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 March 31, 1998
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 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)
Registrant's telephone number, including area code 707-579-2265
NONE
(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (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
April 30, 1998: 1,572,964
Transitional Small Business Disclosure Format (check one): Yes No X
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NORTHERN EMPIRE BANCSHARES AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands)
March 31, December 31,
1998 1997
-------- -----------
ASSETS
Cash and equivalents:
Cash and due from banks $ 11,275 $ 7,412
Federal funds sold 21,690 8,770
--------- --------
Total cash and equivalents 32,965 16,182
Investment securities
Held-to-maturity 0 1,500
Available-for-sale 4,997 3,951
Restricted 1,663 1,639
Loans receivable, net 221,887 204,408
Leasehold improvements and
equipment, net 665 683
Accrued interest receivable
and other assets 5,403 5,374
-------- --------
Total assets $267,580 $233,737
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits $247,122 $214,747
Accrued interest payable
and other liabilities 1,605 1,281
-------- --------
Total liabilities $248,727 $216,028
Commitments and contingencies (Note 10).
Shareholders' equity:
Preferred stock, no par value;
authorized, 10,000,000 shares;
none issued or outstanding
Common stock, no par value;
authorized, 20,000,000 shares;
shares issued and outstanding,
1,570,964 in 1998 and
1,555,069 in 1997 9,880 9,778
Unrealized gain/(loss) on
available for sale securities (4) 0
Retained earnings 8,977 7,931
-------- --------
Total shareholders' equity 18,853 17,709
-------- --------
Total liabilities and
shareholders' equity $267,580 $233,737
======== ========
See Notes to Consolidated Financial Statements
NORTHERN EMPIRE BANCSHARES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
for the three months ended March 31, 1998 and 1997
(Unaudited)
(dollars in thousands, except per share data)
1998 1997
---- ----
Interest income:
Loans $ 5,363 $ 4,319
Certificates of deposits
in other financial institutions 0 41
Federal funds sold and
investment securities 383 352
------ -------
Total interest income 5,746 4,712
Interest expense 2,555 2,134
------ -------
Net interest income before
provision for loan losses 3,191 2,578
Provision for loan losses 120 120
------ ------
Net interest income after
provision for loan losses 3,071 2,458
Other income:
Service charges on deposits 89 89
Gain on sale of loans 198 -
Other 169 185
------ ------
Total other income 456 274
------ ------
Other expenses:
Salaries and employee benefits 997 862
Occupancy 179 166
Equipment 113 83
Outside customer services 64 60
Deposit and other insurance 46 42
Professional fees 47 40
Advertising 75 73
Other 235 236
------ ------
Total other expenses 1,756 1,562
------ ------
Income before income taxes 1,771 1,170
Provision for income taxes 725 496
------ ------
Net income $1,046 $ 674
====== ======
Earnings per common share $ 0.67 $ 0.44
====== ======
Earnings per common share
assuming dilution $ 0.65 $ 0.42
====== ======
See Notes to Consolidated Financial Statements
NORTHERN EMPIRE BANCSHARES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1998 and 1997
(Unaudited)
(dollars in thousands)
1998 1997
---- ----
Cash flows from operating activities:
Net income $ 1,046 $ 674
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 120 120
Depreciation, amortization and accretion 87 73
Net increase/(decrease) in deferred loan
fees and discounts 135 (125)
Increase in interest receivable
and other assets (29) (132)
Increase/(decrease) in accrued interest
payable and other liabilities 324 (104)
------- -------
Net cash provided by in operating activities 1,683 506
------- -------
Cash flows from investing activities:
Purchase of investment securities (2,026) (4,426)
Maturities of investment securities 2,453 12,000
Net decrease in deposits in other
financial institutions 0 594
Net decrease (increase) in loans receivable (17,734) (9,959)
Purchase of leasehold improvements
and equipment, net (70) (30)
------- -------
Net cash used in investing activities (17,377) (1,821)
------- -------
Cash flows from financing activities:
Net increase/(decrease) in deposits 32,375 (3,220)
Stock options exercised 102 28
------- -------
Net cash provided by/(used in)
financing activities 32,477 (3,192)
------- -------
Net increase (decrease) in cash
and cash equivalents 16,783 (4,507)
Cash and cash equivalents at beginning of period 16,182 33,790
------- -------
Cash and cash equivalents at end of period $32,965 $29,283
======= =======
Other cash flow information:
Interest paid $ 2,492 $ 2,130
======= =======
Income taxes paid $ 232 $ 250
======= =======
Additions to Other Real Estate Owned $ 0 $ 90
======= =======
See Notes to Consolidated Financial Statements
Northern Empire Bancshares and Subsidiary
Notes to Consolidated Financial Statements
March 31, 1998
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 March 31, 1998 and the
results of operations for the three 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 1997 Annual Report on Form 10-KSB. The
results of operations for the three months ended March 31, 1998 are not
necessarily indicative of the operating results through December 31, 1998.
Note 2 - Net Income per Common and Common Equivalent Share
Earnings per share (EPS) are shown in accordance with SFAS No. 128
"Earnings per Share" which was effective for fiscal years ended after
December 31, 1997 and requires restatement of prior period EPS. Basic
EPS is computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding during the
period. Diluted EPS is computed by dividing diluted income available to
shareholders by the weighted average number of common shares and common
equivalent shares outstanding which include dilutive stock options. The
computation of common stock equivalent shares is based on the weighted
average market price of the Bank's common stock throughout the period.
Note 3 - New and Pending Accounting Standards
See the Corporation's 1997 Annual Report on Form 10-KSB for a discussion
of new and pending accounting standards.
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.
This report contains "forward-looking statements" as defined in section
27A of the Securities Act of 1933, as amended, and section 21E of the
Securities Exchange Act of 1934, as amended, which includes statements
such as projections, plans and objectives and assumptions about the
future, and such forward looking statements are subject to the safe
harbor created by these sections. Many factors could cause the actual
results, amounts or events to differ materially from those the
Corporation expects to achieve or occur, such as changes in competition,
market interest rates, economic conditions and regulations. Although the
Corporation has based its plans and projections on certain assumptions,
there can be no assurances that its assumptions will be correct, or that
its plans and projections can be achieved.
Total consolidated assets of $267,580,000 at March 31, 1998 grew $33.8
million compared to $233,737,000 at December 31, 1997. Net loans
increased $17.5 million. Cash and equivalents increased $16.8 million
during the first quarter.
The net income after tax for the first three months of 1998 equaled
$1,046,000 compared to $674,000 for the comparable period of 1997, an
increase of 55%. The higher profit resulted from increases in net
interest income due to loan growth (a larger volume of high yielding
earning assets) and gains on sales of the guaranteed portion of Small
Business Administration (SBA) loans.
Net Interest Income
Net interest income of $3,191,000 for the first quarter of 1998
increased 24% from $2,578,000 for the comparable period last year. This
increase in net interest income resulted from volume increases of $41.2
million in average earning assets for the current quarter compared to
the first quarter of 1997. The Bank experienced a $42.8 million
increase in average loans outstanding, which have the highest yields,
while investments and Fed Funds investments declined $1.6 million.
Average interest bearing deposits for the first quarter increased $32.5
million over the same period last year.
The net interest margin equaled 5.25% during the first quarter of 1998
compared to an average margin during 1997 of 5.22%. The yield on
average loans equaled 9.96% in the first quarter compared to 9.98%
during 1997, while the Bank's cost of funds increased from 4.98% for
1997 to 5.00% for the first quarter of 1998.
Several factors impact the Bank's interest margin. The mix of loans
influences the overall yield on loans. During the first quarter of
1998, there was significant growth in all loan categories; however, an
increase of $10.7 million in average construction loans balances
had a positive effect since that loan category has the highest loan
yield. Net interest margin is also affected by the level of loans
relative to deposits. The Bank's ratio of loans to deposits increased
from an average of 90.6% in 1997 to 92.6% during the first quarter of 1998.
The Bank is considered asset sensitive and benefits from rate increases
since more of its assets reprice at a faster rate than deposits. The
Prime lending rate was 8.25% from December 31, 1996 through March
26,1997 when it increased to 8.5%, where it has remained. Of the Bank's
loan portfolio totaling $226.5 million at March 31, 1998, $162.8 million
or 71.9% of total loans are adjustable rate loans which have not reached
a floor or ceiling rate. Approximately $109.5 million are prime-based
loans, of which $26.3 million reprice immediately and $83.2 million
reprice on a quarterly basis. Approximately $72.2 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
4.97% in March 1998 and equaled 4.76% in March 1997.
Interest expense increased from $2,134,000 in the first quarter of 1997
to $2,555,000 in 1998. The major factor was the increase of $32.5
million in average interest bearing deposits when comparing the first
quarter of 1997 to 1998. The average cost of interest bearing deposits
increased from 4.96% to 5.00% when comparing the first quarter of last
year to the first quarter of this year.
Other Income
Other income is derived primarily from service charges on deposit
accounts, discount brokerage income, earnings on life insurance, SBA
loan servicing, SBA loan sales and sales of other real estate owned.
Other income increased to $457,000 from $274,000 when comparing the
first quarter of 1998 to the same period last year.
In the first quarter of this year, the Bank sold the guaranteed portion
of SBA loans totaling $2.1 million and recognized gains on those sales
of $198,000. There were no sales of SBA loans during the first quarter
of 1997. At year end the Bank's liquidity position was low and
management sold the SBA loans as part of several steps taken to increase
liquidity. See, "Liquidity and Investment Portfolio." The Bank
continues to retain the majority of the SBA loans it makes, in order to
realize the interest yield, rather than selling the guaranteed portion
for a one time gain and servicing fees. Management considers the Bank's
liquidity needs and anticipates loans and deposit growth as a part of
the decision to hold SBA guaranteed loans versus selling them.
SBA servicing fees, which totaled $90,000 during the first quarter of
1998, were similar to fees of $93,000 recorded for the same period last
year. This change reflects the decrease in the pool of loans serviced,
on which the Bank receives a servicing fee. The serviced portfolio
equaled $33.3 million at March 31, 1998 compared to $42.5 million at
the end the first quarter of last year.
There were no sales of other real estate owned (OREO) during the first
quarter of 1998. In the first quarter of 1997, the Bank sold a
commercial building, which had been recorded as OREO, realizing a gain
of $15,000.
Non-Interest Expenses
The Bank's non-interest expenses increased from $1,562,000 for the first
quarter of last year to $1,756,000 for the first quarter of 1998. This
increase was anticipated since the Bank has continued to grow at a rapid
rate with minimal increases in non-interest expenses for the last few
years.
The Bank's largest expense category is salaries and benefits which
increased 16% from $862,000 to $997,000. A new loan group specializing
in residential construction loans was added during the second quarter of
last year which added three new staff positions. The growth in the loan
portfolio and deposits increased incentive payments from the previous
first quarter. Personnel costs are also affected by annual salary
increases, and changes in benefit costs.
Occupancy expenses increased 8%, mainly due to scheduled lease
adjustments and additional premises repairs and maintenance. Equipment
costs increased to $113,000 over $83,000 for the comparable quarter last
year. The increase results from upgrading computer equipment and
operations. During the first quarter of this year, the Bank's mainframe
was replaced with the Unisys Clearpath system. This upgrade increased
the speed of processing the Bank's information and set the framework
for installing networks. The use of personal computers was also expanded
and many of the personal computers have been upgraded in preparation for
the installation of two networks scheduled for the second quarter of
this year.
Deposit and other insurance of $46,000 increased $4,000 over the first
quarter of last year. Regulatory assessments and FDIC insurance cost
grew due to the increase in deposit assessment base for Financing
Corporation (FICO) assessment which became effective January
1, 1997. There is no assurance that the current FDIC assessment will
continue at such a low level. The cost of other insurance increased due
to growth and additions to the Bank's insurance coverage which resulted
in higher premiums.
Advertising and business development costs increased to $75,000 up from
$73,000 the first quarter of 1997. Professional fees increased by $7,000
from the first quarter of 1997 to $47,000. Both of these expense
categories vary significantly based on activity throughout the year.
Other expenses, which includes stationery & supplies, telephone,
postage, loan expenses, director fees, dues and subscriptions and
automobile costs, approximated last year's expense level.
Total non-interest expenses for the SBA lending department for the first
quarter of 1998 was approximately $365,000 ($202,000 in personnel costs,
$46,000 in occupancy and equipment expenses, $27,000 in
marketing/business development) compared to $266,000 for the first
quarter of 1997. Since March 31, 1997, the SBA loan portfolio (serviced
portion and Bank's portion) has increased 17% to $137 million, of which
$33 million has been sold and is being serviced.
Income Taxes
The effective tax rate of 41% for the first quarter of 1998 approximated
last year's rate. The provision for the first quarter of 1996 was
$725,000 versus $496,000 for the same period last year. The increase
resulted from the increase in pre-tax income during the comparable
quarters.
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
totaled $33 million or 12% of total assets at March 31, 1998, compared
to $16.2 million or 7% of total assets at December 31, 1997. Liquid
assets were lower than normal at year end due to the rapid growth in
loans at the end of the year. During the first quarter of 1998 the Bank
offered special time deposits at slightly higher rates to attract new
deposits and sold $2.1 million of SBA guaranteed loans in order to
restore liquidity to normal levels. As of March 31, 1998, the Bank held
$51.0 million in SBA guaranteed loans which could be sold if additional
liquidity was needed.
At March 31, 1998, the Bank had unused federal funds lines of credit
totaling $9,000,000. The Bank also has a credit line with the Federal
Home Loan Bank which is based upon the value of collateral (investments
and loans). Management believes this amount of secondary liquidity is
adequate to meet any cash demands that may arise.
At present, the Corporation's primary sources of liquidity are from
interest on deposits, 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 March 31, 1998, the Corporation had non-interest and interest bearing
cash balances of $298,000, 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 first quarter of 1998, deposits increased 15% to $247.1
million compared to $214.7 million at the end of the year.
Money market rate deposits grew from $64.8 million at year end to $72.9
million at the end of the quarter. This 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. The rate offered on this account has
been very attractive and many of the Bank's customers have held their
funds in this deposit product rather than locking a specific maturity.
New customers continue to find this deposit account attractive due to
the immediate availability of the funds versus a time certificate
bearing a future maturity.
Certificates of deposits increased from $102.9 million at December 31,
1997 to $124.2 million as of March 31, 1998. During the first quarter,
the Bank offered attractive rates on ten and thirteen month
certificates, which account for the majority of the growth in time
deposits.
As of March 31, 1998, non-interest bearing deposits equaled $34.5
million compared to $30.1 million at December 31, 1997 and $23.7 million
on March 31, 1997. The Bank's transaction accounts have significant
changes in daily balances, mainly due to deposits held by title
and mortgage companies. Those deposit accounts has greater balance
fluctuations than other types of deposits based upon their business
activity; however, in total their average balances approximate $3
million.
The low interest rate environment over the past several years and the
increased competition from the financial services industry has made it
more difficult to attract new deposits at favorable rates. The Bank
continually monitors competitors' rates, strives to be competitive in
pricing deposits, and has offered attractive time deposit rates to raise
funds during periods of high loan growth.
Loans
Loans, net of discounts and reserves, equaled $221.9 million compared to
$204.4 million at December 31, 1997, increasing 9%.
The SBA department continued to experience strong loan demand with SBA
loans growing $10.6 million during the first quarter of 1998. The
majority of the Bank's SBA loans are secured by real estate; however,
they are reported as commercial loans. SBA loans have the same
underwriting requirements as the Bank's other loans, except they are
sometimes for longer terms (7 to 25 years) and have higher loan-to-value
ratios than the Bank typically accepts. The SBA loan program remains
subject to budget considerations at the Federal government level. Major
changes to the program could affect profitability and future SBA loan
growth. The guaranteed portion of SBA loans which could be sold in the
secondary market increased 52% from $33.5 million at March 31, 1997 to
$51.0 million at March 31, 1998.
The Bank continues to emphasize commercial and real estate lending. At
March 31, 1998, 48.4% of the loans held for investment were commercial
loans and 50.9% were real estate and construction loans, compared to
48.0% and 51.0% respectively at December 31, 1997. The Bank has
increased the commercial and commercial real estate portfolio through
its reputation, in Sonoma and Marin Counties, as an experienced business
and real estate lender which facilitates the successful negotiation of
complex commercial loans. The Bank maintains high credit qualifications
with most real estate loans having 60-70% loan to value ratios.
Management is aware of the risk factors in making commercial and real
estate loans and is continually monitoring the local market place. 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 the second quarter of 1997, the Bank added a residential
construction loan group. As a result, construction loan balances have
increased from $ 2.1 million at March 31, 1997 to $11.0 million at year
end to $14.3 million at March 31, 1998. The Bank offers residential
mortgages on a limited basis.
The Bank has a small portfolio of consumer loans which equaled 0.7% of
the total loan portfolio at March 31, 1998 and 1.0% at December 31,
1997.
Allowance for Loan Losses
The allowance for loan losses equaled $2,659,000 at March 31, 1998,
compared to $2,539,000 at December 31, 1997. At March 31, 1998, the
allowance for loan losses equaled 1.6% of loans (net of the guaranteed
portion of SBA loans), which was unchanged from 1997 year end. The
allowance for loan losses is reviewed on a monthly basis, based upon 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 with a specific reserve
allocation assigned according to the risk assessment.
At March 31, 1998, there were three loans on non-accrual totaling
$151,000 with $129,000 of that amount collateralized by real estate and
$24,000 guaranteed by the SBA. There were two loans totaling $170,000
past due 90 days or more and still accruing interest of which $70,000
was secured by real estate. Loans past due 30 to 89 days totaled
$1,483,000, all of which were secured by real estate. On December 31,
1997, the Bank had $318,000 in non-accrual loans, and $150,000 in loans
past due 90 or more days and still accruing interest.
During the first quarter of 1998, there were no loans charged off and no
loan recoveries. The Bank continues to have a low charge off experience
compared to industry standards.
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 March 31,
1998, the Bank was considered " well capitalized." The total risk-based
capital ratios were 10.7% for the Bank and 10.9% for the Corporation.
The Corporation declared a 5% stock dividend on March 31, 1998 with a
record date of May 1, 1998. The financial statements have not been
adjusted to include the impact of this stock dividend. The impact on
reported net income per share of this stock dividend will be as follows:
As Adjusted for
Quarter ended March 31, As Reported 5% Stock Dividend
- ----------------------- ----------- -----------------
1998
Basic earnings per common share $ 0.67 $ 0.64
Diluted earnings per common share $ 0.65 $ 0.62
1997
Basic earnings per common share $0.44 $ 0.42
Diluted earnings per common share $0.42 $ 0.40
SCHEDULES
LOANS HELD FOR INVESTMENT
Type of Loan March 31, December 31,
(in thousands) 1998 1997
-------- -----------
Commercial $109,633 $100,283
Real Estate Construction 14,262 10,982
Real Estate Other 100,980 95,513
Installment Loans to Individuals 1,648 2,012
-------- --------
TOTAL $226,523 $208,790
======== ========
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
Quarter Ended
March 31, 1998
--------------
Balance - Beginning of Period $2,539,000
Provision for Loan Losses 120,000
Charge Offs 0
Recoveries 0
----------
Balance - End of the Period $2,659,000
==========
There were three loans on non-accrual at March 31, 1998, amounting to
$151,000, of which $129,000 were secured by real estate collateral, and
$24,000 was guaranteed by the U.S. Government. There were two loans
totaling $170,000 past due 90 days or more and still accruing interest
of which $70,000 was secured by real estate.
GAP ANALYSIS
The following schedule represents interest rate sensitivity profile as
of March 31, 1998 of assets, liabilities and shareholder's equity
classified by earliest possible repricing opportunity or maturity date.
<TABLE>
<CAPTION>
Non-rate
Over 3 Over 1 Sensitive
months year Or
Balance Sheet Through 3 through through 5 Over 5
(in thousands) months 1 year years years Total
- ------------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Assets
Fed funds sold $21,690 $21,690
Investment securities 7 $3,000 $1,989 $1,664 6,659
Loans (net of discounts) 111,733 54,871 11,366 46,575 224,545
Non-interest-earning assets
(net of allowance for loan
losses) 14,685 14,685
-------- -------- -------- -------- --------
$133,430 $57,871 $13,355 $62,924 $267,580
======== ======== ======== ======== ========
Liabilities & Shareholders Equity
Time Deposits $100,000 and over $8,431 $20,346 $7,327 $36,104
All other interest-bearing
deposits 105,755 51,436 19,329 $2 176,522
Non-interest bearing deposits 34,496 34,496
Other Liabilities &
Shareholders' Equity 20,458 20,458
-------- -------- -------- -------- --------
$114,186 $71,782 $26,656 $54,956 $267,580
======== ======== ======== ======== ========
Interest Rate Sensitivity (1) $19,244 ($13,911) ($13,301) $7,968
Cumulative Interest Rate Sensitivity $19,244 $5,333 ($7,968) $0
======== ======== ======== ========
</TABLE>
(1) Interest rate sensitivity is the difference between interest rate
sensitive assets and interest rate sensitive liabilities within the
above time frames.
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
On March 31, 1998 a 5% stock dividend was declared which will be issued
to shareholders of record as of May 1, 1998. The stock will be
distributed on or about May 15, 1998.
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).
(e) Secretary's certificate of Amendment to the Bylaws of the
Corporation and revised Bylaws ((filed as Exhibit (3)(e)
to the Corporation's Annual Report on Form 10-KSB for
the Fiscal Year Ended December 31, 1997 and incorporated
herein by this reference).
(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: May 4, 1998
/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
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