SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Period Ended: June 30, 1996
SUNRISE BANCORP
(Exact name of registrant as specified in its charter)
California 94-2819328
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Sierragate Plaza, Roseville, CA 95678
(Address of principal executive offices) (Zip code)
(926) 783-2800
(Registrant's telephone number, including area code)
Not Applicable
(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 Sections 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
YES x No
Number of shares of Common Stock issued and outstanding as of
July 29, 1996: 4,263,298
<PAGE>
SUNRISE BANCORP
QUARTERLY REPORT ON FORM 10-Q
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1 Financial Statements:
Consolidated Condensed Statements of Condition
June 30, 1996, and December 31, 1995 3
Consolidated Condensed Statements of Operations
for the three and six months ended June 30, 1996
and 1995 4
Consolidated Condensed Statements of Cash Flows for
the six months ended June 30, 1996 and 1995 5
Notes to Consolidated Condensed Financial Statements 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 15
SIGNATURES 16
<PAGE>
<TABLE>
ITEM 1 FINANCIAL STATEMENTS
SUNRISE BANCORP AND SUBSIDIARY
Consolidated Condensed Statements of Condition
June 30, 1996 and December 31, 1995
<CAPTION>
(dollar amounts in thousands except per share data) June 30, December 31
1996 1995
Assets (Unaudited)
------------ ----------
<S> <C> <C>
Cash and due from banks $3,395 $3,726
Federal funds sold and repurchase agreements 24,500 29,000
Investment securities held to maturity 19,049 20,273
(market value $18,111 at June 30, 1996 and $19,944
at December 31, 1995)
Loans 64,272 66,765
Less allowance for loan losses 1,802 2,505
------ ------
Net loans 62,470 64,260
------ ------
Premises and equipment 668 873
Other real estate owned 1,230 692
Other assets 2,228 2,160
------- -------
$113,540 $120,984
======= =======
Liabilities and Shareholders' Equity
Deposit liabilities:
Noninterest bearing $13,573 $13,808
Interest bearing 83,009 90,075
------- -------
Total deposit liabilities 96,582 103,883
Borrowings - -
Other liabilities 389 612
------- -------
Total liabilities 96,971 104,495
Shareholders' equity:
Preferred stock, no par value. Authorized
20,000,000 shares; none issued - -
Common stock, no par value. Authorized
20,000,000 shares; issued 4,263,298 shares
in 1996 and 1995 18,327 18,327
Retained earnings (1,758) (1,838)
------ ------
Total shareholders' equity 16,569 16,489
-------- --------
$113,540 $120,984
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
SUNRISE BANCORP AND SUBSIDIARY
Consolidated Condensed Statements of Operations
For the three and six months ended June 30, 1996 and 1995
(unaudited)
<CAPTION>
(dollar amounts in thousands, Three months Six months
except per share data) ended June 30 ended June 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $1,562 $1,850 $3,152 $3,768
Interest on investment securities 267 713 542 1,450
Interest on federal funds sold and repos 312 96 722 120
----- ----- ----- -----
Total interest income 2,141 2,659 4,416 5,338
----- ----- ----- -----
Interest expense:
Interest on deposit liabilities 798 891 1,655 1,653
Interest on other borrowings - 1 118
----- ----- ----- -----
Total interest expense 798 892 1,655 1,771
----- ----- ----- -----
Net interest income 1,343 1,767 2,761 3,567
Provision for loan losses - - - -
----- ----- ----- -----
Net interest income after provision
for loan losses 1,343 1,767 2,761 3,567
----- ----- ----- -----
Other income:
Service charges and fees 76 113 162 209
Loan sales - - - -
Other 338 5 414 2
----- ----- ----- -----
Total other income 414 118 576 211
----- ----- ----- -----
Other expenses:
Salaries and employee benefits 680 758 1,347 1,523
Occupancy 280 331 543 606
Furniture and equipment 107 147 211 299
Other 639 693 1,099 1,303
----- ----- ----- -----
Total other expenses 1,706 1,929 3,200 3,731
----- ----- ----- -----
Net income (loss) before provision for 51 (44) 137 47
Provision (benefit) for income taxes 12 (3) 57 35
----- ----- ----- -----
Net income (loss) $39 ($41) $80 $12
===== ===== ===== =====
Net income (loss) per share $0.01 ($0.01) $0.02 $0.00
===== ===== ===== =====
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
SUNRISE BANCORP AND SUBSIDIARY
Consolidated Condensed Statements of Cash Flows
For the six months ended June 30, 1996 and 1995
(unaudited)
<CAPTION>
(dollar amounts in thousands) Six months
ended June 30,
1996 1995
---- ----
<S> <C> <C>
Operating activities:
Net Income $80 $12
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Accretion of deferred loan fees and costs (1) (93)
Provision for loan and other real estate owned losses - 150
Depreciation and amortization 238 380
Net change in other assets (68) 1,627
Net change in other liabilities (223) (725)
----- -----
Net cash provided by operating activities 26 1,351
----- -----
Investing activities:
Purchases of investment securities - -
Maturities and repayments of investment securities 1,192 6,175
Net (increase) decrease in loans 363 5,115
Net sales of other real estate owned 889 1,744
Net purchases of premises and equipment - -
----- ------
Net cash provided by investing activities 2,444 13,034
----- ------
Financing activities:
Increase (decrease) in deposit liabilities (7,301) 14,133
Decrease in other borrowing - (10,548)
------ -------
Net cash provided (used) by financing activities (7,301) 3,585
------ -------
(Decrease) increase in cash and cash equivalents (4,831) 17,970
Cash and cash equivalents at beginning of period 32,726 6,367
------- -------
Cash and cash equivalents at end of period $27,895 $24,337
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $1,685 $1,790
====== =======
Income taxes paid (refunded) $2 ($1,373)
====== =======
Supplemental schedule of noncash investing and financing activities:
Other real estate owned acquired through foreclosure on assets
securing loans $1,427 $456
====== ======
<FN>
See accompanying notes to consolidated condensed financial statements.
</FN>
</TABLE>
<PAGE>
1) Financial Statement Presentation
--------------------------------
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of norman recurring
adjustments) considered necessary for a fair presentation have been
included. Operating results for the six months ended June 30, 1996, are
not necessarily indicative of the results that may be expected for the
year ended December 31, 1996.
The consolidated condensed financial statements include the accounts of
Sunrise Bancorp (the "Company") and its wholly-owned subsidiary, Sunrise
Bank of California (the "Bank"), with all material intercompany accounts
and transactions eliminated. For further information refer to the
financial statements and notes thereto included in the Company's annual
report on Form 10-K for the year ended December 31, 1995.
2) Contingent Liabilities
----------------------
The Company and its subsidiary are at times subject to threatened or filed
legal actions with regard to matters arising out of the conduct of their
businesses. It is the opinion of management, after consulting with legal
counsel, that the resulting liability, if any, as a result of these legal
actions are not currently anticipated to materially affect the consolidated
financial condition of the Company.
3) Merger Agreement
----------------
On June 24, 1996, the Company agreed to merge with a subsidiary of First
Banks America, Inc., subject to approval of the Company's shareholders and
regulatory approval.
4) Subsequent Event
----------------
On July 25, 1996, as a result of an examination of the Company conducted by
the Federal Reserve Bank ("FRB") as of December 31, 1995, the FRB termin-
ated the memorandum of Understanding between the FRB and the Company
which had been in effect since 1993.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
AND RESULTS OF OPERATIONS
The following information concerns the consolidated financial condition and
results of operations of the Company and relates primarily to the Bank.
This information should be read in conjunction with the Consolidated
Financial Statements and the 1995 Annual Report on Form 10-K.
Liquidity
The objective of liquidity management is to maintain sufficient cash flow
to satisfy both changes in loan demand and deposit fluctuations while
maximizing the yield available from the instruments being used. Liquidity
is managed from both sides of the balance sheet. Liquid assets consist of
cash and due from banks, federal funds sold, securities purchased under
repurchase agreements and investment securities that can be used as collateral
for other borrowings. On the liability side of the balance sheet, liquidity
is provided by core deposits, lines of credit, and other borrowings.
Cash and cash equivalents equaled $27,895,000, at June 30, 1996, and
$32,726,000 at December 31, 1995, and investment securities equaled
$19,049,000 and $20,273,000, respectively. The decrease in cash and cash
equivalents was due to the funding of maturing certificates of deposits, and
other deposit relationships.
As an additional source of liquidity, the Bank is eligible to borrow funds
on an overnight basis from the Federal Reserve Bank of San Francisco and
several broker/dealers. The maximum available advance is dependent upon the
amount of the Bank's investment securities and loans pledged to collateralize
such borrowings. At June 30, 1996, the Bank had no borrowings against these
lines of credit.
Interest Rate Sensitivity
Interest rate sensitivity is a measure of the relationship between a change
in market interest rates and a resultant change in net interest income due to
the repricing and/or maturity characteristics of the assets and liabilities of
the Company. As a result of industry deregulation, the Bank can vary the rates
and, to a limited degree, the terms of the deposits it offers in order to
acquire the funds necessary for lending and other operations. The rates the
Bank pays on these deposits vary, but generally are set at a slight premium
over the rates paid by large commercial banks. While the Bank cannot match
each of its assets with specific funding sources, it does monitor the aggregate
maturities and interest rate sensitivities of all its investments, loans and
deposits within specified time frames.
Management attempts to adjust the interest rates paid on various rate-sensitive
deposits in order to regulate the volume of such deposits in maturity ranges
that correspond to the Bank's needs and interest rate expectations. In
developing strategies to minimize interest rate risk and maximize the net
interest margin, management considers such external factors as current and
projected economic conditions.
The following table illustrates the cumulative repricing/maturity intervals of
all interest earning assets and interest bearing liabilities over several time
frames and the cumulative gap at June 30, 1996. The table does not include
noninterest-bearing accounts as they involve no explicit payment of interest.
The table does not necessarily indicate the impact of general interest rate
movement on net interest income since the repricing of various categories of
assets and liabilities is subject to competitive pressures. Interest earning
assets include variable rate instruments which are presented in time frames
<PAGE>
that correspond to the earlier of initial repricing dates or scheduled
principal amortization maturity dates, and fixed rate instruments which are
presented in time frames that correspond to scheduled principal amortization
or maturity dates. All interest bearing liabilities, other than time deposits,
have variable rates of interest that are repriceable immediately. Time deposits
are presented in timeframes that correspond to scheduled maturity dates.
<TABLE>
<CAPTION>
(dollar amounts in thousands)
3 months 3 - 12 1 - 5 After
June 30, 1996 One day or less months years 5 years Totals
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Loans $ 37,386 10,854 4,338 10,785 1,081 64,444
Investment securities 450 1,350 17,249 0 19,049
Federal funds sold and 0 0
repurchase agreements 5,500 19,000 0 0 0 24,500
------ ------ ----- ------ ----- -------
Total interest earning assets $42,886 30,304 5,688 28,034 1,081 107,993
====== ====== ===== ====== ===== =======
Interest bearing liabilities:
Savings accounts $ 955 0 0 0 0 955
Interest checking accounts 32,347 0 0 0 0 32,347
Money market deposit accounts 19,787 0 0 0 0 19,787
Time deposits of $100,000 or more 0 4,109 4,916 587 0 9,612
Other time deposits 0 7,509 11,017 1,782 0 20,308
Other borrowings 0 0 0 0 0 0
------ ----- ------ ----- ----- ------
Total interest bearing liabilities $ 53,089 11,618 15,933 2,369 0 83,009
====== ====== ====== ====== ===== ======
Current gap (10,203) 18,686 (10,245) 25,665 1,081 24,984
====== ====== ====== ====== ====== ======
Cumulative gap $ (10,203) 8,483 ( 1,762) 23,903 24,984 24,984
====== ====== ====== ====== ====== ======
</TABLE>
The Federal Reserve Board and the FDIC established final risk-based and
leverage capital guidelines for bank holding companies and banks. These
guidelines created a framework wherein balance sheet assets and certain
off-balance sheet commitments are weighted by risk and compared to capital.
Capital is assigned to tiers with common equity included in Tier 1 capital
and a portion of the allowance for credit losses included in Tier 2 capital
or total capital. On June 30, 1996, the minimum required ratio for
qualifying total capital was 8.0%, of which 4.0% must be Tier 1 capital.
Additionally, a 3% minimum leverage ratio of Tier 1 capital to average total
assets for the most recent quarter must be maintained. Banking organizations
anticipating significant asset growth or which are not highly rated by their
primary federal regulators are expected to maintain leverage ratios 1% to 2%
in excess of the minimum. Capital ratios for both the Company and the Bank
at June 30, 1996, exceeded the current regulatory requirements.
<PAGE>
The following table illustrates various capital ratios of the Bank and the
Company (on a consolidated basis) as of June 30, 1996 and December 31, 1995:
As of June 30, 1996 As of December 31, 1995
Bank Company Bank Company
---- ------- ----- -------
Leverage ratio 12.77% 13.74% 10.98% 11.75%
Tier 1 Capital to risk-weighted
assets 19.21% 20.70% 15.69% 17.05%
Total Capital to risk-weighted
assets 20.46% 21.95% 16.95% 18.31%
On April 15, 1996, the Company reported on a Current Report on Form 8-K
(dated April 8, 1996)that the Company and ValliCorp Holdings, Inc.
("ValliCorp") jointly announced that they had signed a nonbinding letter
of intent calling for the Company to merge into ValliCorp. On May 15, 1996,
ValliCorp and the Company jointly announced that they were terminating
further discussion concerning a possible merger. Pursuant to the letter of
intent Vallicorp's deposit of $250,000 paid to the Company has been forfeited
and is included in the Company's other income.
On July 3, 1996, the Company reported on a Current Report on Form 8-K (dated
June 24, 1996) that the Company and First Banks America, Inc. ("FBA"), entered
into an Agreement and Plan of Merger pursuant to which the Company will merge
with a wholly-owned subsidiary or other corporate affiliate of FBA, subject to
approval of the Company's shareholders and regulatory approval. Smith and
Crowley Inc., the Company's investment banking firm, have rendered their
opinion that the consideration to be received in the merger, of $4.00 per
share, is fair from a financial point of view. The Board of Directors
believes the merger is in the best interest of the shareholders.
Regulatory Matters
On July 25, 1996, as a result of an examination of the Company conducted by
the Federal Reserve Bank ("FRB") as of December 31, 1995, the FRB terminated
the Memorandum of Understanding between the FRB and the Company which had
been in effect since 1993.
Results of Operations
The Company recorded consolidated net income of $39,000 ($.01 per share) for
the three months ended June 30, 1996, compared to a net loss of $41,000 ($.01
per share) for the three months ended June 30, 1995.
The Company recorded consolidated net income of $80,000 ($.02 per share) for
the six months ended June 30, 1996, compared to net income of $12,000 ($.00
per share) for the six months ended June 30, 1995.
<PAGE>
The following table illustrates the net income of the Company and the Bank on
a stand-alone basis for the three months and six months ended June 30, 1996
and 1995:
Three months Six months
ended June 30, ended June 30,
(dollar amounts in thousands)
1996 1995 1996 1995
---- ---- ---- ----
Company $ 98 $(45) $ 78 $ (39)
Bank (59) 4 2 51
--- --- --- ---
Consolidated net income (loss) $ 39 $(41) $ 80 $ 12
==== ===== ===== ====
The increased net income for the three and six months ended June 30, 1996,
over the same period in 1995 was primarily due to increased non-recurring
other income, and decreased other expenses, which more than offset the
decrease in net interest income.
Net Interest Income
Net interest income, the difference between interest earned on loans and
other investments and interest paid on deposits and other borrowings, is
the most significant component of the Company's revenues. The Company's
net interest income before provision for loan losses was $2,761,000 in the
six months ended June 30, 1996, compared to $3,567,000 for the six months
ended June 30, 1995, which is a $806,000 (or 23%) decrease. The decrease in
net interest income was the result of a decrease in average earning assets
(see table on next page) of the Company of $18,931,000, or 14%, and a
decrease in the net interest margin from 5.45% to 4.94%.
<PAGE>
<TABLE>
<CAPTION>
The following table sets forth average assets, major deposit categories, other liabilities and
income earned and interest expense paid; average rates earned and expensed and the
net interest
six months ended June 30, 1996 and 1995:
1996 1995
--------------------------- ---------------------------
Average Average Average Average
(dollar amounts in thousands) Balance Interest Yield Balance Interest
Yield
------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest earning assets:
Loans (1) $66,445 $3,152 9.59% $78,618 $3,768 9.67%
Investment securities 19,775 542 5.54% 49,220 1,450 5.94%
Federal funds sold and securities
purchased under agreements to
resell 26,761 722 5.46% 4,074 120 5.94%
Interest bearing deposits 0 0 0.00% 0 0 0.00%
------- ------ ------- ------
Total interest earning assets 112,981 $4,416 7.90% 131,912 $5,338 8.16%
------ ------
Allowance for loan losses (2,387) (4,004)
Cash and due from banks 4,057 6,788
Premises and equipment and other
assets 3,852 6,802
-------- --------
$118,503 $141,498
======== ========
Liabilities and Shareholders' Equity:
Interest bearing liabilities:
Savings accounts $1,059 $13 2.48% $1,007 $13 2.60%
Interest checking accounts 33,675 459 2.76% 35,252 478 2.73%
Money market deposit accounts 22,944 347 3.06% 28,338 429 3.05%
Time deposits 30,232 836 5.59% 26,580 733 5.56%
Other borrowings 0 0 0.00% 4,344 118 5.48%
------ ----- ------ -----
Total interest bearing
liabilities 87,910 1,655 3.81% 95,521 1,771 3.74%
----- -----
Demand deposits 13,576 27,311
Other liabilities 497 686
-------- --------
Total liabilities 101,983 123,518
Shareholders' equity 16,520 17,980
-------- --------
$118,503 $141,498
======== ========
Net interest income and margin (2) $2,761 4.94% $3,567 5.45%
====== ======
<FN>
(1) Average loans include nonaccrual loans.
(2) Net interest margin is computed by dividing net interest income by total
average interest earning assets and is annualized.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
The following table shows the approximate effect on net interest income of volume
and rate changes for the six months ended June 30, 1996 and 1995. Changes which
are the combined result of volume and rate changes are allocated in proportion to
the volume and rate changes.
(dollar amounts in thousands) 1996 vs. 1995
-------------------------------
Volume Rate Total
------ ---- -----
<S> <C> <C> <C>
Increase (decrease) in interest income:
Loans ($587) ($29) ($616)
Investment securities (816) (92) (908)
Federal funds sold 613 (11) 602
Interest bearing deposits 0 0 0
----- ----- -----
(790) (132) (922)
----- ----- -----
Increase (decrease) in interest expense:
Savings accounts 1 (1) 0
Interest checking accounts (23) 4 (19)
Money market deposit accounts (83) 1 (82)
Time deposits 99 4 103
Other borrowings (59) (59) (118)
---- ---- -----
(65) (51) (116)
---- ---- -----
Change in net interest income ($725) ($81) ($806)
====== ===== ======
</TABLE>
<PAGE>
Provision for Loan Losses and Asset Quality
At June 30, 1996, the allowance for loan losses was $1,802,000 or 2.80% of
outstanding loans. Due to the decrease in total loans and nonaccrual loans,
no provision was added to the allowance for loan losses for the six months
ended June 30, 1996 or June 30, 1995.
The following unaudited table sets forth certain information concerning
nonaccrual, past due and other real estate owned:
(dollar amounts in thousands, except percentages)
June 30, December 31, June 30,
1996 1995 1995
-------- ------------ --------
Nonaccrual loans $1,982 $3,228 $5,665
Accruing loans past due 90
days or more 285 89 2
Other real estate owned 1,403 692 1,314
------ ------ ------
Total nonperforming assets $3,670 $4,009 $6,981
====== ====== ======
Percentage of average assets 3.10% 2.98% 4.93%
====== ====== ======
As of June 30, 1996, nonaccrual loans are comprised of loans to 13 borrowers.
Two of the nonaccrual loans totaling $630,900, or 32% of total nonaccrual
loans, are real estate secured. Five of the nonaccrual loans totaling
$1,110,300, or 56% of total nonaccrual loans, consist of commercial loans,
secured by real estate or other commercial assets. The remaining six loans
were comprised of five consumer loans totaling $63,900 and one mortgage loan
totaling of $176,600.
Accruing loans 90 days or more past due as of June 30, 1996 consists of two
real estate secured loan. One totaling $66,000 which was paid in full on
July 2, 1996 and the other loan secured by real estate, totaling $219,000,
received a $145,000 payment in July and is expected to be paid in full in
August 1996.
The California economy and the Sacramento region, appear to be coming out of
a recession and the Bank's loan portfolio, which includes approximately
$33 million in real estate loans representing approximately 51% of the
portfolio, could be adversely affected if California economic conditions and
the real estate market in the Bank's market area weaken. The effect of such
events, although uncertain at this time, could result in an increase in the
level of nonperforming loans and the level of the allowance for loan losses
which could adversely affect the Company's and the Bank's future growth and
profitability.
At June 30, 1996, the Company's recorded investment in loans for which an
impairment has been recognized totaled $2,988,600. Included in this amount
were $25,000 of impaired loans for which an allowance of $25,000 is included
in the allowance for loan losses, as well as $2,963,600 of impaired loans that
as a result of write downs on the fair value of collateral, did not have an
allowance. The average recorded investment in impaired loans was $4,247,600
for the six months ended June 30, 1996. Except for impaired loans on non-
accrual, interest may be recognized on impaired loans when cash is received
and the future collection of principal is considered by management to be
probable. The amount so recognized was immaterial to operations during the
first six months of 1996.
Other real estate owned consists of one medical building, one commercial
office condominium, and one undeveloped parcel of land.
<PAGE>
Other Income
Other income for the three months ended June 30, 1996 increased $296,000
(250%), and $365,000 (173%) for the six months ended June 30, 1996, as
compared to the same periods in 1995. This increase is due primarily to
non-recurring income of $250,000 from a deposit forfeited by ValliCorp
and a $70,000 deposit forfeited from a contract to purchase other real
estate owned, which was not fulfilled and $91,000 in gains recognized on
the sale of other real estate owned. Other income also includes service
charges on deposit accounts, and other customer service fees. The decrease
in service charges in 1996 resulted from the decreased number of demand
deposit accounts.
Other Expenses
Salaries and employee benefit expense decreased $78,000 (10%) for the three
months ended June 30, 1996, and $176,000 (12%) for the six months ended
June 30, 1996, as compared to the same periods in 1995. This decrease in
employee expense is principally due to the decrease in the number of
employees and related decreases in benefit costs.
Occupancy expense and equipment expense decreased $91,000 (19%) for the
three months ended June 30, 1996 and $151,000 (17%) for the six months ended
June 30, 1996, as compared to the same periods in 1995. These decreases are
due primarily to decreased rental and depreciation expense resulting from
the Company's decision to sublease a portion of its administrative offices.
Other expenses decreased $54,000 (8%) and $204,000 (16%) for the three and
six months ended June 30, 1996 as compared to the same periods in 1995. The
components of other expenses are provided in the table below for the three
and six months ended June 30, 1996 and 1995:
(dollar amounts in thousands)
Three months Six months
ended ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
Stationery and supplies $38 $24 $ 79 $54
Communications 65 65 130 121
Professional fees 216 105 345 181
Deposit insurance assessments 48 81 98 175
Outside service fees 101 193 185 345
Loan collection and OREO expense 51 116 72 223
Other 120 109 190 204
---- ---- ------ ------
$639 $693 $1,099 $1,303
==== ==== ====== ======
The principal reasons for the decrease in other expenses between 1996 and
1995 relates to decreased deposit insurance assessment, decreased other
outside service fees and decreased OREO expense related to a $75,000
reserve valuation allowance taken in both the first and second quarter of
1995. Professional fees increased in both the first and second quarter of
1996 over 1995 due to increased legal expenses.
<PAGE>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
Exhibit No. 2 Agreement and Plan of Merger between Sunrise Bancorp and
First Banks America, Inc., dated June 24, 1996, filed as
exhibit 99.2 to the Registrant's Current Report on Form
8-K dated June 24, 1996, is hereby incorporated by
reference.
(b) Reports on Form 8-K
A Current Report on Form 8-K dated April 8, 1996, was filed on April 15,
1996, reporting under Item 5 - Other Events the signing of a nonbinding
letter of intent between for the Company and ValliCorp.
A Current Report on Form 8-K dated June 24, 1996, was filed on July 3, 1996,
reporting under Item 5 - Other Events the signing of an Agreement and Plan of
Merger between the Company and First Banks America, Inc.
<PAGE>
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.
SUNRISE BANCORP
Date: August 2, 1996 By:SARAH THOMPSON
---------------------------------------------
Sarah Thompson
Senior Vice President and Chief Financial
Officer
(Signing on behalf of the registrant and as
principal financial officer and chief
accounting officer).
<PAGE>
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.
SUNRISE BANCORP
Date: August 2, 1996 By: /S/ SARAH THOMPSON
Sarah Thompson
Senior Vice President and Chief Financial
Officer
(Signing on behalf of the registrant and as
principal financial officer and chief
accounting officer).
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
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