<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period from __________ to __________
Commission File Number 0-4559
_____________________________
BEVERLY HILLS BANCORP
______________________________________________________
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-2588374
________________________ _______________________________________
(State of Incorporation) (I.R.S. Employer Identification Number)
100 WILSHIRE BOULEVARD, SUITE 1940, SANTA MONICA, CA 90401
____________________________________________________ __________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 310-395-7754
________________
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 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 .
----- -----
Number of shares of Common Stock, $1.00 par value, outstanding as of
September 30, 1996: 1,194,432.
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BEVERLY HILLS BANCORP
TABLE OF CONTENTS
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Page
PART I. Financial Information Number
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Item 1. Financial Statements
Condensed Financial Statements 3-4
Condensed Statement of Net Assets
in Liquidation at September 30, 1996 5
Condensed Statements of Changes in Net
Assets in Liquidation for the three and
nine months ended September 30, 1995 6
Condensed Statements of Cash Flows
for the nine months ended September 30,
1996 and 1995 7
Notes to Condensed Financial Statements 8-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-12
PART II. Other Information
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURE 13
</TABLE>
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PART I. Financial Information
Item 1. Beverly Hills Bancorp -- Financial Statements
Condensed Financial Statements
(Unaudited)
The Condensed Financial Statements included herein have been
prepared by Beverly Hills Bancorp (the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes the disclosures which are made are adequate to make the
information presented not misleading. Further, the Condensed Financial
Statements have been prepared in accordance with generally accepted accounting
principles for interim financial information, the instructions to Form 10-QSB
and Regulation S-B (including Item 310(b) thereof) and reflect, in the opinion
of management, all adjustments necessary to present fairly the net assets and
results of operations as of and for the periods indicated.
It is suggested that these Condensed Financial Statements be
read in conjunction with the Financial Statements and the Notes thereto for the
year ended December 31, 1995, included in the Beverly Hills Bancorp Form 10-KSB
Annual Report to the Securities and Exchange Commission.
The Company has adopted the liquidation basis of accounting as
of September 30, 1995. This basis of accounting is considered appropriate when
the Company has adopted a Plan of Complete Liquidation and Dissolution (the
"Plan") and liquidation appears imminent, the Company is no longer viewed as a
going concern and the net realizable value of the Company's assets are
reasonably determinable. Under this basis of accounting, assets and liabilities
are stated at their estimated net realizable value and estimated costs of
liquidating the Company are provided to the extent they are reasonably
determinable.
The Plan provides for the liquidation of all of the Company's
assets. In connection with the adoption of the liquidation basis of accounting,
the Company has accrued what management believes are reasonable estimates of
realizable value and costs to liquidate its remaining assets. The actual
realizable value and costs may differ significantly depending on a number of
factors, including the length of time it takes to dispose of and the amount
received for the remaining assets and the holding costs associated therewith.
Estimated costs to liquidate are reflected in the Statement of Net Assets as
"Reserve for Remaining Lease Obligations" and "Reserve for Estimated Costs of
Operation, Liquidation and Dissolution."
The Condensed Financial Statements for the three and nine
months ended September 30, 1996 and 1995 were prepared on the liquidation basis
of accounting.
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The effects of adopting the Plan are explained in Note 2 - Plan of Complete
Liquidation and Dissolution.
The Condensed Financial Statements for the three and nine
months ended September 30, 1996 are not necessarily indicative of results to be
expected for the entire year ending December 31, 1996.
See Item 2 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
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BEVERLY HILLS BANCORP
CONDENSED STATEMENT OF NET ASSETS IN LIQUIDATION
(UNAUDITED)
SEPTEMBER 30, 1996
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ASSETS
Cash and Cash Equivalents $1,735,000
Other Assets 25,000
----------
Total Assets 1,760,000
----------
LIABILITIES
Reserve for Estimated Costs of Operation, Liquidation
and Dissolution 234,000
Reserve for Remaining Lease Obligations 36,000
Other Liabilities 35,000
----------
Total Liabilities 305,000
----------
Net Assets in Liquidation $1,455,000
==========
Number of Common Shares Outstanding 1,194,432
==========
Net Assets in Liquidation Per Share $ 1.22
==========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
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BEVERLY HILLS BANCORP
CONDENSED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
(UNAUDITED)
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FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 1995
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THREE MONTHS NINE MONTHS
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Income:
Interest, Dividend and Other $ 33,000 $ 130,000
Equity in Loss of Investment (2,000) (24,000)
Forfeited Deposit 100,000 100,000
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Total Income 131,000 206,000
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Operating Expenses:
General and Administrative 94,000 309,000
Amortization of Excess Cost of Investment 44,000 131,000
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Total Expenses 138,000 440,000
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Loss Before Minority Interests and Effects of
Liquidation (7,000) (234,000)
Minority Interests in Subsidiaries' Losses 1,000 3,000
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Loss Before Effects of Liquidation (6,000) (231,000)
Effects of Liquidation 643,000 643,000
----------- -----------
Net Income $ 637,000 $ 412,000
=========== ===========
Net Income Per Share $ .53 $ .35
=========== ===========
Weighted Average Number of Common
Shares Outstanding 1,194,432 1,194,432
=========== ===========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
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BEVERLY HILLS BANCORP
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1996 1995
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Cash Flows from Operating Activities:
Net Income $ -- $ 412,000
Adjustments to Reconcile Net Income to
Net Cash Used in Operating Activities:
Equity in Loss of Investment -- 24,000
Amortization of Excess Cost of Investment -- 131,000
Minority Interest in Subsidiaries' Losses -- (3,000)
Effects of Liquidation -- (643,000)
Change in Assets and Liabilities:
Decrease in Investments 726,000 --
Decrease in Notes and Interest Receivable 166,000 --
Increase in Other Assets (25,000) --
Decrease in Accounts Payable and
Accrued Liabilities (54,000) (16,000)
Decrease in Reserve for Remaining
Lease Obligations (36,000) --
Increase in Reserve for Estimated Costs of
Operation, Liquidation and Dissolution 17,000 --
Increase in Other Liabilities 35,000 --
Change in Presentation of Minority
Interest in Subsidiaries -- (1,039,00)
Payment under Plan of Complete
Liquidation and Dissolution (4,180,000) --
----------- -----------
Net Cash Used in Operating Activities and
Net Decrease in Cash and Cash Equivalents (3,351,000) (1,134,000)
----------- -----------
Cash and Cash Equivalents at Beginning
of Period 5,086,000 1,744,000
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Cash and Cash Equivalents at End
of Period $ 1,735,000 $ 610,000
=========== ===========
</TABLE>
See Accompanying Notes to Condensed Financial Statements.
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BEVERLY HILLS BANCORP
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1996
Note 1 - Basis of Presentation:
The Condensed Financial Statements included herein have been prepared
by Beverly Hills Bancorp (the "Company"), without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
the disclosures which are made are adequate to make the information presented
not misleading. Further, the Condensed Financial Statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information, the instructions to Form 10-QSB and Regulation S-B
(including Item 310(b) thereof) and reflect, in the opinion of management, all
adjustments necessary to present fairly the net assets and results of operations
as of and for the periods indicated.
It is suggested that these Condensed Financial Statements be read in
conjunction with the Financial Statements and the Notes thereto for the year
ended December 31, 1995, included in the Beverly Hills Bancorp Form 10-KSB
Annual Report to the Securities and Exchange Commission.
The Company has adopted the liquidation basis of accounting as of
September 30, 1995. This basis of accounting is considered appropriate when the
Company has adopted a Plan of Complete Liquidation and Dissolution (the "Plan")
and liquidation appears imminent, the Company is no longer viewed as a going
concern and the net realizable value of the Company's assets are reasonably
determinable. Under this basis of accounting, assets and liabilities are stated
at their estimated net realizable value and estimated costs of liquidating the
Company are provided to the extent they are reasonably determinable.
The Plan provides for the liquidation of all of the Company's assets.
In connection with the adoption of the liquidation basis of accounting, the
Company has accrued what management believes are reasonable estimates of
realizable value and costs to liquidate its remaining assets. The actual
realizable value and costs may differ significantly depending on a number of
factors, including the length of time it takes to dispose of and the amount
received for the remaining assets and the holding costs associated therewith.
Estimated costs to liquidate are reflected in the Statement of Net Assets as
"Reserve for Remaining Lease Obligations" and "Reserve for Estimated Costs of
Operation, Liquidation and Dissolution."
The Condensed Financial Statements for the three and nine months
ended September 30, 1996 and 1995 were prepared on the liquidation basis of
accounting. The
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effects of adopting the Plan are explained in Note 2 - Plan of Complete
Liquidation and Dissolution.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. There were
no changes in the estimates for the three and nine months ended September 30,
1996.
Reclassification:
Certain prior years' amounts have been reclassified to conform to the
current year presentation.
Note 2 - Plan of Complete Liquidation and Dissolution:
Estimated Effects of Liquidation:
The net adjustment at September 30, 1995 required to convert from the
going concern (historical cost) basis to the liquidation basis of accounting was
an increase in the carrying value of net assets of $643,000 which was included
in the Statement of Net Assets and of Changes in Net Assets. This increase is a
result of recording estimated realizable values and costs, which costs may be
subject to change as facts and circumstances change, as follows:
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1. Increase in valuation of Investment in
Tigera Group, Inc. ("Tigera") to realizable
value of $.90 per share $ 995,000(A)
2. Reserve for Remaining Lease Obligation (80,000)
3. Reserve for Estimated Costs of Operations,
Liquidation and Dissolution (272,000)
---------
Estimated Effects of Liquidation $ 643,000
=========
</TABLE>
--------------------
(A) The increase in valuation of the Tigera shares is based on the
sale of such shares on November 8, 1995.
The Company, as part of the Plan of Complete Liquidation and
Dissolution discussed in the Proxy Statement dated April 14, 1995, made a
payment of $3.50 per share of common stock outstanding on April 30, 1996, to
shareholders of record as of April 16, 1996.
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It is anticipated that the Company will make a final payment during
the first quarter of 1997.
Note 3 - Net Income per Share:
Net income per share is based on the weighted average number of
common shares outstanding.
Note 4 - Income Taxes:
The Company files consolidated federal income and combined California
franchise tax returns on a cash basis. As of December 31, 1995, the Company has
net operating loss carryforwards of approximately $5,000,000 which are available
to offset future taxable income expiring from 1997 through 2009. Examination by
taxing authorities of open tax years could result in tax assessments and
material changes to the net operating loss carryforwards.
As a result of its reorganization, the Company is required to report
income for financial statement purposes as if no tax loss carryforward existed.
However, since the Company's tax status is not affected by the reorganization,
it is entitled to a reduction of federal income taxes, except for personal
holding taxes, arising from the utilization of its net operating losses incurred
prior to reorganization. Such reduction is credited to capital surplus, when
realized, rather than reflected in the income statement.
Federal statutes place significant restrictions on the utilization of
net operating loss deductions. Under present tax law, there is substantial risk
that net operating loss carryforwards will be reduced if certain conditions are
present in connection with an acquisition, merger or reorganization.
As of December 31, 1995, the deferred tax assets related to the net
operating loss carryforwards totaling approximately $2,000,000 have been fully
offset by valuation allowances, since the utilization of such amounts is
uncertain.
Due to the Plan of Complete Liquidation and Dissolution, it is
anticipated that the Company will not fully utilize these net operating loss
carryforwards.
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
September 30, 1996
Results of Operations
Interest, dividend and other income were $33,000 and $130,000,
respectively, for the three and nine months ended September 30, 1995, and
consisted primarily of an interest payment of $67,375 from Sixty Eight Thousand,
Inc. for the interest due on notes receivable for 1994 and the first nine months
of 1995.
The equity in loss of investment and amortization of excess
cost of investment for the three and nine months ended September 30, 1995,
relate to the Company's prior ownership of 22.5% of the outstanding shares of
Tigera which had net losses of $7,000 and $106,000, respectively, for the three
and nine months ended September 30, 1995.
On July 10, 1995, the Company reached an agreement with A-Mark
Financial Corporation ("A-Mark") under which A-Mark was to acquire all the
issued and outstanding shares of the Company. The Company received a deposit of
$100,000 from A-Mark, which deposit was to be forfeited if the tender offer with
the terms set forth was not made or commenced within the time period stated.
Simultaneously, the Company's shareholders adopted the Plan.
On September 6, 1995, A-Mark stated that it would not go
through with the purchase and, thereby, forfeited its deposit.
General and administrative expenses were $94,000 and $309,000,
respectively, for the three and nine months ended September 30, 1995. They
consisted of day-to-day operational costs and professional fees in connection
with the A-Mark agreement, sale of the Tigera shares and Plan of Complete
Liquidation and Dissolution.
The Company files consolidated federal income and combined
California franchise tax returns on a cash basis. As of December 31, 1995, the
Company has net operating loss carryforwards of approximately $5,000,000 which
are available to offset future taxable income expiring from 1997 through 2009.
Examination by taxing authorities of open tax years could result in tax
assessments and material changes to the net operating loss carryforwards.
As a result of its reorganization, the Company is required to
report income for financial statement purposes as if no tax loss carryforward
existed. However, since the Company's tax status is not affected by the
reorganization, it is entitled to a reduction of federal income taxes, except
for personal holding taxes, arising from the utilization of its net operating
losses incurred prior to reorganization. Such reduction is credited to capital
surplus, when realized, rather than reflected in the income statement.
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<PAGE> 12
Federal statutes place significant restrictions on the
utilization of net operating loss deductions. Under present tax law, there is
substantial risk that net operating loss carryforwards will be reduced if
certain conditions are present in connection with an acquisition, merger or
reorganization.
As of December 31, 1995, the deferred tax assets related to
the net operating loss carryforwards totaling approximately $2,000,000 have been
fully offset by valuation allowances, since the utilization of such amounts is
uncertain.
Due to the Plan of Complete Liquidation and Dissolution, it is
anticipated that the Company will not fully utilize these net operating loss
carryforwards.
Liquidity and Capital Resources
Cash and cash equivalents decreased to $1,735,000 as of
September 30, 1996, compared with $5,086,000 as of December 31, 1995. The
decrease is attributable to payments for various liabilities and the payment
under the Plan of Complete Liquidation and Dissolution which were partially
offset by the receipt of interest income, the collection of notes and interest
receivable and receipts regarding the sale of the Company's investments.
As of September 30, 1996, the Company's principal source of
funds consisted of $1,735,000 in cash and cash equivalents. Near-term capital
requirements for the payment of liabilities and liquidating dividends are
expected to be financed through cash flow from interest income and existing cash
balances.
The Company, as part of the Plan of Complete Liquidation and
Dissolution discussed in the Proxy Statement dated April 14, 1995, made a
payment of $3.50 per share of common stock outstanding on April 30, 1996, to
shareholders of record as of April 16, 1996.
It is anticipated that the Company will make a final payment
during the first quarter of 1997.
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<PAGE> 13
PART II. Other Information
Item 1. Legal Proceedings
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None.
(b) Report on Form 8-K: None.
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 thereunto duly authorized.
BEVERLY HILLS BANCORP
(Registrant)
By: /s/ Albert M. Zlotnick
________________________________________
Albert M. Zlotnick
Chairman of the Board, President
and Chief Executive, Financial
and Accounting Officer
Dated: November 6, 1996
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,735,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,760,000
<CURRENT-LIABILITIES> 305,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,455,000
<TOTAL-LIABILITY-AND-EQUITY> 1,760,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
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