UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the period ended March 31, 1995
Commission File Number : 0-12499
First Financial Bancorp
(Exact name of registrant as specified in its charter)
California (State or other jurisdiction of incorporation or
organization)
94-28222858
(I.R.S. Employer Identification No.)
701 South Ham Lane , Lodi, California 95242 (Address of principal
executive offices)
(209)-367-2000
(Registrant's telephone number, including area code)
NA
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months(or
for such shorter period that the registrant was required to file
suchreports),and (2) has been subject to such filing requirements
for the past 90 days.
[ X ] Yes [ ] No
As of March 31, 1995, there were 1,306,446 shares of Common
Stock, no par value, outstanding.
<PAGE>
FIRST FINANCIAL BANCORP
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1995
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
PART I
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 4
PART II
Item 1. Legal Proceedings 5
Item 2. Changes in Securities 5
Item 3. Defaults Upon Senior Securities 5
Item 4. Submission of Matters to a Vote of Security
Holders 5
Item 5. Other Information 5
Item 6. Exhibits and Reports on Form 8-K 6
</TABLE>
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
FIRST FINANCIAL BANCORP AND SUBSIDIARY
Consolidated Balance Sheets
(in thousands)
<CAPTION>
3/31/95 12/31/94
<S> <C> <C>
ASSETS
Cash and due from banks $ 3,729 $ 5,199
Federal funds sold 2,700 2,000
Investment securities:
Held-to-maturity securities (at
amortized cost, market value of
$2,148 and $2,118 at 3/31/95 and
12/31/94) 2,038 2,038
Available-for-sale securities, at
fair value 25,998 31,062
Total Investments 28,036 33,100
Loans 57,509 56,939
Less: Allowance for loan losses 1,112 1,127
Net loans 56,397 55,812
Bank premises and equipment, net 6,614 6,640
Accrued interest receivable 1,003 1,103
Other assets 1,221 1,313
Total Assets $99,700 $105,167
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
Noninterest bearing $ 7,347 $ 8,415
Interest bearing 78,250 81,564
Total deposits 85,597 89,979
Accrued interest payable 305 300
Other liabilities 225 1,660
Note payable 2,610 2,618
Total liabilities 88,737 94,557
Stockholders' equity:
Common stock - no par value;
authorized 9,000,000 shares,
issued and outstanding in 1995
and 1994, 1,306,446 and,
1,306,296 shares 7,311 7,310
Retained earnings 3,646 3,412
Net unrealized holding gains on
available-for sale securities 6 (112)
Total stockholders' equity 10,963 10,610
Total Liabilities and Stockholders'
Equity $99,700 $105,167
</TABLE>
Page 1
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<TABLE>
FIRST FINANCIAL BANCORP AND SUBSIDIARY
Consolidated Statements of Income
(in thousands except per share amounts)
Three months ended March 31,
<CAPTION>
1995 1994
<S> <C> <C>
Interest income:
Loans, including fees $1,533 $1,362
Investment securities:
Taxable 351 199
Exempt from Federal taxes 91 93
Federal funds sold 37 37
Deposits in banks and other
interest income 0 1
Total interest income 2,012 1,692
Interest expense:
Deposit accounts 654 595
Other 70 71
Total interest expense 724 666
Net interest income 1,288 1,026
Provision for loan losses 20 35
Net interest income after provision
for loan losses 1,268 991
Noninterest income:
Service charges 129 146
Premiums and fees from SBA and
mortgage operations 72 146
Miscellaneous 12 14
Total noninterest income 213 306
Noninterest expense:
Salaries and employee benefits 549 559
Occupancy 97 94
Equipment 98 93
Other 405 385
Total noninterest expense 1,149 1,131
Income before provision for income
taxes 332 166
Provision for income taxes 98 50
Net income $ 234 $ 116
Earnings per share:
Primary $ 0.18 $ 0.09
Fully diluted $ 0.18 $ 0.09
</TABLE>
Page 2
<PAGE>
<TABLE>
FIRST FINANCIAL BANCORP AND SUBSIDIARY
Consolidated Statements of Cash Flows
(in thousands)
Three Months Ended March 31
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 234 $ 116
Adjustments to reconcile net income to
net cash (used in) provided by
operating activities:
Increase in loans held for sale (553) (120)
(Decrease) increase in deferred
loan income ( 1) 8
Provision for loss on sale of other
real estate owned 0 2
Depreciation and amortization 106 108
Provision for loan losses 20 35
Provision for deferred taxes 114 ( 7)
Decrease in accrued interest
receivable 100 40
Increase (decrease) in accrued
interest payable 5 ( 29)
Decrease in other liabilities (439) ( 24)
(Increase) decrease in other assets ( 81) 28
Net cash (used in) provided by
operating activities (495) 157
Cash flows from investing activities:
Proceeds from maturity of held-to-
maturity securities 0 46
Proceeds from maturity of available-
for-sale securities 10,046 5,560
Purchases of available-for-sale
securities (5,779) (3,007)
(Increase) decrease in loans made
to customers ( 73) 300
Proceeds from sale of other real
estate 0 203
Purchase of bank premises and
equipment ( 80) ( 40)
Net cash provided by investing
activities 4,114 3,062
Cash flows from financing activities:
Net (decrease) increase in deposits (4,382) 906
Payments on note payable ( 8) ( 7)
Dividends paid 0 ( 131)
Proceeds from issuance of common stock 1 0
Net cash (used in) provided by
financing activities (4,389) 768
Net (decrease) increase in cash
and cash equivalents ( 770) 3,987
Cash and cash equivalents at beginning
of period 7,199 6,424
Cash and cash equivalents at end of year $6,429 $10,411
</TABLE>
Page 3
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
CHANGES IN FINANCIAL CONDITION
Consolidated assets declined by $5.5 million, or 5.2% from
December 31, 1994 to March 31, 1995. The principal cause of the
decline was a $4.4 million, or 4.9%, decline in deposits and the
payment of $1 million to settle 1994 securities purchases that
had 1995 settlement dates. The decline in deposits was consistent
with the historical first quarter trend of the past several years
and included a decrease in noninterest bearing balances of 12.8%
and a decrease in interest bearing deposits of 4.1%. Net
investment security maturities of $4.3 million provided the
necessary liquidity to fund the deposit outflow. Consolidated
average assets for the first quarter of 1995 exceed the
comparable prior year quarter by nearly .86%, or $850 thousand
while average earning assets increased over the prior year
quarter by 1.6%, or $1.4 million.
The allowance for loan losses as a percentage of gross loans
outstanding is 1.93% at March 31, 1995 compared to 1.98% at
December 31, 1994. Nonaccrual loans and their relationship to
total loans were unchanged at March 31, 1995 in comparison to
December 31, 1994. The nonaccrual coverage of the allowance for
loan losses decreased to 1.45 times at March 31, 1995 from 1.47
times at December 31, 1994. Total portfolio delinquency at March
31, 1995 stood at 3.66% compared to 2.71% at December 31, 1994.
Consolidated equity increased to $10.96 million or 10.99% of
total assets at March 31, 1995 compared to $10.61 million or
10.09% of total assets at December 31, 1994. The valuation
adjustment related to investment securities available for sale
increased to a $6 thousand addition to capital at March 31, 1995
from a $112 thousand subtraction from capital at December 31,
1994. The improvement in the investment valuation adjustment was
driven by the decline in interest rates that occurred between
December 31, 1994 and March 31, 1995. The capital position of
the Company's subsidiary, Bank of Lodi, NA, also increased. The
total risk-based capital ratio was 13.13% at March 31, 1995
versus 12.73% at December 31, 1994. The Bank's leverage capital
ratio was 8.71% at March 31, 1995 versus 7.89% at December 31,
1994.
CHANGES IN RESULTS OF OPERATIONS
Net income for the three months ended March 31, 1995 increased by
$118 thousand, or approximately 100% over the first quarter of
1994. Earnings per share for the same periods were $.18 per
share compared to $.09 per share. Return on average assets and
average equity for the quarter ended March 31, 1995 were .94% and
8.7%, respectively, compared to .47% and 4.4%, respectively, for
the quarter ended March 31, 1994. Based upon the operating
results for the quarter ended March 31, 1995, the board of
directors of First Financial Bancorp declared a cash dividend of
$.05 per share, payable May 30, 1995 to shareholders of record on
May 15, 1995.
The increase in earnings reflects improvement in the bank's core
operations. Net interest margin increased by 24%, the provision
for loan losses declined by 43%, and noninterest expenses were
stable. These trends compensated for a decline in income from
Small Business Administration (SBA) and mortgage lending.
Net interest income increased by $262 thousand, or 24% compared
to the prior year quarter. Interest income increased $320
thousand or 19%, while interest expenses increased $58 thousand
or 9%. The improvement in net interest income reflects an
increase of $1.4 million, or 1.6%, in average earning assets
together with an improvement of 110 basis points in net interest
margin. The growth in average earning assets added $25 thousand
to net interest income, and the improvement in net interest
margin added $237 thousand. Average loans declined to 64% of
average earning assets from 70% in the previous year, while
average investments and federal funds sold increased to 36% of
average earning assets form 31%. Noninterest bearing demand
deposits increased to 8% of total deposits from 6% in the prior
year, while NOW and money market deposits declined to 35% of
total deposits from 39%. Assuming no change in the mix of
earning assets and deposits from the quarter ended March 31,
1994, net interest income would have been $47 thousand higher for
the quarter ended March 31, 1995.
The provision for loan losses for the quarter ended March 31,
1995 was 43% below the year ago quarter. The reduction reflects
improvement in the quality of the loan portfolio compared to the
previous year.
Noninterest income declined by $93 thousand, or 30% compared to
the prior year quarter. The decrease was the result of reduced
volumes in SBA and mortgage operations. In comparison to the
prior year quarter, SBA and mortgage income was down by 88% and
Page 4
<PAGE>
72%, respectively. The majority of the decline in SBA lending is
related to the attention directed toward the bank's recent
expansion of its SBA operations. Mortgage volume was
significantly impacted by rising mortgage rates.
Noninterest expenses increased by $18 thousand or 2% compared to
the prior year quarter. Although legal and professional costs
were slightly higher than in the prior year quarter, costs were
contained in a number of areas, including reductions in
regulatory assessments, costs associated with holding and
disposing of other real estate owned, and marketing costs.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on April
25, 1995. The purpose of the meeting was to elect the company's
board of directors and approve an amendment to the 1991 Director
Stock Option Plan. The following directors were elected based
upon the votes cast as indicated:
<TABLE>
<CAPTION>
Votes Votes Votes
Director "for" "against" "withheld"
<S> <C> <C> <C>
Bozant Katzakian 769,857 0 26,494
Angelo J. Anagnos 769,416 0 26,935
Daniel R. Anderson 769,725 0 26,626
Raymond H. Coldani 769,725 0 26,626
Benjamin R. Goehring 769,593 0 26,758
Michael D. Ramsey 769,725 0 26,626
Frank M. Sasaki 769,857 0 26,494
Weldon D. Schumacher 769,593 0 26,758
Dennis R. Swanson 769,196 0 27,155
</TABLE>
The amendment to the 1991 Director Stock Option Plan was approved
based upon the following votes cast as indicated:
For: 716,512 Against: 29,889 Abstain: 49,950
There were 1,306,446 shares issued and outstanding as of the record
date, March 1, 1995.
ITEM 5. OTHER INFORMATION
Not applicable.
Page 5
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
(a) EXHIBITS
<CAPTION>
Exhibit Number
<S> <C>
2 Not applicable.
4 Registrant's current Bylaws.
10 Post Effective Amendment No. 1 to Form S8 Registration Statement
(File Number 3340954).
11 Primary and fully diluted earnings per common and common
equivalent share are calculated by dividing net income by the
weighted-average number of common and common share equivalents
outstanding during the period. Stock options are considered
common share equivalents for this calculation. Weighted average
shares used in the computation of both primary and fully diluted
earnings per share were 1,308,351 and 1,314,488 for the quarters
ended March 31, 1995 and 1994, respectively.
15 Not applicable.
16 Not applicable.
18 Not applicable.
19 Not applicable.
20 Not applicable.
23 Not applicable.
24 Not applicable.
25 Not applicable.
27 Financial Data Schedule (filed electronically).
28 Not applicable.
</TABLE>
(b) REPORTS ON FORM 8-K
On March 1, 1995, the company filed a Form 8-K dated March 1, 1995
regarding changes made with respect to board of director leadership, the
settlement of legal matters, and the release of the company's wholly
owned subsidiary, Bank of Lodi, N.A., from a Formal Agreement with the
Office of the Comptroller of the Currency.
On April 25, 1995, the company filed a Form 8-K dated April 25, 1995
regarding earnings for the first quarter of 1995 and the declaration of
a cash dividend.
Page 6
<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.
FIRST FINANCIAL BANCORP
/s/ David M. Philipp
David M. Philipp
Senior Vice-President
Chief Financial Officer
Corporate Secretary
Dated May 15, 1995
Page 7
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 3729000
<INT-BEARING-DEPOSITS> 78250000
<FED-FUNDS-SOLD> 2700000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 28030000
<INVESTMENTS-MARKET> 28036000
<LOANS> 57509000
<ALLOWANCE> 1112000
<TOTAL-ASSETS> 99700000
<DEPOSITS> 85597000
<SHORT-TERM> 305000
<LIABILITIES-OTHER> 225000
<LONG-TERM> 2610000
<COMMON> 7311000
0
0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 99700000
<INTEREST-LOAN> 1533000
<INTEREST-INVEST> 442000
<INTEREST-OTHER> 37000
<INTEREST-TOTAL> 2012000
<INTEREST-DEPOSIT> 654000
<INTEREST-EXPENSE> 70000
<INTEREST-INCOME-NET> 1288000
<LOAN-LOSSES> 20000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1149000
<INCOME-PRETAX> 332000
<INCOME-PRE-EXTRAORDINARY> 332000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 234000
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
<YIELD-ACTUAL> 0.058
<LOANS-NON> 765000
<LOANS-PAST> 116000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1127000
<CHARGE-OFFS> 42000
<RECOVERIES> 7000
<ALLOWANCE-CLOSE> 1112000
<ALLOWANCE-DOMESTIC> 1112000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
