<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED: MARCH 31, 1997
COMMISSION FILE NUMBER: 0-11108
SUMMIT BANCSHARES, INC.
STATE OF CALIFORNIA I.R.S. IDENTIFICATION
NUMBER 94-2767067
2969 BROADWAY, OAKLAND CALIFORNIA 94611
(510) 839-8800
Indicate by the 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_______
The number of shares outstanding of the registrant's common stock was 429,224
shares of no par value common stock issued as of March 31, 1997
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 PAGE
SUMMIT BANCSHARES, INC. AND SUBSIDIARY FINANCIAL STATEMENTS
Consolidated Balance Sheets .............................. 3
Consolidated Statements of Income ........................ 4
Consolidated Statements of Changes in
Shareholders' Equity ................................ 5
Consolidated Statement of Cash Flows ..................... 6
Notes to Financial Statements............................. 7
Interest Rate Risk Reporting Schedule..................... 8
ITEM 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................... 9-16
PART II - OTHER INFORMATION
ITEMS 1-6 .............................................................. 17-18
2
<PAGE>
SUMMIT BANCSHARES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION MARCH 31, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS 3-31-97 12-31-1996
- --------------------------------------------------------------------------------
Cash and due from banks $ 6,079,891 $ 7,188,515
Federal funds sold 13,360,000 11,980,000
- --------------------------------------------------------------------------------
Cash and cash equivalents 19,439,891 19,168,515
Time deposits with other financial institutions 9,411,000 9,607,000
Investment securities (fair value of $9,818,684 at
March 31, 1997 and $8,830,810 at
December 31, 1996 ) held to maturity 9,788,590 8,759,850
Loans, net of allowance for loan losses of
$1,146,068 at March 31, 1997 and
$1,070,318 at December 31, 1996 51,811,338 51,408,038
Other real estate owned 1,291,459 1,291,459
Premises and equipment, net 914,072 896,856
Interest receivable and other assets 1,795,395 1,814,083
Total Assets $94,451,745 $92,945,801
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
Deposits:
Demand $25,018,025 $27,833,067
Interest-bearing transaction accounts 31,321,879 28,663,828
Savings 2,773,675 2,665,539
Time certificates $100,000 and over 14,629,521 15,324,980
Other time certificates 7,677,290 6,022,170
- --------------------------------------------------------------------------------
Total Deposits 81,420,390 80,509,584
Interest payable and other liabilities 839,763 497,074
Total Liabilities 82,260,153 81,006,658
Shareholders' Equity
Preferred Stock, no par value:
2,000,000 shares authorized, no shares outstanding 0 0
Common Stock, no par value:
3,000,000 shares authorized;
429,224 shares outstanding at March 31, 1997 and
433,209 shares outstanding at December 31, 1996 3,701,279 3,830,343
Retained Earnings 8,490,313 8,108,800
Total Shareholders' Equity 12,191,592 11,939,143
Total Liabilities and Shareholders' Equity $94,451,745 $92,945,801
3
<PAGE>
SUMMIT BANCSHARES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF
INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED 3-31-97 ENDED 3-31-96
- --------------------------------------------------------------------------------
INTEREST INCOME:
Interest and fees on loans $1,505,010 $1,376,755
Interest on time deposits with other
financial institutions 122,676 164,738
Interest on U.S. government
treasury securities 141,617 96,567
Interest on federal funds sold 162,209 113,280
Total interest income 1,931,512 1,751,340
INTEREST EXPENSE:
Interest on deposits 456,022 418,563
Total interest expense 456,022 418,563
Net interest income 1,475,490 1,332,777
Provision for loan losses 75,000 85,000
Net interest income after
provision for loan losses 1,400,490 1,247,777
NON-INTEREST INCOME:
Service charges on deposit accounts 73,954 82,284
Other customer fees and charges 47,722 59,088
Total non-interest income 121,676 141,372
NON-INTEREST EXPENSE:
Salaries and employee benefits 501,800 456,923
Occupancy expense 90,107 87,640
Equipment expense 28,066 16,616
Other 245,644 252,169
Total non-interest expense 865,617 813,348
Income before income taxes 656,549 575,801
Provision for income taxes 275,036 248,701
Net Income $381,513 $327,100
PRIMARY EARNINGS:
Weighted average shares outstanding 463,317 460,045
PRIMARY EARNINGS PER SHARE $0.82 $0.71
4
<PAGE>
SUMMIT BANCSHARES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON RETAINED
OUTSTANDING STOCK EARNINGS
- ---------------------------- ----------- ---------- ----------
<S> <C> <C> <C>
Balance at December 31, 1996 433,209 $3,830,343 $8,108,800
Stock Options Exercised 0 0 0
Repurchase of Common Stock (3,985) (129,064) 0
Net Income 0 0 381,513
Balance at March 31, 1997 429,224 3,701,279 8,490,313
Balance at December 31, 1995 424,259 3,767,258 7,335,003
Stock Options Exercised 1,100 13,497 0
Net Income 0 0 327,100
Balance at March 31, 1996 425,359 3,780,755 7,662,103
</TABLE>
5
<PAGE>
SUMMIT BANCSHARES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF
CASH FLOWS FOR THE QUARTER ENDED MARCH 31, 1997 AND MARCH 31, 1996
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED 3-31-97 ENDED 3-31-96
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received $ 1,747,925 $ 1,671,106
Fees received 307,686 232,792
Interest paid (439,169) (408,292)
Cash paid to suppliers and employees (783,344) (442,838)
Income taxes paid 0 0
Net cash provided by operating activities 833,098 1,052,768
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in time deposits with
other financial institutions 196,000 (98,000)
Maturity of investment securities 970,791 0
Purchase of investment securities (1,999,531) (783,596)
Net (increase) decrease in loans to customers (337,611) 4,013,124
Recoveries on loans previously charged-off 750 1,250
(Increase) decrease in premises and equipment (64,978) (25,468)
Net cash provided by (used in)
investing activities (1,234,579) 3,107,310
CASH FLOWS FROM FINANCING ACTIVITIES:
(Increase) decrease in demand, interest
bearing transaction, and savings deposits 48,855 (2,942,356)
Net increase (decrease) in time deposits 959,661 2,050,459
(Increase) decrease in other assets (206,595) 51,519
Exercise of stock options 0 0
Repurchase of common stock (129,064) 0
Dividends paid 0 0
Net cash provided by (used in)
financing activities 672,857 (840,378)
Net increase (decrease) in cash and
cash equivalents 271,376 3,319,700
Cash and cash equivalents at the
beginning of the year 19,168,515 16,427,903
Cash and cash equivalents at the end of the year $ 19,439,891 $ 19,747,603
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net Income $ 381,513 $ 327,100
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 47,630 33,716
Provision for loan losses 75,000 85,000
(Increase) decrease in interest receivable (44,008) 48,125
Increase (decrease) in unearned loan fees 46,431 (36,939)
Increase (decrease) in accrued interest payable 16,853 10,271
(Increase) decrease in prepaid expenses 28,350 39,087
Increase (decrease) in accounts payable 6,293 297,707
Increase (decrease) in income taxes payable 275,036 248,701
- --------------------------------------------------------------------------------
Total adjustments 451,585 725,668
Net cash provided by operating activities $ 833,098 $ 1,052,768
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the unaudited interim consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position at March 31,
1997 and the results of operations for the three months ended March 31, 1997 and
1996 and cash flows for the three months ended March 31, 1997 and 1996.
Certain information and footnote disclosures presented in the
Corporation's annual consolidated financial statements are not included
in these interim financial statements. Accordingly, the accompanying
unaudited interim consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Corporation's 1996 Annual Report to Shareholders, which
is incorporated by reference in the Company's 1996 annual report on Form
10-K. The results of operations for the three months ended March 31,
1997 are not necessarily indicative of the operating results for the
full year.
2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February of 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128). The
Bank is required to adopt SFAS 128 in the fourth quarter of 1997 and will
restate at that time earnings per share data for prior periods to conform with
SFAS 128. Earlier application is not permitted.
SFAS 128 replaces current earnings per share reporting requirements and requires
a dual presentation of basic and diluted earnings per share. Earnings per share
excludes dilution and is computed by dividing net income by the weighted average
common shares outstanding of 429,746 and 424,392 during the three months ended
March 31, 1997 and 1996, respectively. Diluted earnings per share reflects the
potential dilution that could occur if common shares were issued pursuant to the
exercise of options under the Bank's Stock Option Plans. Diluted earnings per
share under SFAS 128 would not have been significantly different than primary
earnings per share currently reported for the periods.
7
<PAGE>
INTEREST RATE SENSITIVITY/INTEREST RATE RISK ANALYSIS
The following table provides an interest rate sensitivity and
interest rate risk analysis for the quarter ended March 31, 1997. The
table presents each major category of interest-earning assets and
interest bearing-liabilities.
<TABLE>
<CAPTION>
INTEREST RATE RISK REPORTING SCHEDULE
REPORTING INSTITUTION: SUMMIT BANK REPORTING DATE: 3-31-97
REMAINING TIME BEFORE MATURITY OR INTEREST RATE ADJUSTMENT
($000.00) GREATER GREATER GREATER GREATER
OMITTED UP TO THAN 3MOS THAN 1YR THAN 3YRS THAN 5YRS OVER
TOTAL 3MOS LESS THAN 1YR LESS THAN 3YRS LESS THAN 5YRS LESS THAN 10YRS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C>
I. EARNING ASSETS
A. INVESTMENTS:
1. U. S. TREASURIES $ 6,789 $ 1,545 $ 2,246 $ 2,998 $ 0 $ 0 $ 0
2. U. S. AGENCIES 3,000 0 0 3,000 0 0 0
3. FED FUNDS SOLD 13,360 13,360 0 0 0 0 0
4. PURCHASED CDS 9,411 990 6,936 1,485 0 0 0
------- ------- ------- ------- ------- ------- -------
TOTAL INVESTMENTS $32,560 $15,895 $ 9,182 $ 7,483 $ 0 $ 0 $ 0
B. LOANS
1. COMMERCIAL $50,418 $30,501 $ 5,517 $ 5,825 $ 2,886 $ 5,689 $ 0
2. REAL ESTATE 0 0 0 0 0 0 0
3. INSTALLMENT 15 15 0 0 0 0 0
------- ------- ------- ------- ------- ------- -------
TOTAL LOANS $50,433 $30,516 $ 5,517 $ 5,825 $ 2,886 $ 5,689 $ 0
C. TOTAL EARNING ASSETS $82,993 $46,411 $14,699 $13,308 $ 2,886 $ 5,689 $ 0
II. COST OF FUNDS (DEPOSITS)
A. CERTIFICATE OF DEPOSITS $22,407 $15,109 $ 6,392 $ 803 $ 76 $ 27 $ 0
B. MONEY MARKET ACCOUNTS 26,830 0 13,415 13,415 0 0 0
C. TRANSACTION ACCOUNTS 5,088 0 0 2,544 1,272 1,272 0
D. SAVINGS ACCOUNTS 2,478 0 0 1,239 619 620 0
------- ------- ------- ------- ------- ------- -------
TOTAL COST OF FUNDS $56,803 $15,109 $19,807 $18,001 $ 1,967 $ 1,919 $ 0
III. INTEREST SENSITIVE ASSETS $82,993 $46,411 $14,699 $13,308 $ 2,886 $ 5,689 $ 0
IV. INTEREST SENSITIVE LIABILITIES $56,803 $15,109 $19,807 $18,001 $ 1,967 $ 1,919 $ 0
------- ------- ------- ------- ------- ------- -------
V. GAP $26,190 $31,302 ($5,108) ($4,693) $ 919 $ 3,770 $ 0
VI. CUMULATIVE GAP $26,190 $31,302 $26,194 $21,501 $22,420 $26,190 $26,190
VII. GAP RATIO 1.46 3.07 0.74 0.74 1.47 2.96
VIII. CUMULATIVE RATIO 1.46 3.07 1.75 1.41 1.41 1.46 1.46
IX. GAP AS A % OF TOTAL ASSETS 28.64 34.23 (5.59) (5.13) 1.00 4.12 28.64
X. CUMULATIVE GAP AS A % OF
TOTAL ASSETS 28.64 34.23 28.64 23.51 24.52 28.64 28.64
</TABLE>
8
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997
The registrant, Summit Bancshares, Inc. (the "Company") is a bank holding
company whose only operating subsidiary is Summit Bank (the "Bank"). The
following discussion primarily concerns the financial condition and results
of operations of the Company on a consolidated basis including the subsidiary
Bank. All adjustments made in the compilation of this information are of a
normal recurring nature.
FINANCIAL CONDITION
LIQUIDITY MANAGEMENT
The consolidated loan-to-deposit ratio at March 31, 1997 was 65.0% which was
an increase from 62.5% for the same period in 1996. Total outstanding loans
as of March 31, 1997 increased $6,487,000 compared to the same period a year
ago while total deposits increased $7,061,000 versus the same time last year.
The increases in loans and deposits are mainly due to Bank's concentrated
effort in promoting sales culture to its employees. The average
loan-to-deposit ratio for the first quarter of 1997 was 65.5%, down from
67.5% for the same period last year. This decrease was caused by an increase
in average total deposits of $8,791,000 or 12.3% compared to increase in
average total loans of $6,179,000 or 13.3%. Management continues to seek
growth and acquisition of quality credits.
Net liquid assets, which consists primarily of cash, due from banks,
interest-bearing deposits with other financial institutions, investment
securities and federal funds sold totaled $38,639,000 on March 31, 1997.
This amount represented 47.5% of total deposits in comparison to the
liquidity ratio of 50.6% as of March 31, 1996. This decrease is primarily a
result of loan growth. It is management's belief that the current liquidity
level is appropriate given current economic conditions and is sufficient to
meet current needs.
The Company is not aware of any current recommendations by the regulatory
authorities which, if they were implemented, would have a material effect on
the Company.
9
<PAGE>
The following table sets forth book value of investments by category and the
percent of total investments at the dates specified.
INVESTMENT COMPARATIVE
($000.00 Omitted)
3-31-97 % 12-31-96 % 3-31-96 %
Fed funds sold 13,360 41% 11,980 39% 14,250 44%
Interest bearing
deposits 9,411 29% 9,607 32% 11,100 35%
Securities 9,789 30% 8,759 29% 6,757 21%
Interest bearing deposits are comprised of Time Certificates of Deposit with
other banks and savings and loan institutions with no more than $100,000 in
any institution.
Securities on March 31, 1997 were comprised of $1,545,000 in U.S. Gov't
treasury bills, $3,245,000 in U.S. Gov't notes and $4,999,000 in U.S. Gov't
agencies.
CHANGES IN FINANCIAL POSITION
As of March 31, 1997, deposits increased $910,806 from December 31, 1996
while at the same time net loans outstanding increased $403,300. Total
deposits as of March 31, 1997 were $81,420,000, an increase of 9.5% from
$74,359,000 as of March 31, 1996. Total loans as of March 31, 1997 were
$52,957,000, which was an increase from $46,470,000 as of March 31, 1996.
10
<PAGE>
The following table sets forth the amount of deposits by each category and the
percent of total deposits at the dates specified.
DEPOSIT COMPARATIVE
($000.00 Omitted)
3-31-97 % 12-31-96 % 3-31-96 %
Demand $25,018 31% $27,833 34% $22,036 30%
Savings 2,774 3% 2,666 3% 2,369 3%
Interest bearing
trans. deposits 31,322 38% 28,664 36% 28,985 39%
Other time 22,306 28% 21,347 27% 20,969 28%
The following table sets forth the amount of loans outstanding by each
category and the percent of total loans outstanding at the dates specified.
LOAN COMPARATIVE
($000.00 Omitted)
3-31-97 % 12-31-96 % 3-31-96 %
Commercial $36,800 69% $35,788 68% $28,095 60%
Real estate-const 7,342 14% 7,508 14% 7,052 15%
Real estate-other 3,179 6% 3,063 6% 5,810 13%
Installment/other 5,636 11% 6,119 12% 5,513 12%
NON-PERFORMING ASSETS
The following table provides information with respect to the subsidiary
Bank's past due loans and components for non-performing assets at the dates
indicated.
NON-PERFORMING ASSETS
(000.00 Omitted)
3-31-97 12-31-96 3-31-96
Loans 90 days or more past
due & still accruing $ 0 $ 0 $ 472
Non-accrual loans 0 0 137
Other real estate owned 1,291 1,291 1,303
------ ------ ------
Total non-performing assets $1,291 $1,291 $1,912
------ ------ ------
------ ------ ------
Non-performing assets to
period end loans plus
other real estate owned 2.44% 2.46% 4.00%
Allowance to non-performing loans 0% 0% 182%
Allowance to non-performing assets 106% 83% 58%
11
<PAGE>
The subsidiary Bank's policy is to recognize interest income on an accrual
basis unless the full collectibility of principal and interest is uncertain.
Loans that are delinquent 90 days as to principal or interest are placed on a
non-accrual basis, unless they are well secured and in the process of
collection, and any interest earned but uncollected is reversed from income.
Collectibility is determined by considering the borrower's financial
condition, cash flow, quality of management, the existence of collateral or
guarantees and the state of the local economy.
Other real estate owned ("OREO")is comprised of properties acquired through
foreclosure. These properties are carried at the lower of the recorded loan
balance or their estimated fair market value based on appraisal. When the
loan balance plus accrued interest exceeds the fair value of the property,
the difference is charged to the allowance for loan losses at the time of
acquisition. Subsequent declines in value from the recorded amount, if any,
and gains or losses upon disposition are included in noninterest expense.
Operating expenses related to other real estate owned are charged to
noninterest expense in the period incurred.
The decrease in non-performing assets from March 31, 1996 to March 31, 1997
is due primarily to a decrease in loans 90 days past due and non-accrual
loans of $609,000 and a slight decrease in other real estate owned.
The total OREO amount, $1,291,000, is related to two properties. One of the
properties is vacant land in the Oakland Hills and the second property is two
contiguous parcels in the Danville/Diablo Mountain area of Alameda County.
The Bank is actively marketing these two parcels.
12
<PAGE>
CAPITAL POSITION
As of March 31, 1997, Shareholders' Equity was $12,192,000. This represents
an increase of $749,000, or 6.5% over the same period last year. Since the
inception of the repurchase program in 1989, the Company has authorized the
repurchase of $2,250,000 of its stock. As of March 31, 1997, the Company has
repurchased a total of 156,103 shares of the Company stock constituting 29.0%
of the Company's original stock prior to the repurchase program, at a total
cost of $2,215,036, or an average price per share of $14.19. The Company
plans to continue its repurchase program as an additional avenue for
liquidity for its shareholders. The program has not affected the Company's
liquidity or capital position or its ability to operate as the Company's
capital growth has exceeded its asset growth. In addition, the Company's
subsidiary Bank remains more than well-capitalized under current regulations.
On March 14, 1989, the Board of Directors of the Federal Deposit Insurance
Corporation ("FDIC") approved a Statement of Policy on Risk-Based Capital
which became effective December 31, 1990. Under this statement banks are
required to meet certain capital standards in addition to leverage standards
as previously outlined under FDIC Rules and Regulations. The Bank does not
foresee any material or significant impact to its manner of operation in the
foreseeable future. Total qualifying capital allowable under risk-based
capital guidelines for the subsidiary bank is $8,704,000.
The following table shows the risk-based capital and leverage ratios as well
as the minimum regulatory requirements for the same as of March 31, 1997:
Minimum
Capital Ratio Regulatory Requirement
Tier 1 Capital 14.91% 4.00%
Total Capital 16.11% 8.00%
Leverage Ratio 9.84% 3.00%
The Company is not aware of any current recommendations by the regulatory
authorities which if they were implemented would have a material effect on
the Company.
13
<PAGE>
RESULTS OF OPERATIONS
NET INTEREST INCOME
Total interest income including loan fees increased from $1,751,000 for the
first three months of 1996 to $1,932,000 for the same period in 1997. The
prime lending rate increased to 10.55% in March 1997 from 10.25% compared to
the same period last year but was not a factor in the increased interest
income on loans since the increase came late in the quarter. The primary
reason for the increase in interest income on loans was due to $6,179,000
increase in average loans compared to the same period a year ago. Loan fees
showed an increase of $11,220 over the same period last year. The yield on
loans and fees increased 12 basis points over the same period last year. The
increase in interest income from investments was due to total average
outstanding investments volume increase of $4,288,000 for the first quarter
1997 versus 1996. This increase was primarily due to increase in deposit
balances. The yield on investments showed a decrease of 22 basis points
reflective of market conditions. Interest expense increased from $419,000 as
of the end of the first three months of 1996 to $456,000 in 1997. This
increase was brought about by a increase in average interest-bearing deposit
accounts of $4,811,000 during the first quarter of 1997 versus the same
period last year. The average cost of funds for the period ending March 31,
1997 was 5 basis points more than the same period last year. As a result of
these factors, net interest margin for the first three months of 1997
remained at 7.10% compared to the same period last year.
OTHER OPERATING INCOME
Service charges on deposit accounts as of the end of the first three months
of 1997 decreased to $74,000 versus $82,000 for the same period in 1996. The
decrease was due to lower fees collected in service charges related to return
check and overdraft charges and from analysis of service charges on
commercial accounts. Other charges and fees decreased $11,000 primarily due
to lower fees collected on wire transfers.
14
<PAGE>
LOAN LOSS PROVISION
The decrease in loan loss provision was primarily due to a perceived
improvement in California's economy as well as the current level of the
allowance for loan losses.
The allowance for loan losses is maintained at a level that management of the
Company considers to be adequate for losses that can be reasonably
anticipated. The allowance is increased by charges to operating expenses and
reduced by net-charge-offs. The level of the allowance for loan losses is
based on management's evaluation of potential losses in the loan portfolio,
as well as prevailing and anticipated economic conditions.
Management employs a systematic methodology on a monthly basis to determine
the adequacy of the allowance for current and future loan losses. Each loan
is graded at the time of extension or renewal by the credit administrator.
Gradings are assigned a risk factor which is calculated to assess the
adequacy of the allowance for loan losses. Further, management considers
other factors such as overall portfolio quality, trends in the level of
delinquent and classified loans, specific problem loans, and current and
anticipated economic conditions.
The following table summarizes the activity in the Bank's allowance for
credit losses for the three months ended March 31, 1997 and 1996.
THREE MONTHS ENDED
------------------
(000.00 Omitted)
3-31-97 3-31-96
Balance, beginning of the period $1,070 $1,025
Provision for loan losses 75 85
Recoveries 1 1
Loans charged-off 0 0
------ ------
Balance, end of the period $1,146 $1,111
------ ------
------ ------
The balance in the allowance for loan losses at March 31, 1997 was 2.16% of
total loans compared to 2.39% of total loans at March 31, 1996.
15
<PAGE>
OTHER OPERATING EXPENSES
Total other operating expenses increased $52,000 as of the end of the first
three months of 1997 compared to the same period last year. This increase
was primarily due to an increase in salaries and employee expense. The Bank's
committment to grow increased the number of employees from 39 to 42 primarily
in the sales area. The increase was also attributed to increase in regular
raises in pay and increased cost of benefits.
PROVISION FOR INCOME TAXES
The Company's provision for income taxes as of the end of the first three
months of 1997 increased from $249,000 in 1996 to $275,000. This increase is
attributed to increased income from regular business operations. For the same
period in 1997 the Company's total effective tax rate was 41.9% compared to
43.2% in 1996.
NET INCOME
Net income for the first quarter of 1997 increased from $327,000 for the same
period in 1996 to $382,000, or a increase of 16.8%.
16
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
No material developments from that which was
reported in the Form 10-K dated March 31, 1997 for
the year ended December 31, 1996.
ITEM 2 - CHANGES IN SECURITIES
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Statement re: computation of per share
earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
One Form 8-K was filed by the registrant during
the first quarter of 1997, reporting that the
Company had dismissed Arthur Andersen LLP as its
independent accountants. On May 8, 1997, the Company
filed a Form 8-K indicating that it retained Cooper and
Lybrand LLP as its independent public accountants for
the fiscal year ending December 31, 1997.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUMMIT BANCSHARES, INC.
REGISTRANT
DATE:___________________ BY:__________________________
SHIRLEY W. NELSON
CHAIRMAN AND CEO
(PRINCIPAL EXECUTIVE OFFICER)
DATE:___________________ BY:___________________________
KIKUO NAKAHARA
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
The remainder of this page is intentionally left blank
18
<PAGE>
WEIGHTED AVERAGE SHARES
THREE MONTHS ENDED MARCH 31, 1997
PRIMARY FULLY
A. COMMON STOCK ANNUAL 429,746 429,746
(1ST QTR) 429,746 429,746
NO OF
DAYS
433,209 12-31-96(BAL FWD)-------
433,209 TO 1-06-97 6 2,599,254
432,109 TO 1-14-97 8 3,456,872
429,224 TO 3-31-97 76 32,621,024
----- ----------
90 38,677,150
AVERAGE SHARES OUTSTANDING
FOR THE PERIOD 429,746
OPTIONS-FULLY
-------------
USE HIGHER OF YEAR END PRICE OR AVERAGE PRICE
YEAR END PRICE 33.125
AVERAGE PRICE 33.125
USE YEAR END PRICE OF 33.125 33,571
----------
NO OF YEAR END OPTION NO OF
SHARES PRICE PRICE SHARES
------ -------- ------ ------
MZ 1,000 33.125 10.00 698
SN 10,000 33.125 10.00 6,981
MZ 2,900 33.125 13.50 1,718
SN 15,689 33.125 10.00 10,953
SN 8,333 33.125 12.00 5,314
TW 400 33.125 12.25 252
SN 978 33.125 13.25 587
DD 2,500 33.125 13.00 1,519
MZ 1,045 33.125 13.00 635
AC 400 33.125 13.00 243
TW 1,500 33.125 13.00 911
SN 4,000 33.125 17.75 1,857
MZ 2,000 33.125 17.75 928
DD 1,000 33.125 17.75 464
TW 1,000 33.125 17.75 464
AC 100 33.125 17.75 46
OPTIONS-PRIMARY
---------------
AVERAGE PRICE FOR THE YEAR 33.125 33,571
----------
NO OF YEAR END OPTION NO OF
SHARES PRICE PRICE SHARES
------ -------- ------ ------
MZ 1,000 33.125 10.00 698
SN 10,000 33.125 10.00 6,981
SN 15,689 33.125 10.00 10,953
SN 8,333 33.125 12.00 5,314
MZ 2,900 33.125 13.50 1,718
TW 400 33.125 12.25 252
SN 978 33.125 13.25 587
DD 2,500 33.125 13.00 1,519
MZ 1,045 33.125 13.00 635
AC 400 33.125 13.00 243
TW 1,500 33.125 13.00 911
SN 4,000 33.125 17.75 1,857
MZ 2,000 33.125 17.75 928
DD 1,000 33.125 17.75 464
TW 1,000 33.125 17.75 464
AC 100 33.125 17.75 46
TOTAL SHARES 1ST QUARTER 463,317 463,317
TOTAL SHARES YEAR-END 463,317 463,317
NET INCOME IST QUARTER $381,512 $381,512
NET INCOME YEAR TO DATE, 1997 $381,512 $381,512
EARNINGS PER SHARE 1ST QUARTER $0.823 $0.823
EARNINGS PER SHARE, YTD $0.823 $0.823
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,079,891
<INT-BEARING-DEPOSITS> 9,411,000
<FED-FUNDS-SOLD> 13,360,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 9,788,590
<INVESTMENTS-MARKET> 9,818,684
<LOANS> 52,957,406
<ALLOWANCE> 1,146,068
<TOTAL-ASSETS> 94,451,745
<DEPOSITS> 81,420,390
<SHORT-TERM> 0
<LIABILITIES-OTHER> 839,763
<LONG-TERM> 0
0
0
<COMMON> 3,701,279
<OTHER-SE> 8,490,313
<TOTAL-LIABILITIES-AND-EQUITY> 94,451,745
<INTEREST-LOAN> 1,505,010
<INTEREST-INVEST> 141,617
<INTEREST-OTHER> 284,885
<INTEREST-TOTAL> 1,791,933
<INTEREST-DEPOSIT> 456,022
<INTEREST-EXPENSE> 456,022
<INTEREST-INCOME-NET> 1,475,490
<LOAN-LOSSES> 75,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 865,617
<INCOME-PRETAX> 656,549
<INCOME-PRE-EXTRAORDINARY> 656,549
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 381,513
<EPS-PRIMARY> .89
<EPS-DILUTED> .82
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 3,511
<ALLOWANCE-OPEN> 1,070,318
<CHARGE-OFFS> 0
<RECOVERIES> 750
<ALLOWANCE-CLOSE> 1,146,068
<ALLOWANCE-DOMESTIC> 75,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
