<PAGE>
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------------------
For the Quarter Ended March 31, 1999, Commission File No. 0-15450
SIERRAWEST BANCORP
(Exact Name of Registrant as Specified in its Charter)
California 68-0091859
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Reorganization)
10181 Truckee Tahoe Airport Rd., P.O. Box 61000, Truckee, California 96160-9010
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (530) 582-3000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of May 4, 1999: Common Stock - Authorized 10,000,000 shares of no par value;
issued and outstanding - 5,344,014.
- -------------------------------------------------------------------------------
<PAGE>
10-Q Filing
March 31, 1999
Part I. Financial Information
Item 1. Financial Statements
Following are condensed consolidated financial statements for SierraWest
Bancorp ("Bancorp", or together with its subsidiary, the "Company") for the
reportable period ended March 31, 1999. These condensed consolidated
financial statements are unaudited; however, in the opinion of management,
all adjustments have been made for a fair presentation of the financial
condition and earnings of the Company in conformity with generally accepted
accounting principles. The accompanying notes are an integral part of these
condensed consolidated financial statements.
-2-
<PAGE>
SIERRAWEST BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
March 31, 1999 and December 31, 1998
(Amounts in thousands of dollars)
<TABLE>
<CAPTION>
03/31/99 12/31/98
--------- ---------
<S> <C> <C>
ASSETS
Cash and due from banks $ 45,238 $ 53,481
Federal funds sold and securities purchased under
agreements to resell 33,500 14,400
Investment securities 109,941 133,982
Loans held for sale 129,568 114,247
Loans and leases, net of unearned income, deferred loan fees/costs
and allowance for possible loan and lease losses of
$9,117 in 1999 and $8,709 in 1998 520,882 502,027
Other assets 60,484 61,032
--------- ---------
TOTAL ASSETS $ 899,613 $ 879,169
--------- ---------
--------- ---------
LIABILITIES
Deposits $ 801,532 $ 782,552
Other liabilities 18,998 18,347
--------- ---------
TOTAL LIABILITIES 820,530 800,899
--------- ---------
SHAREHOLDERS' EQUITY
Common stock 46,560 45,983
Retained earnings 33,093 32,230
Accumulated other comprehensive income (570) 57
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 79,083 78,270
--------- ---------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $ 899,613 $ 879,169
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these
Condensed Consolidated Statements of Condition.
-3-
<PAGE>
SIERRAWEST BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended March 31, 1999 and 1998
(Amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
03/31/99 03/31/98*
-------- ---------
<S> <C> <C>
Interest Income:
Interest and fees on loans and leases $14,718 $13,969
Interest on federal funds sold 307 423
Interest on investment securities and other assets 1,609 1,622
------- -------
Total Interest Income 16,634 16,014
------- -------
Interest Expense:
Interest on deposits 5,823 6,061
Interest on convertible debentures 0 49
Other interest expense 136 111
------- -------
Total Interest Expense 5,959 6,221
------- -------
Net Interest Income 10,675 9,793
Provision for Possible Loan and Lease Losses 600 525
------- -------
Net Interest Income After Provision for
Possible Loan and Lease Losses 10,075 9,268
Non-interest Income 3,436 2,870
Non-interest Expense 9,309 8,733
------- -------
Income Before Provision for Income Taxes 4,202 3,405
Provision for Income Taxes 1,953 1,386
------- -------
NET INCOME $ 2,249 $ 2,019
------- -------
------- -------
Basic Earnings per share $ 0.42 $ 0.40
Weighted average shares used to calculate
basic earnings per share 5,318 5,035
Diluted earnings per share $ 0.41 $ 0.37
Weighted average shares used to calculate
diluted earnings per share 5,486 5,473
</TABLE>
The accompanying notes are an integral part of these
Condensed Consolidated Statements of Income.
*Restated on a historical basis to reflect the acquisition of California
Community Bancshares Corporation on April 15, 1998, under the pooling-of-
interests method of accounting.
-4-
<PAGE>
SIERRAWEST BANCORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended March 31, 1999 and 1998
(Amounts in thousands of dollars)
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
03/31/99 03/31/98*
-------- --------
<S> <C> <C>
Net Cash (Used in) Provided by Operating Activities $ (4,538) $ 1,569
Cash Flow From Investing Activities:
Proceeds from:
Maturities of investment securities held to maturity 0 1,000
Sales of investment securities available for sale 21,828 0
Maturities of investment securities available for sale 4,158 9,369
Purchase of mutual funds available for sale 0 (2,000)
Purchase of investment securities available for sale (2,942) (4,317)
Loans and leases made net of principal collections (25,381) (9,509)
Capital expenditures (293) (448)
Other 36 33
--------- ---------
Net Cash Used in Investing Activities $ (2,594) $ (5,872)
--------- ---------
Cash Flow From Financing Activities:
Net (decrease) increase in noninterest-bearing, interest-bearing
transaction, money market and savings accounts (6,621) 13,513
Net increase in time deposits 25,601 26,927
Dividend paid (1,387) (992)
Proceeds from issuance of common stock 396 197
Other 0 (93)
--------- ---------
Net Cash Provided by Financing Activities 17,989 39,552
--------- ---------
Net Increase in Cash and Cash Equivalents 10,857 35,249
Cash and Cash Equivalents at Beginning of Year 67,881 80,620
--------- ---------
Cash and Cash Equivalents at March 31 $ 78,738 $ 115,869
--------- ---------
--------- ---------
Cash Paid For Interest Payments $ 5,887 $ 6,174
--------- ---------
--------- ---------
Cash Paid For Income Taxes $ 91 $ 431
--------- ---------
--------- ---------
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON CASH INVESTING AND FINANCING ACTIVITIES
During the three months ended March 31, 1999 and 1998, $17 thousand and $161
thousand of loans were transferred to other real estate owned.
During the three months ended March 31, 1998, $13.5 million of unguaranteed SBA
loans were transferred to held for sale status. In addition in 1999, $9.4
million of government guaranteed SBA loans were transferred to held for sale
status and subsequently sold.
For the three months ended March 31, 1999 and 1998, $117 thousand and $415
thousand of loans were transferred to other assets.
The accompanying notes are an integral part of these
Condensed Consolidated Statements of Cash Flows.
*Restated on a historical basis to reflect the acquisition of California
Community Bancshares Corporation on April 15, 1998, under the
pooling-of-interests method of accounting.
-5-
<PAGE>
SierraWest Bancorp
Notes to Condensed Consolidated Financial Statements
For The Three Months Ended March 31, 1999
1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have
been prepared in a condensed format and, therefore, do not include all of
the information and footnotes required by generally accepted accounting
principles for annual financial statements. However, in the opinion of
management, all adjustments, consisting only of normal recurring
adjustments, considered necessary for a fair presentation have been
reflected in the financial statements. The results of operations for the
three months ended March 31, 1999, are not necessarily indicative of the
results to be expected for the full year. Certain reclassifications have
been made to prior period amounts to present them on a basis consistent
with classifications for the three months ended March 31, 1999.
2. COMMITMENTS & CONTINGENT LIABILITIES
In the normal course of business, there are outstanding various commitments
and contingent liabilities, such as commitments to extend credit and
letters of credit, which are not reflected in the financial statements.
Management does not anticipate any material loss as a result of these
transactions.
3. COMPREHENSIVE INCOME
Comprehensive income includes net income and other comprehensive income.
The Company's only source of other comprehensive income is derived from
unrealized gains and losses on investment securities held-for-sale and
interest-only strips receivable. Reclassification adjustments resulting
from gains or losses on investment securities that were realized and
included in net income of the current period that also had been included in
other comprehensive income as unrealized holding gains or losses in the
period in which they arose are excluded from comprehensive income of the
current period.
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1999 1998
------- -------
(In thousands of dollars)
<S> <C> <C>
Net income $ 2,249 $ 2,019
Other comprehensive loss, net of tax (627) (174)
------- -------
Total comprehensive income $ 1,622 $ 1,845
------- -------
------- -------
</TABLE>
-6-
<PAGE>
SierraWest Bancorp
Notes to Condensed Consolidated Financial Statements
For The Three Months Ended March 31, 1999
4. EARNINGS PER SHARE
The following reconciles the numerator and denominator used in the
calculation of both the basic earnings per share and diluted earnings per
share for each of the periods ended March 31:
<TABLE>
<CAPTION>
1999 1998*
------ ------
<S> <C> <C>
CALCULATION OF BASIC EARNINGS PER SHARE
Numerator - net income $2,249 $2,019
Denominator - weighted average common shares
outstanding 5,318 5,035
------ ------
Basic Earnings Per Share $ 0.42 $ 0.40
------ ------
------ ------
CALCULATION OF DILUTED EARNINGS PER SHARE
Numerator:
Net Income $2,249 $2,019
Effect of convertible debentures 0 28
------ ------
Net Income and effect of assumed conversions $2,249 $2,047
Denominator:
Weighted average common shares outstanding 5,318 5,035
Dilutive effect of options 168 278
Dilutive effect of convertible debentures 0 160
------ ------
5,486 5,473
------ ------
Diluted Earnings Per Share $ 0.41 $ 0.37
------ ------
------ ------
</TABLE>
*Restated on a historical basis to reflect the acquisition of California
Community Bancshares Corporation on April 15, 1998, under the
pooling-of-interests method of accounting.
-7-
<PAGE>
SierraWest Bancorp
Notes to Condensed Consolidated Financial Statements
For The Three Months Ended March 31, 1999
5. CHANGE IN ACCOUNTING ESTIMATE
The Company has experienced a significant increase in the prepayment speed
of its SBA loan portfolio over the past two years. As a result the Company
reevaluated the useful lives of the loans included in the SBA portfolio,
and increased the speed at which it amortizes its servicing assets and
interest-only strips receivable. The increase in amortization from 1998
resulted in a decrease in net income of $106 thousand ($.02 per diluted
share) for the first quarter of 1999.
6. PLAN OF MERGER
On February 25, 1999, the Company entered into an Agreement and Plan of
Merger ("Plan") with BancWest Corporation ("BancWest"). Under the terms of
the Plan, BancWest will acquire all the outstanding common stock of the
Company in exchange for 0.82 shares of BancWest common stock for each share
of SierraWest Bancorp. The merger, which is expected to close in the third
quarter of 1999, is subject to the approval of the Company's shareholders,
various regulatory agencies and certain other conditions.
-8-
<PAGE>
SIERRAWEST BANCORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Certain statements in this document include forward-looking information
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Act of 1934, as amended, and are subject to
the "safe harbor" created by those sections. These forward-looking statements
involve certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements. Such risks
and uncertainties include, but are not limited to, the following factors:
competitive pressure in the banking industry increases significantly; changes
in the interest rate environment reduce margins; general economic conditions,
either nationally or regionally, are less favorable than expected, resulting
in, among other things, a deterioration in credit quality and an increase in
the provision for possible loan losses; changes in the regulatory
environment; changes in business conditions; volatility of rate sensitive
deposits; operational risks including data processing system failures
(including the risk that systems may not process dates after December 31,
1999 properly) or fraud; asset/liability matching risks and liquidity risks;
and changes in the securities markets.
FINANCIAL CONDITION
On February 25, 1999, the Company entered into an Agreement and Plan of
merger with BancWest Corporation ("BancWest"). Under the terms of the Plan
BancWest will acquire all the outstanding common stock of the Company in
exchange for 0.82 shares of BancWest common stock for each share of
SierraWest Bancorp. The merger, which is expected to close in the third
quarter of 1999 is subject to the approval of the Company's shareholders,
various regulatory agencies and certain other conditions. The transaction is
expected to be accounted for under the pooling-of-interests accounting method.
Concurrently with the execution and delivery of the merger agreement,
BancWest and the Company entered into a stock option agreement which will
only become exercisable upon the occurance of certain events. Under the stock
option agreement, the Company gave BancWest an option to purchase up to
1,059,490 shares of the Company's common stock representing approximately
19.9% of the outstanding shares of the Company's common stock. BancWest has
the right to purchase the shares for $28.875 per share.
On April 15, 1998, the Company completed the acquisition of California
Community Bancshares Corporation ("CCBC") and its wholly owned subsidiary
Continental Pacific Bank ("CPB"), under the pooling-of-interests method of
accounting and accordingly, the Company's historical consolidated results
have been restated. On the acquisition date, CCBC had assets of $206 million,
deposits of $184 million and shareholders' equity of $15.4 million.
Total assets increased by $20.4 million from $879.2 million at December 31,
1998, to $899.6 million at March 31, 1999. This increase included increases
of $19.1 million in federal funds sold and securities purchased under
agreements to resell and $34.2 million in loans, net of the allowance for
possible loan and lease losses. These increases were partially offset by
decreases of $8.3 million in cash and due from banks, $24.0 million in
investment securities and $0.6 million in other assets. Federal funds sold
and unpledged investment securities classified as available for sale are all
sources of short-term liquidity and can be used somewhat interchangeably to
provide liquidity. Of the Company's total investment securities, $38.8
million were pledged at March 31, 1999.
The decrease in investment securities was offset by the increase in federal
funds sold. Loan growth was centered in the government guaranteed lending
area and was funded primarily by the increase in time deposits.
-9-
<PAGE>
Loans held for sale at March 31, 1999 totaled approximately $130 million. This
represents an increase of $15 million from December 31, 1998. Loans and portions
of loans guaranteed by the federal government were approximately $71 million.
This compares to $72.3 million at December 31, 1998.
The Company anticipates securitizing and selling up to $100 million of SBA
504 and similar loans during the second or third quarter of 1999. The Company
does not expect a significant gain or loss to be recorded on this
transaction. Loans held for sale at March 31, 1999 include approximately $86
million that may be included in this transaction. The remainder of loans held
for sale are guaranteed portions of SBA and B & I loans.
The following table summarizes the Company's deposits as of March 31, 1999,
and December 31, 1998.
<TABLE>
<CAPTION>
Deposits: 03/31/99 12/31/98 Change
-------- -------- --------
<S> <C> <C> <C>
Non-interest bearing .................................. $171,378 $177,359 $ (5,981)
Interest bearing savings and checking accounts ........ 290,345 290,986 (641)
Time .................................................. 339,809 314,207 25,602
-------- -------- --------
TOTAL DEPOSITS ...................................... $801,532 $782,552 $ 18,980
-------- -------- --------
-------- -------- --------
</TABLE>
As a temporary funding source the Company increased its level of out-of-area
time deposits from $9.4 million at December 31, 1998 to $26.5 million at
March 31, 1999. Additional funding for the Company's third and fourth quarter
loan growth is expected to be provided from the proceeds of the 1999
securitization.
Included in other assets at March 31, 1999 are interest-only strips
receivable with an estimated market value of $21.9 million. This includes an
unrealized loss of $1.1 million. The amortized book value of servicing
assets, net of a valuation allowance of $420 thousand, was $2.1 million at
March 31, 1999.
At March 31, 1999, accumulated other comprehensive income included a loss of
$640 thousand related to the fair value adjustment of the interest-only
strips receivable. In addition, this balance included an unrealized gain of
$70 thousand related to available for sale investment securities.
Included in other assets at December 31, 1998 are interest-only strips
receivable with an estimated market value of $22.1 million. This includes an
unrealized loss of $528 thousand. The amortized book value of servicing
assets, net of a valuation allowance of $420 thousand, was $2.0 million at
December 31, 1998.
At December 31, 1998, accumulated other comprehensive income included a loss
of $310 thousand related to the fair value adjustment of the interest-only
strips receivable. In addition, this balance included an unrealized gain of
$367 thousand related to available for sale investment securities.
-10-
<PAGE>
RESULTS OF OPERATIONS (Three Months Ended March 31, 1999 and 1998)
Net income for the three months ended March 31, 1999 increased by $230
thousand or 11% from $2,019 thousand for the three months ended March 31,
1998 to $2,249 thousand during the current three month period. Increases of
$882 thousand in net interest income and $566 thousand in non-interest income
were partially offset by an increase of $576 thousand in non-interest
expense, $75 thousand in the provision for possible loan and lease losses and
a $567 thousand increase in the provision for income taxes.
During the 1999 period the Company incurred costs totaling $786 thousand
related to the pending acquisition of the Company by BancWest. In the first
quarter of 1998 the Company incurred costs totaling $443 thousand related to
its acquisition of CCBC. Excluding these costs net income would have
increased by $0.6 million, from $2.4 million to $3.0 million, between the
first quarter of 1999 and 1998 or 26%.
NET INTEREST INCOME
The yield on average interest earning assets for the three months ended March
31, 1999 was 5.48%. This compares to 5.62% for the first three months of
1998. The decrease reflects a decrease in the average prime rate during the
first quarter of 1999 as compared to the first quarter of 1998. The yield on
average loans declined from 10.1% during the 1998 period to 9.3% during the
first three months of 1999. This decline was partially offset by a decline in
the cost of the Company's deposits. Average earning assets increased from
$706 million during the first quarter of 1998 to $789 million in the current
quarter.
Yields and interest earned on loans, including loan fees for the three months
ended March 31, 1999 and 1998, were as follows (in thousands except percent
amounts):
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
03/31/99 03/31/98
-------- --------
<S> <C> <C>
Average loans outstanding (1) $641,956 $561,771
Average yields 9.3% 10.1%
Amount of interest and origination fees earned $ 14,718 $ 13,969
</TABLE>
(1) Amounts outstanding are the average of daily balances for the periods
Excluding net loan fees of $231 thousand and $370 thousand for the three
months ended March 31, 1999 and 1998, yields on average loans outstanding
were 9.2% and 9.8%, respectively. The prime rate (upon which a large portion
of the Company's loan portfolio is based), averaged 7.75% for the 1999 period
and 8.50% for the 1998 period. Other earning assets, which primarily consist
of investment securities and federal funds sold, had an average yield of 5.3%
for the first quarter of 1999 and 5.7% for the first quarter of 1998.
-11-
<PAGE>
Rates and amounts paid on total average deposits (including non-interest
bearing deposits), interest bearing accounts, and time deposits for the three
months ended March 31, 1999 and 1998 were as follows (in thousands except
percent amount):
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
03/31/99 03/31/98
-------- --------
<S> <C> <C>
Average deposits outstanding (1) $780,827 $703,810
Average rates paid 3.0% 3.5%
Amount of interest paid or accrued $ 5,823 $ 6,061
</TABLE>
<TABLE>
<CAPTION>
1999 1998
------------------------------- -------------------------------
Interest- Interest-
Bearing Bearing
Checking Checking
& Savings Time & Savings Time
------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Average Balance (in thousands) (1) $ 288,523 $ 326,207 $ 259,426 $ 297,226
Rate Paid 2.4% 5.1% 3.0% 5.7%
</TABLE>
(1) Amounts outstanding are the average of daily balances for the period.
The decrease in rates is reflective of market conditions in the Company's
service area.
PROVISION FOR POSSIBLE LOAN LOSSES
The Allowance for Loan and Lease Loss analysis takes into consideration an
analysis of several components to the lending portfolio. Provisions are based
on several criteria, including loan exposure by grade of the loan and
collateral coverage, type of credit and a subjective assessment of various
factors affecting the loan portfolio. The problem loans graded Special
Mention or worse are analyzed by the loan officer on a quarterly or
semiannual basis, depending on the severity of the loan grade and level of
loss potential. This analysis is documented with each problem loan analyzed
for credit quality, collateral adequacy and potential exposure based on
liquidation collateral values (primarily real estate). Based on historical
trends the Company allocates general reserves to its loan and lease
portfolio. A 1% general reserve is allocated to the covered portion of the
principal and a specific reserve is allocated to the uncovered portion,
ranging from 10% to 50%, depending on severity of the loan grade. Other
reserves are allocated, if it is determined there are circumstances that
would warrant additional reserves (e.g. potential environmental problems,
disruptions in the company, temporary economic setbacks). The documentation
for all changes to and from problem loan grades and accompanying loss reserve
analysis is approved by Credit Administration management. No loss reserve
provisions are allocated for the government guaranteed portions of loans.
Pass loans are reserved as a pool at 1%, regardless of collateral pledged.
As a pool, equipment leases, net of municipal leases, are reserved at 2.4%.
Credit card and Ready Reserve (overdraft lines) balances are reserved at 5%.
Reserves are allocated at 1% of one-sixth of the undisbursed loan proceeds,
on the theory that these loans are on the average are fully disbursed over
six months.
-12-
<PAGE>
In addition to the 1% reserve, the bank applies a reserve factor to the pass
loans based on several discretionary factors. The areas, assessed on a
quarterly basis by the Chief Credit Officer, cover the following issues:
Credit Policy (adequacy), Economy (stability), Volume (loan growth, portfolio
distribution), Management (adequacy, staffing issues, etc.), Credit Review
(internal and external results), Concentrations (risk potential),
Competitive/Regional (environment and economic factors), Past Due/Classified
(portfolio trends) and Year 2000 (risk assessment efforts).
The aggregate calculated minimum reserve level is compared to the actual
level of reserves and a level based on an informal calculation of the
Interagency Recommended formula. These factors, in addition to potential
problem credits and anticipated losses and recoveries in the near future,
determine the level of loan loss provisions to be allocated for the month.
This determination is based on collaboration between Credit Administration
and the Controller's Department. While these factors are essentially
subjective, management considers the allowance of $9.1 million at March 31,
1999 to be adequate.
The provision for loan losses was $600 thousand and $525 thousand for the
first three months of 1999 and 1998, respectively. The provision in 1999
includes the effect of growth in the loan portfolio.
The allowance for possible loan and lease losses as a percentage of loans was
1.38% at March 31, 1999, 1.39% at December 31, 1998, and 1.39% at March 31,
1998. Net charge-offs were $192 thousand for the first three months of 1999.
This compares to net charge-offs of $528 thousand during the three months
ended March 31, 1998. Unguaranteed loans and leases increased $35.9 million
and $3.5 million in the first quarter of 1999 and 1998, respectively.
Guaranteed portions of loans at March 31, 1999 totaled $71.0 million and at
March 31, 1998 they totaled $71.3 million. The Company monitors its exposure
to loan losses each quarter and adjusts its level of provision in the future
to reflect changing circumstances.
Of total gross loans and leases at March 31, 1999, $9.8 million were
considered to be impaired. The allowance for possible loan and lease losses
included $1.1 million related to these loans. The average recorded investment
in impaired loans during the three months ended March 31, 1999 was $8.9
million.
The following table sets forth the ratio of nonaccrual loans to total loans,
the allowance for possible loan and lease losses to nonaccrual loans and the
ratio of the allowance for possible loan and lease losses to total loans, as
of the dates indicated.
<TABLE>
<CAPTION>
March 31, December 31,
----------------- -------------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Nonaccrual loans to total loans and leases 1.5% 1.1% 1.4% 1.3% 1.2%
Allowance for possible loan and lease
losses to nonaccrual loans 93% 123% 100% 114% 104%
Allowance for possible loan and lease
losses to total loans and leases 1.4% 1.4% 1.4% 1.4% 1.3%
</TABLE>
If the guaranteed portions of loans on nonaccrual status, which total $3.4
million, are excluded from the calculations, the ratio of nonaccrual loans to
total loans at March 31, 1999 declines to 1.0% and the allowance for possible
loan and lease losses to nonaccrual loans increases to 142%. At March 31,
1998, excluding guaranteed portions of loans on nonaccrual, these same
percentages are 0.8% and 176%.
-13-
<PAGE>
The following table sets forth the amount of the Company's nonperforming
loans as of the dates indicated (amounts in thousands).
<TABLE>
<CAPTION>
March 31 December 31
------------------ -----------------------------
1999 1998 1998 1997 1996
------------------ -----------------------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans:
SBA ............................................ $6,785 $4,767 $4,736 $5,307 $4,985
Other .......................................... 3,023 1,647 3,928 1,642 448
Accruing loans past due 90 days or more:
SBA ............................................ 2,641 1,899 2,795 1,127 1,071
Other .......................................... 2,426 641 361 449 1,128
Restructured loans (in compliance with
modified terms) ................................. 1,767 1,855 1,916 1,922 1,249
</TABLE>
The performance of the Company's loan portfolio is evaluated regularly by
management. The Company places a loan on nonaccrual status when any
installment of principal or interest is 90 days or more past due, unless, in
management's opinion, the loan is well secured, in the process of collection
and the collection of principal and interest is probable, or management
determines the ultimate collection of principal or interest on a loan to be
unlikely. When a loan is placed on nonaccrual status, the Company's general
policy is to reverse and charge against current income previously accrued but
unpaid interest. Interest income on such loans is subsequently recognized
only to the extent that cash is received and future collection of principal
is deemed by management to be probable.
Interest income on nonaccrual loans which would have been recognized if all
such loans had been current in accordance with their original terms totaled
$265 thousand for the three months ended March 31, 1999. Interest income
actually recognized on nonaccrual loans for the three months ended March 31,
1999 was $17 thousand based on cash collections.
-14-
<PAGE>
The following table shows the loans outstanding, actual charge-offs,
recoveries on loans previously charged off, the allowance for possible loan
and lease losses and net loans charged off to average loans outstanding
during the periods and as of the dates indicated (amounts in thousands except
percentage amounts):
<TABLE>
<CAPTION>
March 31 December 31
----------------------- -----------------------------------
1999 1998 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Average gross loans $641,956 $561,771 $553,756 $496,633 $396,668
Total gross loans at end of period 659,567 566,078 624,983 553,713 436,392
Allowance for possible loan and lease losses:
Balance beginning of period ......................... $ 8,709 $ 7,891 $ 7,891 $ 5,647 $ 5,003
-------- -------- -------- -------- --------
Actual charge-offs:
SBA ............................................... 84 259 863 820 114
Commercial and industrial ......................... 283 157 730 681 554
Leases ............................................ 0 133 133 14 84
Real estate ....................................... 66 0 56 30 264
Installment ....................................... 0 57 285 169 73
-------- -------- -------- -------- --------
Total ............................................ 433 606 2,067 1,714 1,089
-------- -------- -------- -------- --------
Less recoveries:
SBA ............................................... 67 6 210 57 87
Commercial and industrial ......................... 34 62 274 159 183
Leases ............................................ 0 0 0 6 0
Real estate ....................................... 1 6 1 13 26
Installment ....................................... 139 4 30 60 16
-------- -------- -------- -------- --------
Total ........................................... 241 78 515 295 312
-------- -------- -------- -------- --------
Net charge-offs ..................................... 192 528 1,552 1,419 777
Provision for possible loan and lease
losses .............................................. 600 525 2,370 2,799 1,421
-------- -------- -------- -------- --------
Acquisition ......................................... 0 0 0 864 0
Balance-end of period ............................... $ 9,117 $ 7,888 $ 8,709 $ 7,891 $ 5,647
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Net loans charged off to average loans
outstanding (1) ..................................... 0.12% 0.38% 0.28% 0.29% 0.20%
</TABLE>
(1) Percentages for the three months are based on annualized net charge-offs.
-15-
<PAGE>
The following table sets forth management's historical allocation of the
allowance for possible loan and lease losses by loan category and percentage
of loans in each category. Percentage amounts are the percentage of loans in
each category to total loans at the dates indicated (in thousands except
percentage amounts):
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------------------------
1998 1997 1996
------------------------- ------------------------- -------------------------
Percent- Percent- Percent-
Amount age Amount age Amount age
----------- ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
SBA loans .................. $1,342 30% $2,227 30% $1,561 33%
Commercial and
industrial loans(2) ....... 3,048 19 2,682 18 1,934 18
Real estate loans .......... 3,949 49 2,480 49 1,845 42
Consumer loans to
individuals (1) ............ 370 2 502 3 307 7
------ --- ------ --- ------ ---
Total .................... $8,709 100% $7,891 100% $5,647 100%
------ --- ------ --- ------ ---
------ --- ------ --- ------ ---
</TABLE>
<TABLE>
<CAPTION>
March 31,
-----------------------------------------------------------
1999 1998
---------------------------- -----------------------------
Percent- Percent-
Amount age Amount age
------------ -------------- -------------- -------------
<S> <C> <C> <C> <C>
SBA loans $1,683 32% $2,123 32%
Commercial and
industrial loans (2) 2,817 17 2,204 16
Real estate loans 4,032 48 3,094 49
Consumer loans to
individuals (1) 585 3 467 3
------ --- ------ ---
Total $9,117 100% $7,888 100%
------ --- ------ ---
------ --- ------ ---
</TABLE>
- -----------------------------------
(1) Includes equity lines of credit
(2) Includes commercial leases
In allocating the Company's loan loss allowance, management has considered
the credit risk in the various loan categories in its portfolio. While every
effort has been made to allocate the allowance to specific categories of
loans, management believes that any breakdown or allocation of the loan loss
allowance into loan categories lends an appearance of exactness which does
not exist, in that the allowance is utilized as a single unallocated reserve
available for losses on all types of loans.
-16-
<PAGE>
NON-INTEREST INCOME
Non-interest income increased by $566 thousand during the first three months
of 1999 compared to the three months ended March 31, 1998. During the first
quarter of 1999 the Company sold $9.4 million in guaranteed portions of SBA
loans and $4.9 million in guaranteed portions of B & I loans. Gains on sales
of these loans totaled $676 thousand. No sales of government guaranteed loans
were made during the first quarter of 1998.
Income related to the Company's servicing assets and interest-only strips
receivable, net of the amortization of these assets, decreased by $265
thousand from $1,187 thousand for the three months ended March 31, 1998 to
$922 thousand during the current quarter. This decrease resulted from an
increase of $449 thousand in amortization expense from $499 thousand during
the three months ended March 31, 1998 to $948 thousand during the first three
months of 1999. The increase in amortization included $185 thousand from
1998's securitization. Gross servicing and I/O income totaled $1.9 million
during the 1999 quarter of which $590 thousand relates to the 1998
securitization. Gross servicing and I/O income during the first quarter of
1998 totaled $1.7 million, none of which relates to the 1998 securitization.
Over the past two years the Company has experienced an increase in the prepay
speed experienced in its SBA loan portfolio. In response to this increase in
prepayments, the Company has increased the speed at which it amortizes its
servicing and interest-only strip assets. The increase in amortization and
decline in servicing and I/O income is reflective of this increase in prepay
speed.
Income from service charges on deposit accounts increased by $98 thousand
from $806 thousand during the 1998 quarter to $904 thousand during the
current quarter.
NON-INTEREST EXPENSE
The following table compares the various elements of non-interest expense as
an annualized percentage of average assets for the first three months of 1999
and 1998 (in thousands except percentage amounts):
<TABLE>
<CAPTION>
Three Months Salaries & Occupancy & Other
Ended Average Related Equipment Operating
March 31 Assets (1) Benefits Expenses Expenses
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999 $ 879,401 2.2% 0.7% 1.4%
1999 (2) $ 879,401 2.2% 0.7% 1.1%
1998 $ 791,442 2.3% 0.9% 1.3%
1998 (3) $ 791,442 2.3% 0.8% 1.2%
</TABLE>
(1) Based on average daily balances.
(2) Excludes merger costs of $786 thousand.
(3) Excludes merger costs of $443 thousand.
-17-
<PAGE>
The following table summarizes the principal elements of operating expenses
and discloses the increases (decreases) and percent of increases (decreases)
for the three months ended March 31, 1999 and 1998 (amounts in thousands
except percentage amounts):
<TABLE>
<CAPTION>
Increase (Decrease)
----------------------------
Three Months Ended March 31, 1999 over 1998
------------------------------- ----------------------------
1999 1998 Amount Percentage
------------- ---------------- ------------- -------------
<S> <C> <C> <C> <C>
Salaries and related benefits ....... $4,779 $4,449 $ 330 7.4%
Occupancy and equipment ............. 1,459 1,680 (221) (13.2)
Telephone ........................... 138 159 (21) (13.2)
Postage ............................. 108 133 (25) (18.8)
Stationery and supplies ............. 141 154 (13) (8.4)
Advertising ......................... 301 288 13 4.5
Legal ............................... 148 209 (61) (29.2)
Consulting .......................... 696 170 526 309.4
Audit and accounting fees ........... 145 134 11 8.2
Directors' fees and expenses ........ 198 182 16 8.8
Other ............................... 1,196 1,175 21 1.8
------------- ---------------- -------------
$9,309 $8,733 $ 576 6.6%
------------- ---------------- -------------
------------- ---------------- -------------
</TABLE>
Included in 1999 costs are expenses totaling $786 thousand related to the
pending acquisition of the Company by BancWest. These costs include $111
thousand in legal, $600 thousand in consulting, $39 thousand in accounting
and $36 thousand in other expense. Included in 1998's expenses are costs
related to the Company's acquisition of CCBC totaling $443 of which $121
thousand relate to equipment costs, $152 thousand in legal costs, $60
thousand in consulting, $55 thousand in accounting and $55 thousand in other
expense.
The increase in salaries and benefits primarily relates to expansion of the
Company's government guaranteed lending activities.
Included in directors' fees and expenses are $76 thousand in 1999 and $45
thousand in 1998 related to an adjustment required to reflect the increase in
value of the phantom stock shares allocated to the Company's Directors
Deferred Compensation and Stock Award Plan.
PROVISION FOR INCOME TAXES
Provision for income taxes has been made at the prevailing statutory rates
and includes the effect of items which are classified as permanent
differences for federal and state income tax. The provision for income taxes
was $1,953 thousand and $1,386 thousand for the three months ended March 31,
1999 and 1998, respectively, representing 46.5% and 40.7% of income before
taxation for the respective periods. The increase in 1999 relates to certain
merger related expenses which may not be deductible for federal and state
taxes.
-18-
<PAGE>
YEAR 2000
Many existing computer programs use only two digits to identify a year in the
date datum field (e.g., "98" for "1998"). As a result, the Company, like most
other companies, faces a potentially serious information systems (computer)
problem because many software applications and operational programs written
in the past may not properly recognize calendar dates beginning in the year
2000. If not corrected, many computer applications could fail or create
erroneous results by or at the year 2000.
In June of 1996, the Federal Financial Institutions Examination Council
(FFIEC) released its first alert to the financial services industry
concerning Year 2000 risks. This council is comprised of (1) the Board of
Governors of the Federal Reserve System(FRB); (2) the Federal Deposit
Insurance Corporation; (3) the Office of the Comptroller of the Currency; (4)
the National Credit Union Administration and (5) the Office of Thrift
Supervision. On May 5, 1997, the FFIEC issued Interagency Guidelines
outlining Year 2000 Project Management Goals and called for every financial
institution to have a Year 2000 plan. This plan required an inclusion of an
assessment of the Year 2000 risk posed by "mission critical" systems and
required plans which ensured that testing was substantially complete for
mission critical systems by December 31, 1998. A third set of guidelines was
issued on December 22, 1997, further elaborating regulatory expectations
regarding the Year 2000 or "millennium bug" problem. This release
specifically included the requirement that each institution determine the
level of "portfolio risk", posed by borrowers with potential Year 2000
problems, which could lead to impaired performance on the part of the
borrower and, by implication, the financial institution as creditor. Since
December, 1997, there have been additional Interagency Statements released on
the topics of Impact on Customers, Vendor Readiness, Testing Guidance,
Customer Awareness Programs, Contingency Planning Guidance and Fiduciary
Services Guidance. In December 1998 a FFIEC guidance was released which
addressed time lines for the preparation of Remediation Contingency Plans and
of Business Resumption Contingency Plans. All financial institutions
regulated by any of the regulatory bodies of the FFIEC are required to follow
the guidelines outlined in each of the Interagency Statements. Examiners from
the FFIEC member agencies conducted first round supervisory reviews of all
financial institutions' Year 2000 conversion efforts during the first half of
1998. During the 4th quarter of 1998 regulators began the Phase II exams
addressing all areas of Year 2000 compliance to date. Our Phase II exam was
recently conducted and our regulators have reviewed our plans and testing
performed to date and noted our progress. Examiners categorize an
organization's efforts as "Satisfactory", "Needs Improvement" or
"Unsatisfactory". The FDIC intends to mandate supervisory action for
virtually all institutions assessed less than satisfactory. In addition, the
FDIC will consider a change in a component or composite rating if identified
deficiencies so warrant. Focusing on financial institutions alone will not
prevent Year 2000 disruptions. Consequently, examiners will also be
conducting supervisory reviews on data processing service providers and
third-party software vendors who provide services to federally insured
financial institutions.
THE COMPANY'S STATE OF READINESS
In 1997, the Company identified five steps to be accomplished for formulation
of an action plan:
(1) AWARENESS - Awareness of Year 2000 problems. The Company set up a Year
2000 Steering committee to oversee the progress in solving the problems
associated with Year 2000 issues. Progress is reported monthly at the
Company's Board and Committee meetings and documented in the committee and
board minutes.
(2) ASSESSMENT - An inventory of affected systems has been performed, the
problem assessed, risks measured and an action plan formalized.
(3) RENOVATION - In this phase, modifications were made and vendors managed
according to the action plan. Detailed test plans and schedules were
developed. The entire project continues to be monitored and results are
documented.
-19-
<PAGE>
(4) VALIDATION - Tests were conducted and results analyzed to confirm that
the changes made bring the affected system into compliance and no new
problems have surfaced as a result of the changes.
(5) IMPLEMENTATION - Replacement of the non-compliant systems occurred. The
systems were put into production and appropriately interfaced with one
another. Training also occurred and contingency plans were prepared as
required. A review by the end user and the Internal Audit Department was
conducted to insure the accuracy of the test results.
The Company, with the help of consultants, began identifying 260 systems in
use throughout the Bank and performed preliminary assessment of the risk of
non-compliance associated with each one. Each system was given an overall
risk assessment of "high", "moderate", "low", "no risk" or "unknown" risk. In
deriving the overall risk rating, three separate components were considered:
A.) CRITICALITY: How critical is the system to the organization?
B.) CONFIDENCE: How confident are we that the vendor will make their system
compliant?
C.) CONTROL: How much control do we have in the process?
The Company has identified eleven (11) Mission Critical A-Priority Systems
considered to be most critical regardless of the risk of non-compliance and
the degree of control the Company has over the renovation of these systems.
They are listed below:
(1) Core Application Software
(2) Customer Information System & Data Warehouse
(3) Operating System
(4) PC Server Based Application & Operating System
(5) Network Hardware
(6) Loan Document Processing
(7) ACH Processing
(8) Wire Transfer & Settlement
(9) ATM Processing
(10) Telephone Banking
(11) Disaster Recovery & Back-up
The Company established a test plan for its mission critical applications.
Testing of these items commenced in September 1998 and was substantially
completed by December 31, 1998. Monthly status reports continue to be
presented to the Board of Directors.
CORE APPLICATION SOFTWARE AND CUSTOMER INFORMATION SYSTEM & DATA WAREHOUSE
The current level of software has been certified as Year 2000 compliant by
the vendor as well as reviewed and assessed by FDIC. The Company performed an
independent test of the "Century Date Change" (CDC) at its disaster recovery
site during the first quarter of 1999. End-user validation as well as an
independent review by the Company's internal audit department reaffirmed the
software as Year 2000 compliant.
-20-
<PAGE>
OPERATING SYSTEM
The upgrade to the operating system software was installed on September 19,
1998 and is designed to work hand-in-hand with the major information
technology system. Testing of the system occurred with installation in
September and was found to have no Year 2000 compliance issues.
PC SERVER BASED APPLICATION & OPERATING SYSTEM AND NETWORK HARDWARE
The Network Department has completed the replacement of non-compliant system
hardware and software. Testing has been completed and certification has been
received by vendors. Individual applications, spreadsheets, etc. are
scheduled for review in 1999.
LOAN DOCUMENT PROCESSING
Loan document processing software has been tested. The current version is
certified and is Year 2000 compliant with documentation on file with the Year
2000 Project Manager.
ACH PROCESSING AND WIRE TRANSFER & SETTLEMENT
Testing on the current version of the Fed-Line software is now complete.
Certification has been received from the Department Manager. Integration
testing of systems that reside in several different Departments is scheduled.
ATM PROCESSING
The Company has completed testing with the processor. Certification of Year
2000 compliance has been received.
TELEPHONE BANKING
The telephone banking system required an upgrade that was approved for
purchase in the 4th quarter of 1998. The compliant version was installed in
March 1999 and testing is scheduled to be completed in the 2nd quarter of
1999. The vendor has certified the upgrade as Year 2000 compliant.
DISASTER RECOVERY & BACK-UP
End-of-Year (1998) files were created by the Company's Data Processing
Department and forwarded to the Disaster Recovery Vendor in early January
1999. End-user validation indicates that the CDC test was successful.
NON-INFORMATION TECHNOLOGY
A facility inspection worksheet was forwarded to each Office for inventory
and identification of all non-IT date sensitive systems. Systems such as
vaults, telephone systems, and HVAC systems have been identified and
certification has been or will be received soon.
-21-
<PAGE>
YEAR 2000 PLAN MANAGEMENT
In order to effectively manage the Year 2000 Plan, the Company has grouped
all phases of the project into one of six categories as defined in the FFIEC
guidelines:
(1) Business Risk
(2) Due Diligence on Service Providers and Software Vendors Readiness
(3) Impact on Customers
(4) Testing
(5) Customer Awareness Programs
(6) Contingency Planning
With the identification of our A-Priority Mission Critical Systems, business
risk was measured for each application, process and vendor/customer
relationship. In general, the Company believes the business risk associated
with A-Priority Mission Critical systems to be low. As tests progressed and
non-compliant systems were identified, Remediation Contingency Plans were
created as required in regulatory guidelines.
The Company's progress on due diligence and testing was previously discussed
in the section describing its eleven mission critical systems.
Guidance for Customer Awareness and Impact on Customers continues to be
addressed. Some of the on-going programs are education of the Company's
staff, community presentations by the Company's Legal Department and by the
Year 2000 Project Manager and mailings to customers. Customers have been
provided with a toll-free number of the Year 2000 Project Manager to call for
any questions.
The assessment of "high risk" borrowers and depositors is a continual
project. Customers are identified using the criteria established in the
Company's Policies on Year 2000 Borrower Risk and Year 2000 Depositor Risk.
The Credit Services Manager and the Operations Division Manager are
responsible for on-going evaluation.
COSTS TO ADDRESS THE YEAR 2000 ISSUES
Costs directly related to Year 2000 issues totaling $164,000 were incurred
through April 22, 1999. Incurred costs consist of the salary of a full-time
Year 2000 Manager, travel and seminars for staff, customer education
expenses, computer hardware purchases of $19,000, telephone expenses of
$23,000, consultant costs of $22,000, and additional software purchases of
$19,000. These costs are being funded through operating cash flows.
Additional estimated costs relating to Year 2000 issues have been identified
to be approximately $160,000. As the project continues, the costs may prove
to be significantly higher. Of the estimated additional costs, $41,000 has
been identified for additional hardware and software purchases, $11,000 has
been estimated for testing of customer's credit card accounts, and an
additional $108,000 has been estimated for staff salaries and travel and
seminar expenses.
The Year 2000 issue is pervasive and complex as virtually every computer
system will be affected in some way by the Year 2000 date change.
Consequently, no assurance can be given that Year 2000 compliance can be
achieved without costs and uncertainties that might have a material adverse
effect on future financial results or cause reported financial information
not to be necessarily indicative of future operating results or future
financial condition. However it is anticipated that any disruption of
services would be partial and brief, and that there will not be a material
impact on revenues or earnings.
-22-
<PAGE>
RISKS OF THE COMPANY'S YEAR 2000 ISSUES
The Company has substantially completed testing on mission-critical
applications. Most tests were successful and those systems that were
identified as non-compliant have been upgraded or will soon be upgraded. The
Company is confident all mission-critical applications will function normally
at all critical dates. A Business Resumption Contingency Plan is in the final
stage of development to address issues such as loss of power, loss of
telephones or loss of computers.
BUSINESS RESUMPTION CONTINGENCY PLAN
As mentioned previously the Company has developed a Business Resumption
Contingency Plan as required by regulatory agencies to address possible
disruptions of core business functions. The purpose of the Business
Resumption Plan is to address the risks associated with the failure of
systems on specific critical dates. The Business Resumption Plan is intended
to provide assurance that the mission-critical functions will continue if one
or more systems fail.
There are four phases of the Year 2000 Business Resumption Contingency Planning
process which include:
1. Establishing organizational planning guidelines that define the business
continuity planning strategy.
2. Completing a Business Impact Analysis where we are assessing the potential
impact of mission-critical system failures on core business functions.
3. Developing a Contingency Plan that establishes a timeline for
implementation and action, and trigger dates for activation.
4. Designing a method of Validation so that the Business Resumption Plan can
be tested for viability.
The Company expects to have completed all phases of its Business Resumption
Plan by the end of the second quarter of 1999. The Plan will be used
in-conjunction with the Company's current Disaster Recovery Plan. When the
Plan is complete the Company's Internal Audit Department will conduct an
independent review of the Plan.
B-Priority systems, defined as non-mission critical, are being identified and
testing is scheduled for completion by September 1999.
-23-
<PAGE>
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In Management's opinion there has not been a material change in the Company's
market risk profile during the three months ended March 31, 1999.
PART II.
Item 1. Legal Proceedings. No changes.
Item 2. Change in Securities. No changes.
Item 3. Defaults Upon Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders. None
Item 5. Other Information. Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. None
(b) Reports on Form 8-K.
Bancorp filed one Form 8-K during the first quarter
of 1999. This Form 8-K, dated February 25, 1999
reported the signing of a merger agreement between
SierraWest Bancorp and BancWest Corporation and Bank
of the West. Under the terms of this agreement
SierraWest Bancorp and its subsidiary SierraWest Bank
will merge with and into Bank of the West with Bank
of the West as the surviving entity.
-24-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 12, 1999 /s/ William T. Fike
------------------------ -----------------------------------
William T. Fike
President, Chief Executive Officer
Date: May 12, 1999 /s/ David C. Broadley
------------------------ -----------------------------------
David C. Broadley
Executive Vice President
Chief Financial Officer
-25-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF SIERRAWEST BANCORP AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000790555
<NAME> SIERRAWEST BANCORP
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 45,238
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 33,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 109,941
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 659,567
<ALLOWANCE> 9,117
<TOTAL-ASSETS> 899,613
<DEPOSITS> 801,532
<SHORT-TERM> 0
<LIABILITIES-OTHER> 16,348
<LONG-TERM> 2,650
0
0
<COMMON> 46,560
<OTHER-SE> 32,523
<TOTAL-LIABILITIES-AND-EQUITY> 899,613
<INTEREST-LOAN> 14,718
<INTEREST-INVEST> 1,524
<INTEREST-OTHER> 392
<INTEREST-TOTAL> 16,634
<INTEREST-DEPOSIT> 5,823
<INTEREST-EXPENSE> 5,959
<INTEREST-INCOME-NET> 10,675
<LOAN-LOSSES> 600
<SECURITIES-GAINS> (2)
<EXPENSE-OTHER> 9,309
<INCOME-PRETAX> 4,202
<INCOME-PRE-EXTRAORDINARY> 2,249
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,249
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0.41
<YIELD-ACTUAL> 5.48
<LOANS-NON> 9,808
<LOANS-PAST> 5,067
<LOANS-TROUBLED> 1,767
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 8,709
<CHARGE-OFFS> 433
<RECOVERIES> 241
<ALLOWANCE-CLOSE> 9,117
<ALLOWANCE-DOMESTIC> 9,117
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
