FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-18440
BURLINGAME BANCORP
(Exact name of registrant as specified in its charter)
California 94-2921417
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
350 Primrose Road
Burlingame, California
(Address of principal executive offices)
94010
(Zip Code)
(415) 348-2500
(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
Number of shares of common stock outstanding at August 9, 1995 is
576,974.
PART I - FINANCIAL INFORMATION
ITEM 1 - Financial Statements
The information required by Rule 10-01 of Regulation S-X is
attached hereto as Exhibit A.
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
The sole business operation of Burlingame Bancorp (the 'Company')
is conducted through its wholly owned subsidiary, Burlingame Bank
& Trust Co. (the "Bank"). This discussion, therefore, although
presented on a consolidated basis, analyzes primarily the
financial condition and results of operations of the Bank for the
3 month and 6 month periods ended June 30, 1995.
Changes in Financial Condition
During the six month period ended June 30, 1995, deposits
increased $7.3 million or 12.6% to $65.5 million. During the same
period, loans increased $1.3 million or 3.1% to $43.0 million, and
investment securities decreased $2.8 million or 14.3%, to $16.8
million.
During the quarter ended June 30, 1995 deposits increased $3.2
million or 5.2%, loans increased $3.1 million or 7.8%, and
investment securities increased $.4 million or 2.3%.
Non-performing assets, including Other Real Estate owned,
decreased to $1.5 million (2.1% of total assets) as of June 30,
1995, which compares with $2.1 million (3.3% of total assets) at
December 31, 1994. Other Real Estate Owned, totaling $401,000, an
increase of $369,000 over December 31, 1994, includes property
which was sold subsequent to June 30, 1995. The Bank's allowance
for credit losses at June 30, 1995 was 2.7% of total loans
compared with 4.0% at December 31, 1994.
Earnings Summary
Net income for the quarter ended June 30, 1995 was $88,000, an
increase of $77,000 compared with the net income of $11,000 in the
same quarter a year ago. Net income per common and common
equivalent share was $0.15 which compares with net income per
share of $0.02 in the same quarter a year ago. For the six months
ended June 30, 1995, net income was $110,000, an increase of
$93,000 compared with net income of $17,000 in the same period a
year ago. Earnings per common and common equivalent share were
$0.19 for the six months ended June 30, 1995, which compares with
earnings per share of $0.03 for the same period in 1994. The
improved earnings during the period was due primarily to the
reduced volume of non-performing assets and improvement in the mix
of earning assets.
Net Interest Income
Total interest income increased $258,000 or 21.6% for the quarter
as compared to the prior year. During the same period, interest
expense increased $182,000 or 61.5%. Net interest income
increased $76,000 or 61.8% in the second quarter compared to the
same quarter in 1994. The increase is largely a result of a
change in the mix of earning assets offset by increased cost of
deposits. Average loans as a percentage of average earning assets
was 65.3% during the quarter ended June 30, 1995, compared to
63.7% a year earlier. The average balance of lower yielding other
earning assets as a percentage of average total earning assets was
34.7% during the quarter ended June 30, 1995, compared to 36.3% a
year earlier.
Provision for Credit Losses
The Bank maintains its allowance for credit losses at a level
considered appropriate by management to provide for known and
inherent risks in the loan portfolio. This consideration includes
an evaluation of various factors affecting the collectability of
loans, including current and projected economic conditions, past
credit experience and a periodic review of the Bank's loan
portfolio. Because of the decrease in non-performing assets and
the general improvement in asset quality, the Bank recorded no
additional provision to the allowance for credit losses for the
six month period ended June 30, 1995 and 1994. Loans charged off
during the six month period totaled $456,000 in 1995 and $155,000
in 1994. Recoveries in the same period were $21,000 in 1995 and
$8,000 in 1994.
On January 1, 1995, the Company adopted SFAS No. 114, "Accounting
by Creditors for Impairment of a Loan" and SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosure". The effect of adoption on the
Company's financial statements was not material.
Other Income
Other Income consists of gain on sale of assets, service fees and
other fees related to deposit accounts, escrow fees, letter of
credit fees, referral fees and safe deposit box rentals. In this
quarter, income from these sources was $69,000, a decrease of
$54,000 from the same period in 1994. For the six month period
ended June 30, 1995, other income was $145,000 as compared to
$283,000 a year earlier. The decrease is attributable primarily
to reduced gains on sales of SBA loans due to the Bank's decision
in 1995 not to immediately sell the guaranteed portion of all SBA
loans.
Other Expenses
Other expenses decreased $109,000, or 10.9%, to $892,000 for the
quarter ended June 30, 1995, compared to the same period in 1994.
For the six month period, other expenses decreased $121,000, or
6.2% to $846,000, as compared to $1,967,000 for the same period a
year ago. The improvement reflects more efficient use of
personnel resources and reduced costs as a result of reduced
problem assets.
Capital Resources
Management seeks to maintain adequate capital to support
anticipated asset growth and credit risks and to ensure that the
Company meets all regulatory capital requirements.
On June 22, 1995, the Federal Deposit Insurance Corporation (the
"FDIC") terminated the order which had been entered with respect
to Burlingame Bank & Trust Co. (the "Bank") and replaced it with a
Memorandum of Understanding (the MOU) with the FDIC and the
California State Banking Department (the CSBD). The prior
minimum capital requirements of the order, 9% total risk-based and
6.5% leverage, were replaced in the MOU with a 6.0% leverage
ratio. As of June 30, 1995, the Bank was in compliance with all
regulatory capital guidelines and requirements, with total and
tier 1 risk-based capital ratios of 11.9% and 10.6%, respectively,
and tier 1 leverage ratio of 8.3%.
Future growth and earnings retention, as currently projected by
management, are expected to provide for the maintenance of capital
ratios in conformance with the requirements.
Income Taxes
The provision for income taxes was $61,000 for the quarter ended
June 30, 1995, compared to $7,000 in the same quarter a year
earlier. The provision is classified as a current tax liability
for interim reporting purposes. The effective tax rate was 41%
for the six month period ended June 30, 1995, compared to 39% for
the same period in 1994.
Liquidity
The Bank manages its liquidity to ensure that sufficient funds are
available to meet loan commitments and deposit fluctuations.
Primary sources of liquidity include cash and deposits due from
banks, unpledged short-term U.S. Government securities, adjustable
rate government securities funds, money market funds, and federal
funds sold. The Bank's primary liquidity ratio, which is the
ratio of liquid assets to total deposits, was 31% at June 30,
1995, 34% at March 31, 1995, and 27% at December 31, 1994.
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
None
ITEM 2 - Changes in Securities
None
ITEM 3 - Defaults upon Senior Securities
None
ITEM 4 - Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of shareholders held on May 18,
1995, there were present in person or by proxy, shareholders of
the Corporation who were the holders of 422,529 shares of Common
Stock, representing 73.2% of those entitled to vote.
A Board of Directors of seven persons was elected with votes as
follows:
Director Votes For Votes Withheld
David V. Campbell 417,654 4,875
Michael L. Chandler 417,029 5,500
Fred W. Concklin 417,029 5,500
Quentin L. Cook 417,654 4,875
Michael R. Harvey 417,259 8,000
Theodore H. Kruttschnitt 417,029 5,500
Ronald C. Wornick 417,654 4,875
A proposal to approve the appointment of Deloitte & Touche as
independent auditors for the year ending December 31, 1995 was
passed by a vote of 421,654 for, 625 against, with 250 abstaining.
ITEM 5 - Other Information
None
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Report on Form 8-K
A report on Form 8-K dated June 29, 1995 was filed on July 5, 1995
announcing that the Federal Deposit Insurance Corporation (FDIC)
has terminated the order which had been entered with respect to
Burlingame Bank & Trust Co. The order has been replaced by a
Memorandum of Understanding (MOU) with the FDIC and the
California State Banking Department. In the Banks view, the new
MOU is recognition that the Bank has complied with the
requirements of the order and that its condition and operations
have improved significantly.
There are no other applicable items.
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.
BURLINGAME BANCORP
Registrant
Date: August 9, 1995
Theodore H. Kruttschnitt
Chairman and C.E.O.
(Principal Executive Officer)
Date: August 9, 1995
Susann C. Trevena
Chief Accounting Officer
<TABLE>
Exhibit A
Part I - Financial Statements
Burlingame Bancorp and Subsidiary
Consolidated Balance Sheets
<CAPTION>
June 30
1995 December 31
(Unaudited) 1994
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks $3,200,000 $3,512,000
Federal funds sold 8,000,000 400,000
Short-term investments 0 0
------------ ------------
Total cash and equivalents 11,200,000 3,912,000
Investment securities:
Held to Maturity 13,182,000 17,609,000
Available for Sale 3,641,000 2,030,000
Loans Held for Sale 3,474,000 1,098,000
Loans 39,235,000 39,078,000
Allowance for credit losses (1,170,000) (1,605,000)
Premises and equipment, net 1,002,000 1,132,000
Other real estate owned 401,000 32,000
Accrued interest receivable
and other assets 1,416,000 1,395,000
------------ ------------
Total Assets $72,381,000 $64,681,000
============ ============
LIABILITIES & SHAREHOLDERS' EQUITY
Deposits:
Interest-bearing $50,511,000 $46,151,000
Noninterest-bearing 15,019,000 12,058,000
------------ ------------
Total deposits 65,530,000 58,209,000
Accrued interest payable
and other liabilities 772,000 537,000
------------ ------------
Total Liabilities 66,302,000 58,746,000
------------ ------------
Shareholders' Equity
Preferred stock - no par value
Authorized 20,000,000 shares;
Issued, none
Common stock - no par value
Authorized 20,000,000 shares;
Issued, 576,974 shares 4,567,000 4,567,000
Unrealized loss on investment
securities available for sale,
net of tax (67,000) (101,000)
Retained earnings 1,579,000 1,469,000
----------- ------------
Total Shareholders' Equity 6,079,000 5,935,000
------------ ------------
Total Liabilities and
Shareholders' Equity
$72,381,000 $64,681,000
============ =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
Burlingame Bancorp and Subsidiary
Consolidated Statements of Income
(Unaudited)
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
1995 1994 1995 1994
----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income:
Loans (including fees) $1,155,000 $944,000 $2,223,000 $1,849,000
Investment securities 210,000 216,000 437,000 371,000
Federal funds sold 85,000 32,000 127,000 94,000
----------- --------- ---------- ----------
Total Interest Income 1,450,000 1,192,000 2,787,000 2,314,000
Interest Expense on Deposits 478,000 296,000 899,000 603,000
----------- --------- ---------- --------- - - - -
Net Interest Income 972,000 896,000 1,888,000 1,711,000
Provision for credit losses 0 0 0 0
----------- --------- ---------- ---------
Net Interest Income
after provision for credit
losses 972,000 896,000 1,888,000 1,711,000
Other Income 69,000 123,000 145,000 283,000
Other Expenses:
Salaries & benefits 444,000 499,000 913,000 1,021,000
Occupancy 67,000 64,000 127,000 131,000
Furniture & equipment 71,000 72,000 148,000 141,000
Data processing 34,000 32,000 65,000 67,000
Professional services 80,000 153,000 189,000 245,000
Other 196,000 181,000 404,000 362,000
----------- --------- --------- ----------
Total Other Expenses 892,000 1,001,000 1,846,000 1,967,000
----------- --------- --------- ----------
Income before income taxes 149,000 18,000 187,000 27,000
Income taxes 61,000 7,000 77,000 10,000
---------- --------- -------- ----------
Net Income $88,000 $11,000 $110,000 $17,000
========== ========= ========= ==========
Income per common share and
common share equivalent $0.15 $0.02 $0.19 $0.03
========== ========= ========== =========
</TABLE>
See notes to consolidated financial statements.
<TABLE>
Burlingame Bancorp and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
1995 1994 1995 1994
-------------------------- ----------------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income 88,000 $11,000 $110,000 $17,000
Reconciliation to net cash provided by
(used in) operating activities:
Depreciation and amortization
of premises and equipment 79,000 82,000 160,000 159,000
Amortization deferred loan fees (59,000) (34,000) (110,000) (61,000)
Amortization of investment
security premiums (discounts) (30,000) 6,000 (68,000) 25,000
Origination of loans held for sale (676,000) (1,151,000) (2,638,000) (2,512,000)
Sales of loans held for sale 0 778,000 262,000 2,139,000
(Increase) decrease in interest
receivable and other assets 168,000 370,000 (38,000) 461,000
Increase (decrease) in interest
payable and other liabilities (30,000) (7,000) 235,000 (89,000)
---------- ---------- ---------- ----------
Net cash provided by (used in)
operating activities (460,000) 55,000 (2,087,000) 139,000
---------- ---------- ---------- ----------
INVESTING ACTIVITIES:
Activities in securities held-to-maturity:
Purchases (1,507,000) (1,990,000) (1,705,000) (10,523,000)
Maturities 2,700,000 500,000 6,200,000 4,600,000
Activities in securities available-for-sale:
Purchases (1,529,000) 0 (1,560,000) 0
Net loan originations, collections
and principal repayments (2,797,000) 1,472,000 (851,000) 4,064,000
Purchases of premises and equipment (20,000) (66,000) (30,000) (114,000)
---------- ---------- --------- ----------
Net cash provided by (used in)
investing activities (3,153,000) (84,000) 2,054,000 (1,973,000)
---------- ---------- ---------- ----------
FINANCING ACTIVITIES:
Net increase (decrease) in interest-
bearing deposits 678,000 (4,893,000) 4,360,000 (3,588,000)
Net increase (decrease) in noninterest-
bearing deposits 2,563,000 (2,706,000) 2,961,000 (3,588,000)
---------- ---------- ---------- ----------
Net cash provided by
financing activities 3,241,000 (7,599,000) 7,321,000 (7,176,000)
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS (372,000) (7,628,000) 7,288,000 (9,010,000)
CASH AND EQUIVALENTS:
Beginning of period 11,572,000 16,406,000 3,912,000 17,788,000
---------- ---------- ---------- ----------
End of period $11,200,000 $8,778,000 $11,200,000 $8,778,000
========== ========== ========== ==========
OTHER CASH FLOW INFORMATION:
Interest paid $521,000 $332,000 $904,000 $615,000
---------- ---------- ---------- ----------
Taxes paid $64,000 $20,000 $83,000 $20,000
---------- ---------- ---------- ----------
</TABLE>
See notes to consolidated financial statements.
Burlingame Bancorp and Subsidiary
Notes to Consolidated Financial Statements
June 30, 1995
(Unaudited)
Note 1 - Basis of Presentation
In the opinion of Management, the unaudited interim consolidated
financial statements contain all adjustments of a normal recurring
nature, which are necessary to present fairly the financial
condition of Burlingame Bancorp and Subsidiary at June 30, 1995
and the results of operations for the three months and six months
then ended.
Certain information and footnote disclosures presented in the
Company's annual consolidated financial statements are not
included in these interim financial statements. Accordingly, the
accompanying unaudited interim consolidated financial statements
should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's 1994 Annual
Report on Form 10-K. The results of operations for the six months
ended June 30, 1995 are not necessarily indicative of the
operating results through December 31, 1995.
Note 2 - New Accounting Pronouncements
On January 1, 1995, the Company adopted SFAS No. 114, Accounting
by Creditors for Impairment of a Loan and SFAS No. 118,
Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosure. These statements address the
accounting and reporting by creditors for impairment of certain
loans. A loan is impaired when, based upon 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. These statements are applicable to all loans,
uncollaterialized as well as collateralized, except large groups
of smaller-balance homogeneous loans that are collectively
evaluated for impairment such as consumer installment loans and
loans held for sale which are measured at fair value or at the
lower of cost or fair value. Impairment is measured based on the
present value of expected future cash flows discounted at the
loans effective interest rate, except that as a practical
expedient, the Company measures impairment based on a loans
observable market price or the fair value of the collateral if the
loan is collateral dependent. Loans are measured for impairment
as part of the Companys normal internal asset review process.
Interest income is recognized on impaired loans in a manner
similar to that of all loans. It is the Companys policy to place
loans that are delinquent 90 days or more as to principal or
interest on a nonaccrual of interest basis unless secured and in
the process of collection, and to reverse from current income
accrued but uncollected interest. Cash payments subsequently
received on nonaccrual loans are recognized as income only where
the future collection of principal is considered by management to
be probable.
At June 30, 1995, the Companys total recorded investment in the
impaired loans was $1,107,000.for which there was a related
allowance for credit losses of $205,000 determined in accordance
with these Statements.
The average recorded investment in the impaired loans during the
three months ended June 30, 1995 was $1,107,000. The related
amount of interest income recognized during the period that such
loans were impaired was $0 and the amount of interest income
recognized using a cash-basis method of accounting during the time
within the period that the loans were impaired was $0.
Note 3 - Consolidation
The consolidated financial statements include the accounts of
Burlingame Bancorp and its wholly-owned subsidiary, Burlingame
Bank & Trust Co and its wholly-owned subsidiary, Burlingame
Development Corporation. All material intercompany accounts and
transactions have been eliminated in consolidation.
Note 4 - Commitments
The Bank has outstanding standby letters of credit of $492,000 at
June 30, 1995.
Note 5 - Net Income Per Common Share
Net income per share is calculated by using the weighted average
common shares outstanding plus common stock equivalents resulting
from stock options. The difference between primary and fully
diluted net income per share is not significant. The weighted
average number of common and common equivalent shares used in
computing the net income per common share for the periods ending
June 30, 1995 and 1994 was 576,974.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATION AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000737269
<NAME> BURLINGAME BANCORP
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995 DEC-31-1994 DEC-31-1994
<PERIOD-END> JUN-30-1995 JUN-30-1995 JUN-30-1994 JUN-30-1994
<CASH> 3,200,000 3,200,000 6,560,000 6,560,000
<INT-BEARING-DEPOSITS> 0 0 0 0
<FED-FUNDS-SOLD> 8,000,000 8,000,000 2,200,000 2,200,000
<TRADING-ASSETS> 0 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 3,641,000 3,641,000 2,071,000 2,071,000
<INVESTMENTS-CARRYING> 13,182,000 13,182,000 15,864,000 15,864,000
<INVESTMENTS-MARKET> 13,137,000 13,137,000 15,659,000 15,659,000
<LOANS> 39,235,000 39,235,000 40,888,000 40,888,000
<ALLOWANCE> (1,170,000) (1,170,000) (1,602,000) (1,602,000)
<TOTAL-ASSETS> 72,381,000 72,381,000 68,329,000 68,329,000
<DEPOSITS> 65,530,000 65,530,000 62,109,000 62,109,000
<SHORT-TERM> 0 0 0 0
<LIABILITIES-OTHER> 772,000 772,000 370,000 370,000
<LONG-TERM> 0 0 0 0
<COMMON> 4,567,000 4,567,000 4,567,000 4,567,000
0 0 0 0
0 0 0 0
<OTHER-SE> 1,512,000 1,512,000 1,283,000 1,283,000
<TOTAL-LIABILITIES-AND-EQUITY> 72,381,000 72,381,000 68,329,000 68,329,000
<INTEREST-LOAN> 1,155,000 2,223,000 944,000 1,849,000
<INTEREST-INVEST> 295,000 564,000 248,000 465,000
<INTEREST-OTHER> 0 0 0 0
<INTEREST-TOTAL> 1,450,000 2,787,000 1,192,000 2,314,000
<INTEREST-DEPOSIT> 478,000 899,000 296,000 603,000
<INTEREST-EXPENSE> 478,000 899,000 296,000 603,000
<INTEREST-INCOME-NET> 972,000 1,888,000 896,000 1,711,000
<LOAN-LOSSES> 0 0 0 0
<SECURITIES-GAINS> 0 0 0 0
<EXPENSE-OTHER> 892,000 1,846,000 1,001,000 1,967,000
<INCOME-PRETAX> 149,000 187,000 18,000 27,000
<INCOME-PRE-EXTRAORDINARY> 149,000 187,000 18,000 27,000
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 88,000 110,000 11,000 17,000
<EPS-PRIMARY> $0.15 $0.19 $0.02 $0.03
<EPS-DILUTED> $0.15 $0.19 $0.02 $0.03
<YIELD-ACTUAL> 6.13 6.14 5.45 5.13
<LOANS-NON> 1,107,000 1,107,000 1,960,000 1,960,000
<LOANS-PAST> 0 0 0 0
<LOANS-TROUBLED> 0 0 0 0
<LOANS-PROBLEM> 0 0 0 0
<ALLOWANCE-OPEN> 1,626,000 1,605,000 1,743,000 1,749,000
<CHARGE-OFFS> 456,000 456,000 146,000 155,000
<RECOVERIES> 0 21,000 5,000 8,000
<ALLOWANCE-CLOSE> 1,170,000 1,170,000 1,602,000 1,602,000
<ALLOWANCE-DOMESTIC> 1,170,000 1,170,000 1,602,000 1,602,000
<ALLOWANCE-FOREIGN> 0 0 0 0
<ALLOWANCE-UNALLOCATED> 0 0 0 0
</TABLE>
