<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 1996
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to
-------------- --------------------
Commission file number 0-9584
CALIFORNIA BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-2147553
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Park Place, Ste 140, San Ramon, California 94583
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(510) 743-4200
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
---------- ------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 7, 1996
----- --------------------------
Common Stock, $2.50 par value 110,115,471
This report contains a total of pages.
<PAGE>
CALIFORNIA BANCSHARES, INC.
FORM 10-Q
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements
Consolidated Balance Sheet............................... 3
Consolidated Statement of Income......................... 4
Consolidated Statement of Cash Flows..................... 5
Notes to Consolidated Financial Statements............... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Financial Highlights..................................... 8
Overview................................................. 9
Results of Operations
Net Interest Income.................................... 9
Allowance and Provision for Loan Losses................ 12
Noninterest Income..................................... 12
Noninterest Expense.................................... 12
Income Taxes........................................... 13
Financial Condition
Securities............................................. 13
Loan Portfolio......................................... 15
Allowance for Loan Losses ............................. 16
Nonaccrual Loans, Restructured Loans
and Foreclosed Assets................................. 18
Deposits............................................... 19
Asset/Liability Management
Interest Rate Risk..................................... 20
Liquidity.............................................. 22
Capital................................................ 23
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................... 24
SIGNATURES.............................................................. 25
(2)
<PAGE>
ITEM 1. Financial Statements
California Bancshares, Inc. and Subsidiaries
Consolidated Balance Sheet (Unaudited)
(In thousands except share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
---------- ------------
<S> <C> <C>
Cash and due from banks $80,049 $81,606
Federal funds sold 35,530 76,175
---------- ----------
Total cash and cash equivalents 115,579 157,781
Securities:
Available for sale 119,135 73,876
Held to maturity (approximate market values
of $244,461-1996 and $265,575-1995) 245,469 264,552
---------- ----------
Total securities 364,604 338,428
Loans 1,024,616 1,030,780
Less: Allowance for loan losses (14,971) (14,836)
---------- ----------
Net loans 1,009,645 1,015,944
Premises and equipment, net 19,495 20,040
Interest receivable and other assets 36,719 38,265
---------- ----------
TOTAL ASSETS $1,546,042 $1,570,458
---------- ----------
---------- ----------
LIABILITIES
Deposits:
Non interest-bearing demand $270,482 $291,435
Savings and interest-bearing demand 586,561 565,370
Time certificates, $100,000 or more 144,866 145,408
Other time 399,073 423,682
---------- ----------
Total deposits 1,400,982 1,425,895
Borrowed funds 90 90
Interest payable and other liabilities 12,288 13,712
---------- ----------
Total liabilities 1,413,360 1,439,697
---------- ----------
Commitments and contingent liabilities
SHAREHOLDERS' EQUITY
Preferred stock, no par value
Shares authorized: 2,000,000
Shares issued: none --- ---
Common stock, $2.50 par value
Shares authorized: 16,000,000
Shares issued and outstanding:
1996 - 10,095,673
1995 - 10,060,685 25,239 25,152
Capital surplus 39,394 38,766
Unrealized (loss) gain on securities
available for sale, net (1,227) 219
Retained earnings 69,276 66,624
---------- ----------
Total shareholders' equity 132,682 130,761
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,546,042 $1,570,458
---------- ----------
---------- ----------
</TABLE>
See Notes to Consolidated Financial Statements
(3)
<PAGE>
California Bancshares, Inc. and Subsidiaries
Consolidated Statement of Income (Unaudited)
For the Three Month Period Ended March 31, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
------- -------
<S> <C> <C>
INTEREST INCOME
Loans $24,019 $21,819
Securities:
Taxable 4,639 3,736
Exempt from Federal income taxes 534 627
Other interest income 785 549
------- -------
Total interest income 29,977 26,731
------- -------
INTEREST EXPENSE
Interest on deposits:
Savings and interest-bearing demand 3,120 3,339
Time certificates, $100,000 or more 1,997 819
Other time 5,741 4,768
------- -------
Total interest on deposits 10,858 8,926
Interest on borrowed funds --- 565
------- -------
Total interest expense 10,858 9,491
------- -------
Net interest income 19,119 17,240
Provision for loan losses 425 390
------- -------
Net interest income after provision for
loan losses 18,694 16,850
------- -------
NONINTEREST INCOME
Service charges on deposit accounts 1,450 1,321
Other operating income 1,161 689
------- -------
Total noninterest income 2,611 2,010
------- -------
NONINTEREST EXPENSE
Salaries and employee benefits 7,040 6,716
Occupancy expense 1,142 1,115
Equipment expense 916 933
Other operating expense 3,605 3,624
------- -------
Total noninterest expense 12,703 12,388
------- -------
Income before provision for income taxes 8,602 6,472
Provision for income taxes 3,448 2,472
------- -------
NET INCOME $5,154 $4,000
------- -------
------- -------
PER SHARE
Net Income $0.51 $0.40
------- -------
------- -------
Dividends declared $0.22 $0.18
------- -------
------- -------
Weighted average shares outstanding 10,073 9,974
------- -------
------- -------
</TABLE>
See Notes to Consolidated Financial Statements
(4)
<PAGE>
California Bancshares, Inc. and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
For the Three Month Period Ended March 31, 1996 and 1995
(In thousands)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $5,154 $4,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 756 779
Provision for loan losses 425 390
Net gain on sales of premises and equipment and
foreclosed assets (64) (105)
Gain on sale of loans (534) (161)
Provision for foreclosed assets 29 142
Net proceeds (disbursements) from sales of mortgages held
for sale 2,771 (1,391)
Net change in interest receivable, other assets
interest payable and other liabilities 2,320 (628)
-------- --------
Net cash provided by operations 10,857 3,026
-------- --------
Cash flows from investing activities:
Securities:
Held to Maturity:
Proceeds from prepayments and maturities 18,683 8,233
Purchases --- ---
Available for Sale:
Proceeds from prepayments and maturities 18,026 15,458
Purchases (65,842) ---
Loans made to customers less principal payments collected 2,572 8,014
Net cash provided by acquisition --- 4,767
Capital expenditures (224) (1,209)
Proceeds from sales of premises and equipment --- ---
Proceeds from sales of foreclosed assets 460 151
-------- --------
Net cash (used in) provided by investing activities (26,325) 35,414
-------- --------
Cash flows from financing activities:
Net (decrease) increase in deposits (24,913) 7,828
Net decrease in borrowed funds --- (3,947)
Cash dividends paid (2,209) (1,312)
Proceeds from issuance of common stock for stock
options exercised and dividend reinvestment plan 703 329
Repurchase of common stock (315) (554)
-------- --------
Net cash (used in) provided by financing activities (26,734) 2,344
-------- --------
Net change in cash and cash equivalents (42,202) 40,784
Cash and cash equivalents at beginning of year 157,781 81,387
-------- --------
Cash and cash equivalents at end of period $115,579 $122,171
-------- --------
-------- --------
Supplemental disclosure on non-cash investing activities:
Loans transferred to foreclosed assets $821 $757
-------- --------
-------- --------
Supplemental disclosure of cash flow information:
Cash paid during the period for :
Interest $11,211 $9,144
-------- --------
-------- --------
Income taxes $876 $775
-------- --------
-------- --------
</TABLE>
See Notes to Consolidated Financial Statements
(5)
<PAGE>
California Bancshares, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The unaudited consolidated financial statements of California Bancshares,
Inc. and Subsidiaries (the "Company") are prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q. In the opinion of management, all adjustments
necessary for a fair presentation of the financial position, results of
operations and cash flows for the periods presented have been included and are
normal and recurring. These unaudited consolidated financial statements should
be read in conjunction with the audited consolidated financial statements
included in the Company's annual report on Form 10-K for the year ended December
31, 1995.
The unaudited financial statements of the Company include the accounts of
California Bancshares, Inc. and its banking subsidiaries, Alameda First
National Bank, The Bank of Milpitas, N.A., The Bank of San Ramon Valley,
Commercial Bank of Fremont, Community First National Bank, Concord Commercial
Bank, Lamorinda National Bank, Modesto Banking Company and Westside Bank
(collectively, the Banks), and non-bank subsidiaries, CBI Mortgage, Island
Bancorp. Leasing, Inc. and LNB Corp.
The revenues, expenses, assets and liabilities of the subsidiaries are
included in the respective line items in the unaudited consolidated financial
statements, after elimination of all material intercompany accounts and
transactions. The results of operations and cash flows are not necessarily
indicative of those expected for the full fiscal year. Certain amounts for
prior periods have been reclassified to conform with the 1996 presentation.
2. COMMITMENTS AND CONTINGENT LIABILITIES:
In the normal course of business there are outstanding various commitments
to extend credit, letters of credit and contingent liabilities that are not
reflected in the financial statements. While no related losses are anticipated,
such instruments do involve elements of credit and interest rate risk in excess
of amounts recorded in the balance sheet. Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment of a fee.
Since many of the commitments are expected to expire without being drawn upon,
the total commitment amount does not necessarily represent future cash
requirements. Standby and commercial letters of credit are written conditional
commitments issued by the Banks to guarantee the performance of a customer to a
third party. Letters of credit have fixed expiration dates and require payment
of a fee. When making commitments or issuing letters of credit, the Banks
evaluate each customer's creditworthiness on a case-by-case basis. The same
credit policies are used in making commitments and conditional
(6)
<PAGE>
obligations as are used for on-balance sheet instruments. The Banks control the
credit risk of these transactions through credit approval, limits and monitoring
procedures. The amount of collateral obtained, if deemed necessary, is based on
management's credit evaluation of the customer. Exposure to credit loss, in the
event of nonperformance by the other party to the financial instrument, for
commitments to extend credit and letters of credit is represented by the
contractual notional amount of those instruments.
Amounts of these financial instruments at March 31, 1996 and December 31,
1995 are summarized below:
(In thousands) 1996 1995
Commitments to extend credit $262,297 $249,753
Standby letters of credit 7,160 10,554
The Company and its subsidiaries, in the ordinary course of business, are
defendants in various legal proceedings. Management believes the aggregate
contingent liability, if any, will not materially affect the Company's financial
position.
3. PROPOSED ACQUISITION OF CALIFORNIA BANCSHARES, INC. BY U.S. BANCORP
On February 11, 1996, the Company signed a definitive agreement for U.S.
Bancorp to acquire the Company. Under the terms of the agreement, which is
subject to approval by regulators and the Company's shareholders, the Company
will be merged into U.S. Bancorp, and each share of the Company's common stock
will be converted into .95 shares of U.S. Bancorp common stock. The total
value, which can change based on U.S. Bancorp's stock price, is approximately
$327 million, or $32.53 for each share of the Company's common stock, based on
U.S. Bancorp's closing price of $34.25 on the last trading day preceding the
announcement of the agreement. In connection with the agreement, the Company
granted U.S. Bancorp an option to acquire 19.9% of the Company's stock, which
could become exercisable under certain circumstances. The proposed transaction
is expected to be accounted for using the purchase method of accounting and is
expected to be completed during the second half of 1996.
(7)
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
(Dollar amounts in thousands except per share data) 1996 1995
--------- --------
<S> <C> <C>
FOR THE PERIOD
Net interest income on a taxable-equivalent basis $19,407 $17,564
Less: Taxable-equivalent adjustments (288) (324)
Provision for loan losses (425) (390)
--------- --------
Net interest income after provision for loan
losses 18,694 16,850
Noninterest income 2,611 2,010
Noninterest expense (12,703) (12,388)
Provision for income taxes (3,448) (2,472)
--------- --------
Net income $5,154 $4,000
--------- --------
--------- --------
Net income per share $0.51 $0.40
--------- --------
--------- --------
FINANCIAL RATIOS
Return on average assets(1) 1.34% 1.17%
Return on average equity(1) 15.67 13.60
Average shareholders' equity to average assets 8.57 8.61
Total risk-based capital ratio(2) 13.67 14.24
Net interest margin (TE)(1) 5.42 5.52
AT PERIOD END
Loans $1,024,616 $943,118
Allowance for loan losses 14,971 14,377
Assets 1,546,042 1,405,342
Shareholders' equity 132,682 121,047
Deposits 1,400,982 1,251,928
STOCK DATA
Book value per common share $13.14 $12.12
Common stock price range:
High 32 1/4 18 1/2
Low 25 1/4 16 1/2
Closing common stock price 31 3/4 17
Average common shares outstanding (000's) 10,073 9,974
Number of common shares outstanding at
period end (000)'s 10,096 9,984
Dividend payout ratio 43.1% 45.0%
</TABLE>
- ---------------
(1) Annualized
(2) Tier 1 and Tier 2 capital.
(8)
<PAGE>
OVERVIEW
Net income for the first quarter of 1996 was $5.2 million ($0.51 per
share), a 28.9% increase from the $4.0 million ($0.40 per share) reported for
the same period in 1995.
The return on average assets for the three months ended March 31, 1996 was
1.34%, up from 1.17% for the like period in 1995. Return on average
shareholders' equity for the three months ended March 31, 1996 was 15.67%
compared to 13.60% for the same period in 1995.
On June 30, 1995, the Company acquired all of the outstanding shares of
First Community Bankshares, Inc. (FCB), the holding company for Centennial Bank
which was subsequently merged into an existing subsidiary in February, 1996.
This acquisition was accounted for as a purchase and accordingly, the results of
operations are included in the Company's consolidated financial statements from
the acquisition date. When appropriate, this analysis discusses the impact of
this transaction so meaningful comparisons can be made.
The following discusses significant areas , including the above mentioned
acquisition, that have affected the Company's results of operations for the
three months ended March 31, 1996 as compared to the same period in 1995 and
financial condition at March 31, 1996 as compared to December 31, 1995.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income on a taxable-equivalent basis was $19.4 million for the
three month period ended March 31, 1996 compared with $17.6 million million for
the like period in 1995. The increase in net interest income between these
periods is primarily attributable to increases in loan volume. Average loans
outstanding for the first quarter of 1996 increased by $83.3 million (8.8%)
compared to 1995. This increase was related to internal growth and the FCB
acquisition.
The net interest margin on a taxable-equivalent basis decreased to 5.42%
for the first quarter of 1996 compared with 5.52% for the same period in 1995.
The average yield on interest-earning assets decreased 5 basis points in 1996
compared to 1995. The average rate paid on interest bearing liabilities
increased 15 basis points in 1996 compared to 1995.
The following tables present the Company's consolidated average balance
sheets including average yields and rates on a taxable-equivalent basis for the
three month period ended March 31, 1996 and 1995 (Table A) and the approximate
effect on net interest income of volume and rate changes from this period (Table
B). The change in interest due to both rate and volume has been allocated to
change due to rate and change due to volume in proportion to the relationship of
absolute dollar amounts of change in each.
(9)
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------------------------------------
1996 1995
------------------------------------ ------------------------------------
TABLE A Average Yields Average Yields
(Dollars in thousands) Balance Interest & Rates Balance Interest & Rates
---------- -------- ------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Federal funds sold $59,415 $785 5.28% $35,998 $549 6.10%
Securities:
Taxable 311,752 4,639 5.97 265,962 3,736 5.70
Non-taxable (TE)(1) 40,262 822 8.17 47,703 951 7.97
---------- ------- ----- ---------- ------- -----
Total securities(1) 352,014 5,461 6.22 313,665 4,687 6.06
Loans(2) 1,025,080 24,019 9.40 941,773 21,819 9.40
---------- ------- ----- ---------- ------- -----
Total earning assets 1,436,509 30,265 8.45 1,291,436 27,055 8.50
Nonearning assets, net of
allowance for loan losses 102,851 94,951
Total Assets $1,539,360 $1,386,387
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing deposits:
Savings and interest-bearing
demand accounts $576,565 $3,120 2.17 $533,826 $3,339 2.54
Time 551,982 7,738 5.62 476,648 5,587 4.75
---------- ------- ----- ---------- ------- -----
Total interest-bearing deposits 1,128,547 10,858 3.86 1,010,474 8,926 3.58
Other borrowings --- --- --- 26,101 565 8.78
---------- ------- ----- ---------- ------- -----
Total interest-bearing liabilities 1,128,547 10,858 3.86 1,036,575 9,491 3.71
Demand deposits 265,909 223,030
Other liabilities 12,975 7,465
---------- ----------
Total liabilities 1,407,431 1,267,070
Shareholders' equity 131,929 119,317
---------- ----------
Total Liabilities and
Shareholders' Equity $1,539,360 $1,386,387
---------- ------- ----- ---------- ------- -----
---------- ----------
Net Interest Income and Margin (3) $19,407 5.42% $17,564 5.52%
------- ----- ------- -----
------- ----- ------- -----
</TABLE>
- ---------------
(1) Interest income is presented on a taxable-equivalent basis. The taxable-
equivalent adjustments were based on a marginal tax rate of 35%.
(2) Nonaccrual loans are included in total loans, but are not material to this
presentation.
(3) Net interest margin is calculated as annualized net interest income on a
taxable-equivalent basis divided by average earning assets.
(10)
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1996 compared to 1995
--------------------------
TABLE B Volume Rate Total
------ ---- -----
(In thousands)
<S> <C> <C> <C>
Increase (decrease) in interest income:
Federal funds sold $318 $(82) $236
Securities:
Taxable 672 231 903
Non-taxable (TE) (151) 22 (129)
Loans 1,949 251 2,200
------ ------- ------
Total average earning assets 2,788 422 3,210
------ ------- ------
Increase (decrease) in interest expense:
Savings and interest-bearing demand deposits 254 (473) (219)
Time certificates 960 1,191 2,151
Other borrowings (282) (283) (565)
------ ------- ------
Total average interest-bearing
liabilities 932 435 1,367
------ ------- ------
Net increase in net interest income $1,856 $(13) $1,843
------ ------- ------
------ ------- ------
</TABLE>
(11)
<PAGE>
PROVISION FOR LOAN LOSSES
The provision for loan losses for the first three months of 1996 was
$425,000, compared to $390,000 for the same period in 1995. The provision for
loan losses, which is charged to operations, is based on credit losses,
management's ongoing evaluation of the portfolio risk and economic conditions.
The increase in the Company's provision for loan losses between these periods is
primarily attributable to the increase in the size of the portfolio at March 31,
1996 compared to March 31, 1995. Total loans outstanding at March 31, 1996
increased $81.5 million or 8.6% to $1.02 billion compared to $943.1 million at
March 31, 1995.
NONINTEREST INCOME
Noninterest income for the first quarter of 1996 was $2.6 million an
increase of $601,000 over the like period in 1995. The components of noninterest
income were as follows:
Three Months Ended March 31,
----------------------------
(In thousands) 1996 1995
------ ------
Service charges on deposit accounts $1,450 $1,321
Other fee income 427 360
Gains on sales of loans 534 161
Other income 209 168
------ ------
Total noninterest income $2,611 $2,010
------ ------
------ ------
The increase in service charge income and other fee income between the
periods presented was primarily acquisition related. Sales of loans generated
by the Company's mortgage banking subsidiary have increased substantially in the
first quarter of 1996 compared to 1995 principally because of a more favorable
interest rate environment.
NONINTEREST EXPENSE
Total noninterest expense was $12.7 million for the first quarter of 1996
compared with $12.4 million for 1995. The ratio of noninterest expense to
operating revenue, on a taxable-equivalent basis, was 57.7% for the first
quarter of 1996 compared with 63.3% for the like period in 1995.
(12)
<PAGE>
The following table presents the major components of noninterest expense
for the three months ended March 31, 1996 and 1995.
<TABLE>
<CAPTION>
Three Months Ended March 31, Change 96/95
----------------------------- ----------------
1996 1995 $ %
------- ------- ----- -------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Salaries and benefits $7,040 $6,716 $324 4.8%
Occupancy 1,142 1,115 27 2.4
Equipment 916 933 (17) (1.8)
Regulatory expenses 251 732 (481) (65.7)
Banking forms and stationery 340 403 (63) (15.6)
Communications expense 467 437 30 6.9
Outside data processing expense 204 189 15 7.9
Legal expense 186 105 81 77.1
Foreclosed assets expense, net 59 --- 59 n/m
Consultant fees 177 174 3 1.7
Promotional expense 263 231 32 13.9
Courier service 264 251 13 5.2
Other 1,394 1,102 292 26.5
------- ------- -----
Total $12,703 $12,388 $315 2.5%
------- ------- -----
------- ------- -----
</TABLE>
The increase in 1996 salaries and benefits compared to 1995 was primarily
due to standard merit and promotional increases and the acquisition of FCB.
Regulatory expense decreased in 1996 compared to 1995 as the result of the
reduction in premiums paid to the FDIC for deposits insurance. Effective June
30, 1995 the FDIC lowered the amount of the premiums assessed to well
capitalized insured banks from $.23 per $100 in deposits to $.04 per $100 in
deposits. In 1996 the FDIC further lowered this assessment to a flat assessment
rate of $2,000 per well capitalized insured bank per year.
INCOME TAXES
The provision for income taxes was $3.4 million for the quarter ended March
31, 1996 and $2.5 million for the quarter ended March 31, 1995. The effective
tax rates for these periods were 40.1% and 38.2%, respectively. The increase in
the Company's effective tax rate for these periods is primarily attributable to
the decrease in nontaxable income relative to the Company's earnings.
FINANCIAL CONDITION
SECURITIES
The Company's securities portfolio increased $26.2 million or 7.7% between
December 31, 1995 and March 31, 1996. The Company had 1996 maturities and
repayments totaling $36.7 million, and purchases of $65.8 million.
(13)
<PAGE>
At March 31, 1996 and December 31, 1995, the held to maturity securities
portfolio had an estimated unrealized loss of $2.0 million and an unrealized
gain of $1.0 million, respectively.
At March 31, 1996, the available for sale securities portfolio had an
unrealized pretax loss of $2.1 million. At December 31, 1995, the available for
sale securities portfolio had an unrealized pretax gain of $373,000. The
unrealized gain or loss on available for securities is reported on a net of tax
basis as a separate component of shareholders' equity. At March 31, 1996 the
unrealized loss on securities classified as available for sale, net of tax was
$1.2 million, compared with an unrealized net gain of $219,000 at December 31,
1995.
The decrease in the market value of the Company's total securities
portfolio between December 31, 1995 and March 31, 1996, was predominately due to
the declining market valuation of its mortgage-backed securities. As interest
rates increased during the first quarter of 1996, these securities, as well as
the Company's other securities, decreased in market value.
The amortized cost and estimated market value of securities, at March 31,
1996 by contractual maturity are shown in the following table. Actual
maturities will differ from contractual maturities because borrowers have the
right to call or prepay obligations with or without call or prepayment
penalties. For asset/liability purposes, the Company monitors these securities
with consideration of prepayment assumptions. Yields have been calculated by
dividing the taxable-equivalent interest income, including discount or premium
by the book value. Yields on nontaxable securities of states and political
subdivisions were presented on a taxable-equivalent basis using a marginal tax
rate of 35%.
<TABLE>
<CAPTION>
Securities Available for Sale
-------------------------------------------------------------------------------------------------
After One Through After Five Through
Within One Year Five Years Ten Years After Ten Years Total
----------------- ----------------- ----------------- ---------------- ------------------
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
------- ------ ------- ----- ------- ----- ------ ----- -------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
securities $7,011 5.40% $6,747 6.02% $ --- --- % $ --- --- % $13,758 5.70%
Securities of U.S.
Government agencies and
corporations 25,500 6.41 31,520 6.40 42,760 6.62 5,218 6.59 104,998 6.50
Obligations of states
and political sub-
divisions 230 8.27 549 8.06 399 7.16 --- --- 1,178 7.80
Corporate and Federal
Reserve Bank Stock --- --- --- --- --- --- 1,307 6.00 1,307 6.00
------- ------ ------- ----- ------- ----- ------ ----- -------- -----
Total $32,741 $6.21% $38,816 6.36% $43,159 6.62% $6,525 6.47% $121,241 6.42%
------- ------ ------- ----- ------- ----- ------ ----- -------- -----
------- ------ ------- ----- ------- ----- ------ ----- -------- -----
Market Value $31,847 $38,342 $42,437 $6,509 $119,135
------- ------- ------- ------ --------
------- ------- ------- ------ --------
</TABLE>
(14)
<PAGE>
<TABLE>
<CAPTION>
Securities Held to Maturity
-------------------------------------------------------------------------------------------------
After One Through After Five Through
Within One Year Five Years Ten Years After Ten Years Total
----------------- ----------------- ----------------- ---------------- ------------------
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield
------- ------ ------- ----- ------- ----- ------ ----- -------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury
securities $28,226 5.03% $31,897 5.60% $ --- --- % $ --- --- % $60,123 5.33%
Securities of U.S.
Government agencies and
corporations 24,141 5.64 55,166 5.95 26,819 7.22 29,991 6.86 136,117 6.34
Obligations of states
and political sub-
divisions 10,817 8.37 25,803 7.56 12,226 7.77 233 10.58 49,079 7.81
Other Securities --- --- 150 8.37 --- --- --- --- 150 8.37
------- ----- -------- ----- ------- ----- ------- ----- -------- -----
Total $63,184 5.83% $113,016 6.22% $39,045 7.39% $30,224 6.89% $245,469 6.39%
------- ----- -------- ----- ------- ----- ------- ----- -------- -----
------- ----- -------- ----- ------- ----- ------- ----- -------- -----
Market Value $63,270 $112,412 $39,147 $29,632 $244,461
------- -------- ------- ------- --------
------- -------- ------- ------- --------
</TABLE>
LOAN PORTFOLIO
The Company's loan portfolio consists primarily of commercial and
industrial loans, real estate 1-4 family residential properties, other
commercial real estate mortgages, construction and land development loans,
consumer installment loans and individual lines of credit. The following table
presents the loan mix at March 31, 1996 and December 31, 1995:
<TABLE>
<CAPTION>
$ %
-------------------------------- --------------------------------
March 31, 1996 Dec. 31, 1995 March 31, 1996 Dec. 31, 1995
-------------- ------------- -------------- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Real estate -
Construction and land
development $127,215 $125,837 12.4% 12.2%
Secured by 1-4 family residential
properties 329,055 337,093 32.1 32.7
Other real estate mortgages 233,699 236,717 22.8 23.0
Loans held for sale 4,697 7,468 0.5 0.7
Commercial and industrial 192,273 183,930 18.8 17.8
Consumer 137,677 139,735 13.4 13.6
---------- ---------- ----- -----
Total loans $1,024,616 $1,030,780 100% 100.0
---------- ---------- ----- -----
---------- ---------- ----- -----
</TABLE>
The Company's loan portfolio decreased $6.2 million or 0.6% at March 31,
1996 compared to December 31, 1995. This decrease was primarily concentrated in
the Company's 1-4 family residential mortgage portfolio. These loans, the
majority of which were acquired at year-end 1994 from the acquisition of Old
Stone Bank of California, FSB, have experienced an accelerated level of
repayments and refinancings due to favorable market rates. It is expected that
the level of repayments should reduce if interest rates continue to rise in
1996.
(15)
<PAGE>
Inherent in any loan portfolio are risks associated with certain types of
loans. The Company's object is to limit these risks through strict loan
policies and review procedures. Included in these policies are specific loan-
to-value limitations as to various categories of real estate related loans. The
Company also has policies limiting the degree of portfolio concentration in any
product type or to any individual borrower. At March 31, 1996 there was no
concentration of loans in any single category that was not otherwise disclosed
in the loan portfolio table previously.
ALLOWANCE FOR LOAN LOSSES
The following table summarizes the changes in the Company's allowance for
loan losses for the three months ended March 31, 1996 and 1995. The allowance
for loan losses should not be interpreted as an indication that charge-offs in
the future will occur in these amounts or proportions.
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1996 1995
------- -------
(Dollars in thousands)
<S> <C> <C>
Balance, beginning of year $14,836 $12,822
------- -------
Deduct loans charged-off:
Real estate (248) (50)
Commercial, industrial and agricultural (397) (171)
Consumer (171) (146)
------- -------
Total charge-offs (816) (367)
------- -------
Add recoveries of loans charged-off:
Real estate 7 ---
Commercial, industrial and agricultural 441 202
Consumer 78 60
------- -------
Total recoveries 526 262
------- -------
Net charge-offs (290) (105)
------- -------
Provision for loan losses 425 390
Allowance related to acquisitions --- 1,270
------- -------
Balance, end of period $14,971 $14,377
------- -------
------- -------
Net charge-offs to average loans outstanding
(Annualized) 0.11% 0.04%
Average loans outstanding $1,025,080 $941,773
Allowance at end of period to loans
outstanding 1.46% 1.52%
Period end loans $1,024,616 $943,118
</TABLE>
(16)
<PAGE>
Net charge-offs increased $185,000 for the first three months of 1996
compared to the same period in 1995. Gross charge-offs increased $449,000 in
1996 compared to 1995, primarily in real estate and commercial loans. There was
no single individual charge-off in excess of $100,000. Gross recoveries
increased $264,000 in 1996 compared to 1995. Included in 1996 recoveries is a
single recovery of $240,000 related to a commercial loan that was previously
charged-off in 1994.
The Company's determination of allowance for loan losses and the
corresponding provision for loan losses is based on various judgments and
assumptions including, but not limited to, general economic conditions, the
composition of the loan portfolio, prior loss experience and estimates of
potential future losses. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the Banks'
allowances for loan losses.
On January 1, 1995, the Company adopted Statement of Financial Accounting
Standards No. 114 (SFAS No. 114), "Accounting by Creditors for Impairment of a
Loan", as amended by SFAS No. 118 (collectively referred to as SFAS No. 114), on
a prospective basis. These Statements address the accounting treatment of
certain impaired loans and amend SFAS No. 5 and 15. However, these Statements
do not address the overall adequacy of the allowance for loan losses and do not
apply to large groups of smaller-balance homogeneous loans unless they have been
involved in a restructuring. A loan is considered impaired, within the scope of
SFAS No. 114, when, based on current information and events, it is probable that
the Company will be unable to collect principal or interest due according to the
contractual terms of the original loan agreement.
The Company measures the impairment of a loan when and while a loan is on
nonaccrual or the loan has been restructured. The amount of impairment is
calculated by the Company using discounted cash flows, except when the source of
repayment for the loan is through the liquidation of the underlying collateral.
For these loans, the net realizable value of the collateral (current fair value
less estimated costs to sell) is used in place of discounted cash flows. If the
measurement of the impaired loan is less than the recorded investment in the
loan, the Company recognizes such impairment by creating or adjusting the
existing allowance for loan losses. If full collection is uncertain, cash
receipts are applied first to principal, then to recovery of amounts previously
charged-off, then to interest income.
The following table presents the recorded investment in impaired loans and
the related SFAS No. 114 allowance for loan losses at March 31, 1996 and
December 31, 1995.
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1996
----------------------------------- -----------------------------------
Recorded Related SFAS No. Recorded Related SFAS No.
investment in 114 allowance investment in 114 allowance
impaired loans for loan losses impaired loans for loan losses
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
(In thousands)
Impaired loans with a required allowance $3,871 $737 $3,177 $771
Impaired loans not requiring an allowance 8,940 --- 9,196 ---
------- ---- ------- ----
Total $12,811 $737 $12,373 $771
------- ---- ------- ----
------- ---- ------- ----
</TABLE>
(17)
<PAGE>
The Company performs a quarterly assessment to determine the appropriate
level of the allowance for loan losses. This process uses a series of
allocation methods including specific credit allocations for individual loans
and historical loss experience for each loan category and degree of criticism
within each category. The total of these allocations is then supplemented by
the unallocated portion of the allowance for loan losses. Based on management's
analysis of the Company's overall allowance for loan losses, management believes
that the provision for loan losses for 1996 is appropriate. It is management's
opinion that the allowance for loan losses at March 31, 1996, is adequate to
provide for potential losses in the current loan portfolio. No assurances can
be given that adverse economic conditions or other factors will not result in
increased losses in the Company's loan portfolio.
NONACCRUAL, RESTRUCTURED AND PAST DUE LOANS AND FORECLOSED ASSETS
The following table presents the Company's nonaccrual and restructured
loans and foreclosed assets as well as loans past due 90 days and still accruing
interest at March 31, 1996 and December 31, 1995. Classification of a loan as
nonaccrual or restructured does not necessarily indicate the loan is not
performing with respect to collection of principal and interest nor does it mean
that the principal of the loan is uncollectible in whole or in part.
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
(Dollars in thousands)
<S> <C> <C>
Nonaccrual loans:
Real estate -
Construction and land development $3,714 $3,198
1-4 family residential mortgages 5,621 5,341
Other real estate mortgages 2,230 2,720
Commercial, industrial and agricultural 837 679
Consumer 409 435
------- -------
Total nonaccrual loans 12,811 12,373
Restructured loans 2,534 2,544
------- -------
Total nonperforming loans 15,345 14,917
Foreclosed assets 3,460 3,215
------- -------
Total nonperforming assets $18,805 $18,132
------- -------
------- -------
Nonperforming loans as a percentage of total loans 1.50% 1.45%
Nonperforming assets as a percentage of total loans
and foreclosed assets 1.83% 1.75%
Loans past due 90 days and still accruing interest $1,342 $161
</TABLE>
(18)
<PAGE>
Loans are placed on nonaccrual status when full collectibility of principal
or interest is uncertain or when principal or interest is past due for 90 days
(unless the loan is well secured and in the process of collection). From the
time a loan is placed on nonaccrual status, interest previously accrued but not
collected is reversed and charged against interest income. Any interest or
principal payments received on a nonaccrual loan are normally applied as a
principal reduction. A nonaccrual loan may be restored to accrual status when
none of its principal and interest is past due and unpaid or when it otherwise
becomes well secured and in the process of collection. In a case where a
borrower experiences financial difficulties and the Company makes certain
concessionary modifications to contractual terms (i.e., the reduction of either
interest or principal or other such modifications that the Company would not
otherwise consider), the loan is classified as a restructured loan. If the
borrower is not able to meet the revised payment schedule and the loan becomes
delinquent, the loan is placed on nonaccrual status. Forgone interest related
to nonaccural loans for the three months ended March 31, 1996 and 1995 was
$377,000 and $307,000, respectively.
Foreclosed assets include property acquired through foreclosure. These
properties are carried at the lower of (i) fair value less estimated costs to
sell or (ii) the recorded cost of the asset. Upon foreclosure, any necessary
write-downs are charged to the allowance for loan losses. The difference
between cost and fair value less estimated cost to sell, if lower, is recorded
as a valuation allowance. Subsequent declines in the fair value of the property
are recorded as an addition to the valuation allowance.
Management is not aware of any significant potential problem loans which
have not otherwise been disclosed as a nonaccrual or restructured loan at March
31, 1996, in which there is known information about possible credit problems of
a borrower that has caused management to have serious doubts as to the ability
of such borrowers to comply with the present loan repayment terms.
DEPOSITS
Total deposits decreased $24.9 million or 1.7% at March 31, 1996 compared
to December 31, 1995. Average daily deposits, along with the average rates paid
thereon, for the three months ended March 31, 1996 and 1995 on an annualized
basis are summarized in the following table:
<TABLE>
<CAPTION>
Three Months Ended March 31,
--------------------------------------
1996 1995
------------------ ------------------
Amount Rate Amount Rate
---------- ----- ---------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Noninterest-bearing demand $265,909 -% $223,030 -%
Savings and interest-bearing demand 576,565 2.17 533,826 2.54
Time certificates $100,000 or more 142,114 5.64 81,171 4.04
Other time 409,868 5.62 395,477 4.82
---------- ----- ---------- -----
Total deposits $1,394,456 3.12% $1,233,504 2.89%
---------- ----- ---------- -----
---------- ----- ---------- -----
</TABLE>
(19)
<PAGE>
The total amount held in the accounts of any single depositor is not
material in relationship to total deposits.
ASSET/LIABILITY MANAGEMENT
The Company has separate policies and guidelines for managing the Company's
balance sheet and off-balance sheet activities which are incorporated and
considered integral parts of the asset/liability management process. Certain
policies may be governed and implemented by committees or persons other than the
Asset/Liability Committee (ALCO) as directed by the Board of Directors. Overall
asset/liability management encompasses the management and monitoring of asset
quality, liquidity and capital needs and interest rate risk.
INTEREST RATE RISK
One of the principal objectives of asset/liability management is to manage
the risks associated with changing interest rates and their impact on earnings.
The ALCO regularly evaluates and sets predetermined limits on the sensitivity of
each Bank's net interest income to changes in interest rates.
Interest rate risk can be viewed from a variety of perspectives, including
the sensitivity of earnings to rate movements and the sensitivity of the market
value of the Company's equity to changes in interest rates. One way to measure
how a change in interest rates will impact net interest income in specific time
frames is through a cumulative gap analysis. Traditional gap analysis
represents interest rate risk in terms of the mismatch between the stated
repricing of the Company's earning assets and interest-bearing liabilities
within defined time periods. As shown in the following table, at March 31,
1996, the cumulative one-year contractual gap for the Company was a negative
$162.2 million, or (11.4)% of earning assets. In other words, 11.4% of the
Company's's interest-bearing liabilities has the potential to reprice or mature
more quickly than its earning assets in one year.
(20)
<PAGE>
<TABLE>
<CAPTION>
Interest Rate Sensitivity
-----------------------------------------------------------------------------
(Dollars in thousands) 0-3 months 3-12 months 1-5 years 5 years Non -Market Total
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Federal funds sold $35,530 $ -- $ -- $ -- $ -- $35,530
Securities(1) 31,041 71,582 150,825 109,850 1,306 364,604
Loans(2) 484,678 258,973 177,036 91,118 12,811 1,024,616
- --------------------------------------------------------------------------------------------------------------------------------
Total earning assets 551,249 330,555 327,861 200,968 14,117 1,424,750
Noninterest-earning assets -- -- -- -- 121,292 121,292
- --------------------------------------------------------------------------------------------------------------------------------
Total assets 551,249 330,555 327,861 200,968 135,409 1,546,042
- --------------------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Deposits:
Savings and interest-bearing demand deposits $586,561 $ -- $ -- $ -- $ -- $586,561
Time certificates, $100,000 or more 60,307 67,999 16,360 200 -- 144,866
Other time 128,685 200,634 69,754 -- -- 399,073
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 775,553 268,633 86,114 200 -- 1,130,500
Borrowed funds -- -- -- -- 90 90
- --------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 775,553 268,633 86,114 200 90 1,130,500
Noninterest-bearing liabilities -- -- -- -- 282,770 282,860
Shareholders' equity -- -- -- -- 132,682 132,682
- --------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity 775,553 268,633 86,114 200 415,542 1,546,042
- --------------------------------------------------------------------------------------------------------------------------------
Incremental gap (224,304) 61,922 241,747 200,768 (280,133) --
- --------------------------------------------------------------------------------------------------------------------------------
Cumulative gap $(224,137) $(162,382) $79,365 $280,133 --
- --------------------------------------------------------------------------------------------------------------------------------
% to earning assets (15.7) (11.4) 5.6 19.7 --
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) The nonmarket column consists of Federal Reserve Bank stock.
(2) The nonmarket column consists of nonaccrual loans of $12,811.
(21)
<PAGE>
Over the short period (one year or less) changes in interest rates affect
net interest income to the extent that there is a timing difference between the
repricing of assets and liabilities. For instance, if more liabilities than
assets reprice during a time period, such as the Company's gap analysis
indicates, given a rising rate environment, net interest income will have a
tendency to decease if the assets and liabilities reprice in rate by
approximately the same amount. Conversely, if an institution is considered to
be asset sensitive, or as having a positive gap, when the amount of it
liabilities maturing or repricing is less than the amount of its assets also
maturing or repricing during the same period, net interest income would benefit
from a rising rate environment.
However, shortcomings are inherent in a simplified gap analysis that may
result in an institution with a nominally negative gap having interest rate
behavior associated with an asset sensitive balance sheet. For example,
although certain assets and liabilities may have similar maturities or periods
to repricing, they may react in different degrees to changes in market interest
rates. Furthermore, repricing characteristics of certain assets and liabilities
vary substantially within a given time period. In the event of a change in
interest rates, prepayment and early withdrawal levels could also deviate
significantly from those assumed in calculating gap. The Company attempts to
quantify these characteristics by taking into account the expected repricing or
maturities of earning assets and funding sources, as opposed to their
contractual maturities.
Because net interest income is not necessarily a conclusive indication of
an institution's ongoing net worth, a second measure of interest rate risk - the
market value of portfolio equity is important. This measure attempts to
quantify the ongoing worth of the institution by considering all cash flows,
regardless of their timing, and discounting these back to the present. The
difference between the discounted assets less the discounted liabilities is the
present value of equity or the economic measure of the institution's net worth
These two approaches to interest rate risk measurement are complementary
and are used in tandem by the individual Banks to provide a more complete
picture of the interest rate risk associated with their balance sheets.
Included in the Company's Asset/Liability Management Policy are limitations on
the maximum volatility each Bank may undertake associated with possible interest
rate movement.
LIQUIDITY
Liquidity is defined as the Company's ability to provide funds to meet
customers' loan and deposit needs and to fund operations in the most timely and
cost effective basis. The Company's liquidity is measured and managed on a
individual bank basis. The holding company (parent) is funded primarily by
dividends and management fee income from its subsidiaries.
Core deposits have historically provided the Company with funding sources.
The Company also utilizes repurchase agreements. In addition, the Banks have
informal federal funds
(22)
<PAGE>
borrowing arrangements with correspondents banks to meet unforeseen deposit
outflows. At March 31, 1996 and December 31, 1995, the Company's loan to
deposit ratio was 73.1% and 72.3%, respectively.
CAPITAL
The Company reviews various capital adequacy ratios on a quarterly basis to
ensure that each banking subsidiary and the consolidated Company are within
established internal and external guidelines. The Company and its banking
subsidiaries are subject to risk-based capital regulations.
These guidelines are used to evaluate capital adequacy and are based on an
institution's balance sheet risk and off-balance sheet risk. Current
regulations define capital adequacy into five categories; well capitalized,
adequately capitalized, undercapitalized, significantly under capitalized and
critically undercapitalized. Each of these capital categories have predefined
risk-based capital ratio minimums. At March 31, 1996 and December 31, 1995, the
capital ratios of the Company exceeded the "well capitalized" threshold as
prescribed by banking regulators. An institution's deposit insurance premiums
are determined through a matrix based on the institution's capital category and
supervisory subgroup. Any reduction in an institution's capital category can
significantly increase premiums.
The following table presents the Company's capital positions at March 31,
1996 and December 31, 1995, including the risk-based capital ratio and leverage
ratio.
<TABLE>
<CAPTION>
(Dollars in thousands) March 31, December 31,
Tier 1: 1996 1995
--------- ------------
(Dollars in thousands)
<S> <C> <C>
Shareholders' equity $132,682 $130,761
Less: Intangibles (6,726) (6,975)
Adjust: Unrealized losses (gains)
on securities available for sale, net 1,227 (219)
---------- ----------
Total Tier 1 capital 127,183 123,567
Tier 2 capital 12,803 12,838
---------- ----------
Total risk-based capital $139,986 $136,405
---------- ----------
---------- ----------
Risk-adjusted assets $1,024,208 $1,027,057
---------- ----------
---------- ----------
Tier 1 capital/risk-adjusted assets
Capital ratio 12.42% 12.03%
Minimum ratio 4.00% 4.00%
Total risk-based capital/risk-
adjusted assets
Capital ratio 13.67% 13.28%
Minimum ratio 8.00% 8.00%
Leverage ratio 8.26% 7.98%
</TABLE>
(23)
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Computation of Earnings Per Share
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on February 22, 1996 dated as of
February 11, 1996. Reporting Item 5 Other Events, announcing the Company's
entering into an Agreement and Plan of Merger with U.S. Bancorp. Item 7
Exhibits, Press Release, Agreement and Plan of Merger dated as of February 11,
1996 and Stock Option Agreement, dated as of February 12, 1996.
(24)
<PAGE>
SIGNATURES
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.
California Bancshares, Inc.
----------------------------------------
(Registrant)
Date: 5/7/96 /s/ Joseph P. Colmery
----------------------------------------
Joseph P. Colmery
President/Chief Executive Officer
(Principal Executive Officer)
Date: 5/7/96 /s/ Vincent M. Leveroni
----------------------------------------
Vincent M. Leveroni
Exec. Vice President and
Chief Financial Officer
(Principal Financial Officer)
(25)
<PAGE>
CALIFORNIA BANCSHARES, INC.
EXHIBIT INDEX
Exhibit Page
Number Description Number
- ------- ----------- ------
11 Computation of Earnings Per Share 27
(26)
<PAGE>
EXHIBIT 11
CALIFORNIA BANCSHARES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
------- ------
<S> <C> <C>
(In thousands, except per share data)
Net income $5,154 $4,000
------- ------
------- ------
Weighted average number
of common shares
outstanding 10,073 9,974
------- ------
------- ------
Earnings per common share $ 0.51 $ 0.40
------- ------
------- ------
Fully diluted earnings per
common share(1):
Weighted average number of
common shares outstanding 10,073 9,974
Assuming exercise of stock
options reduced by the
number of shares which
could have been purchased
with the proceeds from
exercise of such options 300 161
------- ------
10,373 10,135
------- ------
------- ------
Earnings per common and
common equivalent share $ 0.50 $ 0.39
------- ------
------- ------
</TABLE>
- ---------------
(1) This presentation is submitted in accordance with Item 601(b)(11) of
Regulation S-K. This presentation is not required by APB Opinion No. 15,
because it results in dilution of less than 3%.
(27)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 80,049
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 35,530
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 119,135
<INVESTMENTS-CARRYING> 245,469
<INVESTMENTS-MARKET> 244,461
<LOANS> 1,024,616
<ALLOWANCE> 14,971
<TOTAL-ASSETS> 1,546,042
<DEPOSITS> 1,400,982
<SHORT-TERM> 90
<LIABILITIES-OTHER> 12,288
<LONG-TERM> 0
0
0
<COMMON> 25,239
<OTHER-SE> 108,670
<TOTAL-LIABILITIES-AND-EQUITY> 1,546,042
<INTEREST-LOAN> 24,019
<INTEREST-INVEST> 5,173
<INTEREST-OTHER> 785
<INTEREST-TOTAL> 29,977
<INTEREST-DEPOSIT> 10,858
<INTEREST-EXPENSE> 10,858
<INTEREST-INCOME-NET> 19,119
<LOAN-LOSSES> 425
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 12,703
<INCOME-PRETAX> 8,602
<INCOME-PRE-EXTRAORDINARY> 5,154
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,154
<EPS-PRIMARY> 0.51
<EPS-DILUTED> 0.51
<YIELD-ACTUAL> 8.45
<LOANS-NON> 12,811
<LOANS-PAST> 1,342
<LOANS-TROUBLED> 2,534
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 14,836
<CHARGE-OFFS> 816
<RECOVERIES> 526
<ALLOWANCE-CLOSE> 14,971
<ALLOWANCE-DOMESTIC> 8,695
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 6,276
</TABLE>
