FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended MARCH 31, 1996
Commission file number 2-79261
DELTA NATIONAL BANCORP
(Exact name of registrant as specified in its charter)
California 94-2839814
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
611 North Main Street, Manteca, California 95336-3740
(Address of principal executive offices) (Zip code)
(209) 824-4050
(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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 31, 1996:
Common Stock, no par value - 376,782 shares.
<PAGE>
DELTA NATIONAL BANCORP
FORM 10-Q CROSS REFERENCE INDEX
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PART I. FINANCIAL INFORMATION Page
- --------------------------------------------------------------------------------
Item 1. Financial Statements
Consolidated Balance Sheets -
December 31, 1995 and March 31, 1996 4
Consolidated Statements of Income -
Three months ended March 31, 1996 and 1995 5
Consolidated Statements of Cash Flows -
Three months ended March 31, 1996 and 1995 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
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PART II. OTHER INFORMATION Page
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Item 1. Legal Proceedings 24
Item 2. Changes in Securities 24
Item 3. Defaults Upon Senior Securities 24
Item 4. Submission of Matters to a Vote of Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
DELTA NATIONAL BANCORP
CONSOLIDATED BALANCE SHEETS
( In Thousands)
Unaudited
March 31, Dec 31,
1996 1995
ASSETS
Cash and due from banks ................................ $ 3,187 $ 4,330
Federal funds sold ..................................... 4,800 7,600
------- -------
Total cash and cash equivalents (notes A10 and B) 7,987 11,930
Interest bearing deposits in banks ..................... 622 51
Securities available for sale (notes A3 and C) ......... 12,543 12,926
Securities held to maturity (notes A2 and C) ........... 20,840 20,351
------- -------
33,383 33,277
Loans, net (notes A4, A5 and D) ........................ 46,204 46,520
Property and equipment (note A6) ....................... 1,309 1,343
Interest receivable, other assets and other
real estate owned (notes A7 and F) ..................... 2,273 1,803
------- -------
TOTAL ASSETS ........................................... $91,778 $94,924
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing ............................... 12,268 15,980
Interest bearing ................................... 68,940 68,859
------- -------
Total deposits ................................. 81,208 84,839
Accrued interest/other liabilities ..................... 497 314
Stockholders' equity:
Common stock, no par value
Authorized - 5,000,000 shares
Issued and outstanding - 376,782 shares .......... 3,532 3,532
Retained earnings .................................. 6,515 6,194
Net unrealized appreciation (depreciation) on
securities available-for-sale, net of tax of
$18,201 and $31,827 at March 31, 1996
and December 31, 1995, respectively .............. 26 45
------- -------
Total stockholders' equity ..................... 10,073 9,771
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............. $91,778 $94,924
======= =======
The accompanying notes are an integral part of this statement.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
DELTA NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME
( In Thousands)
EXCEPT PER SHARE DATA
Unaudited
3 Months 3 Months
Ending Ending
March 31, March 31,
1996 1995
--------- ---------
Interest income:
Interest and fees on loans ...................... $ 1,384 $ 1,381
Securities available-for-sale ................... 194 291
Securities held-to-maturity ..................... 354 132
Interest-bearing deposits in banks .............. 1 0
Federal funds sold .............................. 69 49
------- -------
Total interest income ....................... 2,002 1,853
Interest expense on deposits ........................ 724 677
------- -------
Net interest income ......................... 1,278 1,176
Provision for loan losses ........................... (62) 100
------- -------
Net interest income after provision
for possible loan losses ................... 1,340 1,076
Other income
Service charges on deposits ..................... 128 116
Other income .................................... 90 70
------- -------
218 186
------- -------
Other expenses
Salaries, wages and employee benefits ........... 521 467
Occupancy and equipment ......................... 168 155
Other operating expenses ........................ 326 306
------- -------
1,015 928
------- -------
Earning before income taxes ................. 543 334
Income taxes (note A8) .............................. 222 125
------- -------
NET EARNINGS ................................ $ 321 $ 209
======= =======
Net earnings per share (note A9) .................... $ .85 $ .55
======= =======
The accompanying notes are an integral part of this statement.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
DELTA NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Unaudited
3 MONTHS ENDING MARCH 31,
1996 1995
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities:
Net earnings ....................................... $ 321 $ 209
Adjustments to reconcile net earnings to net
cash provided by operating activities
(Gain)/Loss on sale of assets ................ 1 12
(Gain)/Loss on sale of OREO .................. 0 (122)
Provision for possible loan losses ........... (62) 100
Provision for OREO ........................... 62 34
Provision for depreciation and amortization... 123 143
Decrease (increase) in interest
receivable and other assets................... (219) (330)
Increase (decrease) in interest payable
and other liabilities ....................... 121 89
------- -------
Net cash provided by operating activities.. 347 135
------- -------
Cash flows from investing activities:
Proceeds from maturities of securities
available-for-sale ............................... 0 997
Proceeds from maturities of securities
held-to-maturity ................................. 1,770 1,208
Purchase of securities available-for-sale .......... 0 0
Purchase of securities held-to-maturity ............ (1,983) (1377)
Net (increase) decrease in loans ................... 378 1,153
Purchase of property and equipment ................. (16) (29)
Purchase/additions to OREO ......................... (236) (34)
Proceeds from sale of property and equipment ....... 0 0
Proceeds from sale of OREO ......................... 0 497
Net (Inc.) dec. Int. Bearing Deposits Other Inst.... (571) 0
------- -------
Net cash (used in) provided by
investing activities ...................... (658) 2,415
------- -------
The accompanying notes are an integral part of this statement.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
DELTA NATIONAL BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(In Thousands)
Unaudited
3 MONTHS ENDING MARCH 31,
1996 1995
Cash flows from financing activities:
Net increase (decrease) in demand deposits,
money market accounts and savings accounts ....... (3,459) 2,476
Net (decrease) increase in time deposits ........... (173) (1,880)
Cash dividends ..................................... 0 0
-------- --------
Net cash provided by financing activities . (3,632) 596
-------- --------
Net increase (decrease) in cash and
cash equivalents ..................................... (3,943) 3,146
Cash and cash equivalents at beginning of period ..... 11,930 6,149
-------- --------
Cash and cash equivalents at end of period ........... $ 7,987 $ 9,295
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 493 482
Income Taxes 341 234
Noncash investing and financing activities:
The Bank recognized an decrease of $32,835 in the fair value of its
available-for-sale securities in the first three months of 1996 and an
increase of $730,537 in the fair value of its available-for-sale securities
for the year ended December 31, 1995.
The accompanying notes are an integral part of this statement.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
DELTA NATIONAL BANCORP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE A - Summary of Accounting Policies
Delta National Bancorp (the Company) was incorporated under the laws of the
State of California on December 21, 1981 for the purpose of serving as a bank
holding company under the Bank Holding Company Act of 1956. The Company's
wholly-owned subsidiary, Delta National Bank (the Bank), operates as a
commercial bank in the cities of Manteca, Riverbank, Denair and Modesto,
California. The Company's headquarters are located at the Manteca Branch at 611
North Main Street, Manteca, California. Through its branches the Bank provides
traditional commercial banking services to individuals and small and
medium-sized businesses located in the California Central Valley.
The accounting and reporting policies of the Company and the Bank conform with
generally accepted accounting principles and general practice within the banking
industry. The consolidated financial statements of the Company include the
accounts of the Company and the Bank. A summary of the significant accounting
policies applied in the preparation of the accompanying financial statements
follows.
There have been no material changes in Delta National Bancorp's significant
accounting policies during the three months ended March 31, 1996. Management has
presented, for comparison purposes its unaudited consolidated balance sheet as
of March 31, 1996, its unaudited consolidated statements of earning and cash
flows for the three months ended March 31, 1996 and 1995. The financial
statements contain, in the opinion of management, all necessary normal recurring
adjustments and are not intended to be indicative of results that can be
expected for a full year.
1. Consolidation
The consolidated financial statements of the Company include the accounts of the
Company and the Bank. Significant intercompany transactions and amounts have
been eliminated.
2. Securities held-to-maturity
Bonds, notes and debentures for which the Bank has the positive intent and
ability to hold to maturity are reported at cost, adjusted for amortization of
premiums and accretion of discounts which are recognized as adjustments to
interest income over the period to maturity.
3. Securities available-for-sale
Available-for-sale securities consist of bonds, notes and debentures not
classified as trading securities or held-to-maturity securities. Unrealized
holding gains and losses, net of tax, are reported as a net amount in a separate
component of stockholders' equity until realized. Gains and losses on the sale
of available-for-sale securities are determined using the specific
identification method. The amortization of premiums and accretion of discounts
are recognized as adjustments to interest income over the period to maturity.
<PAGE>
DELTA NATIONAL BANCORP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
4. Loans
Loans are reported at the principal amount outstanding, net of unearned income,
deferred loan fees, and the allowance for loan losses (interim financial
statements will also be reported net of deferred profit on OREO sales). Unearned
discounts on installment loans are recognized as income over the terms of the
loans. Interest on other loans is calculated by using the simple interest method
on the daily balance of the principal amount outstanding.
Loan fees net of certain direct costs of origination, which represent an
adjustment to interest yield, are deferred and amortized over the contractual
term of the loan.
Loans on which the accrual of interest has been discontinued are designated as
nonaccrual loans. Accrual of interest on loans is discontinued either when
reasonable doubt exists as to the full and timely collection of interest or
principal or when a loan becomes contractually past due by ninety days or more
with respect to interest or principal. When a loan is placed on nonaccrual
status, all interest previously accrued but not collected is reversed against
current period interest income. Income on such loans is then recognized only to
the extent that cash is received and where the future collection of principal is
probable. Interest accruals are resumed on such loans only when they are brought
fully current with respect to interest and principal and when, in the judgment
of management, the loans are estimated to be fully collectible as to both
principal and interest.
5. Allowance for loan losses
The allowance for loan losses is established through a provision for loan losses
charged to expenses. Loans are charged against the allowance for loans losses
when management believes that the collectibility of the principal is unlikely.
The allowance is an amount that management believes will be adequate to absorb
losses inherent in existing loans and commitments to extend credit, based on
evaluations of collectibility and prior loss experience of loans 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, commitments and current economic
conditions that may affect the borrowers' ability to pay.
6. Property and equipment
Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided for in amounts
sufficient to relate the cost of depreciable assets to operations over their
estimated service lives. Leasehold improvements are amortized over the lives of
the improvements or the terms of the related leases, whichever is shorter. The
straight-line method of depreciation is followed for financial reporting
purposes, but accelerated methods are used for tax purposes. Deferred income
taxes have been provided for the resulting depreciation differences.
<PAGE>
DELTA NATIONAL BANCORP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
7. Foreclosed real estate
Real estate properties acquired through foreclosure are initially recorded a
fair value at the date of foreclosure, establishing a new cost basis. After
foreclosure, valuations are periodically performed by management and the real
estate is carried at the lower of (1) cost, or (2) fair market value minus
estimated costs to sell. The net carrying value (included in other assets on the
balance sheet) of foreclosed real estate was $735,200 for the period ending
March 31, 1996 and $560,600 for the period ending December 31, 1995.
8. Income taxes
Deferred tax assets and liabilities are reflected at currently enacted income
tax rates applicable to the period in which the deferred tax assets or
liabilities are expected to be realized or settled. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted through the
provision for income taxes.
9. Earnings per share
Earnings per share amounts are computed on the basis of the weighted average
number of share outstanding during each year. The weighted average number of
shares outstanding for March 31, 1996 and December 31, 1995 was 376,782.
10. Cash and cash equivalents
For the purposes of the statement of cash flows, the Bank considers due from
banks and federal funds sold for one-day periods to be cash equivalents.
NOTE B - CASH AND DEPOSITS
The Bank is required to maintain reserves by the Federal Reserve Bank. The
average reserve requirements are based on a percentage of deposit liabilities.
The Bank has met or exceeded the average reserve requirements for the periods
presented in the financial statements. In addition, the Federal Reserve requires
the Bank to maintain a certain minimum balance at all times, and such
requirement was met by the Bank during the periods presented in the financial
statements.
<PAGE>
DELTA NATIONAL BANCORP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE C - SECURITIES
Effective December 31, 1993, the Bank adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". These securities are
classified into one of three categories: held-to-maturity, available-for-sale,
or trading. Held-to-maturity securities are measured at amortized cost and
available-for-sale and trading securities are measured at fair value. Unrealized
holding gains and losses for available-for-sale securities are excluded from
earnings and reported as a net amount in a separate component of stockholders'
equity until realized.
Amortized cost (book values) and estimated fair values of investment securities
for March 31, 1996 and December 31, 1995 are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
March 31, 1996 December 31, 1995
Gross Gross
Unrealized Estimated Unrealized Estimated
Amortized Gains Fair Amortized Gains Fair
Cost (Losses) Value Cost (Losses) Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Available-for-sale securities:
U.S. treasury securities ... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Obligations of other U.S.
government agencies ...... 11,839 (82) 11,757 12,189 (66) 12,123
Obligations of state and
political subdivisions ... 605 126 731 606 142 748
Corporate bonds and other .. 55 0 55 55 0 55
------- ------- ------- ------- ------- --------
Total ........................ $ 12,499 $ 44 $12,543 $ 12,850 $ 76 $ 12,926
======== ======= ======= ======= ======== =========
Held-to-maturity securities:
U.S. treasury securities ... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Obligations of other U.S.
government agencies ...... 19,445 122 19,567 18,252 142 18,394
Obligations of state and
political subdivisions ... 695 (1) 694 696 (2) 694
Corporate bonds and other .. 700 (1) 699 1,404 (8) 1,396
-------- ------- ------- -------- -------- ---------
Total ........................ 20,840 120 20,960 20,352 132 20,484
======== ======= ======= ======== ======== =========
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
DELTA NATIONAL BANCORP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE D - LOANS
The composition of the Bank's loan portfolio at March 31, 1996 and December 31,
1995 is as follows:
- --------------------------------------------------------------------------------
March 31, December 31,
1996 1995
- --------------------------------------------------------------------------------
Commercial, financial and agricultural ....... $22,052,682 $22,755,013
Real estate - construction ................... 9,751,240 9,175,475
Real estate - mortgage ....................... 14,104,579 14,090,502
Installment loans to individuals ............. 1,944,843 2,073,749
----------- -----------
47,853,344 48,094,739
Unearned discount ...................... (75,816) (80,189)
Allowance for loan losses .............. (1,188,429) (1,219,304)
Deferred loan fees ..................... (290,512) (275,427)
Deferred profit on OREO sales (1) ...... (95,290)
----------- -----------
Loans, net ........................ $46,203,297 $46,519,819
=========== ===========
- --------------------------------------------------------------------------------
(1) Audited financial statements for December 31, 1995 do not include Deferred
profit on OREO sales due to not being material in amount.
The following table summarizes the changes in the allowance for loan losses for
the periods ending March 31, 1996 and December 31, 1995:
- --------------------------------------------------------------------------------
March 31, December 31,
1996 1995
- --------------------------------------------------------------------------------
Balance at January 1 ........................... $1,219,304 $ 599,422
Charge Offs:
Commercial, financial and agricultural...... 0 0
Real Estate - construction.................. 0 0
Real Estate - mortgage...................... 0 0
Installment loans to individuals ........... (8,664) (112,366)
----------- -----------
Total Charge Offs ...................... (8,664) (112,366)
----------- -----------
Recoveries:
Commercial, financial and agricultural ..... 0 1,390
Real Estate - construction ................. 20,605 80,425
Real Estate - mortgage ..................... 600 2,200
Installment loans to individuals ........... 18,155 24,219
----------- -----------
Total Recoveries ....................... 39,360 108,234
----------- -----------
Net charge offs ................................ 30,696 (4,132)
Additions charged to operations ................ (61,571) 624,014
----------- -----------
Balance at December 31, ........................ $ 1,188,429 $ 1,219,304
=========== ===========
<PAGE>
DELTA NATIONAL BANCORP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
Impaired Loans: In May 1993, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 114 entitled
"Accounting by Creditors for Impairment of a Loan". This statement, which became
effective January 1, 1995, requires that impaired loans, as defined, be measured
based on the present value of expected future cash flows discounted at the
loan's effective interest rate or, as a practical expedient, at the loan's
observable market price or the fair value of the collateral if the loan is
collateral dependent. The Bank adopted and implemented SFAS No. 114 as of
January 1, 1995.
The carrying value of impaired loans totaled $2,014,445 at March 31, 1996, of
which $1,143,561 is the result of a troubled debt restructuring. The total
allowance for loans losses relating to these loans was $273,409. Total cash
collected on impaired loans for the first three months of 1996 approximated
$614,406 of which $590,435 was credited to the principal balance outstanding,
and the remainder was recognized as interest income. One impaired loan in the
amount of $236,238 was transferred to OREO.
A loan is considered impaired when, based on current information and events, it
is probable that a creditor will be unable to collect all amounts due according
to the contractual terms of the loan agreement. Amounts due according to the
contractual terms include both principal and interest. The Company has
determined that the definition of impaired loans will include any loans placed
on nonaccrual status and any loans which have had a modification of terms under
troubled debt restructuring. Loans in the amount of $300,000 or more will be
evaluated individually. Large groups of smaller-balance homogenous loans, under
$300,000, will be evaluated on a composite basis using historical data, such as
average recovery period and average amount recovered, along with a composite
rate of interest as a means of measuring for impairment. Loans that are not
evaluated individually will be grouped together by similar risk characteristics.
The following categories will be grouped together: Agricultural, Commercial,
Real Estate Construction, Residential Real Estate, Consumer, and Commercial Real
Estate loans.
Loan impairment is measured by estimating the present value of expected future
cash flows discounted at the loan's effective interest rate, its observable
market price, or the fair value of collateral if the loan is collateral
dependent. When it has been substantiated that a loss is evident and should be
recognized, the impaired loan will be charged off. The recorded investment in
these loans and the valuation allowance for loan losses related to loan
impairment are as follows:
- --------------------------------------------------------------------------------
March 31, December 31,
1996 1995
- --------------------------------------------------------------------------------
Principal amount of Principal amount of
impaired loans.............$ 2,012,779 impaired loans.............$ 2,840,637
Accrued Interest .......... 1,051 Accrued Interest........... 267
Deferred loan costs ....... 615 Deferred loan costs........ 1,408
----------- -----------
2,014,445 2,842,312
Less valuation allowance .. 273,409 Less valuation allowance.. 334,981
----------- -----------
Total carrying value ..$ 1,741,036 Total carrying value..$ 2,507,331
=========== ===========
Valuation allowance at Valuation allowance at
beginning of period .......$ 334,981 beginning of period...... $ 0
Net charges to operations Net charges to operations
for impairment ........... (61,572) for impairment........... 334,981
Direct write-downs ........ 0 Direct write-downs....... 0
Recoveries ................ 0 Recoveries............... 0
----------- -----------
Valuation allowance at Valuation allowance at
end of period..............$ 273,409 end of period............ $ 334,981
=========== ===========
<PAGE>
DELTA NATIONAL BANCORP
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
NOTE E - RELATED PARTY TRANSACTIONS
The Bank, in the ordinary course of business, makes loans and receives deposits
from its directors and stockholders. The following sets forth information for
all directors and officers (and their families) who had loans with the bank, or
who were otherwise indebted to the Bank in an amount in excess of $60,000.
In 1991 the Bank extended credit to Valerie Salas, daughter of Andrew Rossi,
President, Chief Executive Officer and Director of the Company and sister of
Toinette Rossi, Vice President/Manager and Director of the Company, in the
amount of $16,595. As of March 31, 1996, the principal balance owing was $7,096.
This loan is unsecured and bears interest at a fixed rate of 13%. This loan
matures on April 23, 1997.
In 1995, the Bank funded an unsecured line of credit to John Rossi, son of
Andrew Rossi, President, Chief Executive Officer and Director of the Company and
sister of Toinette Rossi, Vice President/Manager and Director of the Company, in
the amount of $303,250. On March 31, 1996, the principal balance owing was
$200,000. This loan bears interest at the Bank's reference rate plus 2.5% and is
scheduled to mature November 1, 1996.
NOTE F - FORECLOSED REAL ESTATE
Foreclosed real estate owned includes real estate acquired through foreclosure,
or by obtaining a deed in lieu of foreclosure. Real estate properties acquired
through foreclosure are initially recorded at fair value at the date of
foreclosure establishing a new cost basis. After foreclosure, valuations are
periodically performed and the real estate is carried at the lower of (1) cost
or (2) fair market value minus estimated costs to sell. Total foreclosed real
estate (before the valuation allowance) was $1,092,405 at March 31, 1996, this
consisted of four properties, three of which represented bare land. The fourth
property is a condominium complex consisting of eight units which were completed
and placed in service as rental units by the Bank. The valuation allowance at
March 31, 1996 totaled $357,205.
- --------------------------------------------------------------------------------
March 31, 1996 December 31, 1995
- --------------------------------------------------------------------------------
Real estate owned:
Foreclosed assets $1,092,405 $ 856,167
Less valuation allowance 357,205 295,567
- --------------------------------------------------------------------------------
OREO, net $ 735,200 $ 560,600
- --------------------------------------------------------------------------------
Changes in the allowance for losses for foreclosed real estate for the periods
ending March 31, 1996 and December 31, 1995 are as follows:
- --------------------------------------------------------------------------------
March 31, 1996 December 31, 1995
- --------------------------------------------------------------------------------
Balance at January 1, $ 295,567 $ 257,644
Provision charged to operations 61,638 37,923
Charge-offs, net of recoveries 0 0
- -------------------------------------------------------------------------------
Balance at end of period $ 357,205 $ 295,567
- --------------------------------------------------------------------------------
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item II - Financial Condition and Results of Operations
DELTA NATIONAL BANCORP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL REVIEW
PERFORMANCE SUMMARY
The following discussion is intended to provide information to facilitate the
understanding and assessment of significant changes in trends related to the
financial condition of Delta National Bancorp ("the Company") and its results of
operations. It should be read in conjunction with the unaudited financial
statements and footnotes appearing elsewhere in this report.
At March 31, 1996, the Company's total assets were $91,778,039, net loans
amounted to $46,203,295, stockholders' equity was $10,073,184 and the allowance
for loan losses was $1,188,429. This compares to total assets of $94,924,333,
net loans of $46,519,819, stockholders' equity of $9,771,029 and allowance for
loan losses of $1,219,304 at December 31, 1995.
Net income for the first three months of 1996 amounted to $321,364 or $.85 per
share, as compared with $208,482 or $.55 per share earned for the same period in
1995. A significant portion of the increase in net income from a year ago was
due to increased interest income earned on securities and a decrease in the
provision for loan losses.
The carrying value of nonaccrual loans at quarter end amounted to $870,884, down
from $1,694,556 at December 31, 1995. One large commercial loan makes up the
major portion of the nonaccrual loans. At March 31, 1996, other real estate
owned ("OREO") (net of the valuation allowance) totaled $735,200 compared with
OREO of $560,600 at December 31, 1995. Restructured loans, loans outstanding
whose original terms have been modified, totaled $1,143,561 at March 31, 1996,
which consisted of one real estate loan compared to $l,147,775 at December 31,
1995.
There was a decrease in the provision for loan losses of ($61,571) compared to a
$100,000 accrual for the same period in 1995. Net charge-offs continue to
decrease in 1996 over the previous year. Net (charge-offs)/recoveries amounted
to $30,696 for the first three months of 1996 versus $4,733 for the same period
in 1995.
Net interest income was $1,278,556 at March 31, 1996, compared to $1,176,484 for
March 31, 1995. Net interest income increased due to increased interest income
on securities.
Non-interest income amounted to $217,988 as of March 31, 1996, compared to
$185,908 for March 31,1995. Income related to the service charges on deposits
increased $12,082 while other income increased $45,634. This represents an
increase of 17.3% in other income.
Operating expenses amounted to $1,014,279 in the first quarter of 1996, compared
to $927,784 in the first quarter of 1995 which represents a 9.3% increase. FDIC
assessments decreased significantly in 1996 while professional fees and salaries
and wages increased due to normal operating expenditures.
<PAGE>
EARNINGS PERFORMANCE
Net Income: Net income for the first three months of 1996 amounted to $321,364
or $.85 per share, as compared with $208,482 or $.55 per share earned for the
same period in 1995. A significant portion of the increase in net income from a
year ago was due to increased interest income earned on securities and a
decrease in the provision for loan losses.
Net Interest Income: The Company's operating results depend primarily on net
interest income. A primary factor affecting the level of net interest income is
the Company's interest rate margin between the yield earned on interest-earning
assets and the rate paid on interest-bearing liabilities as well as the
difference between the relative amounts of average interest-earning assets and
interest-bearing liabilities. Net interest income increased 8.6% to $1,278,556
for the quarter ending March 31, 1996 compared to $1,176,484 at March 31, 1995.
Net interest income increased primarily due to increased income on securities.
Provision for Loan Losses: The provision for loan losses totaled ($61,571) as of
March 31, 1996, compared to a $100,000 accrual as of March 31, 1995. The
decrease in the provision in 1996 was primarily due to an impaired loan which
was transferred to Other Real Estate Owned. The corresponding provision for this
loan was transferred to the valuation allowance for OREO. The provision for loan
losses reflects management's on-going evaluation of the risk inherent in the
loan portfolio, which includes consideration of numerous factors, such as
economic conditions, relative risks in the loan portfolio, loan loss experience
and review and monitoring of individual loans for identification and resolution
of potential problems.
Non-Interest Income: Non-interest income amounted to $217,988 for the first
three months of 1996, up from $185,908 in 1995. Service charges on deposits
increased approximately 10.4% in 1996 due to the increase in non-interest
bearing demand deposits.
- --------------------------------------------------------------------------------
March 31, 1996 March 31, 1995
(In thousands)
- --------------------------------------------------------------------------------
Service charges on deposit accounts..... $127,894 $115,812
Gain on sale of OREO ................... 144 25,780
Gain on sale of fixed assets............ 0 0
Other income ........................... 89,950 44,316
- --------------------------------------------------------------------------------
Total .............................. $217,988 $185,908
- --------------------------------------------------------------------------------
Non-Interest Expense: Non-interest expense amounted to $1,014,279 in 1996,
compared to $927,784 in 1995. FDIC assessments decreased significantly in 1996
while professional fees and salaries and wages increased due to normal operating
expenditures.
- --------------------------------------------------------------------------------
March 31, 1996 March 31, 1995
(In thousands)
- --------------------------------------------------------------------------------
Salaries and wages ........................ $ 465,862 $ 409,483
Employee benefits .......................... 55,587 57,292
Occupancy and equipment .................... 173,611 161,243
Stationary and supplies .................... 13,182 16,056
Professional fees .......................... 45,070 26,710
Assessments ................................ 10,253 53,748
Other operating ............................ 249,653 191,564
Loss on sale of OREO ....................... 0 0
Loss on sale of fixed assets ............... 1,061 11,688
Loss on sale of available-for-sale security. 0 0
- --------------------------------------------------------------------------------
Total .................................. $1,014,279 $ 927,784
- --------------------------------------------------------------------------------
<PAGE>
ASSET LIABILITY MANAGEMENT
Liquidity: For the Company, as with most commercial banking institutions,
liquidity is the ability to roll over substantial amounts of maturing
liabilities and to acquire new liabilities at levels consistent with
management's financial targets. During the first three months of 1996, the
Company continued to maintain a high level of liquidity. Highly liquid assets
consist of cash, deposits placed with banks, Federal funds sold and securities
available for sale. At quarter end, the Bank had a liquidity ratio of 23.69%.
Interest Rate Sensitivity Management: The primary objectives of the asset
liability management process are to provide a stable net interest margin,
generate net interest income to meet the Company's earnings objectives and
manage balance sheet risks. These risks include liquidity risk, capital adequacy
and overall interest rate risk inherent in the Company's balance sheet. In order
to manage its interest rate sensitivity, the Company has adopted policies which
attempt to limit the change in pre-tax net interest income assuming various
interest rate scenarios. This is accomplished by adjusting the repricing
characteristics of the Company's assets and liabilities as interest rates
change. The Company's Asset Liability Committee chooses strategies in
conformance with its policies to achieve an appropriate trade off between
interest rate sensitivity and the volatility of pre-tax net interest income and
net interest margin.
The following table sets out the maturity and rate sensitivity of the Company's
interest-earning assets and interest -bearing liabilities as of March 31, 1996.
The cumulative interest sensitivity gap ("gap") as reflected in the table
represents the difference between interest-earning assets and interest-bearing
liabilities maturing or repricing, whichever is earlier, at a given point in
time and is not necessarily indicative of the position on other dates.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
0 - 30 31 - 90 3 - 6 6 - 12 1 - 5 Over 5
(In Thousands) Days Days Months Months Years Years Total
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earning Assets:
Fed funds sold .......................... $ 4,800 $ -- $ -- $ -- $ -- $ -- $ 4,800
Deposit accounts with other banks........ 622 -- -- -- -- -- 622
Securities: (3)
U. S. government agencies............ -- 17,495 13,263 500 -- 25 31,283
Municipals .......................... -- 220 410 280 -- 391 1,301
Corporate bonds (6) ................. 700 -- -- -- -- -- 700
- -------------------------------------------------------------------------------------------------------------------------
Total securities ........................ $ 700 $17,715 $13,673 $ 780 $ -- $ 416 $ 33,284
- -------------------------------------------------------------------------------------------------------------------------
Loans: (1)...............................
Commercial - fixed .................. $ 2,381 $ 501 $ 1,168 $ 619 $ 2,625 $ 167 $ 7,461
Commercial - variable (2)............ 14,589 -- -- -- -- -- 14,589
Real estate - fixed ................. -- -- -- 811 1,855 414 3,080
Real estate - variable............... 20,467 -- -- -- -- -- 20,467
Installment (4) ..................... 21 31 31 93 1,182 -- 1,358
- -------------------------------------------------------------------------------------------------------------------------
Total loans ............................. $37,458 $ 532 $ 1,199 $ 1,523 $ 5,662 $ 581 $ 46,955
- -------------------------------------------------------------------------------------------------------------------------
Total assets ............................ $43,580 $18,247 $14,872 $ 2,303 $ 5,662 $ 997 $ 85,661
- -------------------------------------------------------------------------------------------------------------------------
Source of Funds:
Deposits:
Interest-bearing
demand deposits ..................... $14,616 $ -- $ -- $ -- $ -- $ -- $ 14,616
Time deposits greater than $100,000.. 4,220 5,882 7,338 5,592 1,673 -- 24,705
Time deposits less than $100,000..... 1,033 2,967 2,749 2,365 1,578 -- 10,692
Passbook time deposits - variable ... 7,614 -- -- -- -- -- 7,614
Savings (5) ......................... -- 9,704 -- -- -- -- 9,704
- -------------------------------------------------------------------------------------------------------------------------
Total deposits .......................... $27,483 $18,553 $10,087 $ 7,957 $ 3,251 $ -- $ 67,331
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities ....................... $27,483 $18,553 $10,087 $ 7,957 $ 3,251 $ -- $ 67,331
- -------------------------------------------------------------------------------------------------------------------------
Gap ..................................... $16,097 $ (306) $ 4,785 $(5,654) $ 2,411 $ 997 $ 18,330
- -------------------------------------------------------------------------------------------------------------------------
Cumulative interest sensitivity gap ..... $16,097 $15,791 $20,576 $14,922 $17,333 $18,330 $ 18,330
- -------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Non-accruing loans not yet charged off are included in the loan balance.
(2) Overdrafts are not included in the loan balance.
(3) Securities are stated at amortized cost.
(4) Credit Cards are not included in the loan balance.
(5) IRA's and Christmas Club accounts are not included in the balance.
(6) FRB stock is not included in the balance.
</FN>
</TABLE>
<PAGE>
The gap is considered positive when the amount of interest rate sensitive assets
which reprice over a given time period exceeds the amount of interest rate
sensitive liabilities which reprice over the same time period and is considered
negative when the reverse is true. During a period of rising interest rates, a
positive gap tends to result in increased net interest income while a negative
gap would have an adverse affect on net interest income. As illustrated by the
table, the Company maintained a positive gap at March 31, 1996. The Company,
therefore, was asset sensitive and was positioned for increased net interest
income given a rise in interest rates in 1996. The degree of positive gap is not
so large that a significant detrimental impact would result from stable or
declining interest rates.
BALANCE SHEET ANALYSIS
Cash and Due from Banks: Cash and due from banks for the quarter ended March 31,
1996 was $3,187,008, down 26% from $4,330,351 at December 31, 1995 due to lower
cash balance requirements.
Securities: The fair value of available-for-sale securities totaled $12,543,255,
compared to $12,926,352 at December 31, 1995. The decrease in available-for-sale
securities was primarily due to investments that matured during the year. New
securities purchased in the first quarter of 1996 were placed in the
held-to-maturity category due to the Banks intent to hold these funds until they
mature. As of March 31, 1996, available-for-sale securities made up 37% of the
securities portfolio while held-to-maturity securities made up 63% of the
portfolio. The majority of the securities are variable at 92% of the securities
portfolio and 8% are fixed rate.
The securities portfolio consisted primarily of U.S. government agency
securities, municipals and one corporate bond. The amortized cost of
held-to-maturity securities totaled $20,840,154 at quarter end compared to
$20,351,537 at December 31, 1995.
The following table shows the amortized cost (book value) of the Company's
portfolio of available-for-sale and held-to-maturity securities for the periods
ending March 31,1996 and December 31, 1995:
- --------------------------------------------------------------------------------
(In thousands) March 31, 1996 December 31, 1995
- --------------------------------------------------------------------------------
Available-for-sale:
U. S. Treasury ......................... $ -- $ --
U. S. government agencies .............. 11,838,705 12,188,734
States & political subdivisions ........ 605,423 605,656
Corporate bonds and other .............. 55,350 55,350
----------- -----------
Total .............................. $12,499,478 $12,849,740
=========== ===========
Held-to-maturity:
U. S. Treasury ......................... $ -- $ --
U. S. government agencies .............. 19,444,427 18,252,276
States & political subdivisions ........ 695,386 695,578
Corporate bonds and other .............. 700,341 1,403,683
----------- -----------
Total .............................. $20,840,154 $20,351,537
=========== ===========
<PAGE>
The following tables show the amortized cost (book value) and maturities of
securities at March 31, 1996 and the weighted average yields (1).
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Securities/Maturities - March 31, 1996
After 1 but After 5 but
Within 1 year Within 5 Years Within 10 Years After 10 Years
Amount Yield Amount Yield Amount Yield Amount Yield
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-sale:
U. S. Treasury $ -- -- $ -- -- $ -- -- $ -- --
U.S. government
agencies ............. 2,698,722 4.51% 1,683,773 6.88% 7,456,210 6.42% -- --
States & political
subdivisions (2)...... 215,043 6.44% -- -- -- -- 390,380 13.50%
Corporate bonds(2)(3). -- -- -- -- -- -- -- --
----------------------------------------------------------------------------------------------------------------
Total............. $ 2,913,765 4.65% $ 1,683,773 6.88% $ 7,456,210 6.42% $ 390,380 13.50%
- -----------------------------------------------------------------------------------------------------------------
Held-to-maturity:
U. S. Treasury $ -- -- $ -- -- $ -- -- $ -- --
U.S. government
agencies ............. 13,940 7.25% 3,289,037 8.09% 13,880,885 7.53% 2,260,565 7.94%
States & political
subdivisions (2)...... 695,386 5.07% -- -- -- -- -- --
Corporate bond(2)..... 700,341 4.64% -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------
Total ............ $ 1,409,667 4.88% $ 3,289,037 8.09% $13,880,885 7.53% $ 2,260,565 7.94%
- -----------------------------------------------------------------------------------------------------------------
<FN>
(1) Yields are calculated on a tax equivalent basis using the Federal statutory
rate of 34%.
(2) There were no securities which exceeded 10% of stockholders' equity.
(3) Federal Reserve Stock not included in balance.
</FN>
</TABLE>
Loan Composition: The loan portfolio totaled $46,203,297 at March 31, 1996
compared to $46,519,819 at December 31, 1995. There was a slight shift from
commercial loans to real estate construction and real estate mortgage loans.
Total gross loans decreased less than 1% in the first three months of 1996.
Consumer loans continue to decline due to recessionary influences and
competition. The composition of the Bank's loan portfolio is as follows:
- --------------------------------------------------------------------------------
Percentage Percentage
March 31, of Total December 31, of Total
1996 Loans 1995 Loans
- --------------------------------------------------------------------------------
Commercial, financial and
agricultural................ $22,052,682 46.08% $22,755,013 47.30%
Real Estate - construction.. 9,751,240 20.38% 9,175,475 19.10%
Real Estate - mortgage...... 14,104,579 29.48% 14,090,502 29.30%
Installment loans to
individuals................. 1,944,843 4.06% 2,073,749 4.30%
- --------------------------------------------------------------------------------
$47,853,344 100.00% $48,094,739 100.00%
Unearned discount .......... (75,816) (80,189)
Allowance for possible
loan losses................. (1,188,429) (1,219,304)
Deferred loan fees ......... (290,512) (275,427)
Deferred profit on OREO
Sales(2).................... (95,290) -
- --------------------------------------------------------------------------------
Loans, net ............. $46,203,297 $46,519,819
- --------------------------------------------------------------------------------
(1) There were no lease financing or foreign loans
(2) Audited financial statements for December 31, 1995 do not include Deferred
profit on OREO sales due to not being material in amount.
<PAGE>
The Bank's customers are primarily located in Stanislaus County and San Joaquin
County. Approximately 50% of the Bank's loans are for real estate and
construction and approximately 46% of the Bank's loans are for general
commercial uses including professional, retail, agricultural and small business.
Generally real estate loans are secured by real property and commercial and
other loans are secured by funds on deposit, business or personal assets.
Repayment is generally expected from the proceeds of the sales of property for
real estate construction loans, and from cash flows of the borrower for other
loans.
Neither the Bank or the regulators have placed any limitations on the
composition of the Bank's loan portfolio. There were no concentrations of loans
exceeding 10% of total loans which were not otherwise disclosed as a category of
loans in the above table. Unsecured loans are not a significant portion of the
loan portfolio depicted in the above table. There were no other interest bearing
assets at the end of the period.
The Bank has collateral management policies in place so that collateral lending
of all types is on a basis which it believes is consistent with regulatory
lending standards. Valuation analyses are utilized to take into consideration
the potentially adverse economic conditions under which liquidation of
collateral could occur. It is generally the Bank's policy to fully collateralize
all loans with loan-to-value ratios determined on an individual loan basis
taking into account the financial stability of each borrower and the value and
type of the collateral.
Allowance for Loan Losses: The provision for loan losses is based upon
management's evaluation of the adequacy of the existing allowance for loans
outstanding. These evaluations take into consideration such factors as changes
in the nature and volume of the portfolio, overall portfolio quality, loan
concentrations, specific loan problems and current economic conditions that may
affect the borrower's ability to repay. The allowance for loan losses is
increased by provisions charged to expense and reduced by loan charge-offs net
of recoveries. Early recognition of problem credits is critical to avoid
shortages in the allowance. The allowance for loan losses totaled $1,188,429 or
2.48% of total gross loans at March 31,1996 compared to $1,219,304 or 2.54% of
total gross loans at December 31, 1995. The increase in the allowance in 1995
was primarily a response to the current state of the dairy industry which had
somewhat deteriorated. One dairy loan in particular accounts for a significant
portion of the allowance for loan losses.
The provision for loan losses is a product of the Bank's allowance for loan loss
methodology that reflects the potential losses in the loan portfolio. The Bank's
conservative lending philosophy allows this provision to be quite manageable. Of
particular importance is the three year trend of decreasing net charged off
loans which reflects strong management of the loan portfolio. Loans totaling
$8,664 were charged off during the period and $39,360 was collected in
recoveries. Loans charged off totaled $112,366 as of December 31, 1995 and
$108,234 was collected in recoveries.
Total loans classified for regulatory purposes as loss, doubtful, substandard,
or special mention (including nonaccrual loans and troubled debt restructuring)
at March 31, 1996 were $8,132,937. At December 31, 1995 total loans classified
for regulatory purposes was $9,189,084. Of the total classified, none of the
loans were classified as doubtful at the end of March 31, 1996 or December 31,
1995. Management is not aware of any other material credit which there is
serious doubt regarding the ability to repay other than those reflected in
classified loans and in the allowance for possible loan losses.
<PAGE>
Non-Accrual Loans, Restructured Loans and Real Estate Owned: Information
regarding non-accrual loans, past due loans and restructured loans is presented
below.
- ------------------------------------------------------------------ -------------
March 31, 1996 December 31, 1995
- ------------------------------------------------------------------ -------------
Non-accrual loans: (1)
Commercial loans .............. $ 612,909 $ 1,200,342
Real estate loans ............. 257,975 494,214
Consumer loans ................ -- --
- --------------------------------------------------------------------------------
Total non-accrual loans ... $ 870,884 $ 1,694,556
- --------------------------------------------------------------------------------
Loans past due 90 days or more
still accruing interest............ $ -- $ --
- --------------------------------------------------------------------------------
Troubled debt restructuring ....... $ 1,141,895 $ 1,146,080
- --------------------------------------------------------------------------------
(1) Principal balance only
Non-accrual loans at quarter end amounted to $870,884, down from $1,694,556 at
December 31, 1995. One large agricultural/commercial loan makes up the major
portion of the non-accrual loans. Gross interest income that would have been
recorded for non-accrual loans if loans had been current in accordance with
original terms and had been outstanding throughout the period or since
origination for year to date 1996 and December 31, 1995 was $28,550 and
$115,869, respectively. There was no interest income included in net income for
the period for non-accrual loans. There were no loans past due 90 days or more
which were still accruing interest.
Management is constantly aware of the need for maintaining high credit
standards. The Company is not involved in foreign lending and is not engaged in
high yield, high risk loans. A loan is placed on nonaccrual status when either
principal or interest is in default for 90 days more, or when external factors
indicate that payment in full of principal and interest appears unlikely unless
the loan is well secured and in the process of collection. When a loan is placed
on nonaccrual status, all interest previously accrued but uncollected shall be
reversed against the appropriate income account. In most cases, if the loan is
rated substandard or better, payments shall be applied to interest first and
then principal provided no loss is anticipated. If a loss is anticipated, all
payments shall be applied to principal first and then interest. When one loan of
a customer is placed on nonaccrual status related borrowings will be evaluated
as to whether they should also be placed on nonaccrual status. Nonaccrual loans
will be restored to an accruing status when principal and interest is no longer
past due and unpaid, or the loan otherwise becomes well secured and in the
process of collection.
A troubled debt restructuring occurs when the Bank for economic or legal reasons
related to the debtor's financial difficulties, grants a concession to the
debtor that it would not ordinarily consider. Troubled debt restructuring can
occur in a variety of forms, such as transferring assets in a full or partial
settlement of the debt, issuing debt, or modifying terms including reducing the
stated interest rate, extending maturity dates, reducing the face amount or
maturity of the debt, or reducing accrued interest. Restructured loans totaled
$1,143,561 at March 31, 1996 and $1,147,775 at December 31, 1995. All
restructured loans were current as to principal and interest.
<PAGE>
FUNDING SOURCES
Deposits: Total deposits amounted to $81,208,093 as of March 31, 1996 compared
to $84,839,377 at December 31, 1995 a decrease of 4.3 %. The decrease between
December 31, 1995 and March 31, 1996 was primarily due to falling deposit rates
in the savings category. The Bank currently has a savings product which is tied
to the prime rate. As the prime rate decreases, as it has in the last several
months, deposits are redistributed to time deposits or move out of the bank.
Historically, the Bank retains 90% or more of its deposits.
Non-interest bearing demand deposits averaged approximately $13,328,474 at March
31, 1996 and $12,786,000 at December 31, 1995. Interest bearing deposits
averaged approximately $69,352,951 at quarter end and $68,793,000 at year end
December 31, 1995.
- --------------------------------------------------------------------------------
March 31, 1996 December 31, 1995
- --------------------------------------------------------------------------------
Average Average Average Average
Balance Rate Balance Rate
- --------------------------------------------------------------------------------
Interest bearing deposits
Checking accounts...... $14,231,276 1.69% $14,368,972 2.12%
Savings ............... 19,025,823 3.71% 21,271,869 3.91%
Time deposits (1)...... 36,095,852 3.72% 33,152,076 5.59%
Non-interest bearing deposits... 13,328,474 12,786,029
- --------------------------------------------------------------------------------
(1) Included at March 31, 1996 are $24,704,967 in time certificates of
$100,000 or more, of which $10,101,542 matures in 3 months or less,
$7,338,257 matures in 3 to 6 months, $5,592,111 matures in 6 to 12 months,
and $1,673,057 matures in more than 12 months.
Other Borrowings: There were no other borrowings as of March 31, 1996 or
December 31, 1995.
Capital: Retained earnings from operations has been the primary source of new
capital for the Company. As of March 31, 1996 stockholders' equity was
$10,073,184, compared to $9,771,029 at year-end 1995. Risk-adjusted capital
guidelines, issued by bank regulatory agencies, assign risk weighting to assets
and off-balance sheet items and place increased emphasis on common equity. The
guidelines require adequately capitalized institutions to maintain a Tier I
(core) capital ratio of 4% and a combined Tier I and
Tier II capital ratio of 8%. Institutions whose Tier I and total capital ratios
meet or exceed 6% and 10%, respectively, are deemed to be well capitalized. For
the Company, Tier I capital consists of common stockholders' equity. In addition
to the risk-weighted ratios, all banks are expected to maintain leverage ratios,
to be determined on an individual basis, but not below a minimum of 3%. This
ratio is defined as Tier I capital to average total assets for the most recent
quarter. At March 31, 1996, the Company exceeded its capital requirements. Based
on the guidelines, the Bank's Tier I and combined Tier I and Tier II
risk-weighted ratios at March 31, 1996 and December 31, 1995 and 1994 were as
follows:
- --------------------------------------------------------------------------------
Minimum March 31, December 31, December 31,
1996 1995 1994
- --------------------------------------------------------------------------------
Risk Based Capital Ratio ....... 8.00% 18.95% 18.14% 15.47%
Tier I Ratio ................... 4.00% 17.69% 16.88% 14.49%
Leverage Ratio ................. 3.00% 10.52% 10.02% 9.92%
- --------------------------------------------------------------------------------
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings - None other than in the ordinary course of business.
Item 2 - Change in securities - None
Item 3 - Defaults Upon Senior Securities - None
Item 4 - Submission of Matters to a Vote of Security Holders
Item 5 - Other Information - No Change.
Item 6 - Exhibits and Reports on Form 8-K
a) Exhibits
Registrant's Articles of Incorporation and Bylaws are
furnished by way of incorporation by reference to Exhibit 3 to
registrant's registration statement on Form S-14, as filed
under the Securities Act of 1933 on September 10, 1982 and
declared effective on October 8, 1982.
Plan of Reorganization and Agreement of Merger is furnished by
reference to registrant's Form S-14 as filed under the
Securities Act of 1933 on September 10, 1982 and effective on
October 8, 1982.
b) Reports on Form 8-K
The registrant did not file any reports on Form 8-K during the
period ending March 31, 1996
<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.
DELTA NATIONAL BANCORP
(Registrant)
DATE: May 5, 1996 /s/ Andrew Rossi
Andrew Rossi
President/Chief Executive Officer
Director
(Principal Executive Officer)
DATE: May 5, 1996 /s/ Warren E. Wegge
Warren E. Wegge
Executive Vice President
(Principal Financial Officer)
DATE: May 5, 1996 /s/ Toinette Rossi
Toinette Rossi
Vice President and Manager
Director
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 3187
<INT-BEARING-DEPOSITS> 622
<FED-FUNDS-SOLD> 4800
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12543
<INVESTMENTS-CARRYING> 20840
<INVESTMENTS-MARKET> 20960
<LOANS> 47853
<ALLOWANCE> 1188
<TOTAL-ASSETS> 91778
<DEPOSITS> 81208
<SHORT-TERM> 0
<LIABILITIES-OTHER> 497
<LONG-TERM> 0
0
0
<COMMON> 3532
<OTHER-SE> 6515
<TOTAL-LIABILITIES-AND-EQUITY> 91778
<INTEREST-LOAN> 1384
<INTEREST-INVEST> 548
<INTEREST-OTHER> 69
<INTEREST-TOTAL> 2002
<INTEREST-DEPOSIT> 724
<INTEREST-EXPENSE> 724
<INTEREST-INCOME-NET> 1278
<LOAN-LOSSES> (62)
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1015
<INCOME-PRETAX> 543
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 321
<EPS-PRIMARY> 0.85
<EPS-DILUTED> 0.85
<YIELD-ACTUAL> 9.42
<LOANS-NON> 871
<LOANS-PAST> 0
<LOANS-TROUBLED> 1144
<LOANS-PROBLEM> 8133
<ALLOWANCE-OPEN> 1219
<CHARGE-OFFS> 9
<RECOVERIES> 39
<ALLOWANCE-CLOSE> 1188
<ALLOWANCE-DOMESTIC> 1188
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
