SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 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 quarterly period ended March 31, 2000
--------------
OR
/ / Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
---------- ----------
Commission File Number 0-10489
-----------
CENTENNIAL BANCORP
(Exact name of registrant as specified in its charter)
OREGON 93-0792841
(State of Incorporation) (I.R.S. Employer
Identification Number)
One S.W. Columbia St.
Portland, Oregon 97258
(Address of principal executive offices)
(Zip Code)
(503) 973-5556
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes /X/ No / /
<PAGE>
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of latest practicable date:
19,712,312 shares as of April 30, 2000.
2
<PAGE>
CENTENNIAL BANCORP
FORM 10-Q
MARCH 31, 2000
INDEX
-----
Page
PART I - FINANCIAL INFORMATION Reference
- ------------------------------ ---------
Condensed Consolidated Balance Sheets as of
March 31, 2000 and December 31, 1999 4
Condensed Consolidated Statements of Income for
the three months ended March 31, 2000 and 1999 5
Condensed Consolidated Statements of Changes in
Shareholders' Equity for the three months ended
March 31, 2000 and 1999 6
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31,
2000 and 1999 7
Notes to Condensed Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations:
Overview 13
Material Changes in Financial Condition 14
Material Changes in Results of Operations 15
Market Risk 16
Liquidity and Capital Resources 16
Effects of the Year 2000 17
PART II - OTHER INFORMATION
- ---------------------------
Item 6 - Exhibits and Reports on Form 8-K 19
Signatures 20
3
<PAGE>
CENTENNIAL BANCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------- -------------
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents:
Cash and due from banks $ 35,682,367 $ 29,934,856
Federal funds sold 1,130,000 --
------------ ------------
Total cash and cash equivalents 36,812,367 29,934,856
Securities available-for-sale 59,176,181 59,358,757
Mortgage loans held for sale 5,467,552 6,155,343
Loans, net 624,846,682 587,507,784
Federal Home Loan Bank stock 5,557,182 5,468,800
Premises and equipment, net 15,927,719 15,911,497
Other assets 21,083,369 22,400,675
------------ ------------
$768,871,052 $726,737,712
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits:
Demand $110,448,117 $106,113,028
Interest-bearing demand 266,131,022 246,690,606
Savings 22,083,876 33,320,788
Time 216,563,782 186,917,061
------------ ------------
Total deposits 615,226,797 573,041,483
Short-term borrowings 70,081,950 74,553,967
Accrued interest and other liabilities 5,672,820 4,813,501
------------ ------------
Total liabilities 690,981,567 652,408,951
Shareholders' equity:
Preferred stock -- --
Common stock, 19,709,982 issued and outstanding
(19,645,891 at December 31, 1999) 30,601,308 30,390,824
Retained earnings 48,878,567 45,624,007
Accumulated other comprehensive loss (1,590,390) (1,686,070)
------------ ------------
Total shareholders' equity 77,889,485 74,328,761
------------ ------------
$768,871,052 $726,737,712
============ ============
</TABLE>
See accompanying notes.
4
<PAGE>
CENTENNIAL BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
2000 1999
----------- ----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $16,933,751 $11,655,136
Interest on investment securities 945,935 1,173,474
Other interest income 7,293 65,255
---------- ----------
Total interest income 17,886,979 12,893,865
INTEREST EXPENSE
Interest on deposits 4,937,332 3,662,862
Interest on short-term borrowings 1,193,162 170,318
---------- ----------
Total interest expense 6,130,494 3,833,180
---------- ----------
NET INTEREST INCOME 11,756,485 9,060,685
Loan loss provision 750,000 500,000
---------- ----------
Net interest income after loan loss provision 11,006,485 8,560,685
NONINTEREST INCOME
Service charges 378,815 321,870
Other 290,007 185,666
Net gains on sales of mortgage loans 196,320 375,356
Net gains on sales of securities -- 165,806
---------- ---------
Total noninterest income 865,142 1,048,698
NONINTEREST EXPENSES
Salaries and employee benefits 4,173,515 3,277,367
Premises and equipment 979,507 739,186
Legal and professional 150,583 131,438
Advertising 231,118 143,029
Amortization of goodwill 172,107 21,447
Other 924,017 702,108
---------- ----------
Total noninterest expenses 6,630,847 5,014,575
---------- ----------
Income before income taxes 5,240,780 4,594,808
Provision for income taxes 1,986,220 1,635,050
---------- ----------
NET INCOME $3,254,560 $2,959,758
========== ==========
Earnings per share of common stock:
Basic $ .17 $ .15
Diluted $ .16 $ .15
Weighted average shares outstanding:
Basic 19,661,578 19,546,536
Diluted 20,111,786 20,345,523
</TABLE>
See accompanying notes.
5
<PAGE>
<TABLE>
<CAPTION>
CENTENNIAL BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
Accumulated
Other Total
Comprehensive Number of Common Retained Comprehensive Shareholders'
Income Shares Stock Earnings Income/(Loss) Equity
------ ------ ----- -------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 19,484,114 $29,690,949 $33,517,242 $508,950 $63,717,141
Comprehensive Income:
Net Income $2,959,758 2,959,758 2,959,758
Other comprehensive income, net of tax:
Unrealized loss on available-for-sale
securities (31,624) (31,624) (31,624)
Reclassification adjustment for net
gains on sales of securities included
in net income (106,116) (106,116) (106,116)
----------
Comprehensive Income $2,822,018
==========
Stock options exercised 97,068 216,667 216,667
Tax benefit of stock options exercised 176,619 176,619
---------- ----------- ----------- -------- -----------
Balance at March 31, 1999 19,581,182 $30,084,235 $36,477,000 $371,210 $66,932,445
========== =========== =========== ======== ===========
Balance at December 31, 1999 19,645,891 $30,390,824 $45,624,007 $(1,686,070) $74,328,761
Comprehensive Income:
Net Income $3,254,560 3,254,560 3,254,560
Other comprehensive income, net of tax:
Unrealized loss on available-for-sale
securities 95,680 95,680 95,680
----------
Comprehensive Income $3,350,240
==========
Stock options exercised 64,091 129,762 129,762
Tax benefit of stock options exercised 80,722 80,722
---------- ----------- ----------- ------------ -----------
Balance at March 31, 2000 19,709,982 $30,601,308 $48,878,567 $(1,590,390) $77,889,485
========== =========== =========== ============ ===========
</TABLE>
6
<PAGE>
CENTENNIAL BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
2000 1999
------------ ------------
<S> <C> <C>
Net cash provided by operating activities $ 6,946,241 $5,060,713
Cash flows from investing activities:
Net increase in loans (38,088,898) (10,832,140)
Proceeds from investment securities:
Maturities 523,613 606,584
Sales -- 15,244,725
Purchases of premises and equipment (427,226) (356,750)
----------- -----------
Net cash provided by (used in) investing activities (37,992,511) 4,662,419
Cash flows from financing activities:
Net increase in deposits 42,185,314 4,262,860
Net decrease in short-term borrowings (4,472,017) (7,713,055)
Proceeds from issuance of common stock 210,484 393,286
----------- -----------
Net cash provided by (used in) financing activities 37,923,781 (3,056,909)
----------- -----------
Net increase in cash and cash equivalents 6,877,511 6,666,223
Cash and cash equivalents at beginning of period 29,934,856 41,841,367
----------- -----------
Cash and cash equivalents at end of period $36,812,367 $48,507,590
=========== ===========
</TABLE>
See accompanying notes.
7
<PAGE>
CENTENNIAL BANCORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
---------------------
The interim condensed consolidated financial statements include the
accounts of Centennial Bancorp, a bank holding company ("Bancorp"), and its
wholly owned subsidiaries, Centennial Bank ("Bank") and Centennial Mortgage
Co. ("Mortgage Co."). The Bank is an Oregon state-chartered bank which
provides commercial banking services. The Mortgage Co. provides a variety
of residential and commercial real estate financing services.
The interim condensed consolidated financial statements are unaudited, but
include all adjustments, consisting only of normal accruals, which Bancorp
considers necessary for a fair presentation of the results of operations
for such interim periods.
All significant intercompany balances and transactions have been eliminated
in consolidation.
The interim condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements, including the notes
thereto, included in Bancorp's 1999 Annual Report to Shareholders.
Certain amounts for 1999 have been reclassified to conform with the 2000
presentation.
8
<PAGE>
2. Securities Available-for-Sale
-----------------------------
Securities available-for-sale consisted of the following at March 31, 2000
and December 31, 1999:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
March 31, 2000:
U.S. Treasuries $ 1,401,394 $ 2,718 $ 8,044 $ 1,396,068
U.S. Government
agencies 27,989,416 -- 1,523,138 26,466,278
Obligations of
states and
political
subdivisions 28,472,590 57,857 970,300 27,560,147
Corporate bonds 2,278,658 -- 92,396 2,186,262
Mortgage-backed
securities 1,411,673 -- 31,838 1,379,835
Equity securities 188,261 -- 670 187,591
----------- -------- ---------- -----------
Total $61,741,992 $ 60,575 $2,626,386 $59,176,181
=========== ======== ========== ===========
December 31, 1999:
U.S. Treasuries $ 1,400,808 $ 4,759 $ 6,325 $ 1,399,242
U.S. Government
agencies 27,988,761 -- 1,454,349 26,534,412
Obligations of
states and
political
subdivisions 28,468,534 79,235 1,232,228 27,315,541
Corporate bonds 2,284,118 120 79,123 2,205,115
Mortgage-backed
securities 1,936,017 -- 31,570 1,904,447
----------- ---------- ---------- -----------
Total $62,078,238 $ 84,114 $2,803,595 $59,358,757
=========== ========== ========== ===========
9
<PAGE>
3. Loans and Allowance for Loan Losses
-----------------------------------
The composition of the loan portfolio was as follows:
March 31, December 31,
2000 1999
------------ ------------
Real estate -- mortgage $141,231,506 $129,220,429
Real estate -- construction 241,213,065 227,387,353
Commercial 231,629,320 219,588,355
Installment 8,656,759 8,409,380
Lease financing 4,941,218 4,867,834
Other 4,084,095 4,198,940
------------ ------------
631,755,963 593,672,291
Allowance for loan losses (6,909,281) (6,164,507)
------------ ------------
$624,846,682 $587,507,784
============ ============
Transactions in the allowance for loan losses were as follows for the three
months ended March 31:
2000 1999
----------- -----------
Balance at beginning of period $6,164,507 $4,450,614
Provision charged to operations 750,000 500,000
Recoveries 3,267 9,893
Loans charged off (8,493) (37,191)
---------- ----------
Balance at end of period $6,909,281 $4,923,316
========== ==========
At March 31, 2000 and December 31, 1999, Bancorp had approximately
$7,637,000 and $5,833,000, respectively, in impaired loans. The specific
valuation allowance related to these loans was approximately $842,000 and
$465,000 at March 31, 2000 and December 31, 1999, respectively.
10
<PAGE>
It is Bancorp's policy to place loans on nonaccrual status whenever the
collection of all or a part of the principal balance is in doubt. Loans
placed on nonaccrual status may or may not be contractually past due at the
time of such determination, and may or may not be secured by collateral.
Loans on nonaccrual status at March 31, 2000 and December 31, 1999 were
approximately $4,238,000 and $579,000, respectively. The increase in
nonaccrual totals during the quarter was concentrated in one account which
was well secured and subject to an established programmed pay-out.
Loans past due 90 days or more on which Bancorp continued to accrue
interest were approximately $2,759,000 at March 31, 2000, and approximately
$2,163,000 at December 31, 1999. Bancorp had no restructured loans at
March 31, 2000 or December 31, 1999.
4. Short-Term Borrowings
---------------------
Short-term borrowings consisted of the following:
March 31, 2000 December 31, 1999
-------------- -----------------
Securities sold under
agreement to repurchase $ 4,139,950 $ 8,213,967
Federal funds purchased 14,200,000 19,600,000
FHLB cash management
advance program 30,742,000 25,740,000
FHLB borrowings under
promissory notes 21,000,000 21,000,000
------------ -----------
$70,081,950 $74,553,967
=========== ===========
11
<PAGE>
5. Earnings per Share of Common Stock
----------------------------------
A reconcilement of the weighted average shares used to compute basic and
diluted earnings per share is as follows:
Three Months Ended March 31,
----------------------------
2000 1999
---- ----
Weighted average shares
outstanding -- basic 19,661,578 19,546,536
Incremental shares from
stock options 450,208 798,987
---------- ----------
Weighted average shares
outstanding -- diluted 20,111,786 20,345,523
========== ==========
The weighted average number of common shares outstanding used to calculate
earnings per share of common stock and the number of shares outstanding in
the accompanying condensed consolidated statements of changes in
shareholders' equity reflects the retroactive effect of stock splits and
stock dividends.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS QUARTERLY REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS, WHICH
ARE MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. STATEMENTS THAT EXPRESSLY OR IMPLICITLY PREDICT
FUTURE RESULTS, PERFORMANCE OR EVENTS ARE FORWARD-LOOKING. IN ADDITION, THE
WORDS "ANTICIPATE," "BELIEVE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS
IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO CERTAIN
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE ANTICIPATED. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING: (1) POTENTIAL DELAYS
OR OTHER PROBLEMS IN IMPLEMENTING BANCORP'S GROWTH AND EXPANSION STRATEGY; (2)
THE ABILITY TO ATTRACT NEW DEPOSITS AND LOANS; (3) INTEREST RATE FLUCTUATIONS;
(4) COMPETITIVE FACTORS AND PRICING PRESSURES; (5) GENERAL ECONOMIC CONDITIONS,
EITHER NATIONALLY OR REGIONALLY, THAT COULD RESULT IN INCREASED LOAN LOSSES; (6)
CHANGES IN LEGAL AND REGULATORY REQUIREMENTS; AND (7) CHANGES IN TECHNOLOGY, AS
WELL AS OTHER FACTORS DESCRIBED IN THIS AND OTHER BANCORP REPORTS AND
STATEMENTS, INCLUDING, BUT NOT LIMITED TO, EXHIBIT 99.1 TO BANCORP'S FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1999, WHICH IS INCORPORATED HEREIN BY REFERENCE.
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. BANCORP DOES NOT INTEND TO
UPDATE ITS FORWARD-LOOKING STATEMENTS.
OVERVIEW
- --------
Centennial Bancorp, an Oregon corporation, was organized in 1981 as a bank
holding company and has two wholly owned subsidiaries: Centennial Bank and
Centennial Mortgage Co. Bancorp primarily serves the Portland, Oregon and
Eugene, Oregon markets. Unless the context clearly suggests otherwise,
references in this Quarterly Report to "Bancorp" include Centennial Bancorp and
its subsidiaries.
At March 31, 2000, Centennial Bank operated 15 full-service and five
limited-service branches, including the new full-service Mill Plain Office in
Vancouver, Washington, which opened in February 2000.
At March 31, 2000, Centennial Mortgage had two Eugene and two Portland-area
offices.
13
<PAGE>
Bancorp reported net income of $3.3 million, or $.17 per basic share, for
the three months ended March 31, 2000. This represented a 10% increase in net
income as compared to $3.0 million, or $.15 per basic share, for the three
months ended March 31, 1999. The increased earnings primarily reflected the
expansion of Bancorp's interest-earning assets and increased net interest
income. At March 31, 2000, Bancorp recognized a 34.6% increase in total assets
and 33.9% increase in interest-earning assets as compared to March 31, 1999.
MATERIAL CHANGES IN FINANCIAL CONDITION
- ---------------------------------------
Material changes in financial condition for the three months ended March
31, 2000 included continued substantial loan growth, increased cash balances,
strong deposit growth and a significant decrease in short-term borrowings.
At March 31, 2000, total assets of $768.9 million represented a 5.8%
increase from the $726.7 million total at December 31, 1999. Loans and loans
held for sale of $630.3 million at March 31, 2000 increased $36.7 million, or
6.2%, as compared to $593.7 million at December 31, 1999, mainly due to
commercial and real estate loan growth.
Cash and cash equivalents, including cash and due from banks and federal
funds sold, increased $6.9 million to $36.8 million at March 31, 2000 as
compared to $29.9 million at December 31, 1999. Cash and due from banks can
fluctuate significantly on a daily basis due to normal loan and deposit
activity, funds transfers and inter-bank clearing of cash items. Federal funds
sold represent excess funds, which are sold overnight to other financial
institutions, and their levels can also fluctuate significantly on a daily
basis.
Total deposits increased $42.2 million, or 7.4%, to $615.2 million at March
31, 2000 as compared to December 31, 1999. The increase was centered in time and
interest-bearing demand deposits.
At March 31, 2000, short-term borrowings totaled $70.1 million, a $4.5
million decrease from the $74.6 million outstanding at December 31, 1999.
Although short-term borrowings were the primary support for loan growth during
much of the quarter, an acceleration of deposit growth in March allowed the
reduced borrowing levels by quarter end.
14
<PAGE>
Remaining asset and liability category changes during the first quarter of
2000 were comparatively modest.
March 31, 2000 shareholders' equity was $77.9 million, a $3.6 million
increase over December 31, 1999. The increase resulted from earnings and the
exercise of stock options.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
- -----------------------------------------
Mainly as a result of continuing loan growth, total interest income
increased $5.0 million, or 38.7%, for the quarter ended March 31, 2000 when
compared to the quarter ended March 31, 1999.
Total interest expense increased $2.3 million, or 59.9%, for the three
months ended March 31, 2000 as compared to the same period in 1999. This
increase was due to the growth of interest-bearing deposits and substantially
higher levels of short-term borrowings.
The increase in interest earned, partially offset by the increase in
interest expense, served to increase Bancorp's net interest income by $2.7
million, or 29.8%, over the first quarter of 1999.
During the three months ended March 31, 2000, Bancorp charged a $750,000
loan loss provision to operations as compared to $500,000 during the three
months ended March 31, 1999. The increase in the loss provision was primarily
due to the assumed or "inherent" risk of Bancorp's increasing loan totals.
At March 31, 2000, Bancorp's allowance for loan losses was $6.9 million, as
compared to $6.2 million and $4.9 million at December 31, 1999 and March 31,
1999, respectively. Management believes that the allowance is adequate for
potential loan losses, based on management's assessment of various factors,
including present delinquent and non-performing loans, past history of industry
loan loss experience, and present economic trends impacting the areas and
customers served by Bancorp. The allowance is based on estimates, and actual
losses may vary from those currently estimated.
Noninterest income decreased $183,600 for the three months ended March 31,
2000 as compared to the same period in 1999. The decrease was the result of
lower gains on sales of loans and the absence of securities sales during the
quarter.
15
<PAGE>
Noninterest expense increased $1.6 million during first quarter 2000 as
compared to first quarter 1999. The increase, mainly in salaries and benefits,
premises and equipment costs and goodwill amortization, was primarily the result
of Bancorp's continuing growth and expansion.
During the quarter ended March 31, 2000, the provision for income taxes was
$2.0 million, an increase of $351,200 over the provision during the quarter
ended March 31, 1999. The increase primarily resulted from Bancorp's increased
pre-tax income.
MARKET RISK
- -----------
Market risk is the risk of loss from adverse changes in market prices and
rates. Bancorp's primary market risk is the interest rate risk associated with
its investing, lending, deposit and borrowing activities. Other types of market
risk, such as foreign currency exchange rate risk and commodity price risk, do
not materially affect or are not part of Bancorp's normal business activities.
Management actively monitors and manages Bancorp's interest rate risk with the
overall objective of achieving satisfactory and consistent profitability while
maintaining interest rate sensitivity within formal policy guidelines
established by the Board of Directors.
Bancorp did not experience a material change in market risk at March 31,
2000 as compared to December 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Bancorp's principal subsidiary, Centennial Bank, has adopted policies to
maintain a relatively liquid position to enable it to respond to changes in the
Bank's needs and financial environment. Currently, the Bank's main sources of
liquidity are customer deposits, short-term borrowings, loan repayments, sales
of loans and net cash provided by operating activities. Although sales of
investment securities were a significant funding source in 1999, the investment
portfolio is currently a less effective source of immediate liquidity due to
unrealized losses resulting from recent interest rate increases. Scheduled loan
repayments are a relatively stable source of funds, while deposit inflows and
unscheduled loan prepayments, which are influenced by general interest rate
levels, interest rates available on other investments, competition, economic
conditions and other factors, are not.
16
<PAGE>
The Bank maintains, on an unsecured basis, federal funds lines with
correspondent banks as a back-up source of temporary liquidity. At March 31,
2000, the Bank had federal funds lines of $42 million available with $14.2
million outstanding.
The Bank also maintains a cash management advance line of credit with the
Federal Home Loan Bank of Seattle which allows temporary borrowings for
liquidity. At March 31, 2000, the line was fully utilized with $30.7 million
outstanding.
At March 31, 2000, Bancorp's Tier 1 and total risk-based capital ratios
under the Federal Reserve Board's ("FRB") risk-based capital guidelines were
9.15% and 10.05%, respectively. The FRB's minimum risk-based capital ratio
guidelines for Tier 1 and total capital are 4% and 8%, respectively.
At March 31, 2000, Bancorp's capital-to-assets ratio under leverage ratio
guidelines was 9.45%. The FRB's current minimum leverage capital ratio guideline
is 3%.
During the quarter, Bancorp's Board of Directors approved a stock
repurchase program authorizing the repurchase of up to 5% of outstanding shares
over a two-year period. Repurchase activity began subsequent to quarter end and,
at April 30, 2000, a total of 23,500 shares had been repurchased at a cost of
approximately $214,000.
EFFECTS OF THE YEAR 2000
- ------------------------
Some computers and computer software programs are unable to accurately
recognize, for years after 1999, dates which are often expressed as a two digit
number. This inability to recognize date information accurately could
potentially affect computer operations and calculations, or could cause computer
systems to not operate at all.
Bancorp is heavily reliant on computers for accounting for customer records
and transactions, as well as operating performance. Prior to December 31, 1999,
Bancorp initiated and completed a comprehensive Year 2000 audit program,
primarily directed by a task force organized by management in early 1997.
Bancorp also prepared contingency plans to minimize disruptions to its
operations due to Year 2000 issues. Among other criteria, Bancorp's Year 2000
programs were designed to comply with guidance provided by federal banking
regulators to financial institutions with respect to becoming Year 2000
compliant.
17
<PAGE>
To date, Bancorp has not, nor to management's knowledge has any third party
vendor or service provider on which Bancorp relies, experienced any material
problems related to the Year 2000.
However, Bancorp cannot determine if it will be subject to Year 2000
compliance problems in the future, or if Year 2000 problems have arisen that
management has failed to detect.
Bancorp will continue to monitor its business applications and maintain
contact with significant third parties to resolve any Year 2000 problems that
may arise in the future. Management believes that its efforts to achieve Year
2000 compliance and the impact of the Year 2000 problem will not have a material
effect on Bancorp's operations.
18
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
- ------------------------------------------
(a) Exhibits
27 Financial Statement Schedule
(b) Reports on Form 8-K.
None
19
<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.
CENTENNIAL BANCORP
Dated: May 10, 2000 /s/ Richard C. Williams
-----------------------------------
Richard C. Williams
President & Chief Executive Officer
Dated: May 10, 2000 /s/ Michael J. Nysingh
-----------------------------------
Michael J. Nysingh
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTENNIAL
BANCORP'S CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN ITS QUARTERLY REPORT ON
FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 36,812,367
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,130,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 59,176,181
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 631,755,963
<ALLOWANCE> 6,909,281
<TOTAL-ASSETS> 768,871,052
<DEPOSITS> 615,226,797
<SHORT-TERM> 70,081,950
<LIABILITIES-OTHER> 5,672,820
<LONG-TERM> 0
0
0
<COMMON> 30,601,308
<OTHER-SE> 47,288,177
<TOTAL-LIABILITIES-AND-EQUITY> 768,871,052
<INTEREST-LOAN> 16,933,751
<INTEREST-INVEST> 945,935
<INTEREST-OTHER> 7,293
<INTEREST-TOTAL> 17,886,979
<INTEREST-DEPOSIT> 4,937,332
<INTEREST-EXPENSE> 6,130,494
<INTEREST-INCOME-NET> 11,756,485
<LOAN-LOSSES> 750,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,630,847
<INCOME-PRETAX> 5,240,780
<INCOME-PRE-EXTRAORDINARY> 5,240,780
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,254,560
<EPS-BASIC> .17
<EPS-DILUTED> .16
<YIELD-ACTUAL> 0<F1>
<LOANS-NON> 4,238,000
<LOANS-PAST> 2,759,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,164,507
<CHARGE-OFFS> 8,493
<RECOVERIES> 3,267
<ALLOWANCE-CLOSE> 6,909,281
<ALLOWANCE-DOMESTIC> 6,909,281
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1> INFORMATION NOT CALCULATED FOR INTERIM REPORTS.
</FN>
</TABLE>
