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 September 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 2-91196
NORTHERN EMPIRE BANCSHARES
(Exact name of small business issuer 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)
Issuer's telephone number, including area code 707-579-2265
NONE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate whether the registrant (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the
past
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
State 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 as of October 31, 1995 :1,322,299
Transitional Small Business Disclosure Format (check one): Yes _____ No X
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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NORTHERN EMPIRE BANCSHARES AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
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September 30, December 31,
1995 1994
ASSETS
Cash and equivalents:
Cash and due from banks $10,143,000 $6,042,000
Federal funds sold 2,134,000 11,924,000
Total cash and equivalents 12,277,000 17,966,000
Certificates of deposits in
other financial institutions 6,228,000 6,231,000
Investment securities - held to maturity
(market value: 1995 - $4,881,000;
1994 - $3,060,000) 4,882,000 3,072,000
Loans held for sale 11,481,000 3,831,000
Loans receivable, net 111,090,000 86,285,000
Leasehold improvements and equipment, net 675,000 677,000
Accrued interest receivable and other assets 4,197,000 3,714,000
Total assets $150,830,000 $121,776,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits $138,830,000 $111,083,000
Accrued interest payable and
other liabilities 480,000 494,000
Total liabilities 139,310,000 111,577,000
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 4,703,000 3,710,000
Total shareholders' equity 11,520,000 10,199,000
Total liabilities and shareholders' equity $150,830,000 $121,776,000
</TABLE>
<TABLE>
<CAPTION>
NORTHERN EMPIRE BANCSHARES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Interest income:
Loans $3,221,000 $2,199,000 $8,516,000 $6,198,000
Certificates of deposits
in other
financial institutions 103,000 50,000 263,000 123,000
Federal funds sold and
investment securities 184,000 142,000 571,000 357,000
Total interest income 3,508,000 2,391,000 9,350,000 6,678,000
Interest expense 1,475,000 782,000 3,881,000 2,167,000
Net interest income before
provision for loan losses 2,033,000 1,609,000 5,469,000 4,511,000
Provision for loan losses 70,000 80,000 170,000 260,000
Net interest income after
provision for loan losses 1,963,000 1,529,000 5,299,000 4,251,000
Other income:
Service charges on deposits 106,000 105,000 289,000 304,000
Gain on sale of loans 271,000 353,000 644,000 908,000
Other 122,000 75,000 358,000 208,000
Total other income 499,000 533,000 1,291,000 1,420,000
Other expenses:
Salaries & employee benefits 834,000 678,000 2,346,000 1,989,000
Occupancy 171,000 183,000 523,000 499,000
Furniture & equipment 70,000 93,000 215,000 278,000
Outside customer services 55,000 71,000 171,000 201,000
Deposit and other insurance 24,000 87,000 199,000 248,000
Professional fees 32,000 32,000 102,000 126,000
Advertising & bus. develop. 57,000 90,000 211,000 217,000
Other 190,000 177,000 593,000 540,000
Total other expenses 1,433,000 1,411,000 4,360,000 4,098,000
Income before income taxes 1,029,000 651,000 2,230,000 1,573,000
Provision for income taxes 453,000 271,000 973,000 652,000
Net income $576,000 $380,000 $1,257,000 $921,000
Common stock earnings per share data:
Net income $0.44 $0.31 $0.96 $0.79
Average common shares outstanding for
net income/share calculation 1,322,299 1,210,892 1,310,942 1,168,226
</TABLE>
<TABLE>
<CAPTION>
NORTHERN EMPIRE BANCSHARES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<S> <C> <C>
Nine Months Ended September 30,
1995 1994
Cash flows from operating activities:
Net income $1,257,000 $921,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for loan losses 170,000 260,000
Depreciation and amortization 166,000 252,000
(Increase) in loans held for sale (7,650,000) (3,852,000)
(Increase) in interest receivable and other assets (483,000) (403,000)
Increase (decrease) in accrued interest payable and
other liabilities (14,000) 63,000
Net cash (used in) provided by operating activities (6,554,000) (2,759,000)
Cash flows from investing activities:
(Purchases) of investment securities (10,810,000) (1,961,000)
Maturities of investment securities 9,000,000 500,000
Net (increase) decrease in deposits in other financial
institutions 3,000 (1,001,000)
Net (increase) in loans receivable (24,975,000) (5,718,000)
(Purchases) of leasehold improvements & equipment, net (164,000) (123,000)
Proceeds on sale of other real estate owned 0 475,000
Investment in other real estate owned 0 (22,000)
Net cash used in investing activities (26,946,000) (7,850,000)
Cash flows from financing activities:
Net increase in deposits 27,747,000 8,946,000
Payment of cash dividend (264,000) (207,000)
Stock options exercised 328,000 233,000
Net cash provided by financing activities 27,811,000 8,972,000
Net increase in cash and cash equivalents (5,689,000) (1,637,000)
Cash and cash equivalents at beginning of year 17,966,000 16,407,000
Cash and cash equivalents at end of period $12,277,000 $14,770,000
</TABLE>
Northern Empire Bancshares and Subsidiary
Notes to Consolidated Financial Statements
September 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 September 30, 1995 and the
results of operations for the three and nine 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 nine months ended September
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. They have 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 $150,830,000 at September 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 $27.7
million.
The net income after tax for the first nine months of 1995 equalled
$1,257,000 compared to $921,000 for the comparable period of 1994,
an increase of 36%. The third quarter's net income after tax of
$576,000 increased 52% over the third quarter of 1994 when net income
equalled $380,000.
Net Interest Income
Net interest income of $2,033,000 for the third quarter of 1995 increased 26%
from $1,609,000 for the comparable period last year. The increase in net
interest income resulted from volume increases of $31.8 million in average
earning assets ($27.7 million in average loans outstanding). The net interest
margin equalled 5.72% during the third quarter of 1995. The decrease from
5.85% in the third quarter of 1994 was caused by the higher cost of deposits
which rose from 3.59% to 5.02% while yield on earning assets increased to
9.89% in the third quarter of 1995 from 8.71% for the same period last year.
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 where it has remained through
September 30, 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 $125.9 million at September 30,
1995, 90% of the loans are floating rate loans. Approximately $61 million
are prime-based loans, of which $20 million reprice immediately and $36
million reprice on a quarterly basis. Approximately $50 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 3.86% in September 1994 and has been slowly increasing
to 5.13% in September 1995. The overall impact of the rate increases has
been to increase the yield on earning assets from 8.71% for the third
quarter of 1994 to 9.89% for the same period in 1995.
The increase in interest income has been partially offset by an increase in
interest expense ($782,000 in the third quarter of 1994 versus $1,475,000
in the third quarter of 1995). The major factor was the
increase of $30 million in average interest bearing deposits when
comparing the third quarter of 1994 to 1995. The average cost of interest
bearing deposits has increased from 3.59% in the third quarter last year
to 5.02% for the same period in 1995. The increase in third quarter's
average time certificates (see "Deposits"), which bear higher interest
rates, by $18 million compared to the third quarter of 1994 has
increased the average cost of funds. The rising interest rate environment
and competition for deposits have resulted in higher deposit costs.
Other Income
Other income decreased 6% when comparing the third quarter of 1995 to the
same period last year. Gains on sale of Small Business Administration
(SBA) loans equalled $271,000 in the third quarter of 1995
compared to $353,000 in the third quarter of 1994 due to fewer loan sales
($4.6 million in the third quarter of 1994 versus $4.1 in 1995). The SBA
servicing fees have increased due to the growth in the
portfolio of SBA loans serviced and equalled $88,000 in the third quarter
this year compared to $68,000 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 products.
Service charges during the quarter were consistent with last year; however
the earnings have declined due to the higher earning credits on
analysis customers' balances and the drop in average balances held by title
companies.
The Bank will be offering investment services through the "PrimeVest"
program during the fourth quarter of this year.
Non-Interest Expenses
The Bank's non-interest expenses increased by 1.6% over the third quarter
of 1994 to $1,433,000 in the third quarter of 1995. While many expense
areas declined, salaries and benefits increased 23%. This increase was
caused by incentive expenses on SBA loan production on SBA loan held for sale.
Since the Bank is holding more SBA loans, the incentives can not be offset
in the gain in sale calculation. Annual salary increases and increased
employee benefits costs have also impacted salaries and benefit expense.
Occupancy expenses decreased 7% mainly due to the reduction in SBA loan
production offices (Fresno, Hollister and Ukiah offices were closed in
1995). Equipment costs declined 25% due to the reduction in
depreciation of the data processing equipment, which is now fully
amortized. Deposit insurance decreased due a refund of $73,000 received
from the FDIC. The FDIC assessment rate has declined from $0.23 per
$100 of insurable deposits to $0.04 per $100. Advertising and marketing
costs vary significantly based upon the marketing activities and were
37% below the same quarter last year. Professional expenses
remained at the same level as the third quarter of last year. Other
expenses, which increased 7%, includes: stationery & supplies, telephone,
postage, loan expenses, director fees, dues and subscriptions and
automobile costs.
The total non-interest expenses for the SBA lending department for the third
quarter was approximately $371,000 ($253,000 in personnel costs, $44,000
in occupancy and equipment expenses, $26,000 in marketing/business
development) compared to $294,000 for the third quarter of 1994. The
increase in SBA costs relate to the reduced level of SBA loan sales,
since the direct cost associated with a loan are recovered when the loan
is sold. The increase of $7.6 million in SBA loans held which could be
sold has had a negative impact on expenses since all loan costs are
expensed as incurred and later reversed if the loan is sold in the same year.
The operating expenses for the Windsor Branch, which opened in July of 1993,
totalled $54,000 for the third quarter of 1995 compared to $57,000 for
the same period last year. The Branch has increased its deposit total
from $4.1 million at September 30, 1994 to $11.2 million at September 30,
1995.
Income Taxes
The effective tax rate approximated 44% for the third quarter of 1995 and
42% a year ago. The tax rate for California increased slightly in 1995.
The provision for the third quarter of 1995 was $453,000 versus
$271,000 for the same period last year, due to the increase in pre tax
income.
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.
Cash and due from banks, federal funds sold and certificates of deposit
totalled $18.5 million or 12.3% of total assets at September 30, 1995,
compared to $24.2 million or 19.9% of total assets at December 31,
1994. The decline results from the investment of $4 million for 10 days
in US Treasuries which matured in early October. At September 30, 1995,
the Bank held a total of $4.9 million in US Treasuries compared to
investments totalling $3.1 million at year end. The Bank pledges $500,000
of its investment as required for Federal Tax Deposits. This level of
liquidity is below the Bank's liquidity position over the last
several years. This resulted from the rapid growth in loan balances
which has exceeded the growth in new deposits. The Bank is currently
running a certificate of deposit campaign which is expected to attract
sufficient time deposits to increase the Bank's liquidity. During the
third quarter the Bank increased liquidity through the sale of
SBA loans and loan participations.
Due to the high yield on loans, management prefers to obtain
liquidity through increases in deposits. During the third quarter of 1995
the Bank sold $4.0 million in SBA loans (guaranteed portion) compared to
$4.6 million for the same period last year. At September 30, 1995,
the Bank held $11.5 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 September 30, 1995, the Corporation had non-interest and interest bearing
cash balances of $181,000 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 third quarter of 1995, deposits increased 4% to $138.8 million.
This resulted from an increase in certificates of deposits from $48.5
million at June 30, 1995 to $53.5 million as of September 30, 1995.
Rates on certificates of deposit rates have been increasing and are more
competitive with other investment options such as U.S. Treasuries.
Rates offered on the Bank's transaction accounts were relatively
stable during the third quarter. This has resulted in some movement by
depositors to lock in higher certificate of deposit rates and move funds
from transaction accounts which have a lower yield.
Deposits include $50.2 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.
Bank customers have found that the rate offered on this account has been
very attractive and have maintained funds in this account rather than
locking in a specific maturity. 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. There has
been some movement to time deposits; however, the "Sonoma
Investors Reserve" account continues to be a very popular deposit option.
At the end of September 1995, non-interest bearing deposits equalled $21
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;
however, they consistently carry average balances of between $2 and $3
million.
At September 30, 1995, certificates of deposits of $100,000 or more equalled
$15,735,000 or 11.3% 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 which occurred in the
first half on 1995.
The lower interest rate environment over the past few years and the
increased competition from the financial services industry has made it
more difficult for the Bank to attract new deposits at favorable
rates. The previous increases in Federal Funds rates and the prime lending
rate resulted in higher rates on deposit accounts. During the third
quarter, rates on certificates of deposits did continue to increase, while
other transactions rates have remained at approximately the same levels.
The Bank continually continually monitors competitors' rates, strives to
be competitive in pricing deposits and has offered attractive time
deposit rates to raise funds during a period of high loan growth.
Loans
Total loans held for investment of $111,090,000 increased 29% from
$86,285,000 at December 31, 1994. The Bank experienced growth in its
commercial loan and SBA lending programs during the third
quarter. During the nine months of 1995, $28.8 million in loans which
were partially guaranteed by the SBA were funded and $8.9 million in
SBA guaranteed loans were sold in the secondary market. New SBA
borrowers are located in the San Francisco Bay Area, Sonoma County and
Arizonia. Loans held for sale include SBA guaranteed loans which could
be sold totalling $11.5 million as of September 30, 1995 versus
$3.8 million at last year end. SBA guaranteed loans bear a higher yield
than alternate investments; therefore, management decided to hold them
for a longer period.
The Bank continues to emphasize commercial and real estate lending. At
September 30, 1995, 41% of the loans held for investment were commercial
loans and 57% 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 September 30, 1995, the Bank had $2,534,000 outstanding in construction
loan financing. A decline in real estate values and/or demand could
potentially have an adverse impact on the loan portfolio.
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 re-
enter the market in the future.
The Bank has a small portfolio of consumer loans which equaled 2.3% of the
total loan portfolio at September 30, 1995.
Allowance for Loan Losses
The allowance for loan losses equalled $1,561,000 at September 30, 1995, as
compared to $1,421,000 at December 31, 1994. At September 30, 1995, the
allowance for loan losses equalled 1.4% 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 management reserved for it according to the risk assessment.
At September 30, 1995, there were five loans on non-accrual which totalled
$281,000. There was one additional loan totalling $20,000 past due 90 days
or more, and loans past due 30-89 days totalled $152,000. 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 September 30, 1995,
the Bank's was considered " well capitalized." The Bank's risk-based capital
ratio was 10.1% 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. Payment occurred in May 1995.
In September 1995, the Corporation declared a 5% stock dividend
to shareholders of record October 31, 1995. The new shares will be
distributed in mid-November 1995.
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<CAPTION>
SCHEDULES
LOANS HELD FOR INVESTMENT
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September 30, 1995 December 31, 1994
Commercial Loans $46,501,000 $34,857,000
Real Estate Loans-Construction 2,534,000 1,701,000
Real Estate Loans-Other 62,762,000 49,601,000
Installment Loans 2,614,000 2,965,000
Total $114,411,000 $89,124,000
Of the total loans due in more than one year $8,057,000 were at fixed interest rates and
$113,546,000 were at adjustable interest rates at September 30, 1995.
The loan portfolio has no foreign balances.
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<TABLE>
<CAPTION>
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
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Quarter Ended Nine Months Ended
September 30, 1995 September 30, 1995
Balance - Beginning of Period $1,511,000 $1,421,000
Provision for Loan Losses 70,000 170,000
Charge Offs 21,000 102,000
Recoveries 1,000 72,000
Balance - End of the Period $1,561,000 $1,561,000
There were five loans on non-accrual at September 30, 1995, amounting to $281,000, of which
$89,000 were secured by real estate collateral.
</TABLE>
<TABLE>
<CAPTION>
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.
<S> <C> <C> <C> <C> <C>
Over Over Non-rate
Balance Sheet - September 30, 1995 3 Months 1 Year Sensitive
Through through through or Over
($000) 3 Months 1 Year 5 Years 5 Years Total
Assets
Time Deposits-other financial
institutions $2,376 $3,852 $6,228
Fed funds sold 2,134 2,134
Investment securities 3,998 761 $123 4,882
Loans & loans held
for sale(gross) 31,922 83,582 $7,766 2,622 125,892
Non-interest-earning assets (net) 11,694 11,694
Total Assets $40,430 $88,195 $7,766 $14,439 $150,830
Liabilities & Shareholders Equity
Time Deposits
$100,000 and over $6,639 $5,727 $3,369 $15,735
All other interest-bearing
deposits 61,913 31,513 8,486 $273 102,185
Non-interest bearing liabilities 21,390 21,390
Shareholders' Equity 11,520 11,520
Total Liabilities &
Shareholders' Equity $68,552 $37,240 $11,855 $33,183 $150,830
Int. Rate
Sensitivity GAP (1) ($28,122) $50,955 ($4,089) ($18,744)
Cumulative Interest
Rate Sensitivity GAP ($28,122) $22,833 $18,744 $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.
</F1>
</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
None
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: 11/10/1995
/s/ James B. Keegan, Jr. /s/ Patrick R. Gallaher
James B. Keegan, JR. Patrick R. Gallaher
Director & President Director & Chief Accounting Officer
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This schedule contains summary financial information extracted from the
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