FORM 10-QSB
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
Commission File Number 2-91196
NORTHERN EMPIRE BANCSHARES
(Exact name of registrant as specified in its charter)
California 94-2830529
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
801 Fourth Street, Santa Rosa, California 95404
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 707-579-2265
NONE
(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
and 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 the latest practicable date.
Title of class: Common Stock, no par value Outstanding shares as of
July 31, 1995 : 1,322,299
Transitional Small Business Disclosure Format (check one): Yes No X
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NORTHERN EMPIRE BANCSHARES AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1995 1994
<S> <C> <C>
ASSETS
Cash and equivalents:
Cash and due from banks $8,710,000 $6,042,000
Federal funds sold 4,888,000 11,924,000
Total cash and equivalents 13,598,000 17,966,000
Certificates of deposits in other financial institutions 6,624,000 6,231,000
Investment securities - held to maturity
(market value: 1995 - $6,856,000; 1994 - $3,060,000) 6,857,000 3,072,000
Loans held for sale 10,501,000 3,831,000
Loans receivable, net 102,747,000 86,285,000
Leasehold improvements and equipment, net 586,000 677,000
Accrued interest receivable and other assets 4,112,000 3,714,000
Total assets $145,025,000 $121,776,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits $133,704,000 $111,083,000
Accrued interest payable and other liabilities 378,000 494,000
Total liabilities 134,082,000 111,577,000
Shareholders' equity:
Common stock, no par value; authorized, 20,000,000 shares;
shares issued and outstanding, 1,322,299 in 1995 and
1,253,350 in 1994 6,817,000 6,489,000
Retained earnings 4,126,000 3,710,000
Total shareholders' equity 10,943,000 10,199,000
Total liabilities and shareholders' equity $145,025,000 $121,776,000
</TABLE>
<TABLE>
<CAPTION>
NORTHERN EMPIRE BANCSHARES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
June 30, 1995 June 30, 1994 June 30, 1995 June 30, 1994
<S> <C> <C> <C> <C>
Interest income:
Loans $2,838,000 $2,074,000 $5,295,000 $3,999,000
Certificates of deposits in other financial institutions 82,000 39,000 160,000 73,000
Federal funds sold and investment securities 260,000 124,000 387,000 215,000
Total interest income 3,180,000 2,237,000 5,842,000 4,287,000
Interest expense 1,369,000 728,000 2,406,000 1,385,000
Net interest income before provision for loan losses 1,811,000 1,509,000 3,436,000 2,902,000
Provision for loan losses 40,000 90,000 100,000 180,000
Net interest income after provision for loan losses 1,771,000 1,419,000 3,336,000 2,722,000
Other income:
Service charges on deposits 93,000 102,000 183,000 199,000
Gain on sale of loans 112,000 233,000 373,000 506,000
Other 117,000 118,000 236,000 182,000
Total other income 322,000 453,000 792,000 887,000
Other expenses:
Salaries and employee benefits 755,000 668,000 1,512,000 1,311,000
Occupancy 171,000 163,000 352,000 315,000
Furniture & equipment 71,000 94,000 145,000 184,000
Outside customer services 48,000 63,000 116,000 130,000
Deposit and other insurance 88,000 81,000 175,000 161,000
Professional fees 38,000 56,000 70,000 94,000
Advertising & business development 72,000 75,000 154,000 128,000
Other 185,000 193,000 403,000 364,000
Total other expenses 1,428,000 1,393,000 2,927,000 2,687,000
Income before income taxes 665,000 479,000 1,201,000 922,000
Provision for income taxes 293,000 198,000 520,000 381,000
Net income $372,000 $281,000 $681,000 $541,000
Common stock earnings per share data:
Net income $0.29 $0.24 $0.52 $0.47
Average common shares outstanding for net income per
share calculation 1,288,393 1,150,136 1,305,170 1,146,429
</TABLE>
<TABLE>
<CAPTION>
NORTHERN EMPIRE BANCSHARES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30, 1995 June 30, 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $681,000 $541,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for loan losses 100,000 180,000
Depreciation and amortization 114,000 169,000
(Increase) decrease in loans held for sale (6,670,000) (4,075,000)
Increase in interest receivable and other assets (398,000) (300,000)
Increase in accrued interest payable and
other liabilities (116,000) 93,000
Net cash (used in) provided by operating activities (6,289,000) (3,392,000)
Cash flows from investing activities:
(Purchases) of investment securities (6,785,000) (2,945,000)
Maturities of investment securities 3,000,000 1,500,000
Net decrease in deposits in other financial institutions (393,000) (208,000)
Net (increase) in loans receivable (16,562,000) (3,728,000)
Purchase of leasehold improvements and equipment, net (23,000) (96,000)
Investment in other real estate owned 0 457,000
Net cash used in investing activities (20,763,000) (5,020,000)
Cash flows from financing activities:
Net increase in deposits 22,621,000 9,471,000
Payment of cash dividend (265,000) (207,000)
Stock options exercised 328,000 71,000
Net cash provided by financing activities 22,684,000 9,335,000
Net increase in cash and cash equivalents (4,368,000) 923,000
Cash and cash equivalents at beginning of year 17,966,000 16,407,000
Cash and cash equivalents at end of period $13,598,000 $17,330,000
</TABLE>
Northern Empire Bancshares and Subsidiary
Notes to Consolidated Financial Statements
June 30, 1995
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 Northern Empire Bancshares and Subsidiary at June 30, 1995 and the
results of operations for the three and six months then ended.
Certain information and footnote disclosures presented in the
Corporation'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 Corporation's 1994 Annual
Report on Form 10-KSB. The results of operations for the three and
six months ended June 30, 1995 are not necessarily indicative of the
operating results through December 31, 1995.
Note 2 - New Accounting Pronouncements
In May, 1993, the Financial Accounting Standards Board issued
statement #114 as amended by statement #118, which requires
recognition of impairment of contractual loan obligations when it is
probable that both principal and interest are not collectable under
the contractual terms of the loan agreement. SFAS #114 and #118 have
been adopted by the Corporation for the 1995 fiscal year. It has not
had a material impact on the Corporation or the Bank.
Note 3 - Net Income per Common Share
Net income per share is calculated by using the weighted average
number of common shares outstanding during the period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Northern Empire Bancshares (the "Corporation") is the bank holding
company of Sonoma National Bank (the "Bank"). Since the principal
business of the Corporation is the Bank, the following discussion
pertains mainly to the Bank.
Total consolidated assets equalled $145,025,000 at June 30, 1995
compared to $121,776,000 at December 31, 1994. The majority of the
increase in assets occurred in loans held for investments and loans
held for sale. The asset growth was funded through an increase in
deposits of approximately $23 million.
The net income after tax for the first six months of 1995 equalled
$681,000 compared to $541,000 for the comparable period of 1994, an
increase of 26%. The second quarter's net income after tax of
$372,000 increased 32% over the second quarter of 1994 when net
income equalled $281,000.
Net Interest Income
Net interest income of $1,811,000 for the second quarter of 1995
increased 20% from $1,509,000 for the comparable period last year.
The increase in net interest income resulted from volume increases of
$25.8 million in average earning assets ($21 million in average loans
outstanding). The net interest margin, which decreased from 5.76% in
the second quarter of 1994 to 5.49% in the second quarter of 1995,
resulted from the higher cost of deposits and the lower loan-to-
deposit ratio during the second quarter of 1995.
In March 1994, the Federal Reserve Bank started to increase the Fed
Funds Rate. The prime lending rate had been 6% since July 1992;
however, since March 1994 the Prime Rate increased six times to a
high of 9% and was adjusted downward to 8.75% on July 7, 1995.
The Bank is considered asset sensitive and has benefited from these
rate increases since more of its assets reprice at a faster rate than
deposits. Of the Bank's loan portfolio totalling $113 million at June
30, 1995, 89% of the loans are floating rate loans. Approximately $49
million are prime-based loans, of which $14 million reprice
immediately and $32 million reprice on a quarterly basis.
Approximately $43 million of the Bank's loan portfolio is periodically
adjustable (generally every six months) based upon the Eleventh
District's cost of funds index. This index was 3.67% in June 1994 and
increased to 5.14% in June 1995. The overall impact of the rate
increases has been to increase the yield on earning assets from 8.51%
for the second quarter of 1994 to 9.65% in 1995.
The increase in interest income has been offset by an increase in
interest expense, which increased from $728,000 in the second quarter
of 1994 to $1,369,000 in the second quarter of 1995. A major factor
was the increase of $25 million in average interest bearing deposits
when comparing the second quarter of 1994 to 1995. The cost of
interest bearing deposits has also increased significantly during the
quarter from 3.45% last year to 4.99% in 1995. The increase in the
average cost of funds was 40 basis points higher than the increase in
yields on earning assets. The rising interest rate environment and
competition for deposits have resulted in higher deposit costs. The
increase in time certificates (see "Deposits"), which bear higher
interest rates, by $17 million during the quarter has increased the
average cost of funds.
Other Income
Other income decreased 29% when comparing the second quarter of 1995
to the same period last year. Gains on sale of Small Business
Administration (SBA) loans equalled $112,000 in the second quarter of
1995 compared to $233,000 in the second quarter of 1994 due to smaller
amount of loans sold. The SBA servicing fees have increased due to
the growth in the portfolio of SBA loans serviced and equalled $87,000
in the second quarter this year compared to $60,000 for the same
period of 1994.
With the increase in residential loan rates, the volume of mortgage
refinance and home sales declined to such a level that the Bank
stopped actively marketing its residential mortgage product.
Service charges have declined due to the higher earning credits on
analysis customers' balances and the drop in average balances held by
title companies due to the reduced level of refinance activity in
their business.
Non-Interest Expenses
The Bank's operating expenses increased by 2.5% over the second
quarter of 1994 to $1,428,000 in the second quarter of 1995. Salaries
and benefits increased 13% due to incentives on SBA loan production,
annual salary increases and increased employee benefits costs.
Occupancy expenses increased 5% mainly due to increases in lease rates
tied to indexes. Equipment costs declined 24% due to the reduction in
depreciation of the data processing equipment which is now fully
amortized. Deposit insurance has increased due to the higher level of
deposits. Advertising and marketing costs vary significantly based
upon the marketing activities. Professional expenses have declined
due to the lower level of legal activity on problem loans. Other
expenses which include: stationery & supplies, telephone, postage,
loan expenses, director fees, dues and subscriptions, automobile costs
and others decreased 4%.
The total non-interest expenses for the SBA lending department for the
second quarter was approximately $340,000 ($205,000 in personnel
costs, $45,000 in occupancy and equipment expenses, $18,000 in
marketing/business development) compared to $285,000 for the second
quarter of 1994. The increase in SBA costs relate to the reduced
level of loan sales, since the direct cost associated with a loan are
recovered when the loan is sold.
The operating expenses for the Windsor Branch, which opened in July of
1993, totalled $60,000 for the second quarter of 1995 compared to
$55,000 for the same period last year. The Branch has increased its
deposit total from $4 million at June 30, 1994 to $10.3 million at
June 30, 1995.
Income Taxes
The effective tax rate approximated 44% for the second quarter of 1995
and 41% during 1994. The provision for the second quarter of 1995 was
$293,000 versus $198,000 for the same period last year. The increase
resulted from the increase in pre-tax income during the second quarter
of 1995 compared to 1994.
Liquidity and Investment Portfolio
Liquidity is a bank's ability to meet possible deposit withdrawals, to
meet loan commitments and increased loan demand, and to take advantage
of other investment opportunities as they arise. The Bank's liquidity
practices are defined in both the Asset and Liability Policy and the
Investment Policy. These policies define acceptable liquidity
measures in terms of ratios to total assets, deposits, liabilities and
capital. As of June 30, 1995, the Bank was in compliance with these
policies and specified ratios.
Cash and due from banks, federal funds sold and certificates of
deposit totalled $20,222,000 or 13.9% of total assets at June 30,
1995, compared to $24,197,000 or 19.9% of total assets at December 31,
1994. The decline results from the investment of $4 million for 14
days in US Treasuries which matured in early July. At June 30, 1995
the Bank held a total of $6.7 million in US Treasuries compared to
investments totalling $3,072,000 at year end. The Bank pledges
$500,000 of its investment as required for Federal Tax Deposits. This
level of liquidity is similar to the Bank's liquidity position over
the last several years, and comparable to financial institutions in
its asset size range.
Liquidity is also provided through the sale or participation of loans.
During the second quarter of 1995 the Bank sold $1,603,000 in SBA
loans (guaranteed portion) compared to $4,907,000 for the same period
last year. At June 30, 1995, the Bank held $10.5 million in SBA loans
which could be sold to provide liquidity, if needed.
The Bank also has three unused federal funds lines of credit totalling
$8,000,000. The Bank feels this amount of liquidity is adequate to
meet any cash demands that may arise.
At present, the Corporation's primary sources of liquidity are from
short term investments on its capital, exercise of stock options and
dividends from the Bank. The Bank's ability to pay dividends to the
Corporation is subject to the restrictions of the national banking
laws and, under certain circumstances, the approval of the Comptroller
of the Currency.
At June 30, 1995, the Corporation had non-interest and interest
bearing cash balances of $378,000 which management believes is
adequate to meet the Corporation's operational expenses.
The Corporation and the Bank do not engage in hedging transactions
(interest rate futures, caps, swap agreements, etc.).
Deposits
During the second quarter of 1995, deposits increased 8.6% to $133.7
million. This increase resulted from two certificate of deposit (CD)
campaigns which were offered to new customers at slightly higher than
market rates. The first product was a one year time deposit and the
second product was an eighteen month time deposit with a one time
adjustment, made at the depositor's request, to its rate based upon
the 26 week US Treasury Bill rate plus one half of one percent. These
promotions increased deposits by approximately $12 million during the
first quarter and $7.4 during the second quarter of 1995. The amounts
raised were used to fund loans and the balance invested in short term
investments.
Deposit rates have been increasing. Rates on the various deposit
products had been compressed to a very narrow margin, if any, between
rates offered on transactions accounts and certificates of deposit
(CDs). With the increasing rate environment, CD rates have increased
at a faster pace than interest rates on transaction accounts. This
change has resulted in time certificate becoming a more attractive
investment option to depositors.
Demand deposits include $49.6 million in the "Sonoma Investors
Reserve" account. This account is a limited transaction account with
a floating rate which is tied to the 13 week treasury bill less a
margin of 50 basis points. Due to the low rate environment, the rate
offered on this account has been very attractive and many of the
Bank's customers have moved their funds into this deposit product.
New customers have also found this type of deposit preferable due to
the immediate availability of the funds versus a time certificate
bearing a future maturity; however, with the rise in interest rates
depositors may move a portion of these funds into a higher yielding
investment such as a time deposit.
At the end of June 1995, non-interest bearing deposits equalled $20
million compared to $21 million at December 31, 1994. Transaction
accounts include balances with title companies. This type of deposit
account has greater balance fluctuations than other types of deposits
based upon their business activity. During the third quarter of last
year one title company which had been holding balances approximating
$1.5 million with the Bank changed their operating procedures on
escrow accounts, and no longer has these balances on deposit.
At June 30, 1995, certificates of deposits of $100,000 or more
equalled $14,342,000 or 10.7% of total deposits versus $8,616,000 or
7.8% of total deposits at December 31, 1994. The holders of these
deposits are primarily local customers of the Bank. While these
deposits are considered to be rate sensitive, the Bank believes they
are stable deposits, as they are obtained primarily from customers
with other banking relationships with the Bank. The increase in the
balance resulted from the certificate of deposit promotions previously
discussed.
The lower interest rate environment over the past few years and the
increased competition from the financial services industry has made it
more difficult to attract new deposits at favorable rates. With the
recent increases in Federal Funds rates and the prime lending rate
there has been more pressure to increase rates on deposit accounts and
deposit rates had been increasing during the second quarter. Rates
have softened since the reduction in the Fed Funds rate on July 6.
The Bank continually monitors competitors rates and strives to be
competitive in pricing deposits.
Loans
Total loans held for investment of $102,747,000 increased 19.1% from
$86,285,000 at December 31, 1995. The Bank has experienced growth and
loan demand in its commercial loan and SBA lending programs during the
second quarter. During the first six months of 1995, $20 million in
loans which were partially guaranteed by the SBA were funded and $4.8
million in SBA guaranteed loans were sold in the secondary market.
Loans held for sale include SBA guaranteed loans which could be sold
totalling $10.5 million as of June 30, 1995 versus $3.8 million at
year end.
The Bank continues to emphasize commercial and real estate lending.
At June 30, 1995, 41% of the loans held for investment were commercial
loans and 56% were real estate and construction loans, compared to 39%
and 58% respectively at December 31, 1994. Management is aware of the
risk factors in making commercial and real estate loans and is
continually monitoring the local market place. Real estate
construction loans are primarily for single family residences and
commercial properties under $1,500,000 located within Sonoma County.
Construction loans are made to "owner/occupied" and "owner/users" of
the properties and occasionally to developers with a successful
history of developing projects in the Corporation's market area. The
construction lending business is subject to, among other things, the
volatility of interest rates, real estate prices in the area and
market availability of conventional real estate financing to repay
such construction loans. As of June 30, 1995, the Bank had $2,831,000
outstanding in construction loan financing. A decline in real estate
values and/or demand could potentially have an adverse impact on the
loan portfolio, and on the financial condition of the Bank.
During 1993 and 1994, the Bank was very active in residential mortgage
refinancing. The Bank originated residential mortgage loans with the
intent to sell them to the Federal Home Loan Mortgage Corporation
(FHLMC) or outside investors at a price approximating par value. The
increasing mortgage rates during 1994 severely impacted the refinance
activity. The Bank's mortgage loan sales declined to the level that
it was no longer economically feasible to have a designated staff
assigned to residential mortgage lending. The Bank continues to offer
residential mortgage services on a limited basis. While market
conditions have improved the Bank has not expanded its residential
mortgage products and services; however, it may in the future.
The Bank has a small portfolio of consumer loans which equaled 2.8% of
the total loan portfolio at June 30, 1995.
Allowance for Loan Losses
The allowance for loan losses equalled $1,511,000 at June 30, 1995 as
compared to $1,421,000 at December 31, 1994. At June 30, 1995, the
allowance for loan losses equalled 1.5% of total loans (net of loans
held for sale) compared to 1.6% at December 31, 1994. The allowance
for loan loss is reviewed on a monthly basis and is based on an
allocation for each loan category, plus an allocation for any
outstanding loans which have been classified by regulators or
internally for the "Watch List". Each loan that has been classified
is individually analyzed for the risk involved and reserved for
according to the risk assessment.
At June 30, 1995 there were six loans on non-accrual which totalled
$383,000. There was one loan totalling $1,000 past due 90 days or
more, and loans past due 30-89 days totalled $1,207,000. Many of
these loans are secured by real estate or other property. On December
31, 1994, there were five loans on non-accrual totalling $201,000,
there were no loans past due 90 or more days, and past due 30-89 days
totalled $327,000.
Capital Resources
Pursuant to regulations under the FDIC Improvement Act of 1991
(FDICIA), five capital levels were prescribed as applicable for banks,
ranging from well-capitalized to critically under-capitalized. At
June 30, 1995, the Bank's was considered " well capitalized." The
Bank's risk-based capital ratio was 10.3% and leverage capital ratio
was 7.5%.
In March 1995, the Corporation declared a $0.20 cash dividend to
shareholders of record on April 28, 1995 and paid in May 1995.
SCHEDULES
LOANS HELD FOR INVESTMENT
<TABLE>
Maturities and sensitivities of loans held for investment (gross of deferred fees) to changes in interest rates by loan types
as of June 30, 1995 is summarized in the following table:
<CAPTION>
June 30, 1995 December 31, 1994
<S> <C> <C>
Commercial $43,347,000 $34,857,000
Real Estate-Construction 2,831,000 1,701,000
Real Estate- Other 56,676,000 49,601,000
Installment Loans 2,989,000 2,965,000
Total $105,843,000 $86,285,000
</TABLE>
Of the total loans due in more than one year $8,314,000 were at
fixed interest rates and $81,134,000 were at adjustable
interest rates at June 30, 1995. The loan portfolio has no
foreign balances.
<TABLE>
<CAPTION>
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
Quarter Ended Six Months Ended
June 30, 1995 June 30, 1995
<S> <C> <C>
Balance - Beginning of Period $1,413,000 $1,421,000
Provision for Loan Losses 40,000 100,000
Charge Offs 8,000 81,000
Recoveries 66,000 71,000
Balance - End of the Period $1,511,000 $1,511,000
</TABLE>
There were six loans on non-accrual at June 30, 1995, amounting
to $383,000, of which $313,000 were secured by real estate
collateral.
<TABLE>
GAP ANALYSIS
The following schedule represents interest rate sensitivity profile of assets, liabilities and shareholder's equity
classified by earliest possible repricing opportunity or maturity date.
<CAPTION>
Over Over Non-rate
Balance Sheet - June 30, 1995 Through 3 Months 1 Year Sensitive Total
(In 000's) 3 Months through through or Over
1 Year 5 Years 5 Years
<S> <C> <C> <C> <C> <C>
Assets
Time Deposits-other financial institutions $1,386 $5,238 $6,624
Fed funds sold 4,888 4,888
Investment securities 5,976 $764 $117 6,857
Loans and loans held for sale 35,388 70,997 6,846 2,801 116,032
Non-interest-earning assets (net) 10,624 10,624
Total Assets $47,638 $76,235 $7,610 $13,542 $145,025
Liabilities & Shareholders Equity
Time Deposits $100,000 and over $5,270 $5,931 $3,141 $14,342
All other interest-bearing deposits 69,369 19,832 10,118 99,319
Non-interest bearing liabilities $20,421 20,421
Shareholders' Equity 10,943 10,943
Total Liabilities & Shareholders' Equity $74,639 $25,763 $13,259 $31,364 $145,025
Interest Rate Sensitivity GAP (1) ($27,001) $50,472 ($5,649) ($17,822)
Cumulative Interest Rate Sensitivity GAP ($27,001) $23,471 $17,822 $0
<F1>
(1) Interest rate sensitivity gap is the difference between interest rate sensitive assets and interest rate sensitive
liabilities within the above time frames.
</F>
</TABLE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None other than in the ordinary course of business.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Corporation was held on May
16, 1995. The following directors were re-elected.
<TABLE>
<CAPTION>
For Against Withheld Percent
<S> <C> <C> <C> <C>
Patrick R. Gallaher 951,270 0 4,305 72.1
William P. Gallaher 951,270 0 4,305 72.1
William E. Geary 951,270 0 4,305 72.1
Robert V. Pauley 951,270 0 4,305 72.1
James B. Keegan, Jr. 951,270 0 4,305 72.1
Dennis R. Hunter 951,270 0 4,305 72.1
</TABLE>
All Board members from the previous year were re-elected. No other
matters were voted on at this meeting.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits:
(3) (a) Articles of Incorporation of the Corporation (filed as
Exhibit 3.1 to the Corporation's S-1 Registration Statement, filed May
18, 1984 and incorporated herein by this reference).
(b) Certificate of Amendment to Articles of Incorporation, filed
January 17, 1989 (filed as exhibit (3)(b) to the Corporation's Annual
Report on Form 10-K for the Fiscal Year Ended December 31, 1988 and
incorporated herein by this reference).
(c) Bylaws of the Corporation, as amended (filed as Exhibit 3.2 to
the Corporation's S-2 Registration Statement, File No. 33-51906 filed
September 11, 1992 and incorporated herein by this reference).
(d) Amendment to the Bylaws of the Corporation and revised Bylaws
(filed as Exhibit (3)(d) to the Corporation's Annual Report on Form
10-KSB for the Fiscal Year Ended December 31, 1994 and incorporated
herein by this reference).
(10)(a) Lease for Bank Premises at 801 Fourth Street, Santa Rosa,
California (filed as Exhibit 10.1 to Amendment No. 1 to the
Corporation's S-1 Registration Statement, filed June 23, 1984, and
incorporated herein by this reference).
(b)* Stock Option Plan (filed as Exhibit 10.2 to the Corporation's
S-1 Registration Statement, filed May 18, 1984, and incorporated
herein by this reference).
(c) Lease for Bank Premises at 6641 Oakmont Drive, Santa Rosa,
California, dated February 1, 1989 (filed as Exhibit (10)(c) to the
Corporation's Annual Report on Form 10-K for the Fiscal Year ended
December 31, 1988 and incorporated herein by this reference).
(d)* Amendment No. 1 to Stock Option Plan (filed as Exhibit (10)(d)
to the Corporation's Annual Report on Form 10-K for the Fiscal Year
ended December 31, 1989 and incorporated herein by this reference).
(e) Lease for Administrative Office at 755 Fourth Street, Santa
Rosa, California, dated January 10, 1990 (filed as Exhibit (10)(e) to
the Corporation's Annual Report on Form 10-K for the Fiscal Year ended
December 31, 1989 and incorporated herein by this reference).
(f)* Amendment No. 2 to Stock Option Plan (filed as Exhibit (10)(f)
to the Corporation's Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 1991 and incorporated herein by this reference).
(g) Lease for second floor at 755 Fourth Street, Santa Rosa,
California, Dated November 12, 1992 (filed as Exhibit (10)(g) to the
Corporation's Annual Report on Form 10-KSB for the Fiscal Year Ended
December 31,1992 and incorporated herein by this reference).
(h)* Indemnification Agreements between James B. Keegan, Jr. and
Northern Empire Bancshares and Sonoma National Bank (filed as Exhibit
(10)(h) to the Corporation's Annual Report on Form 10-KSB for the
Fiscal Year Ended December 31,1992 and incorporated herein by this
reference).
(i)* Indemnification Agreements between Dennis R. Hunter and
Northern Empire Bancshares and Sonoma National Bank (filed as Exhibit
(10)(i) to the Corporation's Annual Report on Form 10-KSB for the
Fiscal Year Ended December 31,1992 and incorporated herein by this
reference).
(j)* Indemnification Agreements between Robert V. Pauley and
Northern Empire Bancshares and Sonoma National Bank (filed as Exhibit
(10)(j) to the Corporation's Annual Report on Form 10-KSB for the
Fiscal Year Ended December 31,1992 and incorporated herein by this
reference).
(k)* Indemnification Agreements between William E. Geary and
Northern Empire Bancshares and Sonoma National Bank (filed as Exhibit
(10)(k) to the Corporation's Annual Report on Form 10-KSB for the
Fiscal Year Ended December 31,1992 and incorporated herein by this
reference).
(l)* Indemnification Agreements between Patrick R. Gallaher and
Northern Empire Bancshares and Sonoma National Bank (filed as Exhibit
(10)(l) to the Corporation's Annual Report on Form 10-KSB for the
Fiscal Year Ended December 31,1992 and incorporated herein by this
reference).
(m)* Indemnification Agreement between William P. Gallaher and
Sonoma National Bank (filed as Exhibit (10)(m) to the Corporation's
Annual Report on Form 10-KSB for the Fiscal Year Ended December
31,1992 and incorporated herein by this reference).
(n)* Indemnification Agreement between Deborah A. Meekins and
Sonoma National Bank (filed as Exhibit (10)(p) to the Corporation's
Annual Report on Form 10-KSB for the Fiscal Year Ended December
31,1992 and incorporated herein by this reference).
(o)* Executive Salary Continuation Agreement between Deborah A.
Meekins and Sonoma National Bank (filed as Exhibit (10)(O) to the
Corporation's Annual Report on Form 10-KSB for the Fiscal Year Ended
December 31,1993 and incorporated herein by this reference).
(p)* Executive Salary Continuation Agreement between David F. Titus
and Sonoma National Bank (filed as Exhibit (10)(p) to the
Corporation's Annual Report on Form 10-KSB for the Fiscal Year Ended
December 31,1993 and incorporated herein by this reference).
(q) Lease for premises in Lakeside Village Shopping Center,
Windsor, California, dated March 1,1993 (filed as Exhibit (10.15) to
the Corporation's Amendment No. 1 to Form S-2 Registration Statement,
File No. 33-60566, filed May 13, 1993 and incorporated herein by this
reference).
(r)* Director's Deferred Compensation Plan between Patrick R.
Gallaher and Sonoma National Bank (filed as Exhibit (10)(r) to the
Corporation's Annual Report on Form 10-KSB for the Fiscal Year Ended
December 31, 1994 and incorporated herein by this reference).
(s)* Director's Deferred Compensation Plan between William P.
Gallaher and Sonoma National Bank (filed as Exhibit (10)(s) to the
Corporation's Annual Report on Form 10-KSB for the Fiscal Year Ended
December 31, 1994 and incorporated herein by this reference).
(t)* Director's Deferred Compensation Plan between James B. Keegan,
Jr. and Sonoma National Bank (filed as Exhibit (10)(t) to the
Corporation's Annual Report on Form 10-KSB for the Fiscal Year Ended
December 31, 1994 and incorporated herein by this reference).
(u)* Director's Deferred Compensation Plan between William E. Geary
and Sonoma National Bank (filed as Exhibit (10)(u) to the
Corporation's Annual Report on Form 10-KSB for the Fiscal Year Ended
December 31, 1994 and incorporated herein by this reference).
*Management contract or compensation plan or arrangement.
(27)(a) Financial Data Schedule
b. Reports on Form 8-K
None
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
NORTHERN EMPIRE BANCSHARES
Date: August 8, 1995
/s/James B. Keegan, Jr. /s/Patrick R. Gallaher
James B. Keegan, Jr. Patrick R. Gallaher
Director & President Director & Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet, and Statement of Income, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 8,710
<INT-BEARING-DEPOSITS> 6,624
<FED-FUNDS-SOLD> 4,888
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 6,740
<INVESTMENTS-MARKET> 117
<LOANS> 114,759
<ALLOWANCE> (1,511)
<TOTAL-ASSETS> 145,025
<DEPOSITS> 133,704
<SHORT-TERM> 0
<LIABILITIES-OTHER> 378
<LONG-TERM> 0
<COMMON> 6,817
0
0
<OTHER-SE> 4,126
<TOTAL-LIABILITIES-AND-EQUITY> 145,025
<INTEREST-LOAN> 5,295
<INTEREST-INVEST> 387
<INTEREST-OTHER> 160
<INTEREST-TOTAL> 5,842
<INTEREST-DEPOSIT> 2,406
<INTEREST-EXPENSE> 2,406
<INTEREST-INCOME-NET> 3,436
<LOAN-LOSSES> 100
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,927
<INCOME-PRETAX> 1,201
<INCOME-PRE-EXTRAORDINARY> 1,201
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 681
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
<YIELD-ACTUAL> 5.49
<LOANS-NON> 383
<LOANS-PAST> 1,208
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,208
<ALLOWANCE-OPEN> 1,421
<CHARGE-OFFS> 81
<RECOVERIES> 71
<ALLOWANCE-CLOSE> 1,511
<ALLOWANCE-DOMESTIC> 1,511
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 102
</TABLE>
