<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended March 31, 1997
--------------------------------------------------------
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: 1-9709
--------------------------------------------------------
ELDORADO BANCORP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3642383
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
17752 EAST SEVENTEENTH STREET, TUSTIN, CALIFORNIA 92680
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(714) 798-1100
- --------------------------------------------------------------------------------
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
requirement for the past 90 days.
[ X ] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDING DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[ ] Yes [ ] No
There were 3,813,987 shares of common stock for the registrant outstanding as of
March 31, 1997.
1
<PAGE> 2
Part I. Financial Information
Item I. Financial Statements
Eldorado Bancorp and Its Subsidiary
Eldorado Bank
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
ASSETS March 31, 1997 December 31, 1996
- ------ -------------- -----------------
<S> <C> <C>
Cash and due from banks .................................... $ 35,304 $ 34,101
Federal funds sold ......................................... 21,000 28,400
Securities available-for-sale .............................. 95,990 95,919
Securities held-to-maturity - approximate market value of
$7,946 in 1997 and $8,074 in 1996 ........................ 8,082 8,082
Loans and direct lease financing ........................... 226,519 223,904
Less allowance for possible credit losses .................. 4,603 4,672
--------- ---------
Net loans and direct lease financing ..... 221,916 219,232
Premises and equipment, net ................................ 7,944 8,139
Other real estate owned .................................... 863 394
Accrued interest receivable and other assets ............... 12,951 12,494
--------- ---------
$ 404,050 $ 406,761
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities
Deposits
Demand, non-interest bearing ...................... $ 112,916 $ 111,414
Savings and money market .......................... 152,794 156,857
Time certificates under $100,000 .................. 48,246 47,782
Time certificates of $100,000 or more ............. 35,237 37,351
--------- ---------
Total deposits ........................... 349,193 353,404
Federal funds purchased .................................... 2,881 2,188
Other liabilities .......................................... 4,377 4,225
--------- ---------
Total liabilities ........................ $ 356,451 $ 359,817
Shareholders' equity
Preferred stock, no par value;
authorized 5,000 shares, none issued .............. -- --
Common stock, no par value;
authorized 12,500,000 shares, issued and
outstanding 3,813,987 shares in 1997 and
3,810,756 shares in 1996 .......................... 32,477 32,448
Retained earnings .......................................... 15,186 14,358
Net unrealized gain on securities available-for-sale ....... (64) 138
--------- ---------
47,599 46,944
--------- ---------
Total shareholders' equity and liabilities $ 404,050 $ 406,761
========= =========
</TABLE>
2
<PAGE> 3
Part I. Financial Information
Item I. Financial Statements (continued)
Eldorado Bancorp and Its Subsidiary
Eldorado Bank
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(Dollars in Thousands except for earnings per share
and weighted average number of shares outstanding)
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------
1997 1996
---- ----
<S> <C> <C>
Interest Income
Loans ................................ $ 5,269 $ 5,593
Securities ........................... 1,535 1,443
Federal funds sold ................... 316 294
Direct lease financing ............... 14 24
---------- ----------
7,134 7,354
Interest Expense
Savings, NOW and money market deposits 742 775
Time deposits of $100,000 or more .... 477 454
Time deposits under $100,000 ......... 589 623
Other ................................ 30 37
---------- ----------
Total interest expense ............. 1,838 1,889
---------- ----------
Net interest income .................. 5,296 5,465
Provision for loan and lease losses ........... -- 152
---------- ----------
Net interest income after provision
for loan and lease losses .......... 5,296 5,313
Other Income
Service charges on deposit accounts .. 579 607
Loan servicing income ................ 182 224
Gain on sales of SBA loans ........... 13 13
Other ................................ 219 333
---------- ----------
993 1,177
Other Expense
Salaries ............................. 1,237 1,364
Employee benefits .................... 834 561
Net occupancy of bank premises ....... 418 406
Furniture and equipment expense ...... 285 298
Other ................................ 1,488 1,636
---------- ----------
4,262 4,265
---------- ----------
Earnings before taxes ......................... 2,027 2,225
Income Taxes .................................. 817 915
---------- ----------
Net Earnings ......................... $ 1,210 $ 1,310
========== ==========
Earnings per common share ..................... $ 0.30 $ 0.34
========== ==========
Weighted average common shares outstanding .... 3,967,423 3,865,806
</TABLE>
3
<PAGE> 4
Part I. Financial Information
Item I. Financial Statements (continued)
Eldorado Bancorp and Its Subsidiary
Eldorado Bank
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1996
------------------ ------------------
<S> <C> <C>
Cash Flows from operating activities:
Net earnings ................................................... $ 1,210 $ 1,310
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization ............................ (402) 240
Amortization of intangible assets ........................ 154 167
Provision for possible credit losses ..................... -- 152
(Gain) loss on sale of SBA loans ......................... 13 (13)
Amortization of deferred income, costs, discounts and fees (48) (97)
Loan fees collected ...................................... 209 4
(Gain) loss on sale of other real estate owned ........... -- (170)
Increase in deferred income taxes ........................ 433 --
Change in assets and liabilities:
(Increase) decrease in other assets ...................... (1,296) (1,344)
Increase (decrease) in other liabilities ................. 75 88
-------- --------
Total adjustments ............................... (862) (973)
-------- --------
Net cash provided by operating activities ....... 348 337
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale .. 23,758 11,404
Proceeds from sale of securities available-for-sale ...... -- 1,160
Proceeds from sale of securities held-to-maturity ........ -- 2,000
Proceeds from sale of equipment .......................... -- 14
Purchase of securities available-for-sale ................ (23,517) (21,246)
Purchase of securities held-to-maturity .................. -- (3,492)
Net (increase) decrease in loans and leases .............. (2,858) 5,606
Purchases of premises and equipment ...................... (57) (111)
Proceeds from sale of other real estate owned ............ -- 671
-------- --------
Net cash used in investing activities ........... $ (2,674) $ (3,994)
-------- --------
</TABLE>
4
<PAGE> 5
Part I. Financial Information
Item I. Financial Statements (continued)
Eldorado Bancorp and Its Subsidiary
Eldorado Bank
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1996
------------------ ------------------
<S> <C> <C>
Cash Flows from operating activities:
Net increase (decrease) in deposits .............. $ (4,211) $ 12,771
Net increase (decrease) in federal funds purchased 693 (1,736)
Dividends paid ................................... (382) (302)
Proceeds from stock options exercised ............ 29 236
-------- --------
Net cash provided by financing activities (3,871) 10,969
-------- --------
Increase (decrease) in cash and cash equivalents .......... (6,197) 7,312
Cash and cash equivalents at beginning of year ............ 62,501 41,933
Cash and cash equivalents at March 31 ..................... $ 56,304 $ 49,245
======== ========
</TABLE>
5
<PAGE> 6
Part I. Financial Information
Item I. Financial Statements (continued)
Eldorado Bancorp and Its Subsidiary
Eldorado Bank
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For three months ended March 31, 1997
and
For years ended December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Net Unrealized
Securities Gain (Loss) on Total
Common Stock Securities Retained Shareholders'
Shares Amount Available-for-Sale Earnings Equity
------ ------ ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 ................ 2,756,728 $ 17,462,000 $(345,000) $ 11,977,000 $ 29,094,000
Cash dividends declared ($0.32 per share) . -- -- -- (960,000) (960,000)
Stock options exercised ................... 7,380 62,000 -- -- 62,000
Common stock issued ....................... 630,276 8,928,000 -- -- 8,928,000
10% common stock dividend ................. 339,438 5,346,000 -- (5,346,000) --
Change in net unrealized gain on securities
available-for-sale .................... -- -- 745,000 -- 745,000
Net earnings .............................. -- -- -- 4,504,000 4,504,000
--------- ------------ --------- ------------ ------------
Balance, December 31, 1995 ................ 3,733,822 $ 31,798,000 $ 400,000 $ 10,175,000 $ 42,373,000
Cash dividends declared ($0.37) per share . -- -- -- (1,397,000) (1,397,000)
Stock options exercised ................... 76,934 650,000 -- -- 650,000
Change in net unrealized loss on securities
available-for-sale .................... -- -- (262,000) -- (262,000)
Net earnings .............................. -- -- -- 5,580,000 5,580,000
--------- ------------ --------- ------------ ------------
Balance, December 31, 1996 ................ 3,810,756 $ 32,448,000 $ 138,000 $ 14,358,000 $ 46,944,000
Cash dividends declared ($0.10 per share) . -- -- -- (382,000) (382,000)
Stock options exercised ................... 3,231 29,000 -- -- 29,000
Change in net unrealized loss on securities
available-for-sale .................... -- -- (202,000) -- (202,000)
Net earnings .............................. -- -- -- 1,210,000 1,210,000
--------- ------------ --------- ------------ ------------
Balance, March 31, 1997 ................... 3,813,987 $ 32,477,000 $ (64,000) $ 15,186,000 $ 47,599,000
</TABLE>
6
<PAGE> 7
Part I. Financial Information
Item I. Financial Statements (continued)
Eldorado Bancorp and Its Subsidiary
Eldorado Bank
NOTE OF CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
------------------------
NOTE A - BASIS OF PRESENTATION
---------------------
The financial statements for interim periods are unaudited. In the opinion of
management, all material adjustments necessary for fair presentation of the
interim financial statements have been included.
Interim period financial statements are not necessarily indicative of results to
be expected for the entire year.
NOTE B - EARNINGS PER SHARE
------------------
Net earnings per common share are based on the weighted average number of shares
outstanding. Stock options have been included as common stock equivalents.
NOTE C - RECLASSIFICATIONS
-----------------
Certain items in prior periods have been reclassified to conform to the current
presentation.
7
<PAGE> 8
Part I. Financial Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Financial Condition
- -------------------
Total assets at March 31, 1997 were $404.1 million compared to $406.8 million at
December 31, 1996. The decrease in total assets was primarily due to a decrease
in federal funds sold as a result of a decline in total deposits. Federal funds
sold , considered as overnight loans to other banks, decreased to $21.0 million
at March 31, 1997 compared to $28.4 million at December 31, 1996.
Securities available-for-sale increased $71.0 thousand to $96.0 million at
March 31, 1997 compared to $95.9 million at December 31, 1996.
The following table summarizes the components of total gross loans outstanding
in each category at the date indicated (in thousands):
<TABLE>
<CAPTION>
March 31,
1997 1996 1995 1994 1993 1992
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Commercial, Secured and Unsecured $ 91,439 $ 101,798 $ 95,548 $ 66,987 $ 66,987 $ 74,603
Interim Construction ............ 15,417 14,464 18,219 4,789 4,789 21,595
Real Estate ..................... 90,059 77,570 88,097 78,607 78,607 90,985
Installment ..................... 27,385 27,623 26,553 18,945 18,945 21,374
Credit Card ..................... 1,673 1,864 1,791 1,298 1,298 1,456
Lease Financing ................. 610 668 876 1,286 1,286 3,515
Less: Unearned Income ........... (64) (83) (127) (38) (38) (739)
--------- --------- --------- --------- --------- ---------
Total Gross Loans ........... $ 226,519 $ 223,904 $ 229,957 $ 171,874 $ 182,465 $ 212,789
</TABLE>
Total gross loans increased to $226.5 million at March 31, 1997 from $223.9
million at December 31, 1996 due primarily to funding of new loans and the
disbursement of existing lines of credit reflecting the strength of the local
economy. This loan growth reverses the long-term trend of declining loan
balances experienced during the past five years, not including the effects of
acquisition, due to fewer borrowers in the recessionary environment meeting the
underwriting criteria, loan payoffs, especially in the real estate sector, and
reduced demand for new credit. Additionally during this earlier period, the
Company eliminated the construction lending department in order to reduce its
exposure to the declining real estate market. The Company, through the
acquisition of Mariners Bancorp in October 1995, again operates a construction
lending department.
8
<PAGE> 9
The following tables show the maturities of loans and their sensitivities to
changes in interest rates at March 31, 1997:
<TABLE>
<CAPTION>
Due in Due after
One Year One Year to Due after
Or Less Five Years Five Years Total
-------- ----------- ---------- --------
<S> <C> <C> <C> <C>
Commercial, Secured and Unsecured $ 65,771 $ 17,196 $ 8,512 $ 91,479
Interim Construction ............ 11,022 2,940 1,455 15,417
Real Estate ..................... 61,701 18,164 10,135 90,000
Installment ..................... 19,619 5,172 2,561 27,352
Credit Card ..................... 1,733 0 0 1,733
Leases .......................... 138 106 294 538
-------- -------- -------- --------
$159,984 $ 43,578 $ 22,957 $226,519
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Maturing
Within After
One Year One Year Total
-------- -------- --------
<S> <C> <C> <C>
Loans with Predetermined Interest Rates ........ $ 16,928 $ 65,992 $ 82,920
Loans with Floating or Adjustable Interest Rates 128,290 15,309 143,599
</TABLE>
The following table provides information with respect to the components of the
Company's nonperforming assets at the dates indicated (amounts in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996 1995 1994 1993 1992
--------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual Loans ............... $5,248 $4,661 $5,818 $3,161 $2,092 $2,927
Loans More Than 90 Days Past Due 60 11 380 246 56 361
------ ------ ------ ------ ------ ------
Total Nonperforming Loans ..... $5,308 $4,672 $6,198 $3,407 $2,148 $3,288
====== ====== ====== ====== ====== ======
</TABLE>
Ordinarily, the accrual of interest ceases when no payment of interest or
principal has been made for 90 days or if the Bank has reason to believe that
continued payment of interest and principal is unlikely. Accrued interest, if
any, is reversed at the time such loans are placed on nonaccrual status. If
these loans had been current throughout their terms, interest and fees on loans
would have increased by approximately $63,000 three months ended March 31, 1997
and $343,000, $172,000, $144,000, $108,000, $103,000 for the years ended 1996,
1995, 1994, 1993, and 1992 respectively.
9
<PAGE> 10
The following is a summary of impaired loans and the related allowance for
possible credit losses:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
------------------------------ -----------------------------
Allowance Allowance
Recorded for Possible Recorded for Possible
Investment Credit Losses Investment Credit Losses
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Impaired loans requiring an allowance
for possible credit losses ............. $3,506,570 $ 361,575 $4,060,000 $ 449,000
Impaired loans not requiring an allowance
for possible credit losses ............. -- -- -- --
---------- ---------- ---------- ----------
$3,506,570 $ 361,575 $4,060,000 $ 449,000
========== ========== ========== ==========
</TABLE>
Troubled Debt Restructurings
- ----------------------------
<TABLE>
<CAPTION>
December 31,
March 31, -------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
------------ -------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Troubled debt restructuring $2,595 $3,425 $1,531 $7,069 $1,431- $ --
</TABLE>
Troubled debt restructurings consist primarily of loans for which the interest
rate was reduced or the payment provisions were modified because of the
inability of the borrower to service the obligation under the original terms of
the agreements. Income is accrued at the lower effective rate provided the
borrower is current under the revised terms and conditions of the agreements.
Under the original terms of the restructured loans, interest earned would have
totaled approximately $78 thousand for the three months ended March 31, 1997 and
$496 thousand for the year ended December 31, 1996. Under the restructured
terms, recorded interest income amounted to $57 thousand for the three months
ended March 31, 1997 and $316 thousand for the year ended December 31, 1996.
10
<PAGE> 11
The following table summarizes, for the periods indicated, changes in the
allowance for possible credit losses arising from loans charged off, recoveries
on loans previously charged off, and additions to the allowance which have been
charged to operating expenses and certain ratios relating to the allowance for
possible credit losses (amounts in thousands):
<TABLE>
<CAPTION>
For the Three For the Year Ended December 31,
Months Ended ------------------------------------------------------
March 31, 1997 1996 1995 1994 1993 1992
-------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Allowance for possible credit losses:
Balance at beginning of period ........... $4,672 $6,265 $5,564 $4,740 $3,530 $3,757
Actual charge-offs:
Commercial ........................... 23 197 342 570 502 574
Interim construction ................. -- -- -- -- 590 741
Credit cards ......................... 39 44 36 36 35 66
Consumer ............................. 28 198 165 151 98 494
Real estate .......................... -- 1,532 763 720 1,277 142
Direct lease financing ............... -- 5 5 97 32 60
------ ------ ------ ------ ------ ------
Total charge-offs .................. 90 1,976 1,311 1,574 2,534 2,077
Less recoveries:
Commercial ........................... 8 80 156 118 27 54
Interim construction ................. -- -- -- -- 11 --
Credit cards ......................... 1 10 9 13 21 5
Consumer ............................. 11 86 49 30 106 50
Real estate .......................... 1 47 225 -- -- --
Direct lease financing ............... -- 7 -- 8 3 6
------ ------ ------ ------ ------ ------
Total recoveries .................... 21 230 439 169 168 115
------ ------ ------ ------ ------ ------
Net loans charged off .................... 69 1,746 872 1,405 2,366 1,962
Provision for credit losses .............. -- 153 756 2,006 3,576 1,735
Changes incident to acquisitions ......... -- -- 817 223 -- --
------ ------ ------ ------ ------ ------
Balance at end of period ................. $4,603 $4,672 $6,265 $5,564 $4,740 $3,530
====== ====== ====== ====== ====== ======
Ratios:
Net loans charged off to average loans 0.03% 0.79% 0.47% 0.79% 1.22% 0.84%
Allowance for credit losses to total
gross loans ........................ 2.03% 2.09% 2.72% 3.24% 2.60% 1.66%
Net loans charged off to allowance for
credit losses ...................... 1.50% 37.37% 13.92% 25.25% 49.92% 55.58%
Net loans charged off to provision
for credit losses .................. -- 1,141.18% 115.34% 70.04% 66.16% 113.08%
Allowance for credit losses to non-
performing loans ................... 86.72% 100.24% 101.08% 163.31% 220.07% 107.36%
</TABLE>
The allowance for possible credit losses is established by a provision for
possible credit losses charged against current period income. Loans and leases
are charged against the allowance for possible credit losses when management
believes that the collectibility of principal is unlikely. The allowance is an
amount that management believes will be adequate to absorb losses inherent in
existing loans, leases and commitments to extend credit, based on the
evaluations of the collectibility and prior loss experience of loans, leases and
commitments to extend credit. The evaluations take into consideration such
factors as changes in the nature and volume of the portfolio, overall portfolio
quality; loan concentrations; specific problem loans, leases and commitments;
and current and anticipated economic conditions that may affect the borrowers'
ability to pay.
11
<PAGE> 12
Management believes that the allowance for possible credit losses is adequate.
While management uses available information to recognize losses on loans and
leases, future additions to the allowance may be necessary based on changes in
economic conditions. In addition, both Federal and state regulators, as an
integral part of their examination process, periodically review the Bank's
allowance for possible credit losses and may recommend additions based upon
their evaluation of the portfolio at the time of their examination.
The risk of nonpayment of loans is an inherent feature of the banking business.
That risk varies with the type and purpose of the loan, the collateral which is
utilized to secure payment, and ultimately, the credit worthiness of the
borrower. In order to minimize this credit risk, the Bank has established
lending limits for each of its officers having lending authority, in each case
based upon the officer's experience level and prior performance. Whenever a
proposed loan by itself, or when aggregated with outstanding extensions of
credit to the same borrower, exceeds the officer's lending limits, the loan must
be approved by the Bank's Chairman, President or Executive Vice President/Chief
Credit Officer or by the Bank's loan committee, depending upon the dollar amount
involved. The loan committee is comprised of two directors and four members of
the Bank's senior management. In addition, each loan officer has primary
responsibilities to conduct credit documentation reviews of all loans made by
that officer.
Furthermore, the Bank also maintains a program of periodic review of all
existing loans and employs a specialist who reviews loans over a certain dollar
amount and grades these loans based upon the dollar amount and credit worthiness
using a grading system. Loans are graded from "one" to "eight" depending on
credit quality, with "grade one" representing a prime loan with a definite and
reliable repayment program based upon liquid collateral with adequate margin or
supported by a strong up-to-date financial statement. Problem or substandard
loans identified in the review process are scheduled for remedial action, and
where appropriate, allowances are established for such loans. Periodically, an
outside loan review consultant further reviews loans for credit quality.
Additionally, the Bank is examined regularly by the FDIC and California State
Banking Department at which time a further review of loans is conducted.
The Company has allocated the allowance for credit losses according to the
amount deemed to be reasonably necessary to provide for the possibility of
losses being incurred within the categories of loans set forth in the following
table:
<TABLE>
<CAPTION>
For the Three
Months Ended For the Year Ended December 31,
March 31, 1997 1996 1995 1994 1993 1992
-------------- ---- ---- ---- ---- ----
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, Secured
and Unsecured $1,859 40.37% $2,126 45.5% $2,117 33.8% $2,281 39.0% $2,164 37.1% $1,715 35.1%
Interim Construction 313 6.81 304 6.5 280 4.5 310 2.8 325 7.1 440 10.1
Real Estate 1,830 39.76 1,616 34.6 3,274 52.3 2,597 45.7 1,780 43.9 1,091 42.8
Installment 556 12.09 575 12.3 500 8.0 271 11.0 334 9.8 245 10.0
Credit Card 34 0.74 37 0.8 64 1.0 52 0.8 101 0.8 11 0.7
Lease Financing 11 0.24 14 0.3 30 0.4 53 0.7 36 1.3 28 1.3
------ ------ ------ ------ ------ ----- ------ ----- ------ ----- ------ -----
Total $4,603 100.00% $4,672 100.0% $6,265 100.0% $5,564 100.0% $4,740 100.0% $3,530 100.0%
====== ====== ====== ===== ====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
The Company sometimes acquires real estate properties in satisfaction of loans
receivable through foreclosure or other means. These real estate properties
acquired are accounted for pursuant to Statement of Position 92-3, Accounting
for Foreclosed Assets, which presumes that foreclosed assets are held for sale
and not for the production of income. Accordingly, the real estate properties
are carried at fair value less estimated costs to sell. Fair value is determined
based upon appraisals near the date of foreclosure. These appraisals are updated
periodically and subsequent write-downs of the carrying value may be recognized
in the event of declining fair values.
On March 31, 1997 other real estate owned totaled $863.3 thousand compared to
$394.0 thousand at December 31, 1996.
Total deposits decreased $4.2 million at March 31, 1997 to $349.2 million
compared to $353.4 million at December 31, 1996. Savings and money market
deposits, and time certificates of $100 thousand and greater decreased $4.1
million and $2.1 million, respectively, during the first quarter of 1997.
Non-interest bearing demand deposits and time certificates under $100 thousand
increased $1.5 million and $464 thousand, respectively, during this same period.
Federal funds purchased increased $693 thousand to $2.9 million at March 31,
1997 compared to December 31, 1996. The Company purchases federal funds from one
of its financial institution customers as an accommodation.
Total shareholders' equity increased $655 thousand during the three months ended
March 31, 1997. Net earnings for the period contributed $1.2 million to retained
earnings while cash dividends of $382 thousand decreased retained earnings.
During this period common stock increased approximately $29 thousand as a result
of exercise of stock options and the value of securities available-for-sale
declined approximately $202 thousand.
12
<PAGE> 13
Liquidity and Interest Sensitivity
- ----------------------------------
In order to meet periodic increases in loan demand, potential deposit
withdrawals and maturities of short-term, large time certificates of deposit,
the Company maintains short-term fund sources. These include cash on hand and on
deposit with correspondent banks; "federal funds sold", which are essentially
demand loans to other banks; and securities available-for-sale. Such cash and
near-cash items, and securities available-for-sale totaled $152.3 million at
March 31, 1997, which represented 37.7 percent of total assets.
Other possible liquidity sources to meet cash requirements include federal funds
purchased lines, the sale of loans, and anticipated increases in deposits.
Substantially all of the Company's installment loans and leases are made on
terms that require regular monthly repayments, which provides a regular flow of
cash funds.
The Company manages its interest rate sensitivity by matching the repricing
opportunities on its earning assets to those on its funding liabilities.
Management uses various asset/liability strategies to manage the repricing
characteristics of its assets and liabilities to ensure that exposure to
interest rate fluctuations is limited within Company guidelines of acceptable
levels of risk-taking. Hedging strategies, including the terms and pricing of
loans and deposits, and managing the deployment of its securities are used to
reduce mismatches in interest rate repricing opportunities of portfolio assets
and their funding sources. The Company does not utilize derivative financial
instruments as part of its hedging strategy.
One way to measure the impact that future change in interest rates will have on
net interest income is through a cumulative gap measure. The gap represents the
net position of assets and liabilities subject to repricing in specified time
periods. The Company's cumulative gap at March 31, 1997 for a three month and
one year period was 89 percent and 108 percent, respectively.
Since interest rate changes do not affect all categories of assets and
liabilities equally or simultaneously, a cumulative gap analysis alone cannot be
used to evaluate the Company's interest rate sensitivity position. To supplement
traditional gap analysis, the Company performs simulation modeling to estimate
the potential effects of changing interest rates. The process allows the Company
to explore the complex relationships within the gap over time and various
interest rate environments. The simulation analysis indicates certain scenarios
in which the Company may experience a decline in its net interest income despite
its strategy of matching repricing opportunities of its earning assets and
funding liabilities.
Results of Operations - Quarter Ended March 31, 1997
- ----------------------------------------------------
Net earnings for the three months ended March 31, 1997 was $1.2 million, or
$0.30 per share, compared to $1.3 million, or $0.34 per share, for the same
period in 1996. This decrease was primarily due to lower net interest margins,
and lower other income.
Net interest income decreased $169 thousand to $5.3 million in the three month
period ended March 31, 1997 compared to $5.5 million for the same period in
1996. A higher volume of earning assets in 1997 was offset by narrower net
interest margins. Lower loan yields, investment securities and Fed Fund sold
yields is a result of lower market interest rates during the 1997 period
compared to 1996. While lower yields have been earned on the Company's earning
assets, the cost of funds increased only slightly during the same period. An
increase in the volume of non-interest bearing liabilities funding the earning
assets has assisted in preserving the net interest margin.
The provision for loan and lease losses during the three months ended March 31,
1997 was zero compared to $152 thousand in the same period in 1996. This
reduction was made based upon the Company's evaluation of the adequacy of its
allowance for possible credit losses. The allowance for possible credit losses
is established based upon an analysis providing specific allowances for loans
that management has identified to have potential loss and general allowances for
unidentified losses inherent in the portfolio. The general allowance is
determined by segmenting the portfolio by risk rating and loan type with
allowances established based upon historical losses in each portfolio segment.
Additionally, consideration is given to loan type concentrations in the
portfolio and the current and anticipated economic environment.
Other income for the quarter ended March 31, 1997 was $1.0 million compared to
$1.2 million for the same period in1996 due to lower service charges on deposit
accounts, lower loan servicing income and lower levels of miscellaneous income.
Other expenses for the three months ended March 31, 1997 were nearly flat at
$4.3 million compared to the same period in 1996. Lower salary expense during
the first quarter of 1997 was offset by higher levels of employee benefit
expense as compared to the same period for the 1996 year.
13
<PAGE> 14
Part II.
Items 1 - 3.
No reportable events.
Item 4. Submission of Matters to a Vote of Security Holders
On April 30, 1997 a Special Meeting of Shareholders of Eldorado Bancorp was
held. At the meeting the shareholders were asked to consider and vote upon a
proposal to approve the principal terms of the Agreement and Plan of Merger,
dated as of December 24, 1996, by and between the Company and Commerce Security
Bancorp, Inc. (CSBI), pursuant to which CSBI will acquire the Company by means
of a cash merger. Total shares outstanding entitled to vote were 3,811,746 of
which 2,950469 shares, or 77.4 percent, voted in favor of the proposal and
252,552 shares, or 6.6 percent, voted against the proposal. 6,839 shares, or 0.2
percent, abstained and the balance of shares did not vote.
Item 5. Other Information
On February 19, 1997 the Board of Directors declared a cash dividend of 10 cents
per share payable April 4, 1997 to Shareholders of record March 3, 1997.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
(27) Financial Data Schedule.
Reports on Form 8-K
(1) None.
14
<PAGE> 15
SIGNATURE
---------
Pursuant to 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.
Eldorado Bancorp
--------------------------------
(Registrant)
May 14, 1997 /s/ RAYMOND E. DELLERBA
- ------------------------- -------------------------------
Date Raymond E. Dellerba
President
Chief Operating Officer
May 14, 1997 /s/ DAVID R. BROWN
- -------------------------- -------------------------------
Date David R. Brown
Executive Vice President
Chief Financial Officer
15
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