated as of April 16, 1993,
between Continental Pacific Bank, California Community
Bancshares Corporation and U.S. Trust Company of
California, N.A. are incorporated by reference from the
Corporation's 1995 Annual Report on Form 10-KSB filed
on March 29, 1996.
10.1 Deferred Compensation Arrangement, as amended are *
incorporated by reference from the Corporation's 1995
Annual Report on Form 10-KSB filed on March 29, 1996.
10.2 Amended and Restated Employment Agreement between Walter *
O. Sunderman and Continental Pacific Bank, dated August
1, 1993 are incorporated by reference from the
Corporation's 1995 Annual Report on Form 10-KSB filed
on March 29, 1996.
10.3 Amended and Restated Employment Agreement between Andrew *
S. Popovich and Continental Pacific Bank, dated August
1, 1993 are incorporated by reference from the
Corporation's 1995 Annual Report on Form 10-KSB filed
on March 29, 1996.
Page 22 of 27
10.4 Amended and Restated Employment Agreement between Ronald *
A. Alfstad and Continental Pacific Bank, dated August
1, 1993 are incorporated by reference from the
Corporation's 1995 Annual Report on Form 10-KSB filed
on March 29, 1996.
10.5 Employment Agreement between Larry Q. Fletcher and *
Continental Pacific Bank, dated August 1, 1993 are
incorporated by reference from the Corporation's 1995
Annual Report on Form 10-KSB filed on March 29, 1996.
10.6 Continental Pacific Bank Supplemental Retirement Plan, *
effective August 1, 1993 are incorporated by reference
from the Corporation's 1995 Annual Report on Form 10-KSB
filed on March 29, 1996.
10.7 1990 Amended Stock Option Plan are incorporated by *
reference from the Corporation's 1995 Annual Report on
Form 10-KSB filed on March 29, 1996.
10.8 1993 Stock Option Plan are incorporated by reference *
from the Corporation's 1995 Annual Report on Form 10-KSB
filed on March 29, 1996.
10.9 Lease Agreement, dated July 15, 1993, between Conpac *
Development Corporation and Continental Pacific Bank for
the Administrative Offices are incorporated by reference
from the Corporation's 1995 Annual Report on Form 10-KSB
filed on March 29, 1996.
10.10 Lease Agreement and Addendum, dated May 31, 1983, between *
Ibrahim Dib and Continental Pacific Bank for the Vacaville
Branch are incorporated by reference from the Corporation's
1995 Annual Report on Form 10-KSB filed on March 29, 1996.
10.11 Lease Agreement and Amendment, dated August 11, 1983, *
between Leon Schiller, Joseph Friend, Ida Friend, Beulah
Schiller and Bruch J. Friend and Continental Pacific Bank
for the Fairfield Branch are incorporated by reference from
the Corporation's 1995 Annual Report on Form 10-KSB filed
on March 29, 1996.
10.12 Modification of Lease Agreement, dated December 31, 1987, *
between Dante A. Madnani, Ernest N. Kettenhofen and
Maxine M. Campbell and Continental Pacific Bank for the
Vallejo Branch are incorporated by reference from the
Corporation's 1995 Annual Report on Form 10-KSB filed
on March 29, 1996.
10.13 Lease Agreement, dated May 3, 1988, between Albert Morgan *
Family Trust and Continental Pacific Bank for the Benicia
Branch are incorporated by reference from the Corporation's
1995 Annual Report on Form 10-KSB filed on March 29, 1996.
Page 23 of 27
10.14 Ground Lease Agreement and Amendment, dated April 4, 1993, *
between Jepson Parkway Associates L.P. and Continental
Pacific Bank for the Power Plaza Branch are incorporated
by reference from the Corporation's 1995 Annual Report on
Form 10-KSB filed on March 29, 1996.
10.15 Lease Agreement and First Amendment to Lease, dated *
January 15, 1993, between BTV Crown Equities, Inc. and
Continental Pacific Bank for the Oliver Road Branch are
incorporated by reference from the Corporation's 1995
Annual Report on Form 10-KSB filed on March 29, 1996.
10.16 Lease Agreement, dated July 8, 1991, between Vallejo C & R *
Associates and Continental Pacific Bank for the Park Place
Branch are incorporated by reference from the Corporation's
1995 Annual Report on Form 10-KSB filed on March 29, 1996.
11 Statement re computations of per share earnings 26
19 Report furnished to security holders is incorporated *
by reference in Part I of this Form 10-QSB Report
22 Published report regarding matters submitted to *
vote of security holders is incorporated by reference
In Item 4 of Part II of this Form 10-QSB Report
27 Financial Data Schedule under Article 9 27
___________________
* Asterisk denotes documents which have been incorporated by reference.
Page 24 of 27
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.
CALIFORNIA COMMUNITY
BANCSHARES CORPORATION
--------------------------------
Date /s/ Walter O. Sunderman
------------------ --------------------------------
Walter O. Sunderman
President and
Chief Executive Officer
--------------------------------
Date /s/ ANDREW S. POPOVICH
------------------ --------------------------------
Andrew S. Popovich
Executive Vice President and
Chief Administrative Officer
Page 25 of 27
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
Exhibits
to
FORM 10 - QSB
QUARTERLY REPORT
UNDER
SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
__________
CALIFORNIA COMMUNITY BANCSHARES CORPORATION
Page 26 of 27
EXHIBIT 11 - STATEMENT RE COMPUTATIONS OF PER SHARE EARNINGS
(Unaudited)(In Thousands, Except Earnings per Share)
<TABLE>
--------------------- ---------------------
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
--------------------- ---------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Weighted Average Shares
Used to Compute Common
and Equivalent Shares:
Primary 1,025,539 1,003,875 1,013,305 997,387
Fully Diluted 1,319,841 1,319,562 1,319,841 1,313,073
========= ========= ========= =========
Net Income Used in the
Computation of Income
per Common Share:
Net Income, as Reported
Used to Compute Primary
Income per Share $ 389 $ 357 $ 1,136 $ 995
========= ========= ========= =========
Adjustment for after Tax
Effect of Interest Paid
on Convertible Debentures 44 52 136 153
--------- --------- --------- ---------
Net Income, as Adjusted Used
to Compute Fully Diluted
Income per Share $ 433 $ 409 $ 1,272 $ 1,148
========= ========= ========= =========
Income per Common and
Equivalent Share:
Primary $ 0.38 $ 0.36 $ 1.12 $ 1.00
Fully Diluted $ 0.33 $ 0.31 $ 0.96 $ 0.87
========= ========= ========= =========
</TABLE>
Page 27 of 27
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Form 10QSB
Condensed Consolidated Balance Sheet &
Condensed Statements of Income
</LEGEND>
<CIK> 0001009325
<NAME> CALIFORNIA COMMUNITY BANCSHARES CORPORATION
<MULTIPLIER> 1000
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0
0
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</TABLE>
