SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For Quarter Ended June 30, 1997 Commission file number 0-16213
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GBC BANCORP
- - -------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3586596
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
800 West 6th Street, Los Angeles, California 90017
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 213/972-4172
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Former name 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 _______
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Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the close of the
period covered by this report.
Common stock, no par value, 6,794,199 shares issued and
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outstanding as of June 30, 1997.
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TABLE OF CONTENTS
PART I FINANCIAL INFORMATION .............................
Item 1. Financial Statements ..............................
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ...
PART II OTHER INFORMATION .................................
Item 1. Legal Proceedings .................................
Item 2. Changes In Securities .............................
Item 3. Default Upon Senior Securities ....................
Item 4. Submission Of Matters To A Vote Of Securities
Holders ...........................................
Item 5. Other Information .................................
Item 6. Exhibits And Reports On Form 8-K ..................
PART III- SIGNATURES ......................................
PART I - FINANCIAL INFORMATION
<TABLE>
GBC Bancorp and Subsidiaries
Consolidated Statement of Financial Condition
June 30, December 31,
(In Thousands, Except Share Data) 1997 1996
- - --------------------------------------------------------------------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash and Due From Banks $47,641 $46,809
Federal Funds Sold and Securities Purchased
Under Agreements to Resell 115,000 140,200
Securities Available for Sale at Fair Value
(Amortized Cost of $562,634 and $518,701 at
June 30, 1997 and December 31, 1996,
respectively) 562,706 519,821
Securities Held to Maturity (Fair Value of
$54,596 and $12,463 at June 30,1997 and
December 31, 1996, respectively) 54,461 12,274
Loans and Leases 610,141 602,354
Less: Allowance for Credit Losses (14,936) (16,209)
Deferred Loan Fees (3,520) (3,638)
--------- ---------
Loans and Leases, Net 591,685 582,507
Bank Premises and Equipment, Net 5,726 5,806
Other Real Estate Owned, Net 15,051 12,988
Due From Customers on Acceptances 8,190 6,535
Real Estate Held for Investment 9,023 9,686
Accrued Interest Receivable and Other Assets 14,889 15,489
---------- ----------
Total Assets $1,424,372 $1,352,115
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $148,082 $158,728
Interest Bearing Demand 232,415 213,697
Savings 108,195 119,315
Time Deposits of $100,000 or More 588,287 545,578
Other Time Deposits 181,542 164,195
--------- ---------
Total Deposits 1,258,521 1,201,513
Federal Funds Purchased and Securities Sold
Under Repurchase Agreements - -
Subordinated Debt 15,000 15,000
Acceptances Outstanding 8,190 6,535
Accrued Expenses and Other Liabilities 15,398 12,431
-------- --------
Total Liabilities $1,297,109 $1,235,479
Stockholders' Equity:
Common Stock, No Par or Stated Value;
20,000,000 Shares Authorized; 6,794,199 and
6,766,469 Shares Outstanding at June 30,
1997 and December 31, 1996, respectively $47,938 $47,281
Securities Valuation Allowance, Net of Tax 42 646
Retained Earnings 79,290 68,716
Foreign Currency Translation Adjustments (7) (7)
---------- ----------
Total Stockholders' Equity 127,263 116,636
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Total Liabilities and Stockholders' Equity $1,424,372 $1,352,115
========== ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<TABLE>
GBC Bancorp and Subsidiaries
Consolidated Statement of Income
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(In Thousands, Except Per Share Data) 1997 1996 1997 1996
- - -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans and Leases $15,677 $12,989 $30,970 $25,268
Securities Available for Sale 8,801 9,208 17,089 17,325
Securities Held to Maturity 505 577 764 1,225
Federal Funds Sold and Securities
Purchased under Agreements
to Resell 2,176 1,721 4,070 3,961
------- ------- ------- -------
Total Interest Income 27,159 24,495 52,893 47,779
INTEREST EXPENSE
Interest Bearing Demand 1,319 1,111 2,477 2,255
Savings 799 950 1,563 1,881
Time Deposits of $100,000 or More 7,311 6,259 14,088 11,937
Other Time Deposits 2,121 2,140 4,071 4,318
Federal Funds Purchased and
Securities Sold under Repurchase
Agreements - 333 2 669
Subordinated Debt 399 399 798 798
------- ------- ------- -------
Total Interest Expense 11,949 11,192 22,999 21,858
Net Interest Income 15,210 13,303 29,894 25,921
Provision for Credit Losses - 1,000 1,000 2,500
------- ------- ------- -------
Net Interest Income after
Provision for Credit Losses 15,210 12,303 28,894 23,421
NON-INTEREST INCOME
Service Charges and Commissions 1,424 1,257 2,766 2,805
Gain on Sale of Loans, Net 24 16 74 101
Gain on Sale of Fixed Assets - 8 - 8
Gain on Sale of Real Estate
Investment - - - 101
Other 153 121 285 219
------- ------- ------- -------
Total Non-Interest Income 1,601 1,402 3,125 3,234
NON-INTEREST EXPENSE
Salaries and Employee Benefits 4,032 3,440 7,801 6,826
Occupancy Expense 714 687 1,408 1,362
Furniture and Equipment Expense 453 395 873 791
Net Other Real Estate Owned Expense 236 419 479 906
Other 1,387 1,802 3,051 3,446
------- ------- ------- -------
Total Non-Interest Expense 6,822 6,743 13,612 13,331
Income before Income Taxes 9,989 6,962 18,407 13,324
Provision for Income Taxes 3,529 2,300 6,203 4,353
------- ------- -------- -------
Net Income $6,460 $4,662 $12,204 $8,971
======= ======= ======== =======
Earnings Per Share $0.92 $0.66 $1.75 $1.27
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
GBC Bancorp and Subsidiaries
Consolidated Statement of Cash Flows
(unaudited)
<TABLE>
For the Six Months Ended
June 30,
(In Thousands, Except Per Share Data) 1997 1996
- - -----------------------------------------------------------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $12,204 $8,971
Adjustments to Reconcile Net Income to Net
CashProvided by Operating Activities:
Depreciation 584 556
Net Accretion of Discounts on Securities (127) (1,186)
Writedown on Real Estate Held for Investment 663 761
Provision for Credit Losses 1,000 2,500
Provision for Losses on Other Real Estate
Owned - 554
Amortization of Deferred Loan Fees (1,137) (1,136)
Gain on Sale of Loans (74) (101)
Gain on Sale of Real Estate Investment - (101)
Loss on Sale of Other Real Estate Owned 10 2
Gain on Sale of Fixed Assets - (8)
Loans Originated for Sale (14,369) (18,125)
Proceeds from Sales of Loans
Originated for Sale 15,596 23,755
Net Decrease/(Increase) in Accrued Interest
Receivable and Other Assets 1,044 (48)
Net Increase/ (Decrease) in Accrued Expenses
and Other Liabilities 2,829 (1,646)
Other, Net - (2)
-------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES $18,223 $14,746
-------- ---------
INVESTING ACTIVITIES:
Purchases of Securities Available for Sale (246,952) (454,068)
Proceeds from Maturities of Securities
Available for Sale 203,118 384,059
Purchases of Securities Held to Maturity (42,940) -
Proceeds from Maturities of Securities Held
to Maturity 781 9,580
Net Increase in Loans and Leases (13,895) (62,049)
Proceeds from Sales of Other Real Estate
Owned 1,996 1,522
Capitalized Costs of Other
Real Estate Owned (368) -
Proceeds from Sales of Real
Estate Investments - 1,134
Purchases of Premises and Equipment (505) (631)
Proceeds from Sales of Bank Premises and
Equipment - 19
-------- --------
NET CASH USED BY INVESTING ACTIVITIES $(98,765) $(120,434)
-------- --------
FINANCING ACTIVITIES:
Net (Decrease)/Increase in Demand,
Interest Bearing Demand and Saving Deposits (3,048) 13,659
Net Increase in Time Certificates of Deposits 60,056 101,133
Cash Dividend Paid (1,491) (1,074)
Proceeds from Exercise of Stock Options 657 784
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES $56,174 $114,502
NET CHANGE IN CASH AND CASH EQUIVALENTS (24,368) 8,814
Cash and Cash Equivalents
at Beginning of Period 187,009 163,837
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Cash and Cash Equivalents at End of Period $162,641 $172,651
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Supplemental Disclosures of Cash Flow
Information:
Cash Paid During This Period
Interest $23,075 $21,797
Income Taxes 920 4,180
--------- --------
Noncash Investing Activities:
Loans Transferred to Other Real Estate
Owned at Fair Value $3,862 $10,180
Loans to Facilitate the Sale of Other Real
Estate Owned - 262
--------- --------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
GBC Bancorp and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
In the opinion of management, the consolidated
financial statements of GBC Bancorp and its subsidiaries
(the "Company") as of June 30, 1997 and December 31, 1996,
and the six and three months ended June 30, 1997 and 1996,
reflect all adjustments (which consist only of normal
recurring adjustments) necessary for a fair presentation.
In the opinion of management, the aforementioned
consolidated financial statements are in conformity with
generally accepted accounting principles.
Earnings Per Share
Earnings per share are computed based on the weighted
average shares outstanding including common stock
equivalents for the periods disclosed.
Consolidated Statements of Cash Flows
Cash and cash equivalents consist of cash and due from
banks, and federal funds sold and securities purchased under
agreements to resell.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Net income for the second quarter of 1997 was
$6,460,000, or $0.92 per share, compared to $4,662,000, or
$0.66 per share, for the corresponding period of 1996,
representing the sixth consecutive record setting quarterly
net income for the Company. The increase in the net income
for the second quarter was primarily the result of an
increase in net interest income and a reduced provision for
credit losses.
For the six months ended June 30, 1997, net income
totaled $12,204,000, an increase of $3,233,000, or 36.0%,
from the $8,971,000 earned during the corresponding period
of 1996. Earnings per share for the six months ended June
30, 1997 were $1.75 compared to $1.27 for the same period of
1996. The increase in net income was primarily due to an
increase in net interest income combined with a lower
provision for credit losses. The increase in net interest
income is due to an increase in the net interest spread and
an increase in average interest earning assets. The decline
in the provision for credit losses in 1997 primarily
reflects a reduction in non-accrual loans. Non-accrual
loans decreased to $9.6 million as of June 30, 1997,
compared to $19.0 million as of June 30, 1996. The decline
in non-accrual loans is a reflection of the improvement of
the Southern California economy, in general, and the quality
of the Bank's real estate loan portfolio, in particular.
For the quarter ended June 30, 1997 and 1996, the
return on average assets ("ROA") was 1.87% and 1.41%,
respectively, and the return on average stockholders' equity
("ROE") was 21.22% and 18.16%, respectively. The
improvement of these ratios is as explained above.
For the six months ended June 30, 1997 and 1996, the
ROA was 1.80% and 1.39%, respectively. For the six months
ended June 30, 1997 and 1996, the ROE was 20.40% and 17.61%,
respectively. The improvement of these ratios is as
explained above.
Recent Developments
On July 28, 1997, GBC Bancorp announced the issuance of
$40 million of 8.375% subordinated notes due August 1, 2007.
The net proceeds to GBC Bancorp from the sale of the
notes (after deducting the underwriting discount and the
estimated expenses of the offering) are estimated to be
$38,390,000. GBC Bancorp intends to use a portion of the
net proceeds for general corporate purposes, which may
include the repayment of it's $15 million of outstanding
subordinated debentures, repurchases of it's common stock
and possible future acquisitions. GBC Bancorp's $15 million
outstanding subordinated debentures have a stated maturity
of September 1, 2000 and bear interest at a rate of 10.52%.
Although GBC Bancorp has no contractual right to prepay the
subordinated debentures, it is currently negotiating
prepayment with the holder of such debentures. Any such
prepayment would require a prepayment premium which would be
paid with a portion of the net proceeds. Pending their
ultimate application, the net proceeds may be loaned to the
Bank or invested in short term investment grade financial
instruments. The notes are expected to be treated as Tier 2
capital for regulatory purposes. As Tier 2 capital, they
will help to strengthen further the capital structure of the
Company.
RESULTS OF OPERATIONS
Net Interest Income
For the quarter ended June 30, 1997 and 1996, net
interest income before the provision for credit losses was
$15,210,000 and $13,303,000, respectively, representing an
increase of $1,907,000, or 14.3%. The components describing
this change are described below.
Total interest income for the quarter ended June 30,
1997 was $27,159,000, representing a $2,664,000, or 10.9%,
increase over the corresponding quarter of a year ago. The
increase was due to a growth of $43.3 million, or 3.4%, of
average interest earning assets, and a 54 basis point
increase on the yield on interest earning assets. For the
quarter ended June 30, 1997 and 1996, the yield on interest
earning assets was 8.33% and 7.79%, respectively. The yield
increase reflects an improvement in the percentage of the
balance of average accruing loans to average interest
earning assets, a decline in non-accrual loans, and an
increase in the yield on securities. For the quarter ended
June 30, 1997, average accruing loans to average interest
earning assets was 45%, average nonaccrual loans were $9
million, and the yield on securities was 6.62%, compared to
37%, $31 million, and 6.20%, respectively, for the quarter
ended June 30, 1996.
Total interest expense for the quarter ended June 30,
1997 was $11,949,000, representing a $757,000, or 6.8%,
increase over the corresponding quarter of a year ago. The
increase was due to a growth of $22.6 million of interest
bearing liabilities, and an increased cost of funds. For
the quarter ended June 30, 1997 and 1996, the cost of funds
was 4.33% and 4.15%, respectively.
For the six months ended June 30, 1997, net interest
income before the provision for credit losses was
$29,894,000, an increase of $3,973,000, or 15.3%, compared
to the corresponding period of 1996. The components
describing this change are described below.
Total interest income for the six months ended June 30,
1997 was $52,893,000 compared to $47,779,000 for the
corresponding period of a year ago. The $5,114,000, or
10.7%, increase is primarily the result of both an increase
in the balance of average interest earning assets and in the
yield on average interest earning assets. Average interest
earning assets increased to $1,292.2 million for the six
months ended June 30, 1997 from $1,229.8 million for the
corresponding period of a year ago, representing a $62.4
million, or 5.1%, increase. This growth was primarily the
result of a $110.7 million increase in the average balance
of loans and leases partially offset by a reduction of $49.2
million in the average balance of securities. There was
also a $0.9 million increase of federal funds sold &
securities purchased under agreements to resell. The yield
on interest earning assets increased to 8.25% for the six
months ended June 30, 1997, from 7.81% for the corresponding
period of a year ago, representing a 44 basis point
increase. The yield improvement is due to the increase in
the average balance of accruing loans as a percentage of
average interest earning assets (45% in 1997 from 36% in
1996), a decline in the balance of average non-accrual loans
to $11 million in 1997 from $38 million in 1996, and an
increase in the yield on securities to 6.55% in 1997 from
6.23% in 1996.
Total interest expense for the six months ended June
30, 1997, was $22,999,000 compared to $21,858,000 for the
corresponding period of a year ago. The increase of
$1,141,000, or 5.2%, was due to an increase in the average
balance of interest bearing deposits and an increase in the
cost of funds. For the six months ended June 30, 1997 and
1996, the balance of average interest bearing deposits was
$1,074.1 million and $1,009.1 million, respectively, an
increase of $65.0 million, or 6.4%. There was also a slight
increase in the cost of funds to 4.26% for the six months
ended June 30, 1997 from 4.19% for the corresponding period
of the prior year. While rates paid for the certificates of
deposits declined in 1997 compared to 1996, this higher
costing deposit product comprised a larger percentage of the
balance of average interest bearing deposits in 1997
compared to 1996, which, accordingly, increased the cost of
funds.
The net interest spread is defined as the yield on
interest earning assets less the rates paid on interest
bearing liabilities. For the six months ending June 30,
1997 and 1996, the net interest spread was 3.99% and 3.62%,
respectively. The increase in the spread is due to the
reasons explained above.
The net interest margin is defined as the annualized
difference between interest income and interest expense
divided by average interest earning assets. For the six
months ended June 30, 1997 and 1996, the net interest margin
was 4.67% and 4.24%, respectively. The increase in the
margin is primarily the result of the improved yield on
interest earning assets.
Provision for Credit Losses
For the quarter ended June 30, 1997, there was no
provision for credit losses compared to $1,000,000 for the
corresponding period a year ago.
For the six months ended June 30, 1997, the provision
for credit losses was $1,000,000, compared to $2,500,000 for
the same period of 1996, a decrease of $1,500,000, or 60.0%.
The decline in the provision for credit losses
primarily reflects the reduction in non-accrual loans. As
of June 30, 1997, non-accrual loans totaled $9.6 million
compared to $11.7 million and $19.0 million as of December
31, 1996 and June 30, 1996, respectively. The combination
of loans returned to accrual status, repayments, transfers
to OREO and charge-offs, significantly impacted the
reduction of non-accrual loans. The decline in non-accrual
loans and the corresponding decrease in the provision is
also a reflection of the continued improvement of the
Southern California economy, in general, and the quality of
the Bank's real estate loan portfolio, in particular.
The amount of the provision for credit losses is
determined by management and is based upon the quality of
the loan portfolio, management's assessment of the economic
environment, evaluations made by regulatory authorities,
historical loan loss experience, collateral values,
assessment of borrowers' ability to repay, and estimates of
potential future losses. Please refer to the discussion
"Allowance for Credit Losses", following.
Non-Interest Income
Non-interest income for the quarter ended June 30, 1997
totaled $1,601,000, representing a $198,000, or 14.1%,
increase compared to $1,403,000 for the quarter ended June
30, 1996. The increase was primarily the result of a
$167,000 increase in service charges and commissions due in
large measure to increased commissions earned by the Bank's
International Department and increased service charges on
deposit accounts.
For the six months ended June 30, 1997, non-interest
income totaled $3,125,000 representing a $109,000, or 3.4%,
decrease compared to $3,234,000 for the six months ended
June 30, 1996. The net decrease was primarily due to the
receipt of a $400,000 fee in exchange for which the Bank
released a guarantor of a real estate loan, in the first
quarter of 1996.
Non-Interest Expense
For the three months ended June 30, 1997, non-interest
expense was $6,822,000, representing a $79,000, or 1.2%,
increase over $6,743,000 for the corresponding period of a
year ago.
For the six months ended June 30, 1997, non-interest
expense was $13,612,000, representing a $281,000, or 2.1%,
increase over $13,331,000 reported for the corresponding
period of a year ago. The net increase was due to a
$975,000, or 14.3%, increase in salaries and employee
benefits, partially offset by decreases in net other real
estate owned expense and other expense of $427,000 and
$395,000, respectively. The increase in salaries and
employee benefits was caused primarily by higher level of
pre-tax income. The reduced net other real estate owned
expense is primarily the result of no required provision for
OREO valuation in 1997 compared to $554,000 in 1996. The
decline of other expense was primarily the result of reduced
legal fees.
For the six months ended June 30, 1997, the Company's
efficiency ratio, defined as non-interest expense divided by
the sum of net interest income plus non-interest income,
declined to 41.2%, comparing favorably to 45.7% for the
corresponding period of 1996.
Provision for Income Taxes
For the quarter ended June 30, 1997 and 1996, the
provision for income taxes was $3,529,000 and $2,301,000,
respectively, representing effective tax rates of 35.3% and
33.0%.
For the six months ended June 30, 1997, the provision
for income taxes was $6,203,000, representing 33.7% of pre-
tax income. The provision for the six months ended June 30,
1996, was $4,353,000, representing 32.7% of pre-tax income.
FINANCIAL CONDITION
Total assets as of June 30, 1997 were $1,424.4 million,
an increase of $72.3 million from total assets of $1,352.1
million as of December 31, 1996. The increase was mainly
due to a growth of deposits that was invested primarily in
investment securities. As of June 30, 1997 and December 31,
1996, total deposits were $1,258.5 million and $1,201.5
million, respectively.
Loans
As of June 30, 1997, loans and leases totaled $610.1
million, representing a $7.7 million, or 1.3%, increase from
the balance of $602.4 million as of December 31, 1996.
Growth in the commercial loan portfolio representing $42.5
million was primarily in the trade-financing area which
increased $34.9 million. The growth of this category of
loan reflects the growth in international trade and new
customer relationships. In addition, there was an increase
of $11.4 million of real estate - construction. Partially
offsetting the above were decreases of $19.7 million and
$30.0 million in the real estate - conventional and term
federal funds sold loan categories, respectively.
The following table sets forth the amount of loans and
leases outstanding by category and the percentage of each
category to the total loans and leases outstanding:
<TABLE>
- - ----------------------------------------------------------------------
June 30, 1997 December 31, 1996
(DOLLARS IN THOUSANDS) Amount Percentage Amount Percentage
- - ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial $225,789 37.00% $183,268 30.43%
Real Estate - Construction 77,975 12.78% 66,572 11.05%
Real Estate - Conventional 253,382 41.53% 273,081 45.34%
Installment 70 0.01% 86 0.01%
Other Loans 25,414 4.17% 22,361 3.71%
Leveraged Leases 7,511 1.23% 6,986 1.16%
Term Fed Funds Sold 20,000 3.28% 50,000 8.30%
- - ----------------------------------------------------------------------
Total $610,141 100.00% $602,354 100.00%
- - ----------------------------------------------------------------------
</TABLE>
Non-Performing Assets
A certain degree of risk is inherent in the extension
of credit. Management has credit policies in place to
minimize the level of loan losses and non-performing loans.
The Company performs a quarterly assessment of the credit
portfolio to determine the appropriate level of the
allowance. Included in the assessment is the identification
of loan impairment. A loan is identified as impaired when
it is probable that interest and principal will not be
collected according to the contractual terms of the loan
agreement. Loan impairment is measured by estimating the
expected future cash flows and discounting them at the
respective effective interest rate or by valuing the
underlying collateral.
The Company has a policy of classifying loans
(including an impaired loan) which are 90 days past due as
to principal and/or interest as non-accrual loans unless
management determines that the fair value of underlying
collateral is substantially in excess of the loan amount or
other circumstances justify treating the loan as fully
collectible. After a loan is placed on non-accrual status,
any interest previously accrued, but not yet collected, is
reversed against current income. A loan is returned to
accrual status only when the borrower has demonstrated the
ability to make future payments of principal and interest as
scheduled, and the borrower has demonstrated a sustained
period of repayment performance in accordance with the
contractual terms. Interest received on non-accrual loans
generally is either applied as principal reduction or
reported as recoveries on amounts previously charged-off,
according to management's judgment as to the collectability
of principal.
The following table provides information with respect
to the Company's past due loans, non-accrual loans,
restructured loans and other real estate owned, net, as of
the dates indicated:
<TABLE>
- - -------------------------------------------------------------------
(IN THOUSANDS) June 30, 1997 December 31, 1996
- - -------------------------------------------------------------------
<S> <C> <C>
Loans 90 Days or More Past Due
and Still Accruing $400 $6,779
Non-accrual Loans 9,586 11,719
-------- --------
Total Past Due Loans 9,986 18,498
Restructured Loans 20,837 23,125
-------- --------
Total Non-performing Loans 30,823 41,623
Other Real Estate Owned, Net 15,051 12,988
-------- --------
Total Non-Performing Assets $45,874 $54,611
-------- --------
</TABLE>
Total non-performing assets decreased to $45.9 million,
as of June 30, 1997, from $54.6 million, as of December 31,
1996, representing an $8.7 million, or 15.9%, reduction.
The net decrease was due to reductions in all categories of
non-performing loans, partially offset by an increase of
other real estate owned, net.
Non-accrual loans declined to $9.6 million as of June
30, 1997, from $11.7 million, as of December 31, 1996, a
reduction of $2.1 million, or 17.9%.
The following table analyzes the decline in non-accrual
loans during the six months ended June 30, 1997:
<TABLE>
- - ----------------------------------------------------
(IN THOUSANDS)
- - ----------------------------------------------------
<S> <C>
Balance, December 31, 1996 $11,719
---------
Add: Loans placed on non-accrual 8,534
Less: Charge-offs (2,055)
Returned to accrual status (2,177)
Repayments (2,777)
Transfer to OREO (3,658)
---------
Balance, June 30, 1997 $9,586
---------
</TABLE>
The following table breaks out the Company's non-
accrual loans by category as of June 30, 1997 and December
31, 1996:
<TABLE>
- - --------------------------------------------------------------
(IN THOUSANDS) June 30, 1997 December 31, 1996
- - --------------------------------------------------------------
<S> <C> <C>
Commercial $4,047 $3,219
Real Estate- Construction 455 477
Real Estate- Conventional 5,057 8,023
Other Loans 27 -
--------- ---------
Total $9,586 $11,719
--------- ---------
</TABLE>
The balance of restructured loans as of June 30, 1997
was $20.8 million compared to $23.1 million as of December
31, 1996, representing a $2.3 million, or 10.0%, decrease.
A loan is categorized as restructured if the original
interest rate on such loan, the repayment terms, or both,
are modified due to a deterioration in the financial
condition of the borrower. Restructured loans may also be
put on a non-accrual status in keeping with the Bank's
policy of classifying loans which are 90 days past due as to
principal and/or interest. Restructured loans which are non-
accrual loans are not included in the balance of
restructured loans. As of June 30, 1997, restructured loans
consisted of fifteen real estate credits. This compares to
sixteen real estate credits as of December 31, 1996. The
weighted average yield of the restructured loans as of June
30, 1997, was 10.21%. All restructured loans are performing
pursuant to the terms and conditions of the restructuring.
The following table breaks out the restructured loans
by accrual status as of the dates indicated:
<TABLE>
- - -------------------------------------------------------------
(IN THOUSANDS) June 30, 1997 December 31, 1996
- - -------------------------------------------------------------
<S> <C> <C>
On Accrual Status $20,837 $23,125
On Non-accrual Status 223 2,820
-------- --------
Total $21,060 $25,945
-------- --------
</TABLE>
There are no commitments to lend additional funds on
any of the restructured loans.
As of June 30, 1997, other real estate owned ("OREO"),
net of valuation allowance of $1.5 million, totaled $15.1
million, representing an increase of $2.1 million, or 16.2%,
from the net balance of $13.0 million, net of valuation
allowance of $1.8 million, as of December 31, 1996. As of
June 30, 1997 and December 31, 1996, OREO consisted of 26
properties.
The outstanding OREO properties are all included in the
Bank's market area. They include single family residences,
condominiums, commercial buildings, and land both for
commercial and residential improvement. Seven properties
comprise the land category of OREO. The Company does not
intend to develop these properties; rather, it will sell the
land undeveloped.
The following table sets forth OREO by property type
for the dates as indicated:
<TABLE>
- - ----------------------------------------------------------------
(IN THOUSANDS) June 30, 1997 December 31, 1996
- - ----------------------------------------------------------------
PROPERTY TYPE
<S> <C> <C>
Single-Family Residential $701 $901
Condominium 4,051 6,284
Multi-Family Residential 220 -
Land for Residential 3,614 1,413
Land for Commercial 735 735
Retail Facilities 7,196 5,228
Office 34 250
Less: Valuation Allowance (1,500) (1,823)
---------- -----------
Total $15,051 $12,988
---------- -----------
</TABLE>
In accordance with SFAS 114, "Accounting by Creditors
for Impairment of a Loan," as amended by SFAS 118, a loan is
identified as impaired when it is probable that interest and
principal will not be collected according to the contractual
terms of the loan agreement. Loan impairment is measured by
estimating the expected future cash flows and discounting
them at the respective effective interest rate, or by
valuing the underlying collateral.
The following table discloses pertinent information as
it relates to the Company's impaired loans as of the dates
indicated:
<TABLE>
- - -------------------------------------------------------------------------
(IN THOUSANDS) June 30, 1997 Dec. 31, 1996
- - -------------------------------------------------------------------------
<S> <C> <C>
Recorded Investment with Related Allowance $19,436 $21,210
Recorded Investment with no Related Allowance 3,147 2,303
------- -------
Total Recorded Investment 22,583 23,513
------- -------
Allowance for Impaired Loans 1,705 2,011
------- -------
</TABLE>
The average balance of impaired loans before the
allowance was $24.4 million for the six months ended June
30, 1997 and $35.7 million for the twelve months ended
December 31, 1996.
Income recognition on impaired loans uses methods
existing for non-accrual loans but can include the accrual
of interest. While a loan is in non-accrual status, some or
all of the cash payments received may be treated as interest
income on a cash basis as long as the remaining book balance
of the loan (i.e. after charge-off of identified losses, if
any) is deemed to be fully collectible. The Bank's
determination as to the ultimate collectibility of the
loan's remaining book balance must be supported by a
current, well documented credit evaluation of the borrower's
financial condition and prospects for repayment, including
consideration of the borrower's historical repayment
performance and other relevant factors. For the six months
ended June 30, 1997 and 1996, interest income recognized on
impaired loans was $832,000 and $1,472,000, respectively.
Of the amount of interest income recognized during the six
months ended June 30, 1997 and 1996, no interest was
recognized under the cash basis method.
Management cannot predict the extent to which the
current economic environment, including the real estate
market, may improve or worsen, or the full impact such
environment may have on the Bank's loan portfolio.
Furthermore, as the Bank's primary regulators review the
loan portfolio as part of their routine, periodic
examinations of the Bank, their assessment of specific
credits may affect the level of the Bank's non-performing
loans. Accordingly, there can be no assurance that other
loans will not be placed on non-accrual, become 90 days or
more past due, have terms modified in the future, or become
OREO.
Allowance for Credit Losses
As of June 30, 1997, the balance of the allowance for
credit losses was $14.9 million, representing 2.44% of
outstanding loans and leases. This compares to an allowance
for credit losses of $16.2 million as of December 31, 1996,
representing 2.69% of outstanding loans and leases.
The table below summarizes the activity in the total
allowance for credit losses (which amount includes the
allowance on impaired loans) for the six month periods ended
as indicated:
<TABLE>
- - -------------------------------------------------------------
(IN THOUSANDS) June 30, 1997 June 30, 1996
- - -------------------------------------------------------------
<S> <C> <C>
Balance, Beginning of Period $16,209 $16,674
--------- ---------
Provision for Credit Losses 1,000 2,500
--------- ---------
Charge-offs (3,622) (4,008)
Recoveries 1,349 1,510
--------- ---------
Net Charge-offs (2,273) (2,498)
--------- ---------
Balance, End of Period $14,936 $16,676
--------- ---------
</TABLE>
As of June 30, 1997, the allowance represents 48.5% and
156% of non-performing loans and of non-accrual loans,
respectively. As of December 31, 1996, the allowance
represented 38.9% and 138% of non-performing loans and of
non-accrual loans, respectively.
Management believes that the allowance for credit
losses is adequate to cover known and inherent losses
related to loans and leases outstanding as of June 30, 1997.
Securities
The Company classifies its securities as held to
maturity or available for sale. Securities classified as
held to maturity are those that the Company has the positive
intent and ability to hold until maturity. These securities
are carried at amortized cost.
Securities that could be sold in response to changes in
interest rates, increased loan demand, liquidity needs,
capital requirements or other similar factors, are
classified as securities available for sale. These
securities are carried at fair value, with unrealized gains
or losses reflected net of tax in stockholders' equity.
As of June 30, 1997, the Company recorded gross
unrealized gains of $72,000 on its available-for-sale
portfolio and the inclusion as a separate deduction of
stockholders' equity of $42,000, representing the unrealized
holding gain, net of tax.
The amortized cost, gross unrealized gains, gross
unrealized losses and fair value of securities at June 30,
1997 and December 31, 1996 were as follows:
<TABLE>
- - ------------------------------------------------------------------------------------
Gross Gross
(In Thousands) Amortized Unrealizd Unrealiz Fair
June 30, 1997 Cost Gains Losses Value
- - ------------------------------------------------------------------------------------
Securities Held to Maturity
<S> <C> <C> <C> <C>
State and Municipal Securities $1,475 $8 $- $1,483
U.S. Government Agencies 42,945 71 - 43,016
Collateralized Mortgage Obligations 51 - - 51
Asset Backed Securities 9,990 56 - 10,046
-------- ----- ------ -------
Total Securities Held to Maturity $54,461 $135 $- $54,596
-------- ----- ------ -------
Securities available for sale
U. S. Treasuries 6,905 - (4) 6,901
U.S. Government Agencies 172,789 - (145) 172,644
Mortgage Backed Securities 55,143 - (255) 54,888
Corporate Notes 16,006 341 - 16,347
Collateralized Mortgage Obligations 177,416 - (255) 177,161
Asset Backed Securities 89,960 390 - 90,350
Auctioned Preferred Stock 33,900 - - 33,900
Other Securities 10,515 - - 10,515
-------- ----- ------ --------
Total Securities Available for Sale $562,634 $731 $(659) $562,706
-------- ----- ------ --------
</TABLE>
<TABLE>
- - ------------------------------------------------------------------------------------
Gross Gross
(In Thousands) Amortized Unrealizd Unrealiz Fair
December 31, 1996 Cost Gains Losses Value
- - ------------------------------------------------------------------------------------
Securities Held to Maturity
<S> <C> <C> <C> <C>
State and Municipal Securities $2,222 $28 $- $2,250
Collateralized Mortgage Obligations 56 6 - 62
Asset Backed Securities 9,996 155 - 10,151
-------- ----- ------ --------
Total Securities Held to Maturity $12,274 $189 $- $12,463
-------- ----- ------ --------
Securities available for sale
U. S. Treasuries 1,918 - (27) 1,891
U.S. Government Agencies 160,718 - (52) 160,666
Mortgage Backed Securities 51,503 - (247) 51,256
Corporate Notes 19,014 580 - 19,594
Collateralized Mortgage Obligations 165,517 281 - 165,798
Asset Backed Securities 37,474 460 - 37,934
Auctioned Preferred Stock 72,450 - 72,450
Other Securities 10,107 125 - 10,232
-------- ------ ------ --------
Total Securities Available for Sale $518,701 $1,446 $(326) $519,821
-------- ------ ------ --------
</TABLE>
There were no sales of securities available for sale
during the six months ended June 30, 1997 and 1996. There
were no sales of securities held to maturity for the six
months ended June 30, 1997 and 1996.
Deposits
The Company's deposits totaled $1,258.5 million as of
June 30, 1997, representing a $57.0 million, or 4.7%,
increase from total deposits of $1,201.5 million as of
December 31, 1996. The net growth was primarily due to
increases in time deposits, which increased $60.0 million,
or 8.5%. Interest-bearing demand also increased $18.7
million, with decreases in demand and savings of $10.6
million and $11.1 million, respectively, partially
offsetting the total deposit increase.
There are no brokered deposits outstanding. The
Company believes that the majority of its deposit customers
have strong ties to the Bank. Although the Company has a
significant amount of time deposits of $100,000 or more
having maturities of one year or less, historically, the
depositors have generally renewed their deposits at their
maturity. Accordingly, the Company believes its deposit
source to be stable.
The maturity schedule of time certificates of deposit
of $100,000 or more, as of June 30, 1997, is as follows:
<TABLE>
- - ------------------------------------------------------
(IN THOUSANDS)
- - ------------------------------------------------------
<S> <C>
3 Months or Less $289,635
Over 3 Months Through One Year 296,631
Over One Year through 5 Years 2,021
----------
Total $588,287
----------
</TABLE>
Other Borrowings
On August 31, 1990, the Company issued $15.0 million of
subordinated debentures through private placement with an
annual interest rate of 10.52% and stated maturity of
September 1, 2000. The table below is a summary of the
required repayment schedule, as specified in the Debenture
Purchase Agreement ("the Agreement").
<TABLE>
- - ------------------------------------------------------
(IN THOUSANDS)
- - ------------------------------------------------------
<S> <C>
September 1, 1997 $3,750
September 1, 1998 $3,750
September 1, 1999 $3,750
September 1, 2000 $3,750
----------
Total $15,000
----------
</TABLE>
The Agreement includes several covenants which restrict
the payment of dividends, amount of indebtedness, certain
acquisitions and the sale of assets. In the opinion of
management, the Company was in compliance with the
provisions of the Agreement as of June 30, 1997.
Regulatory Matters
During the first quarter of 1997, the annual safety and
soundness examination was conducted by the Federal Deposit
Insurance Corporation ("FDIC") and the State Banking
department. Reports have been received by the Bank from
both agencies with no material adverse findings noted.
Capital Resources
As of June 30, 1997, stockholders' equity totaled
$127.3 million, an increase of $10.6 million, or 9.1%, from
$116.6 million as of December 31, 1996. The increase was
due primarily to net income of $12.2 million, less cash
dividends declared to stockholders of $1.6 million, less the
net change in the securities valuation allowance, net of
tax, of $0.6 million, for the six months ended June 30,
1997. Additionally, approximately $0.6 million of the net
increase resulted from the exercise of stock options and
related tax benefits.
Capital ratios for the Company and for the Bank were as
follows as of the dates indicated:
<TABLE>
- - --------------------------------------------------------------------------
Well-Capitalized June 30, December 31,
Standards 1997 1996
- - --------------------------------------------------------------------------
GBC Bancorp
<S> <C> <C> <C>
Tier 1 Leverage Ratio 5% 9.14% 8.74%
Tier 1 Risk-Based Capital Ratio 6% 12.89% 11.97%
Total Risk-Based Capital Ratio 10% 14.60% 13.69%
General Bank
Tier 1 Leverage Ratio 5% 8.62% 8.61%
Tier 1 Risk-Based Capital Ratio 6% 12.17% 11.81%
Total Risk-Based Capital Ratio 10% 13.42% 13.06%
</TABLE>
Liquidity and Interest Rate Sensitivity
Liquidity measures the ability of the Company to meet
fluctuations in deposit levels, to fund its operations and
to provide for customers' credit needs. Asset liquidity is
provided by cash and short-term financial instruments which
include federal funds sold and securities purchased under
agreements to resell, unpledged securities held to maturity
maturing within one year and unpledged securities available
for sale. These sources of liquidity amounted to $732.5
million, or 51.4% of total assets, as of June 30, 1997,
compared to $717.0 million, or 53.0% of total assets, as of
December 31, 1996.
To further supplement its liquidity, the Company has
established federal funds lines with correspondent banks and
three master repurchase agreements with major brokerage
companies. In August, 1992, the Federal Home Loan Bank of
San Francisco ("FHLB") granted the Bank a line of credit
currently equal to 25 percent of assets with terms up to 360
months. As of June 30, 1997, the Company has no borrowing
outstanding under this financing facility with the FHLB.
Management believes its liquidity sources to be stable and
adequate.
As of June 30, 1997, total loans and leases represented
48.5% of total deposits. This compares to 50.1% as of
December 31, 1996.
As of June 30, 1997, management is not aware of any
information that would result in or that was reasonably
likely to have a material effect on the Company's liquidity
and capital resources.
The liquidity of the parent company, GBC Bancorp, is
primarily dependent on the payment of cash dividends by its
subsidiary, General Bank, subject to the limitations imposed
by the Financial Code of the State of California. For the
six months ended June 30, 1997, General Bank paid/declared
$6.6 million of cash dividends to GBC Bancorp.
Effective asset/liability management includes
maintaining adequate liquidity and minimizing the impact of
future interest rate changes on net interest income. The
Company attempts to manage its interest rate sensitivity on
an on-going basis through the analysis of the repricing
characteristics of its loans, investments, and deposits, and
managing the estimated net interest income volatility by
adjusting the terms of its interest-earning assets and
liabilities, and through the use of derivatives as needed.
The Company has only limited involvement with
derivative financial instruments and does not use them for
trading purposes. As of June 30, 1997, three contracts
totaling $2 million were outstanding. These instruments are
used to manage the interest rate risk from the origination
of fixed rate residential mortgage loans for sale in the
secondary markets. The Company utilizes Treasury note
futures and forward sales of mortgage-backed securities to
hedge interest rate risk associated with its residential
mortgage banking activities. Futures and forward sale
contracts provide for sale of the underlying securities,
including mortgage-backed securities, at a specified future
date, at a specified price or yield. The amount of the
futures and forward sale contracts is determined by the
aggregate amount of fixed rate commitments for mortgage
loans that are expected to be funded plus the amount of
fixed rate residential mortgages categorized as being held
for sale that have not been sold. The fair value of the
underlying futures and forward sale contracts is expected to
move inversely to the change in fair value of the mortgage
loans.
The Company never intends to deliver the underlying
securities that the futures and forward sale contracts
commit to sell, rather it purchases offsetting contracts to
eliminate the obligation. The Company is exposed to the
risk that the fair value of futures contracts, being based
on the value of the Treasury note will not move
proportionately with the change in value of the mortgage
loans being hedged. This basis risk is unpredictable and
can result in economic loss to the Company. There is no
basis risk related to the use of forward sale contracts on
mortgage-backed securities since their fair value is based
on similar mortgage loans. However, a gain or loss will
arise from the difference between the fair value and the
forward sale price of the mortgage-backed security. At the
time the obligation of the forward sales contract or
treasury note future is eliminated, a resulting gain or loss
is included in the computation of the gain/loss on sale of
loans, net, and accordingly, is included in non-interest
income. In addition, as of month-end, unrealized
gains/losses on outstanding contracts are recorded and
included in gain/loss on sale of loans, net.
As of June 30, 1997 and December 31, 1996, there were
outstanding fixed rate mortgages held for sale of $0.8
million and $1.9 million, and a notional value of derivative
instruments of $2.0 million and $0.5 million, respectively.
For the six months ended June 30, 1997 and 1996, the Company
had realized net losses of $4,000 and $11,000, respectively,
related to its hedging activities. There was a $5,000
unrealized loss related to hedging activities as of June 30,
1997. There was no unrealized gain/loss related to hedging
activities as of June 30, 1996.
Initial margin requirements and daily calls on futures
contracts are met in cash. There are no margin requirements
nor daily calls on forward sale contracts since whole loans
are expected to be delivered to fulfill the commitment.
While no single measure can completely identify the
impact of changes in interest rates on net interest income,
one gauge of interest rate sensitivity is to measure, over
various time periods, the differences in the amounts of the
Company's rate sensitive assets and rate sensitive
liabilities. These differences, or "gaps", provide an
indication of the extent that net interest income may be
affected by future changes in interest rates. However,
these "gaps" do not take into account timing differences
between the repricing of assets and the repricing of
liabilities.
A positive gap exists when rate sensitive assets exceed
rate sensitive liabilities and indicates that a greater
volume of assets than liabilities will reprice during a
given period. This mismatch may enhance earnings in a
rising rate environment and may inhibit earnings when rates
decline. Conversely, when rate sensitive liabilities exceed
rate sensitive assets, referred to as a negative gap, it
indicates that a greater volume of liabilities than assets
will reprice during the period. In this case, a rising
interest rate environment may inhibit earnings and declining
rates may enhance earnings.
"Gap" reports originated as a means to provide
management with a tool to monitor repricing differences, or
"gaps", between assets and liabilities repricing
differences, or "gaps", between assets and liabilities
repricing in a specified period, based upon their underlying
contractual rights. The use of "gap" reports is thus
limited to a quantification of the "mismatch" between assets
and liabilities repricing within a unique specified
timeframe. "Gap" reports cannot be used to quantify
exposure to interest rate changes because they do not take
into account timing differences between repricing assets and
liabilities, and changes in the amount of prepayments.
The Company uses a simulation analysis to attempt to
predict changes in the yields earned on different asset
categories and the rates paid on liabilities in relation to
changes in market interest rates. The analysis has
concluded that the Bank's liabilities reprice more slowly
than it's assets, and the Company's balance sheet has a
positive gap when the timing of repricing is taken into
account. This results in an interest rate sensitivity
profile for the Company where it has exposure to a downward
shift in interest rates. The Company has established an
internal policy to manage its net interest income volatility
to a change of 10% when the simulation is using an assumed
instant change of money market rates of 100 basis points and
to a change of 15% when the assumed rate change is 200 basis
points. As of June 30, 1997, the Company was well within
the policy limits.
As of June 30, 1997, there was a cumulative one year
negative "gap" of $446.7 million, up from $311.4 million as
of December 31, 1996. The $135.3 million increase in the
gap was caused by the purchase of intermediate maturity
investment securities and loan activity. The negative gaps
would appear to be predictive of an increase in the net
interest margin if interest rates were to fall
significantly. However, as discussed above, due to the lag
in the downward repricing of the rates paid on liabilities
versus the immediate downward repricing of its assets, the
Company would not anticipate a corresponding increase in the
net interest margin should rates decline.
The following table indicates the Company's interest
rate sensitivity position as of June 30, 1997, and may not
be reflective of positions in subsequent periods:
<TABLE>
JUNE 30, 1997
INTEREST SENSITIVITY PERIOD
- - ------------------------------------------------------------------------------------------------------
0 to 90 91 to 365 Over 1 Year Over Non-Interest
(In Thousands) Days Days to 5 Years 5 Years Erng/Bearing Total
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Securities Available for Sale $57,242 $21,337 $173,628 $310,499 $- $562,706
Securities Held to Maturity 6,488 975 33,121 13,877 - 54,461
Federal Funds Sold &
Securities Purchased Under
Agreements to Resell 115,000 - - - - -
Loans and Leases (1) (2) 409,543 33,859 69,766 67,387 - 580,555
Loans to Depository Institution 20,000 - - - - 20,000
Non-Earning Assets (2) - - - - 91,650 91,650
-------- ------- -------- -------- ------- ----------
Total Assets $608,273 $56,171 $276,515 $391,763 $91,650 $1,424,372
-------- ------- -------- -------- ------- ----------
Source of Funds for Assets:
Deposits:
Demand $- $- $- $- $148,082 $148,082
Interest Bearing Demand 232,415 - - - - 232,415
Savings 108,195 - - - - 108,195
TCD'S Under $100,000 85,757 94,793 992 - - 181,542
TCD'S $100,000 and Over 292,836 293,430 2,021 - - 588,287
-------- ------- -------- -------- -------- ----------
Total Deposits $719,203 $388,223 $3,013 $- $148,082 $1,258,521
-------- ------- -------- -------- ------- ----------
Subordinated Debt $3,750 $- $11,250 $- $- $15,000
Other Liabilities - - - - 23,588 23,588
Stockholders' Equity - - - - 127,263 127,263
-------- ------- -------- -------- ------- ----------
Total Liabilities and
Stockholders' Equity $722,953 $388,223 $14,263 $- $298,933 $1,424,372
-------- ------- -------- -------- ------- ---------- 2
Interest Sensitivity Gap ($114,680) ($332,052) $262,252 $391,763 ($207,283)
Cumulative Interest
Sensitivity Gap ($114,680) ($446,732) ($184,480) $207,283 -
Gap Ratio (% of Total Assets) -8.1% -23.3% 18.4% 27.5% -14.6%
Cumulative Gap Ratio -8.1% -31.4% -13.0% 14.6% 0.0%
</TABLE>
(1) Loans and leases are before unamortized deferred loan fees and allowance
for credit losses.
(2) Nonaccrual loans are included in non-earning assets.
Forward-Looking Statements
Certain statements contained herein, including, without
limitation, statements containing the words "believes,"
"intends," "expects" and words of similar import, constitute
"forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the
following: general economics and business conditions in
those areas in which the Company operates; demographic
changes; competition; fluctuations in interest rates;
changes in business strategy or development plans; changes
in governmental regulation; credit quality; and other
factors referenced herein, including, without limitation,
under the captions Provision for Credit Losses, Non-
Performing Assets, Allowance for Credit Losses, and
Liquidity and Interest Rate Sensitivity. Given these
uncertainties, the reader is cautioned not to place undue
reliance on such forward-looking statements. The Company
disclaims any obligation to update any such factors or to
publicly announce the results of any revisions to any of the
forward-looking statements contained herein to reflect
future events or developments.
Recent Accounting Developments
In February 1997, the FASB issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per
share". SFAS 128 establishes standards for computing and
presenting basic and diluted earnings per share and is
effective for financial statement periods ending after
December 15, 1997. Earlier application is not permitted.
SFAS 128 replaces the presentation of primary earnings per
share with a presentation of basic earnings per share.
Diluted earnings per share is computed similarly to fully
diluted earnings per share pursuant to SFAS 15.
Implementation of SFAS 128 will not have a material adverse
effect on the Company's financial condition or results of
operations.
In February, 1997, the FASB issued SFAS 129,
"Disclosure of Information about Capital Structure". This
statement was issued in connection with SFAS 128. The
statement lists required disclosures about capital structure
that had been included in a number of previously existing
separate statements and opinions. Whereas SFAS 128 applies
only to public entities, the guidance relative to SFAS 129
is applicable to both public and non-public entities. SFAS
129 is effective for financial statements for periods ending
after December 15, 1997. Implementation of SFAS 129 will
not have a materiel adverse effect on the Company's
financial condition or results of operations.
In June 1997, the FASB issued SFAS 130, "Reporting
Comprehensive Income". Comprehensive income represents the
change in equity of the Company during a period from
transactions and other events and circumstances from non-
owner sources. It includes all changes in equity during a
period except those resulting from investments by owners and
distributions to owners. SFAS 130 establishes standards for
reporting and display of comprehensive income and its
components in a full set of general purpose financial
statements. It does not, however, specify when to recognize
or how to measure items that make up comprehensive income.
This statement requires all items that are required to be
recognized under accounting standards as components of
comprehensive income be reported in a financial statement
that is displayed in equal prominence with the other
financial statements. It does not require a specific format
for that financial statement, but will require the Company
to display an amount representing total comprehensive income
for the period in that financial statement. SFAS 130 is
effective for both interim and annual periods beginning
after December 15, 1997. Implementation of SFAS 130 will
not have a material adverse effected on the Company's
financial condition or results of operations.
In June 1997, the FASB issued SFAS 131, "Disclosures
about Segments of an Enterprise and Related Information".
This statement establishes standards for the way public
business enterprises are to report information about
operating segments in annual financial statements and
requires those enterprises to report selected information
about operating segments in interim financial reports issued
to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas,
and major customers. SFAS 131 supersedes SFAS 14,
"Financial Reporting for Segments of a Business Enterprise",
but retains the requirement to report information about
major customers. SFAS 131 is effective for financial
statements for periods beginning after December 15, 1997.
Implementation of SFAS 131 will not have a materiel adverse
effect on the Company's financial condition or results of
operations.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Bank is a defendant in various lawsuits arising
from the normal course of business. No material legal
proceedings to which the Registrant or its subsidiaries is a
party have been initiated or terminated during the quarter
ended June 30, 1997. There have been no significant
developments in any material pending legal proceedings
involving the Registrant or its subsidiaries during this
same quarter.
Item 2. CHANGES IN SECURITIES
There have been no changes in the securities of the
Registrant during the quarter ended June 30, 1997.
Item 3. DEFAULT UPON SENIOR SECURITIES
This item is not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
HOLDERS
At the Annual Meeting of Shareholders held on April 24,
1997, a proposal to elect seventeen directors to the Board
of Directors of the Registrant to hold office until the next
meeting and until their successors are elected and qualified
was approved by shareholders. This proposal received the
following votes:
<TABLE>
For Withheld
----------- ---------
<S> <C> <C>
Eric W. Chang 5,513,704 17,182
Helen Y. Chen 5,513,704 17,182
Thomas C. T. Chiu 5,513,704 17,182
Stephen Huang 5,513,704 17,182
Chuang-I Lin 5,513,704 17,182
Ko-Yen Lin 5,513,704 17,182
Ting Yung Liu 5,513,704 17,182
Alan Thian 5,513,704 17,182
John Wang 5,513,704 17,182
Kenneth Wang 5,513,704 17,182
Chien-Te Wu 5,513,704 17,182
Julian Wu 5,513,704 17,182
Li-Pei Wu 5,513,704 17,182
Peter Wu 5,513,704 17,182
Ping C. Wu 5,513,704 17,182
Walter Wu 5,513,704 17,182
Chin-Liang Yen 5,513,704 17,182
</TABLE>
Item 5. OTHER INFORMATION
There are no events to be reported under this item.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits: None.
b) Reports on Form 8-K: None.
PART III - SIGNATURES
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.
GBC Bancorp
(Registrant)
Dated: __________________ s/ ______________________
Li-Pei Wu, Chairman,
President and Chief
Executive Officer
Dated: ___________________ s/ _______________________
Peter Lowe, Executive
Vice President and
Chief Financial Officer
<TABLE> <S> <C>
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0
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