UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1998
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 33-40799
TIMBERLINE BANCSHARES, INC.
(Exact name of small business issuer as specified in its charter)
California 68-0269988
(State or other jurisdiction of (IRS Employer Identification No.)
of incorporation or organization)
123 N. Main Street P. O. Box 1087, Yreka, Ca 96097
(Address of principal executive offices)
( 530 )842-6191
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and report required to be filed
by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,006,726
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TIMBERLINE BANCSHARES, INC.
CONSOLIDATED INCOME STATEMENT
Periods Indicated
($ in thousand except per share)
Year Prior Year Prior Year
Quarter End to Date Quarter End to Date
06/30/98 06/30/98 06/30/97 06/30/97
1. Interest and Fees on Loans 1,240 2,453 1,111 2,175
2. Interest On Securities
Held to Maturity 197 368 182 283
Available for Sale 100 219 120 254
3. Trading Account interest -0- -0- -0- -0-
4. Other interest 159 323 129 312
5. Total Interest Income 1,696 3,363 1,542 3,024
6. Interest on Deposits 609 1,189 510 1,003
7. Interest on short term borrowing -0- -0- -0- -0-
8. Interest on long term debt -0- -0- -0- -0-
9. Total Interest Expense 609 1,189 510 1,003
10. Net Interest Income 1,087 2,174 1,032 2,021
11. Provision for Loan Losses 18 38 -0- -0-
12. Net Interest Income after
Provision for loan losses 1,069 2,136 1,032 2,021
13. Other Income 106 214 109 223
14. Other Expenses 872 1,797 844 1,691
15. Income before Tax 303 553 297 553
16. Income Tax Expense 68 128 40 122
17. Income before extraordinary
item 235 425 257 431
18. Extraordinary item net of tax -0- -0- -0- -0-
19. Cumulative effect of accounting
changes -0- -0- -0- -0-
20. Net Income $ 235 $ 425 $ 257 $ 431
21. Earnings per share $ .23 $ .42 $ .26 $ .43
Note 1: The financial statements included in this report are unaudited but,
in the opinion of management of the Corporation, reflect all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of financial position, results of operations, and changes in
financial position for the periods presented.
-1-
TIMBERLINE BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
06/30/98
ASSETS
1. Cash and Due from Banks $ 4,605
2. Interest Bearing Deposits other banks -0-
3. Federal Funds sold and securities
purchased under resale agreement 9,100
4. Trading Account Assets -0-
5. Other short-term investments 1,330
6. Investment securities
Held for Sale 14,107
Held to Maturity 6,481
7. Loans, Total 49,153
Allowance for loan losses (387)
Unearned Income (101)
8. Premises and Equipment 2,456
9. Due from customers on acceptances -0-
10. Other assets 1,211
11. Total Assets $ 87,955
LIABILITIES
12. Deposits, non-interest bearing $ 15,030
Interest bearing 64,715
13. Short-term borrowing -0-
14. Bank Acceptances outstanding -0-
15. Other liabilities 578
16. Long-term debt -0-
17. Commitments and contingent liabilities -0-
18. Minority Interests -0-
SHAREHOLDERS EQUITY
19 & 20. Preferred stock -0-
21. Common Stock 2,992
22. Other Shareholders equity 4,640
23. Total Liabilities and Shareholders Equity $ 87,955
($ in thousand)
Note: Held for Sale amount stated net of unrealized loss of $2.
-2-
TIMBERLINE BANCSHARES, INC
CONSOLIDATED STATEMENT OF CASH FLOWS
For Periods Indicated
Year Year
($ in thousand) to Date to Date
06/30/98 06/30/97
Cash Flow from Operating Activities
Net Income $425 $ 435
Non-cash items included in income
Depreciation 153 93
Net change in Bad Debt Provision (14) (3)
Cumulative effect of accounting
change
(Increase)Decrease in:
Other Assets 370 52
Increase(Decrease) in:
Accrued Expenses 36 32
Prior period adjustment -0- -0-
Net cash provided by operations 970 609
Cash Flow from Investing Activities
Increase(Decrease) in:
Deposits 2,187 2,499
(Increase)Decrease in:
Short term investments (27) -0-
Securities: Held for Sale (992) (7,493)
Held to Maturity 723 1585
Federal Funds Sold (2,100) 6,200
Loans (551) (3,466)
(Purchase)Sale of Fixed assets (577) (35)
Net cash (used for) provided by
investing activities (1,337) (710)
Cash Flow from Financing Activities
Dividends Paid (252) (251)
Additional Paid In Capital -0- 166
Net cash (applied to)provided by
financing activities (252) (85)
Net cash increase (decrease) in
cash and due from banks (619) (186)
Cash and Due from Banks at
beginning of year 5,224 5,202
Cash and Due from Banks at
end of period $4,605 $5,016
-3-
Item 2. Management's Discussion
(a) Plan of Operation
Timberline Bancshares management is an "overlay" of its wholly-owned subsidiary,
Timberline Community Bank, and therefore shares the same concepts regarding
growth of the institution, protection and preservation of assets, shareholder
enhancement, and fulfilling the joint mission statement to assist the
communities which we serve.
(b) Management's Discussion and Analysis of Financial condition and Results of
Operations
As reflected in the financial comparisons of 1997 and 1998, the bank has
continued growth in net interest income. This growth has slowed somewhat from
prior years due to the economic conditions of the county in which the bank is
located.
While economic indicators report the nation's unemployment rate at 4.7% Siskiyou
County has a current unemployment rate of 11.6%. The county has been in an
economic downturn for years as it's main economy was based on timber products
and services. The quarter just completed has seen an additional loss of some
400 hundred jobs in the timber industry.
In view of those economic conditions , the Bank has accelerated its program of
buying participations from other financial institutions outside its normal
lending area. As a relatively small bank in a sparsely populated county, the
bank has not seen fit to offer mutual funds or insurance as an avenue of
enhancing income. Nor has the bank greatly increased service fees to its
customers, but has relied on the traditional banking revenue sources;
i.e. income from lending.
At the same time, the Bank has increased services to its customer base by the
installation of 24 hour telephone banking in the first quarter of the year and
a Visa debit card program for its customers in the second quarter of the year.
The bank has also been addressing the Y2K situation diligently, being on
schedule with the guidelines established by the regulatory authorities including
necessary upgrading of equipment and application testing. The bank is also
offering seminars on the Y2K to all business located in Siskiyou County.
The cost of these programs and the increased personnel to handle same are
reflected in the nominal increase in other operating expenses.
In addition, the Bank has continued its dividend program paying a $.25 per
share cash dividend to shareholders of record in the second quarter of the year.
-4-
PART 11 - OTHER INFORMATION
Item 1. Legal Proceedings
There are no legal proceedings pending other than those in the normal course of
doing business that may have a material impact on the bank.
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
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TIMBERLINE BANCSHARES, INC.
Date 7/28/98 /ss Robert J. Youngs
Robert J. Youngs, President & CEO
Date 7/28/98 /ss Helen L. Gaulden
Helen L. Gaulden, Sr. V. P. & Treasurer
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