<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 14, 1999
HIGHLAND BANCORP, INC.
(Exact name of Registrant as specified in its charter)
Commission file number: 0-29668
DELAWARE 95-4654552
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
601 SOUTH GLENOAKS BOULEVARD
BURBANK, CALIFORNIA 91502
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (818) 848-4265
<PAGE>
ITEM 5. OTHER EVENTS
On April 14, 1999, Highland Bancorp, Inc. (the "Company") issued a news release
reporting the results of the Company's first quarter 1999 operations. The news
release is attached as exhibit 99.1 and is incorporated herein by reference.
On April 20, 1999, the Company issued a news release reporting the declaration
of a cash and stock dividends. The news release is attached as exhibit 99.2 and
is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) Exhibits
Exhibit
Number Description of Exhibit
99.1 News release dated April 14, 1999 reporting the Company's results of
operations for the first quarter of 1999.
99.2 News release dated April 20, 1999 reporting the Company's declaration
of a cash and stock dividend.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HIGHLAND BANCORP; INC.
----------------------
Date: April 26, 1999 /s/ ANTHONY L. FREY
- -------------------- --------------------
Anthony L. Frey, Executive Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT 99.1
HIGHLAND BANCORP, INC.
FOR IMMEDIATE RELEASE [LETTERHEAD APPEARS HERE]
HIGHLAND BANCORP REPORTS FIRST QUARTER RESULTS
Burbank, California (April 14, 1999) -- Highland Bancorp, Inc. (NASDAQ - HBNK)
today reported its results of operations for the quarter ended March 31, 1999.
Net earnings for the quarter ended March 31, 1999, were $2,448,000, or $1.12
basic earnings per share and $1.07 diluted earnings per share, compared with net
earnings of $1,924,000, or 83 cents basic earnings per share and 79 cents
diluted earnings per share, for the like quarter of 1998. The results for the
first quarter of 1998, included $0.3 million of gains on the sale of loans and
securities.
President and Chief Executive Officer, Stephen Rippe, said, "Highland's net
earnings for the first quarter of 1999 were 27% higher than the Company's first
quarter, 1998 net earnings, and 11% higher than the earnings of the fourth
quarter of 1998. These excellent operating earnings resulted in the Company
achieving a 22% annualized return on equity and a 1.60% annualized return on
assets for the first quarter of 1999. I continue to be pleased with Highland's
improving credit quality indicators. The ratio of nonperforming assets to total
assets at March 31, 1999, declined to 0.41% from 0.50% at December 31, 1998,
while chargeoffs for the first quarter of 1999 totaled only $243,000, and only
$54,000 of new real estate owned was recorded. The Company also maintained its
large and stable net interest margin. For the quarter ended March 31, 1999, the
Company's net interest margin was 4.75%. Highland remains one of California's
best performing thrift institutions."
The Company's total assets at March 31, 1999, were $617.3 million compared
with $604.8 million at December 31, 1998. The increase in assets during the
first quarter of 1999 was principally a result of growth in the Company's loan
portfolio. Net loans receivable stood at $502.9 million at March 31, 1999,
compared with $483.7 million at year-end, 1998. The $19.2 million increase in
net loans during the first quarter of 1999 was fueled by $46.9 million in new
loan originations, $13.7 million more than for the like quarter of 1998. This
growth was partially offset by $27.9
<PAGE>
million in loan principal amortization and payoffs during the first quarter of
1999, which was $7.9 million higher than loan principal amortization and payoffs
during the first quarter of 1998.
The Company's ratio of nonperforming assets to total assets was 0.41% at March
31, 1999, compared with 0.50% at December 31, 1998. At March 31, 1999,
nonperforming assets totaled $2.5 million, and consisted of $2.2 million of
nonaccrual loans and $0.3 million of real estate owned.
The Company's provision for losses on loans for the quarter ended March 31,
1999, was $0.7 million, compared with $0.9 million for the first quarter of
1998. At March 31, 1999, the Company's allowance for loan losses stood at $10.4
million compared with $9.9 million at December 31, 1998.
Net interest income was $6.9 million for the quarter ended March 31, 1999,
compared with $5.7 million for the first quarter of 1998. The increase in net
interest income for the quarter ended March 31, 1999, is principally
attributable to increased amounts of net loans receivable outstanding in the
first quarter of 1999 compared with the first quarter of 1998, to increased
levels of deferred loan fee and discount amortization and loan prepayment fee
recognition related to increased levels of loan prepayments in the first quarter
of 1999 compared with the first quarter of 1998, and to decreases in the
Company's cost of funds during the first quarter of 1999 compared with the first
quarter of 1998. For the first quarter of 1999 loan principal amortization and
payoffs were 40% higher than for the first quarter of 1998. The Company's net
interest margins for the quarter ended March 31, 1999, was 4.75%, compared with
4.36% for the like quarter of 1998. The increase in net interest margins in the
first quarter of 1999 relative to the first quarter of 1998 is principally
attributable to a decrease in the cost of the Company's interest-bearing
liabilities, which declined by 40 basis points in the first quarter of 1999
compared with the first quarter of 1998.
The Company's noninterest income consists principally of loan and deposit-
related fees, loan sale gains, and dividends from the Federal Home Loan Bank.
For the quarter ended March 31, 1999, the Company's noninterest income was $0.5
million. For the first quarter of 1998 noninterest income was $0.8 million, and
included a $0.3 million loan and securities sale gain.
2
<PAGE>
The ratios of general and administrative expense to average assets for the
quarters ended March 31, 1999 and 1998, were both 1.64%. However, the Company's
efficiency ratio improved to 33.82% for the quarter ended March 31, 1999,
compared with an efficiency ratio of 36.40% for the first quarter of 1998.
At March 31, 1999, after giving effect to the Company's 137,000 treasury
shares totaling $5.3 million, the Company's shareholders' equity totaled $45.5
million, or 7.37% of total assets, while the Bank's equity stood at $43.8
million, which is in excess of all regulatory capital requirements. The Bank's
Tangible and Leverage Capital ratios were both 7.12%, and its Risk-based capital
ratio was 10.31%. The Bank is considered "well-capitalized" for regulatory
capital purposes.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 which are subject to
risks and uncertainties that could cause actual results, performance, or
achievements to differ materially. These risks and uncertainties include
economic conditions, interest rates, changes in government regulation and
monetary policy, competition, and other factors as set forth in the Company's
Annual Report on Form 10-K.
Highland Bancorp., Inc. is the holding company for Highland Federal Bank, a
30-year-old federal savings bank. Highland operates 7 retail branches in
California, and is headquartered at 601 South Glenoaks Blvd., Burbank,
California 91502.
3
<PAGE>
SELECTED FINANCIAL RATIOS AND OTHER DATA
<TABLE>
<CAPTION>
At or for the three months
ended March 31,
----------------------------------
Performance Ratios: 1999 1998
---------- ----------
<S> <C> <C>
Yield on loan portfolio 10.11% 10.26%
Yield on investment portfolio 5.59% 5.71%
Yield on total interest earning assets 9.47% 9.50%
Rate on interest bearing deposits 4.78% 5.16%
Rate of FHLB advances and other
borrowings 5.58% 6.09%
Rate on total interest bearing liabilities 5.01% 5.41%
Interest rate spread 4.46% 4.09%
Net interest margin 4.75% 4.36%
Return on average assets 1.60% 1.40%
Return on average equity 21.99% 18.09%
Average equity to average assets 7.30% 7.71%
Average interest-earning assets to
average interest-bearing liabilities 106.13% 105.28%
Noninterest expense to average assets 1.63% 1.65%
General and administrative expense to
average assets 1.64% 1.64%
Efficiency ratio 33.82% 36.40%
Book value per share $ 20.74 (1) $ 18.76 (2)
Regulatory Capital Ratios: (Bank only)
Tangible capital 7.12% 7.13%
Leverage capital 7.12% 7.13%
Risk-based capital 10.31% 11.04%
</TABLE>
(1) 2,194,309 shares outstanding
(2) 2,322,687 shares outstanding
4
<PAGE>
CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
Assets: 1999 1998
------------- -------------
<S> <C> <C>
Cash and cash equivalents $ 24,321 $ 28,776
Investment securities 63,492 65,300
Net loans receivable 502,946 483,694
Accrued interest receivable 4,019 4,205
Real estate acquired through foreclosure, net 327 630
Other assets 22,180 22,198
------------- -------------
Total $617,285 $604,803
============= =============
Liabilities and Shareholders' Equity:
Liabilities:
Deposits $398,585 $388,047
FHLB advances and other borrowings 159,900 160,900
Accounts payable and accrued liabilities 13,297 12,417
------------- -------------
Total liabilities 571,782 561,364
Total shareholders' equity 45,503 43,439
------------- -------------
Total $617,285 $604,803
============= =============
</TABLE>
5
<PAGE>
CONDENSED STATEMENTS OF OPERATIONS
(In thousands except per-share amounts)
<TABLE>
<CAPTION>
For the three months ended
March 31,
------------------------------------
1999 1998
<S> <C> <C>
Total interest income $13,593 $12,241
Total interest expense 6,682 6,528
------------ -------------
Net interest income 6,911 5,713
Provision for losses on loans 718 940
------------ -------------
Net interest income after provision
for losses on loans 6,193 4,773
Total noninterest income 469 779
General & administrative expenses
Compensation and benefits 1,474 1,384
Occupancy and equipment 293 266
FDIC insurance premium 60 54
Service bureau and related equipment rental 161 130
Other 508 424
------------ -------------
Total general and administrative expenses 2,496 2,258
Net (income) cost of operations of real
estate acquired through foreclosure (3) 15
------------ -------------
Earnings before income taxes 4,169 3,279
Provision for income taxes 1,721 1,355
------------ -------------
Net earnings $ 2,448 $ 1,924
============ =============
Basic earnings per share $ 1.12 $ 0.83
============ =============
Weighted average shares outstanding 2,192 2,321
============ =============
Diluted earnings per share $ 1.07 $ 0.79
============ =============
Weighted average shares outstanding including
effect of dilutive securities 2,285 2,435
============ =============
</TABLE>
6
<PAGE>
ANALYSIS OF NET LOAN PORTFOLIO
(Dollars in thousands)
<TABLE>
<CAPTION>
For the three months
ended March 31,
----------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net loans at beginning of period $483,694 $427,237
Loans Originated:
Real Estate:
One to four family - -
Multi-family 16,702 19,867
Commercial 30,100 11,320
Construction and land 88 2,022
Commercial and consumer - -
------------ ------------
Total loans originated 46,890 33,209
Loans purchased - -
------------ ------------
Total 46,890 33,209
Less:
Principal payments (including payoffs) 27,863 19,948
Sales of loans - 8,268
Transfer to real estate owned 54 1,330
Other net changes (279) (1,973)
------------ ------------
Net loans $502,946 $432,873
============ ============
</TABLE>
7
<PAGE>
ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands)
<TABLE>
<CAPTION>
For the three For the year
months ended ended
March 31, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Balance at beginning of period $ 9,909 $ 8,848
Provision for loss 718 3,315
Chargeoffs:
Real estate loans:
One-to-four family 25 91
Multi-family 188 1,144
Commercial 30 968
Construction and land - 47
Consumer - 4
------------- ------------
Total 243 2,254
------------- ------------
Balance at end of period $10,384 $ 9,909
============= ============
</TABLE>
NONPERFORMING ASSETS
(Dollars in thousands)
<TABLE>
<CAPTION>
As of As of
March 31, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Nonaccrual loans:
Real Estate:
One-to-four family $ 575 $ 526
Multi-family 1,062 1,379
Commercial 538 423
Consumer 37 37
------------- ------------
Total 2,212 2,365
REO 327 630
------------- ------------
Total nonperforming assets $ 2,539 $ 2,995
============= ============
Troubled debt restructurings $ 2,982 $ 3,017
============= ============
Allowance for loan losses as a percentage
of gross loans receivable 2.02% 2.01%
Allowance for loan losses as a percentage
of total nonaccrual loans 469.37% 418.99%
Nonaccrual loans as a percentage of
gross loans receivable 0.43% 0.48%
Nonperforming assets as a percentage of
total assets 0.41% 0.50%
</TABLE>
8
<PAGE>
EXHIBIT 99.2
HIGHLAND BANCORP, INC.
FOR IMMEDIATE RELEASE [LETTERHEAD APPEARS HERE]
HIGHLAND BANCORP DECLARES CASH AND STOCK DIVIDENDS
Burbank, California (April 20, 1999) - Highland Bancorp, Inc. (NASDAQ - HBNK)
today reported that its Board of Directors has declared a 12.5 cents per share
cash dividend and a 100% stock dividend both payable in the second quarter of
1999.
The 12.5 cents per share cash dividend is payable to shareholders of record as
of April 30, 1999, on or before May 12, 1999. The Board of Directors of the
Company has also declared a one-for-one stock dividend, payable to shareholders
of record as of May 3, 1999 on or before May 14, 1999. Because the stock
dividend occurs after the cash dividend, the 12.5 cents per share cash dividend
will be paid based upon existing outstanding shares. It is currently the
Company's intention to continue to pay future cash dividends on a quarterly
basis of approximately 6.25 cents per share in order to take into account the
increased shares outstanding arising from the 100% stock dividend. Such future
dividend payments may be modified or discontinued based upon a variety of
factors, including future Company performance, investment opportunities, and
required levels of capital and liquidity.
This news release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, relating to, among other
things, future dividends, which are subject to risks and uncertainties that
could cause actual results, performance, or achievements to differ materially.
These risks and uncertainties include economic conditions, interest rates,
changes in government regulation and monetary policy, competition, and other
factors as set forth in the Company's Annual Report on Form 10-K.
Highland Bancorp is the holding company for Highland Federal Bank, a 30-year-
old federal savings bank. Highland operates 7 retail branches in California, and
is headquartered at 601 South Glenoaks Blvd., Burbank, California 91502.
