<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) OCTOBER 27, 1999
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COMMUNITY BANCORP INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 000-26505 33-0859334
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(State or other jurisdiction (File number) (I.R.S. Employer
of incorporation) Identification No.)
130 WEST FALLBROOK STREET, FALLBROOK, CA 92028
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (760) 723-8811
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(Former name or former address, if changed since last report)
Page 1 of ___ pages
Exhibit Index page 4
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ITEM 5. OTHER EVENTS
The Company is filing this Amendment to correct an error on the date
of the press release attached as Exhibit 99b. The release was issued on
November 1, 1999 and not on October 29, 1999 as previously reported. The text
of the Report, as amended, follows:
"In connection with a previously reported litigation matter in which
an ex-employee of the Company's banking subsidiary, Fallbrook National Bank,
had been awarded approximately $800,000 plus court and legal costs, a
Riverside County Superior Court on October 26, 1999 ordered a new trial on
punitive damages unless the plaintiff consents to a reduction in punitive
damages to $250,000. Despite the reduction in the amount of the award,
Fallbrook National Bank intends to file an appeal in connection with this
matter if a new trial is not granted.
A copy of the press release issued on October 27, 1999 in connection
with the reduction in the award is attached as Exhibit 99a.
The Company declared a 5% stock dividend payable on November 30,
1999 to shareholders of record on November 15, 1999.
A copy of the press release issued on November 1, 1999 in connection
with the dividend is attached as Exhibit 99b."
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amended report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: November 3, 1999 COMMUNITY BANCORP INC.
By: /s/ Thomas E. Swanson
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Thomas E. Swanson
President
3
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ----------- --------
99a Press Release of October 27, 1999
99b Press Release of November 1, 1999
4
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COMMUNITY BANCORP INC.
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130 W. Fallbrook Street
Fallbrook, CA 92028
FALLBROOK NATIONAL BANK, SUBSIDIARY OF
COMMUNITY BANCORP INC. ANNOUNCES THAT THE
JUDGE HAS ORDERED A NEW TRIAL ON THE ISSUE
OF PUNITIVE DAMAGES
FOR IMMEDIATE RELEASE
CONTACT: TOM SWANSON
COMMUNITY BANCORP INC.
(760) 723-6001
FALLBROOK, Calif., October 27, 1999--Community Bancorp Inc. (NASDAQ:CMBC),
announced on August 4, 1999 that its subsidiary, Fallbrook National Bank,
received an adverse jury rendering in favor of a terminated ex-employee, with
damages of approximately $800,000. This week the Riverside County Superior
Court ordered a new trial on punitive damages only. The new trial is granted
unless the plaintiff consents to a reduction of the punitive damage verdict
to $250,000. "The judge obviously felt the award itself was excessive, and
the jury did not execute proper judgement in determining the award. We, on
the other hand, feel that any award for punitive damages based on an
accusation of fraud is unfounded. If a new trial is not granted, we would
move forward with an appeal in order to vindicate ourselves," stated Tom
Swanson, President and CEO of Community Bancorp Inc. and Fallbrook National
Bank. Mr. Swanson noted that any award on punitive damages will not be paid
until there is an appellate ruling, which will take up to two years to
conclude. In the interim, the Bank will accrue $298,000 during the third
quarter of 1999. Earnings for the third quarter will be
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negatively impacted by this one time aberration. There will be an earnings
announcement within the week.
Statements concerning future performance, developments or events
concerning expectation for growth and market forecasts, and any other guidance
on future periods, constitute forward-looking statements which are subject to a
number of risks and uncertainties which might cause actual results to differ
materially from stated expectations.
<PAGE>
COMMUNITY BANCORP INC.
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130 W. Fallbrook Street
Fallbrook, CA 92028
COMMUNITY BANCORP INC. ANNOUNCES 5
PERCENT STOCK DIVIDEND AND THIRD QUARTER
EARNINGS
FOR IMMEDIATE RELEASE
CONTACT: TOM SWANSON
COMMUNITY BANCORP INC.
(760) 723-6001
FALLBROOK, Calif., October 29, 1999--Community Bancorp Inc. (NASDAQ:CMBC),
parent company of Fallbrook National Bank, today announced a loss of ($40,000),
or ($0.02) per diluted share, for the third quarter of 1999, compared to
earnings of $303,000, or $0.14 per diluted share, for the third quarter of 1998.
Net income totaled $695,000, or $0.30 per diluted share, for the nine months
ended September 30, 1999 compared to $774,000, or $0.35 per diluted share, for
the nine months ended September 30, 1998.
Earnings for the nine months ended September 30,1999 were negatively
impacted by the non-recurring expenses of the cost of forming the holding
company combined with the outcome of a lawsuit. "Without these non-recurring
expenses, year to date earnings would have been $907,000, or $0.39 per diluted
share, compared to $774,000, or $0.35 per diluted share, for the nine months
ended September 30, 1998. This calculates to a 17.2% increase in earnings from
operations," stated Tom Swanson, President and CEO of Community Bancorp Inc. and
Fallbrook National Bank. Although the Courts have ruled in favor of a new trial,
subject to certain conditions, the Bank felt it
<PAGE>
prudent to accrue the entire potential award of $298,000. If a new trial is
not granted, the Bank would move forward with an appeal.
"In addition to the jury verdict award, the third quarter was
impacted by reduced loan sales," continued Swanson. "The decision to reduce
sales of guaranteed and unguaranteed SBA loans during the third quarter was
made in order to maximize returns on each loan by increasing the holding
period, which will add interest income to the Company's earnings. The Company
anticipates making loan sales during the fourth quarter. Quality of assets
continue to improve, with nonperforming assets, net of SBA guarantees,
declining from $1.5 million at September, 1998 to $834,000 at September,
1999. In addition, the ratio of charge offs to average loans outstanding has
been extraordinary during 1999, being reduced to only 2 basis points as a
percent of average loans outstanding, as compared to 22 basis points for the
same period in 1998." The Company's total assets increased to $155.7 million
as of September 30,1999, compared to $136.2 million as of December 31, 1998,
for a 19 percent annualized growth rate.
The Board of Directors has declared a stock dividend of 5%, payable
on November 30, 1999, to shareholders' of record on November 15, 1999. Cash
will be paid in lieu of any fractional shares. "The Bank has met its
strategic objectives to date, and therefore the Board has decided to issue
this dividend," stated Chairman Haugh.
Community Bancorp Inc., parent company of Fallbrook National Bank,
is a $156 million bank holding company headquartered in Fallbrook,
California. The Company's primary subsidiary, Fallbrook National Bank, serves
the North San Diego and Inland Empire communities with retail banking offices
in Fallbrook, Temecula and Vista, and loan production offices in the cities
of Fallbrook, Los Angeles, Ontario, Orange, Sacramento, Temecula, and Vista.
Fallbrook National Bank's web site is www.fallbrooknationalbank.com.
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Statements concerning future performance, developments or events
concerning expectation for growth and market forecasts, and any other
guidance on future periods, constitute forward-looking statements which are
subject to a number of risks and uncertainties which might cause actual
results to differ materially from stated expectations.
<PAGE>
STATEMENTS OF INCOME
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED FOR THE THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------- ----------------------------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 8,874 $ 7,139 $ 3,033 $ 2,627
Interest on federal funds sold 416 689 183 253
Interest on interest bearing deposits in financial
institutions 30 31 10 10
Interest on investment securities 167 38 105 13
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Total interest income 9,487 7,897 3,331 2,903
Interest expense - deposits 2,875 2,658 1,021 946
Interest expense - other borrowed money 138 88 95 28
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Total interest expense 3,013 2,746 1,116 974
Net interest income before provision for loan
losses 6,474 5,151 2,215 1,929
Provision for loan losses 385 410 70 179
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Net interest income after provision for loan
losses 6,089 4,741 2,145 1,750
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Other operating income:
Customer service charges 282 269 104 90
Other fee income 989 811 324 367
Gain on sale of loans 1,844 1,031 131 438
Servicing fees, net 432 453 162 168
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Total other operating income 3,547 2,564 721 1,063
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Other operating expenses:
Salaries and employee benefits 4,555 3,375 1,410 1,270
Occupancy 829 562 275 205
Bank premises and equipment 376 240 133 96
Marketing and promotions 174 248 60 112
Data processing 562 446 200 164
Professional services 403 305 166 132
Non-recurring expense 362 - 258 -
Other expenses 1,192 810 432 318
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Total other operating expenses 8,453 5,986 2,934 2,297
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Income before taxes 1,183 1,319 (68) 516
INCOME TAXES 488 545 (28) 213
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NET INCOME $ 695 $ 774 $ (40) $ 303
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BASIC EARNINGS PER SHARE $ 0.30 $ 0.36 $ (0.02) $ 0.14
DILUTED EARNINGS PER SHARE $ 0.30 $ 0.35 $ (0.02) $ 0.14
</TABLE>
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CONSOLIDATED BALANCE SHEETS
AT SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(dollars in thousands)
<TABLE>
<CAPTION>
(Unaudited)
ASSETS SEPTEMBER 30, 1999 DECEMBER 31, 1998
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<S> <C> <C>
Cash and due from banks $ 7,178 $ 6,064
Federal funds sold 6,105 10,250
Interest bearing deposits in financial institutions 800 800
Federal Reserve Bank stock 161 132
Investment securities held-to-maturity, at amortized cost 6,706 1,676
Loans, held for investment 116,278 103,101
Loans, held for sale 11,437 6,600
Less allowance for loan losses (1,357) (992)
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NET LOANS 126,358 108,709
Bank premises and equipment, net 2,435 2,460
Accrued interest and other assets 3,295 3,182
Servicing asset, net 2,658 2,950
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TOTAL ASSETS $ 155,696 $ 136,223
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LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS
Interest bearing $ 114,387 $ 102,869
Non-interest bearing 25,666 21,286
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TOTAL DEPOSITS 140,053 124,155
Other Borrowings 4,022 1,000
Accrued expenses and other liabilities 1,195 1,522
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TOTAL LIABILITIES 145,270 126,677
SHAREHOLDERS' EQUITY
Common stock, $ .625 par value;
authorized 40,000,000 shares,
issued and outstanding, 2,416,305 at September 30, 1999 and
2,407,065 at December 31, 1998 1,510 1,505
Additional paid-in capital 3,883 3,856
Unearned ESOP contribution (847) (1,000)
Retained Earnings 5,880 5,185
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TOTAL SHAREHOLDERS' EQUITY 10,426 9,546
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 155,696 $ 136,223
------------------ ------------------
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</TABLE>
<PAGE>
Community Bancorp Inc.
Financial Highlights
FINANCIAL RATIOS:
<TABLE>
<CAPTION>
For the nine months ended For the quarter ended
September 30, September 30,
------------------ ----------------- ----------------- ------------------
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Return on average assets 0.63% 0.89% (0.10%) 0.93%
Return on average equity 9.36% 11.91% (1.56%) 13.65%
Efficiency ratio 80.74% 77.59% 91.14% 75.53%
Net interest margin 6.47% 6.63% 6.19% 6.59%
Average equity to average assets 6.70% 7.44% 6.54% 6.83%
</TABLE>
ALLOWANCE FOR LOAN LOSSES:
<TABLE>
<CAPTION>
At or for the nine months ended
September 30,
--------------------------------------------
1999 1998
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(dollars in thousands)
<S> <C> <C>
Balance beginning of year $ 992 $ 650
Provision for loan losses 385 410
Net charge offs (net recoveries) 20 142
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Balance end of period $ 1,357 $ 918
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Allowance for loan losses to nonaccrual loans 76.36% 170.63%
Allowance for loan losses to nonperforming loans 76.36% 72.97%
Total Gross Loans $ 129,347 $ 99,543
Allowance for loans losses to total gross loans 1.05% 0.92%
Allowance for loan losses to nonperforming assets 76.36% 52.40%
Ratio of net charge-offs to average loans outstanding
(annualized) 0.02% 0.22%
</TABLE>
NON-PERFORMING ASSETS:
<TABLE>
<CAPTION>
At September 30, At December 31,
-------------------------------------------- ---------------------
1999 1998 1998
---------------------- --------------------- ----------------------
(dollars in thousands)
<S> <C> <C> <C>
Total nonaccrual loans1 $ 1,777 $ 538 $ 969
Troubled debt restructurings - 720 723
Loans 90 days past due and still accruing - - 203
---------------------- --------------------- ----------------------
Total nonperforming loans 1,777 1,258 1,895
Other real estate owned - 494 -
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Total nonperforming assets $ 1,777 $ 1,752 $ 1,895
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---------------------- --------------------- ----------------------
Nonaccrual loans to total gross loans 1.37% 0.54% 0.86%
Nonperforming loans to total gross loans 1.37% 1.26% 1.68%
Nonperforming loans, net of SBA guarantees, to
total gross loans 0.64% 0.97% 1.42%
Total nonperforming assets to total assets 1.14% 1.44% 1.39%
</TABLE>
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1 Includes $943,000, $295,000 and $293,000 in SBA guaranteed portion of
nonperforming loans as of September 30, 1999 and 1998 and December 31, 1998,
respectively.
