<PAGE> 1
FORM 10-QSB
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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(X) QUARTERLY REPORT UNDER SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 OF THE
SECURITIES EXCHANGE ACT OF 1934
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Commission File Number 0-17650
FP Bancorp, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 33-0018976
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
613 West Valley Parkway, Escondido, California 92025-4929
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(Address of principal executive offices) (ZIP Code)
(760) 741-3312
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(Issuer's telephone number)
Check whether the issuer (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
----- -----
As of March 31, 1997, the number of shares outstanding of the Registrant's only
class of common stock was 2,653,638.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FP BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNDAUDITED)
<TABLE>
<CAPTION>
ASSETS March 31, 1997 December 31, 1996
- ------------------------------------------------------------------------------ -------------- -----------------
<S> <C> <C>
Cash and due from banks $ 21,582,000 $ 22,919,000
Investment securities available for sale 51,777,000 47,405,000
Investment securities held to maturity 10,244,000 9,279,000
Loans, net of allowance for loan losses of $3,055,000 as of March 31, 1997
and $3,121,000 as of December 31, 1996 222,207,000 10,876,000
Premises and equipment, net 7,999,000 7,672,000
Other real estate owned, net 1,995,000 1,329,000
Goodwill and other intangibles, net 4,370,000 3,431,000
Accrued interest and other assets 4,774,000 5,674,000
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$ 324,948,000 $ 308,585,000
============================================================================== ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------
Deposits:
Noninterest-bearing $ 70,128,000 $ 59,541,000
Interest-bearing 220,588,000 204,980,000
- ------------------------------------------------------------------------------ ------------- -------------
Total deposits 290,716,000 264,521,000
- ------------------------------------------------------------------------------ ------------- -------------
Federal funds purchased 7,000,000 11,802,000
Other borrowings - 4,950,000
Accrued expenses and other liabilities 1,276,000 1,759,000
Subordinated debentures 4,575,000 4,575,000
- ------------------------------------------------------------------------------ ------------- -------------
Total liabilities 303,567,000 287,607,000
- ------------------------------------------------------------------------------ ------------- -------------
Stockholders' equity:
Common stock, par value $.001, authorized 4,000,000 shares; issued and
outstanding 2,653,638 as of March 31, 1997 and 2,653,441
as of December 31, 1996 3,000 3,000
Additional paid-in capital 24,571,000 24,571,000
Accumulated deficit (2,788,000) (3,702,000)
Unrealized holding gains (losses) on investment securities available for sale (405,000) 106,000
- ------------------------------------------------------------------------------ ------------- -------------
Total stockholders' equity 21,381,000 20,978,000
- ------------------------------------------------------------------------------ ------------- -------------
$ 324,948,000 $ 308,585,000
============================================================================== ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
FP BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(UNDAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1997 1996
- ---------------------------------------------- ----------- -----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 5,630,000 $ 3,789,000
Federal funds sold 23,000 79,000
Investment securities 1,088,000 555,000
- ---------------------------------------------- ----------- -----------
Total interest income 6,741,000 4,423,000
- ---------------------------------------------- ----------- -----------
Interest expense:
Deposits 1,654,000 1,171,000
Other 406,000 122,000
- ---------------------------------------------- ----------- -----------
Total interest expense 2,060,000 1,293,000
- ---------------------------------------------- ----------- -----------
Net interest income 4,681,000 3,130,000
Provision for loan losses 108,000 250,000
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Net interest income after
provision for loan losses 4,573,000 2,880,000
- ---------------------------------------------- ----------- -----------
Other operating income:
Service charges 469,000 313,000
Other 96,000 63,000
- ---------------------------------------------- ----------- -----------
Total other operating income 565,000 376,000
- ---------------------------------------------- ----------- -----------
Other operating expenses:
Salaries and employee benefits 1,883,000 1,413,000
Professional services 320,000 414,000
Occupancy 378,000 296,000
Furniture and equipment 284,000 204,000
Other real estate owned, net 32,000 84,000
Goodwill and other intangible amortization 80,000 28,000
Other 582,000 372,000
- ---------------------------------------------- ----------- -----------
Total other operating expenses 3,559,000 2,811,000
- ---------------------------------------------- ----------- -----------
Earnings before income taxes 1,579,000 445,000
Net income taxes (benefit) 665,000 (279,000)
- ---------------------------------------------- ----------- -----------
Net earnings 914,000 724,000
============================================== =========== ===========
Primary earnings per share $ 0.33 $ 0.27
============================================== =========== ===========
Fully diluted earnings per share $ 0.29 $ 0.22
============================================== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
FP BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------
1997 1996
- ----------------------------------------------------------- ------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 914,000 $ 724,000
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization 356,000 244,000
Provision for loan losses 108,000 250,000
Provision for losses on other real estate owned -- 63,000
Loss (gain) on sale of other real estate owned 3,000 (26,000)
Decrease (increase) in accrued interest and other assets 886,000 (23,000)
Decrease in accrued expenses and other liabilities (512,000) (367,000)
Decrease in deferred loan origination fees 15,000 67,000
- ----------------------------------------------------------- ------------ ------------
Net cash provided by operating activities 1,770,000 932,000
- ----------------------------------------------------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in loans outstanding (10,658,000) (5,401,000)
Proceeds on sale of other real estate owned 180,000 1,013,000
Maturities of investment securities available for sale 2,113,000 1,665,000
Maturities of investment securities held to maturity 30,000 134,000
Purchase of investment securities available for sale (7,042,000) (1,030,000)
Purchase of investment securities held to maturity (1,002,000) --
Decrease in receivable from ESOP -- 100,000
Capital expenditures for premises and equipment (354,000) (260,000)
Net cash acquired in branch acquisition 14,042,000 --
- ----------------------------------------------------------- ------------ ------------
Net cash used in investing activities (2,691,000) (3,779,000)
- ----------------------------------------------------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in interest-bearing deposits 3,193,000 5,037,000
Net increase (decrease) in noninterest-bearing deposits 6,143,000 (2,323,000)
Proceeds from exercise of stock options -- 5,000
Decrease in Federal funds purchased (4,802,000) --
Decrease in other borrowings (4,950,000) --
- ----------------------------------------------------------- ------------ ------------
Net cash (used in) provided by financing activities (416,000) 2,719,000
- ----------------------------------------------------------- ------------ ------------
Net decrease in cash and cash equivalents (1,337,000) (128,000)
Cash and cash equivalents at beginning of period 22,919,000 16,293,000
- ----------------------------------------------------------- ------------ ------------
Cash and cash equivalents at end of period $ 21,582,000 $ 16,165,000
=========================================================== ============ ============
</TABLE>
(continued)
4
<PAGE> 5
FP BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 2,122,000 $ 150,600
Income taxes $ 18,000 $ --
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Transfer from loans to other real estate owned $ 849,000 $ 229,000
Change in unrealized holding gains (losses) on investment securities
available for sale $ (511,000) $ (402,000)
========================================================================= =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
FP BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements include the accounts of FP Bancorp,
Inc. (the "Company") and its wholly-owned subsidiary, First Pacific
National Bank ("FPNB"). All material intercompany accounts and transactions
have been eliminated. The consolidated financial statements as of March 31,
1997 and for the three-month periods ended March 31, 1997 and 1996 are
unaudited and reflect all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the financial position and operating results of the interim
periods. The consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto,
together with management's discussion and analysis of financial condition
and results of operations contained in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1996. The results of operations for
the three-month period ended March 31, 1997 are not necessarily indicative
of the results for the entire year ending December 31, 1997.
2. Primary earnings per share is computed by dividing net earnings by the
weighted average number of shares of common stock and common stock
equivalents outstanding during the period. Stock options are considered to
be common stock equivalents and are used in the primary earnings per share
calculations unless they are antidilutive. The weighted average numbers of
shares used for the primary earnings per share calculations for the
three-month periods ended March 31, 1997 and 1996 were 2,803,000 and
2,712,000, respectively.
Fully diluted earnings per share is computed by dividing net earnings,
subject to certain adjustments, by the weighted average number of shares of
common stock, common stock equivalents and other potentially dilutive
securities. Stock options are considered to be common stock equivalents and
are used in the fully diluted earnings per share calculations unless they
are antidilutive. The subordinated convertible debentures are considered to
be other potentially dilutive securities and are used in the fully diluted
earnings per share calculations unless they are antidilutive. The adjusted
net earnings used for the fully diluted earnings per share calculations for
the three-month periods ended March 31, 1997 and 1996 were $958,000 and
$698,000, respectively. The weighted average numbers of shares used for the
fully diluted earnings per share calculations for the three-month periods
ended March 31, 1997 and 1996 were 3,263,000 and 3,170,000, respectively.
3. On February 21, 1997, the Company completed its acquisition of the Wells
Fargo Bank Valley Center branch, located in Valley Center in San Diego
County, California (the "Wells Acquisition"). The acquisition was accounted
for under the purchase accounting method. As a result of this transaction,
deposits increased by $16,838,000 and a core deposit intangible of $992,000
was recorded.
4. Because of the nature of its activities, the Company is at all times
subject to pending and threatened legal actions which arise out of the
normal course of its business. In the opinion of management, based in part
upon opinions of legal counsel, the disposition of all litigation will not
have a material effect on the Company.
5. Goodwill is amortized on a straight-line basis over estimated useful lives
of twelve to fifteen years. The core deposit intangible is amortized on a
straight-line basis over an estimated useful life of ten years.
6. Certain 1996 amounts have been reclassified to conform to the presentation
used in 1997.
6
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Statements made in this report that state the Company's or management's
intentions, beliefs, expectations or predictions of the future are
forward-looking statements. The Company's actual results could differ materially
from those projected in such forward-looking statements. Additional information
concerning factors that could cause actual results to differ materially from
those in the forward-looking statements is contained in the Company's Form
10-KSB and other SEC filings. Copies of such filings may be obtained by
contacting the Company or the SEC.
OVERVIEW
The financial position and the results of operations as of March 31, 1997
reflect the Company's acquisition of RB Bancorp on April 1, 1996 (the "RB
Merger"), the opening of a second branch in the City of Temecula in Riverside
County, California (the "Rancho California Road Branch") on April 22, 1996 and
the Wells Acquisition on February 21, 1997.
The Company's net earnings for the quarter ended March 31, 1997 were $914,000 or
$.29 fully diluted earnings per share, compared to net earnings of $724,000 or
$.22 fully diluted earnings per share for the same quarter in 1996. The
Company's return on average assets and return on average stockholders' equity
were .28% and 4.28%, respectively, for the three-month period ended March 31,
1997 as compared to .34% and 4.20%, respectively, for the same period in 1996.
Although the increase in net earnings is only $190,000 or 26.24% over 1996,
growth in pretax earnings was $1,134,000 or 254.83% for the three-month period
ended March 31, 1997 as compared to the same period in 1996, due to the fact
that the Company became taxable at an effective rate of approximately 42% in
1997 as compared to having recorded a net income tax benefit of $279,000 in
1996. The increase in pretax earnings was primarily due to growth accomplished
through the RB Merger and the Wells Acquisition, internal deposit growth and a
reduction in other real estate owned ("OREO") expenses and other noninterest
expenses during the year.
Total assets increased $16,363,000 or 5.30% from $308,585,000 as of December 31,
1996 to $324,948,000 as of March 31, 1997. The increase in asset size was
primarily a result of the Wells Acquisition and strong loan growth. Net loans
increased $11,331,000 or 5.37% to $222,207,000 as of March 31, 1997 from
$210,876,000 as of December 31, 1996, due to an increase in new loan volume
during the first quarter of 1997. Total investment securities increased
$5,337,000 or 9.42% from December 31, 1996 to a balance of $62,021,000. Deposits
of $290,716,000 as of March 31, 1997 increased $26,195,000 or 9.90% from
December 31, 1996. Deposits of $16,838,000 were acquired in the Wells
Acquisition and the balance of the increase since December 31, 1996 was
attributed to internal growth in deposits generated at branches throughout the
FPNB franchise. The growth in deposits resulted in a decrease in Federal funds
purchased and other borrowings of $9,752,000 or 58.21% since December 31, 1996.
NET INTEREST INCOME
Net interest income before provision for loan losses increased $1,551,000 or
49.55% for the quarter ended March 31, 1997 as compared to the same period in
1996. Net interest income is affected by changes in average rates, average
volumes of interest-earning assets and average volumes of interest-bearing
liabilities. On April 1, 1997, $42,498,000 of net loans and $43,982,000 of
interest-bearing deposits were acquired in the RB Merger, which contributed to
the increase in net interest income during 1997 as compared to 1996. The
purchase of $9,000,000 in real estate loans in October 1996 contributed to the
increase as well. Changes in the interest rate environment and the Company's
cost of funds also affected net interest income.
The rate earned on interest-earning assets for the quarter ended March 31, 1997
increased to 9.60% from 9.54% for the same period in 1996. Average loans
outstanding during the quarter ended March 31, 1997 were $221,157,000, which
earned interest at an average rate of 10.32% as compared to average loans
7
<PAGE> 8
outstanding of $141,222,000 which earned a rate of 10.62% during the same period
in 1996. Average Federal funds sold were $15,778,000, which earned an average
rate of 5.07% for the three months ended March 31, 1997 as compared to
$10,254,000 which earned 5.65% during the same quarter in 1996. Conversely, the
investment securities portfolios had an aggregate average balance of $41,445,000
and earned 7.07% for the three months ended March 31, 1997 as compared to
$32,244,000 which earned 6.43% during the same period in 1996. The increase in
the Company's yield on investment securities was the result of a restructuring
of the investment portfolio into higher-yielding securities during the last
three quarters of 1996 and again in 1997.
The rate paid on interest-bearing liabilities increased to 3.52% for the quarter
ended March 31, 1997 from 3.36% for the quarter ended March 31, 1996. Average
outstanding interest-bearing deposits of $211,783,000 for the quarter ended
March 31, 1997 were paid an average rate of 3.17% as compared to average
outstanding interest-bearing deposits of $150,109,000 which were paid an average
rate of 3.14% for the same period in 1996. Debentures and other borrowings had
an average outstanding balance of $25,475,000 and paid 6.46% for the three-month
period ended March 31, 1997 as compared to an average balance of $4,647,000
which paid 10.56% for the three-month period ended March 31, 1996.
The following table presents, for the periods indicated, a summary of changes in
interest income and interest expense for the major categories of average
interest-earning assets and average interest-bearing liabilities and the amounts
of change attributable to variations in volume and in interest rates.
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 compared to 1996
----------------------------------
(in thousands)
Increase (Decrease)
-----------------------------------
Volume Rate Net
------- ------- -------
<S> <C> <C> <C>
Interest earned on interest-earning assets:
Loans (1) $ 1,952 $ (111) $ 1,841
Taxable investment securities 428 105 533
Federal funds sold (54) (2) (56)
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Total interest on interest-earning assets 2,326 (8) 2,318
Interest paid on interest-bearing liabilities:
Interest-bearing deposits:
Savings and time 320 (11) 309
Interest-bearing demand 167 7 174
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Total interest-bearing deposits 487 (4) 483
Debentures and Federal funds purchased 542 (258) 284
------- ------- -------
Total interest on interest-bearing liabilities 1,029 (262) 767
------- ------- -------
Change in net interest income $ 1,297 $ 254 $ 1,551
======= ======= =======
</TABLE>
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(1) Nonaccrual loans are included in the loan totals used in the calculation of
this table.
Interest income on loans includes the accretion of loan fees resulting from the
Company's lending activities. Net fees included in interest income for the three
months ended March 31, 1997 and 1996 were $257,000 and $136,000, respectively.
OTHER OPERATING INCOME
Other operating income was $565,000 for the quarter ended March 31, 1997 as
compared to $376,000 for the same period in 1996, an increase of $189,000 or
50.27%. Service charges increased by $156,000 or 49.84% while all other
operating income increased $33,000 or 52.38%. The increase in service charges
and other operating income during the three-month period ended March 31, 1997 as
compared to the same
8
<PAGE> 9
period in 1996 was due to significant deposit growth and Company expansion
during the last nine months of 1996 and the first quarter of 1997.
OTHER OPERATING EXPENSES
Total other operating expenses for the three months ended March 31, 1997 were
$3,559,000, an increase of $748,000 or 26.61% as compared to the same quarter in
1996. Many of the increases were a direct result of the RB Merger and to a
lesser extent, the opening of the Rancho California Road Branch and the Wells
Acquisition. Salaries and benefits expense increased $470,000 or 33.26%;
occupancy and furniture and equipment expense increased by $162,000 or 32.40%;
goodwill and other intangible amortization increased by $52,000 or 185.71%; and
other noninterest expense increased $210,000 or 56.45%. Conversely, professional
services expense decreased $94,000 or 22.71% primarily due to a reduction in
legal and data processing expenses. Net OREO expenses decreased by $52,000 or
61.90% for the three-month period ended March 31, 1997 as compared to the same
period in 1996 due to a reduction in level of OREO properties during the
preceding year.
ALLOWANCE AND PROVISION FOR LOAN AND LEASE LOSSES
The Company maintains an allowance for loan and lease losses ("ALLL") which it
considers adequate to cover the risk of losses in the loan portfolio. The ALLL
is based upon management's ongoing evaluation of the quality of the loan
portfolio, total outstanding and committed loans, previous charges against the
allowance and current and anticipated economic conditions. In making its
evaluation, the Company takes into account the results of regulatory
examinations of the Company and FPNB, which can be expected to occur at least
once each year. The Company determines the allocation for allowances based upon
the evaluation of quality of the loan portfolio, total outstanding loans,
previous charges against the allowance and current and anticipated economic
conditions. The provision for loan losses is a charge against earnings in the
period in which the potential loss is identified. Actual loan losses are charged
against the allowance for loan losses in the period in which they occur.
A provision for loan losses of $108,000 was recorded for the three-month period
ended March 31, 1997 as compared to $250,000 recorded in the first quarter of
1996. Based on a review of the loan portfolio and considering historical
experience with regard to potential loan losses, the provisions were necessary
so that the allowances for loan losses as of March 31, 1997 and 1996 were
adequate to absorb potential losses.
As of March 31, 1997, the allowance for loan losses totaled $3,055,000 or 1.36%
of total loans outstanding as compared to $3,121,000 or 1.46% of total loans
outstanding as of December 31, 1996. Based on management's evaluation of the
loan portfolio and considering the factors mentioned above, management believes
that the allowance for loan losses was adequate as of March 31, 1997. However,
there is no assurance that future changes in economic conditions would not
require that additional provisions be made.
NONPERFORMING ASSETS
Interest on loans is normally accrued from the date a disbursement is made and
recognized as income as it is accrued. Generally, the Company reviews any loan
on which payment has not been made for 90 days for potential nonaccrual. The
loan is examined and the collateral is reviewed to determine loss potential. If
the loan is placed on nonaccrual, any prior accrued interest which remains
unpaid is reversed. Classification of a loan as nonaccrual does not necessarily
mean that the loan will be charged off in the future.
9
<PAGE> 10
The following table presents information with respect to the Company's past due
loans and the components of nonperforming assets as of the dates indicated.
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
Nonperforming loans:
Loans greater than 90 days past due and still accruing interest $1,450 $ 774
Loans on nonaccrual 1,920 1,374
------ ------
Total nonperforming loans 3,370 2,148
Other real estate owned 1,995 1,329
------ ------
Total Nonperforming Assets $5,365 $3,477
====== ======
</TABLE>
Nonperforming assets totaled $5,365,000 or 1.65% of total assets as of March 31,
1997, as compared to $3,477,000 or 1.13% as of December 31, 1996.
INCOME TAXES
Income tax expense for the first quarter of 1997 was $665,000 as compared to an
income tax benefit of $279,000 recorded during the three-month period ended
March 31, 1996. Net income tax benefits recorded in 1996 represented the last of
the significant income tax benefits recorded by the Company as a result of prior
years' net operating losses. During 1997, the Company expects that it will be
taxable at an effective rate of approximately 42%.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
Effective asset/liability management is achieved by maintaining adequate
liquidity and minimizing the impact of future interest rate changes on net
interest income. The responsibility for monitoring the Company's liquidity and
interest rate sensitivity lies with the Asset/Liability Management and Executive
Committees of FPNB. The Executive Committee meets weekly and the Asset/Liability
Management Committee meets quarterly to monitor liquidity, investment
strategies, rate sensitivity strategy and loan demand as well as the adequacy of
funding sources.
Liquidity measures the ability of the Company to meet its maturing obligations
and existing commitments, to withstand fluctuations in deposit levels, to fund
its operations and to provide for customers' credit needs. Liquidity is provided
by cash and due from banks, Federal funds sold, investments available for sale,
interest-earning deposits in other financial institutions and loan repayments.
The Company's total liquid assets as a percentage of deposits and short-term
borrowings totaled 24.50% and 25.00% as of March 31, 1997 and December 31, 1996,
respectively.
The Company actively manages its interest rate sensitivity position. The
objectives of interest rate risk management are to control exposure of net
interest income to risks associated with interest rate movements, to achieve
consistent growth in net interest income, and to profit from favorable market
opportunities. The Company manages the rate sensitivity position by adjusting
the average maturity of and establishing rates on earning assets and
interest-bearing liabilities in line with its expectation for future interest
rates. However, even with perfectly matched repricing of assets and liabilities,
interest rate risk cannot be avoided entirely. Interest rate risk remains in the
form of prepayment risk of assets or liabilities, risks related to differences
in the timing and indexes for interest rate adjustments for assets and
liabilities with adjustable interest rates, and basis risk. In the Company's
experience, in a rising rate environment, rates on short-term liabilities rise
more slowly than rates on its adjustable rate assets, while in a decreasing rate
environment, the Company would expect rates on its short-term liabilities to
decrease more consistently with the rates on its adjustable rate assets.
10
<PAGE> 11
CAPITAL RESOURCES
The Company engages in an ongoing assessment of its capital needs in order to
maintain an adequate level of capital to support business growth and to ensure
depositor protection. The Company's two sources of capital are internally
generated funds and the capital markets.
The Federal Reserve Board (the "FRB") in December 1988, the Office of the
Comptroller of the Currency (the "OCC") in January 1989 and the Federal Deposit
Insurance Corporation in March 1989 adopted risk-based capital adequacy
guidelines for bank holding companies and banks. The risk-based capital adequacy
guidelines establish a risk-based capital ratio based on the overall risk of the
entity determined by assigning various weighted risks to each balance sheet
asset and certain off-balance sheet commitments, adding up all of the weighted
risk amounts, and dividing Tier 1 capital (capital, surplus and retained
earnings) into the risk-weighted assets. As of March 31, 1997, the Company's
Tier I risk-based capital to risk-weighted assets totaled 7.30% as compared to
7.47% as of December 31, 1996, and the Company's total capital to risk-weighted
assets totaled 8.55% as compared to 8.72% as of December 31, 1996. As of March
31, 1997, FPNB's Tier I risk-based capital to risk-weighted assets totaled 8.51%
as compared to 8.79% as of December 31, 1996, and FPNB's total capital to
risk-weighted assets totaled 9.76% as compared to 10.04% as of December 31,
1996.
The FRB and the OCC adopted leverage requirements effective January 1, 1992
which apply in addition to the risk-based capital requirements. Under these
requirements, bank holding companies and national banking associations are
required to maintain core capital of at least 3% of total assets. On March 31,
1997 and December 31, 1996, the Company's core capital to total assets stood at
5.40% and 5.54%, respectively. On March 31, 1997 and December 31, 1996, FPNB's
core capital to total assets stood at 6.30% and 6.52%, respectively.
11
<PAGE> 12
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
SIGNATURES
In the opinion of management, the financial statements presented reflect all
adjustments which are necessary to a fair statement of the results for the
periods presented.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
FP Bancorp, Inc.
By: \s\ Michael J. Perdue
---------------------------------
Michael J. Perdue
Executive Vice President and
Chief Operating Officer
(duly authorized officer and
principal financial officer)
Dated: May 12, 1997
12
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 21,582,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> (7,000,000)
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 51,777,000
<INVESTMENTS-CARRYING> 10,244,000
<INVESTMENTS-MARKET> 10,089,000
<LOANS> 225,262,000
<ALLOWANCE> 3,055,000
<TOTAL-ASSETS> 324,948,000
<DEPOSITS> 290,716,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,276,000
<LONG-TERM> 4,575,000
0
0
<COMMON> 3,000
<OTHER-SE> 21,378,000
<TOTAL-LIABILITIES-AND-EQUITY> 324,948,000
<INTEREST-LOAN> 5,630,000
<INTEREST-INVEST> 1,088,000
<INTEREST-OTHER> 23,000
<INTEREST-TOTAL> 6,741,000
<INTEREST-DEPOSIT> 1,654,000
<INTEREST-EXPENSE> 2,060,000
<INTEREST-INCOME-NET> 4,681,000
<LOAN-LOSSES> 108,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,559,000
<INCOME-PRETAX> 1,579,000
<INCOME-PRE-EXTRAORDINARY> 1,579,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 914,000
<EPS-PRIMARY> .33
<EPS-DILUTED> .29
<YIELD-ACTUAL> 6.67
<LOANS-NON> 1,920,000
<LOANS-PAST> 1,450,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,121,000
<CHARGE-OFFS> 249,000
<RECOVERIES> 75,000
<ALLOWANCE-CLOSE> 3,055,000
<ALLOWANCE-DOMESTIC> 3,055,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
