FINANCIAL HIGHLIGHTS
Percent
1998 1997 Change
FOR THE YEAR
Net Interest Income $ 4,360 4,267 2.18%
Net Income before
Taxes 1,223 1,334 -8.32%
Net Income 919 987 -6.89%
PER SHARE
Net earnings for the year .91 .99 -8.08%
Book Value at Year End 9.11 7.43 22.61%
(Includes Capital & Loan Loss Reserve)
AT YEAR END
Assets 90,524 85,577 5.78%
Investment Securities
and Fed Funds Sold 29,995 28,640 4.73%
Loans 52,282 48,100 8.69%
Deposits 81,999 77,558 5.72%
Stockholder's Equity 7,872 7,478 5.27%
Amounts are stated in thousands except earnings per share and Book Value which
are stated in actual dollars.
This statement has not been reviewed or confirmed for accuracy or relevance
by the Federal Deposit Insurance Corporation.
IN MEMORY
This Annual report is dedicated in fond memory to these two fine gentlemen that
have passed on since our last report to you.
Elmo Smith, as most of your know, was the founding President and CEO of
Timberline Community Bank and served us well as a director after his retirement
as president in 1981. He was instrumental in the initial organization of the
Bank and its early growth, having brought many years of bank knowledge and
several years of serving this community as a manager of the local branch of the
Crocker National Bank. He served the community in various civic capacities, his
last being the perennial treasurer of the Siskiyou Golden Fair.
R. E. (Bob) Banning was a member of the original founders group of Timberline
Community Bank and joined the Board of Directors in 1981. He was a long time
businessman in Scott Valley, dealing primarily with the farming community
throughout Siskiyou County. Bob was an active community servant involved in
many projects in the Scott Valley area.
Both of these fine gentlemen were valuable assets to the Bank and its subsequent
holding company.
They will be greatly missed by all of us who worked with them.
The Directors, Management and Staff
Timberline Community Bank
LETTER TO SHAREHOLDER
1998 continued the growth we have enjoyed since the bank began.
We held the line on earnings during the year despite a substantial drop in loan
and investment interest rates. We did not lower our rates paid on deposits by
any significant amount, thereby retaining our existing depositors and obtaining
new customers as well.
The return on assets and on beginning equity do remain at excellent levels for
our peer group. These numbers are enumerated throughout the report.
We have finished the credit card program alluded to in our last report in the
last quarter of 1998 and are pressing forward with loan acquisitions throughout
Western Oregon. We are moving forward with plans to increase loan to deposit
ratios thereby improving per share earnings.
Those of you who attended the annual meeting last year were introduced to Mr.
John Linton, who is now an executive vice-president of the bank and who was
elected a director late last year. It is also my pleasure to announce the
election of Mr. Stephen Bradley as a director in early 1999.
Sadly we note in our dedication that we lost two directors last year both of
whom were considered by management to be assets to our board. We feel that
these two new gentlemen bring a new perspective to the board and look forward to
serving with them.
We did take a run at acquiring a Southern Oregon bank last year but they felt
that they were too new and had committed to their shareholders that they would
stay within their city boundaries and stay independent. The search for a
Southern Oregon presence will continue.
We also had one prospective buyer talk to us, but their bank was in desperate
shape and they needed us to make them look better. We declined since the
marriage of the two banks would have been detrimental to our shareholders'
interests.
We are well on our way to the year 2000 as you receive this report and yes we
have been examined by the FDIC for both phase one and two of the Y2K millennium
bug and are comfortable with our compliance efforts. As we prepare our
computers for the Y2K event we have taken the opportunity to upgrade our systems
to allow us to move into the next century prepared to expand our capabilities
and increase our range of services.
Sincerely,
Robert J. Youngs
President and CEO
Timberline Bancshares Inc.
Timberline Community Bank
IN OUR OPINION
1998 was a year of challenge. The Bank ended the year with a return on average
assets of 1.04%, a return on beginning equity of 12.29% and a per share return
of $.91, which are respectable numbers and compare favorably with our peers.
In a year of falling interest rates, a continuing slow down of loan demand in
the Bank's primary lending area and continued growth in deposits, it was with
the dedicated efforts of the Bank's staff that these respectable numbers were
obtained. The Bank was also able to maintain a desired balance of growth in
assets, deposits and capital, all in the 5% range.
Traditionally, a Bank's primary source of income is the net spread between
interest earned on loans and investments and interest paid to depositors. In
1998 the net spread dropped from an average 5.6% to an average 4.5% as the
interest earned on loans and investments dropped as a result of interest rate
moves made by the Federal Reserve Bank, while the interest paid to our customers
dropped less. This is a result of the market conditions in today's banking
environment. In order to generate loans, the Bank must charge competitive
rates; in order to maintain depositors, the Bank must pay competitive rates.
In lending, the Bank must compete with major banks, regional banks, other
community banks, capital funding groups, credit unions, credit card affiliates
and all other entities that have entered the lending market. Conversely, when
paying interest on deposits to maintain market share of customers, the Bank
competes with regional banks, other community banks, and credit unions. And,
while the major banks have lowered their interest paid rates dramatically, the
regional banks, other community banks and credit unions have not, thus creating
a lesser net interest spread.
In addition, the Bank's investment portfolio in government agency issues
experienced a downward shifting of interest rates as those instruments issued at
the 1997 rates were called and new issues carry the lower 1998 rates, and the
Fed Funds rate declined from 5.25 to 4.25 in the same period.
To offset the softening of net interest income, the Bank embarked on an
aggressive loan participation program with banks in Central and Southern Oregon
to enhance earnings and maintain growth in income. In addition, the Bank took
measures to control operating costs, streamline operations and enhance products
without curtailing service in the branches to its customers. The Bank also
expended considerable time and material in preparation with the coming Y2K which
is discussed in detail later in this report
It is the Bank's intention to continue to implement new products and comply with
new regulations and at the same time maintain operating expenses at the most
possible minimum level. Management and staff look forward to 1999 and the new
millennium with confidence and the expectation that the Bank will continue to
prosper and to serve the communities of Siskiyou County.
OUR MISSION REMAINS
Timberline Community Bank was formed for the specific purpose of providing
banking facilities and products in the Bank's serving area.
The following is our mission statement:
To serve all the Banking needs within our geographic boundaries
within normal industry credit underwriting and regulatory standards.
To purposely fill gaps left by major banking institutions.
To consistently return a reasonable level of earnings to our shareholders.
To protect the integrity of our shareholders' investment.
To be a good corporate citizen to the communities which we serve.
To maintain the highest possible standards of conduct to our customers and
our fellow employees.
To assist others in our industry when possible
TIMBERLINE COMMUNITY BANK AND Y2K
The Year 2000 Problem relates to a computer systems ability to recognize and
properly respond to the change to the year 2000. This problem has two critical
elements. The first is that many systems only store two digit for year dates,
therefore when the date rolls to 00' it treats the date as >1900'. This creates
a problem for systems that use dates for calculation purposes (IE. interest
bearing accounts, mortgage loans, and billing systems). The second is that the
year 2000 is a leap year, which can create a problem if the systems are not
programmed to recognize the additional day. The effects of this problem are not
confined to the financial industry and are worldwide.
The Year 2000 bug or Y2K is one of the biggest challenges that the financial
industry has ever faced. Each individual computer, operating system, program,
and interface to other computers had to be evaluated, changed if necessary, and
tested. Although computers are greatly impacted, it is not just a computer
problem. Many electronic devices have embedded chips that may be affected by
the date change on 01/01/2000.
We know that you expect, and deserve, accurate accounting and accessibility to
your funds. This project has been a top priority issue for over two years. It
has involved extensive dedicated resources and senior management involvement.
As required by Federal Regulators we have performed the following steps in
approaching this task:
AWARENESS- This involved educating ourselves to the extent of the problem. This
was done by reading everything we could find about the problem, contacting the
manufacturers of our systems hardware, the producers of the software, and all
companies that provide services to our bank. We also attended several industry
seminars devoted to the topic, as well as doing extensive research on the
Internet.
ASSESSMENT- This involved inventorying and analyzing our systems and equipment.
It was far reaching including our vaults, fax machines, security systems, forms,
and HVAC. A part of this step was to determine whether the system or function
was mission critical to the banks operations. An example would be. Accurate
posting of interest to a savings account is considered mission critical while
whether a fax machine worked or put the correct date on a fax would not be
mission critical.
RENOVATION- This involved either reprogramming, updating, or replacing the
system or equipment. Our approach has been; If there is a question, replace it.
VALIDATION- Each of the reprogrammed, updated or replaced system or equipment
has been tested for compliance to Year 2000 standards.
IMPLEMENTATION- As soon as validation for Year 2000 standards were completed,
the systems or equipment have been placed in operation. This was done to
prevent a back log of systems to implement and promote employee awareness of the
new system.
As of year end 1998, all mission critical systems had been renovated or
replaced. It is anticipated that all of the testing and implementation will be
completed by March 31, 1999. We are confident that we will meet this regulatory
deadline.
WE ARE NOT STOPPING THERE. It has been our philosophy that you can't over test.
We plan to continually test up until December 31, 1999. We are also in the
process of developing a Contingency Plan that will address our ability to
continue operations in the event of a mission critical system failure. This
plan will also:
- - Address external influences such as electrical power and telephone systems.
- - Have documented procedures, management task assignments, and employee
training.
- - Consider multiple or cascading system failures.
We will also put this Contingency Plan through a validation process to ensure
our plans to continue business operations will work.
I hope this helped in addressing your concerns regarding your bank and the Year
2000 issue. We are confident our efforts to make the transition to the next
millennium.
Sincerely,
Robert J. Youngs
President & CEO
This is a Year 2000 Readiness Disclosure Statement and is subject to the Year
2000 Information and Readiness Disclosure Act.
INDEPENDENT AUDITORS REPORT
To the Board of Directors and
Stockholders of Timberline Bancshares, Inc.
We have audited the accompanying consolidated balance sheets of Timberline
Bancshares, Inc. (a California corporation) and subsidiary as of December 31,
1998, 1997 and 1996, and the related consolidated statements of income,
comprehensive income, changes in stockholders' equity, and cash flows for the
years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Timberline Bancshares, Inc. and subsidiary as of December 31, 1998, 1997 and
1996, and the consolidated results of their operations and their cash flows for
years then ended in conformity with generally accepted accounting principles.
Carlson, Pavlik and Drageset
Certified Public Accountants, LLP
Yreka, California
February 2, 1999
TIMBERLINE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1998, 1997 and 1996
1998 1997 1996
ASSETS
Cash and due from banks, non-interest bearing $4,785 $5,224 $5,202
Interest bearing deposits in other banks 100 - -
Federal funds sold 9,800 7,000 12,700
Securities available for sale 13,296 13,132 6,422
Securities to be held to maturity 5,538 7,205 9,574
Cash surrender value of officers'life insurance 1,361 1,303 1,249
Loans, less allowance for loan losses of
1998-$378 1997-$401; 1996-$491 51,904 48,100 38,707
Premises and equipment 2,009 2,032 2,097
Other assets 1,731 1,581 1,524
Total assets $90,524 $85,577 $77,475
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand $15,937 $15,407 $14,025
Savings 44,774 46,127 45,646
Time, under $100 16,361 12,354 8,879
Time, $100 and over 4,927 3,670 1,718
Total deposits 81,999 77,558 70,268
Other liabilities 653 541 430
Total liabilities 82,652 78,099 70,698
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized 2,000,000
shares, issued and outstanding shares
1998-1,006,810; 1997-1,006,726; 1996-954,484 2,993 2,992 2,813
Additional paid-in capital 1 1 1
Retained earnings 4,883 4,467 3,982
Accumulated other comprehensive income (loss);
Unrealized holding gains (losses) on securities
available for sale (5) 18 (19)
Total stockholders' equity 7,872 7,478 6,777
Total liabilities and stockholders' equity $90,524 $85,577 $77,475
The accompanying notes are an integral part of these consolidated financial
statements.
TIMBERLINE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income
For The Years Ended December 31, 1998, 1997 and 1996
($ in thousands, except per share)
1998 1997 1996
Interest income:
Interest and fees on loans $4,923 $4,568 $4,338
Interest on federal funds sold 674 586 691
Interest on securities available for sale 750 735 407
Interest on securities to be held to maturity 336 409 598
Interest, other 74 69 69
Total 6,757 6,367 6,103
Interest expense:
Interest on deposits 2,397 2,100 2,028
Net interest income 4,360 4,267 4,075
Provision for loan losses 83 - 15
Net interest income after provision
for loan losses 4,277 4,267 4,060
Other income:
Service charges 412 411 373
Gain on sale of premises and equipment - 2 2
Gain on securities available for sale - 3 -
Other 16 14 20
Total 428 430 395
Other expenses:
Salaries and employee benefits 1,984 1,827 1,689
Occupancy expenses 392 402 396
Equipment and data processing expenses 313 318 303
Other operating expenses 793 816 717
Total 3,482 3,363 3,105
Income before income taxes 1,223 1,334 1,350
Income tax expense 304 347 438
Net income $919 $987 $912
Earnings per common share:
Basic $0.91 $0.99 $0.97
Assuming dilution $0.91 $0.98 $0.92
The accompanying notes are an integral part of these consolidated financial
statements.
TIMBERLINE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
For The Years Ended December 31, 1998, 1997 and 1996
($ in thousands, except per share)
1998 1997 1996
Net income, per consolidated
statements of income $919 $987 $912
Other comprehensive income (loss):
Unrealized holding gains (losses) on securities
available for sale arising during the year (41) 67 (41)
Reclassification adjustment for (gains) losses
included in net income - - -
Other comprehensive income (loss) (41) 67 (41)
Income tax expense (benefit) related to other
comprehensive income (loss) (18) 30 (19)
Other comprehensive income (loss)
net of income tax (23) 37 (22)
Total comprehensive income $896 $1,024 $890
The accompanying notes are an integral part of these consolidated financial
statements.
TIMBERLINE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements Of Changes In Stockholders' Equity
For The Years Ended December 31, 1998, 1997 and 1996
($ in thousands)
Accumulated
Other
Additional Comprehensive
Common Stock Paid-In Retained Income
Shares Amount Capital Earnings (Loss) Total
Balance, Dec.31, 1995 457,683 $2,678 $1 $3,545 $3 $6,227
Net income - - - 912 - 912
Other comprehensive
income (loss)net of
income tax; change in
unrealized gain (loss)
on securities
available for sale,
net of deferred
income tax benefit
of $19 - - - - (22) (22)
Cash dividends declared - - - (475) - (475)
Options exercised by
Directors and employees 24,682 135 - - - 135
Stock split 472,119 - - - - -
Balance, Dec.31, 1996 954,484 2,813 1 3,982 (19) 6,777
Net income - - - 987 - 987
Other comprehensive
income (loss)net of
income tax; change in
unrealized gain (loss)
on securities
available for sale,
net of deferred
income tax benefit
of $30 - - - - 37 37
Cash dividends declared - - - (502) - (502)
Options exercised by
Directors and employees 52,242 179 - - - 179
Balance,Dec.31,1997 1,006,726 2,992 1 4,467 18 7,478
Net income - - - 919 - 919
Other comprehensive
income (loss)net of
income tax; change in
unrealized gain (loss)
on securities
available for sale,
net of deferred
income tax benefit
of $18 - - - - (23) (23)
Cash dividends declared - - - (503) - (503)
Options exercised by
Directors and employees 84 1 - - - 1
Balance,Dec.31,1998 1,006,810 $2,993 $1 $4,883 $(5) $7,872
The accompanying notes are an integral part of these consolidated financial
statements.
TIMBERLINE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements Of Cash Flows
For The YearsState and political
subdivisions 5,588 102 - $ 5,690
$ 7,205 $ 102 $ 1 $ 7,306
December 31, 1996:
Securities available for sale:
U.S. Government and
agency securities $ 5,750 $ 2 $ 38 $ 5,714
State and political
subdivisions 707 3 2 708
Total $ 6,457 $ 5 $ 40 $ 6,422
Securities to be held
to maturity:
U.S. Government and
agency securities $ 3,381 $ 8 $ 8 $ 3,381
State and political
subdivisions 6,193 69 10 6,252
$ 9,574 $ 77 $ 18 $ 9,633
Securities carried at approximately $3,234 at December 31, 1998; $2,740 at
December 31, 1997; and $2,428 at December 31, 1996, and were pledged to secure
public deposits and for other purposes required or permitted by law.
Gross realized gains on sales of securities available for sale were $-0-, $3,
and $-0- for the years ended December 31, 1998, 1997 and 1996, respectively.
There were no sales of securities to be held to maturity for the years ended
December 31, 1998, 1997 and 1996. Gross realized losses on sales of securities
were $-0- for all types of securities for the years ended December 31,1998, 1997
and 1996.
Gross proceeds from the sale of securities were $-0-, $1,185, and $-0-, for the
years ended December 31, 1998, 1997 and 1996, respectively. The applicable
income taxes were approximately $-0-, $508, and $-0- for the years ended
December 31, 1998, 1997 and 1996, respectively.
The amortized cost and estimated fair value of securities held to maturity and
available for sale at December 31, 1998, by contractual maturity, are as
follows:
Available for Sale Held to Maturity
Amortized Fair Amortized Fair
Cost Value Cost Value
Amounts maturing in:
One year or less $ 1,100 $ 1,101 $1,773 $1,787
After one year through
five years 11,109 11,112 3,683 3,779
After five years through
ten years 1,095 1,083 82 90
Total $13,304 $13,296 $5,538 $5,656
Expected maturities will differ from contractual maturities because issuers may
have the right to call or prepay obligations with or without call or prepayment
penalties.
NOTE 4 - LOANS AND ALLOWANCE FOR LOAN LOSSES:
The components of loans in the consolidated balance sheets were as follows:
December 31,
1998 1997 1996
Commercial $43,991 $40,977 $34,188
Real estate construction 2,933 787 567
Residential mortgage 2,790 2,809 3,025
Consumer installment 2,686 3,110 1,484
Credit cards - 904 -
Total 52,400 48,587 39,264
Deferred fees and costs (118) (86) (66)
Allowance for loan losses (378) (401) (491)
Loans, net $51,904 $48,100 $38,707
Loans classified as non-accrual approximated $-0-, $-0-, and $-0- as of December
31, 1998, 1997 and 1996, respectively.
The changes in the allowance for loan losses were as follows:
December 31,
1998 1997 1996
Balance, beginning of year $401 $491 $475
Loans charged off (132) (93) (4)
Recoveries 26 3 5
Provision for loan losses 83 - 15
Balance, end of year $378 $401 $491
NOTE 5 - PLEDGED AND RESTRICTED ASSETS:
The Federal Reserve Board requires that banks maintain non-interest bearing cash
balances in accordance with the Board's reserve requirements. The average non-
interest bearing cash balance maintained to meet reserve requirements was
approximately $600, $600 and $600 during 1998, 1997 and 1996, respectively.
Information concerning pledged assets is contained in Note 3.
NOTE 6 - PREMISES AND EQUIPMENT:
Major classifications of premises and equipment are as follows:
December 31,
1998 1997 1996
Premises $2,621 $2,538 $2,491
Equipment 1,177 1,089 1,027
Total 3,798 3,627 3,518
Accumulated depreciation (1,789) (1,595) (1,421)
$2,009 $2,032 $2,097
Depreciation expense $ 195 $ 190 $ 189
Certain facilities and equipment are leased under various operating leases.
Rental expense was $117, $104 and $113 in 1998, 1997 and 1996, respectively.
Future minimum rental commitments under noncancelable leases are:
1999 $ 47
2000 41
2001 41
2002 41
2003 41
Thereafter 1,090
$ 1,301
NOTE 7 - TIME CERTIFICATES OF DEPOSIT MATURITIES:
Time certificates of deposit under $100 maturing in years ending December 31, as
of December 31, 1998:
1999 $15,055
2000 511
2001 398
2002 251
2003 33
Thereafter 113
Total $16,361
Time certificates of deposit $100 and over maturing in years ending December 31,
as of December 31, 1998:
1999 $4,294
2000 263
2001 166
2002 100
2003 104
Thereafter -
Total $4,927
NOTE 8 - EMPLOYEE BENEFITS:
The Bank has a non-qualified salary continuation plan for several key executive
officers that provides for certain amounts to be paid to the officers upon their
retirement at age 65, or upon certain terminations of employment. The Bank
purchased single premium life insurance policies on the lives of the officers to
assist with the funding of the plan.
Also, the Bank has a 401(k) Employee Retirement Plan. Employees must meet
certain age and hour requirements in order to be eligible to participate.
Employees can make contributions to the plan, within limits established by the
Internal Revenue (401) (401)
Financial liabilities:
Deposits 77,558 77,558
Unrecognized financial instruments:
Commitments to extend credit - -
Letters of credit - -
(The amounts shown under Carrying Amount represent deferred fees arising from
those unrecognized financial instruments.)
The estimated fair values of the Company?s financial instruments at December 31,
1996 are as follows:
Carrying Fair
Amount Value
Financial assets:
Cash and due from banks $ 5,202 $ 5,202
Federal funds sold 12,700 12,700
Investment securities 15,996 16,055
Cash surrender value of officers? life insurance 1,249 1,249
Loans 39,198 39,195
Less allowance for loan losses (491) (491)
Financial liabilities:
Deposits 70,268 70,268
Unrecognized financial instruments:
Commitments to extend credit - -
Letters of credit - -
(The amounts shown under Carrying Amount represent deferred fees arising from
those unrecognized financial instruments.)
NOTE 16 - CONTINGENCIES:
The Bank is a party to several lawsuits arising out of its normal course of
business. In the opinion of management and legal counsel, the ultimate
resolution of these matters will not have a material effect on the consolidated
financial statements.
FIVE YEARS AT A GLANCE
December 31,
1998 1997 1996 1995 1994
($ in thousands except # of shares,
per share income and dividends)
Interest Income $6,757 $ 6,367 $ 6,103 $ 6,375 $ 5,786
Interest Expense 2,397 2,100 2,028 2,232 1,839
Net Interest Income 4,360 4,267 4,075 4,143 3,947
Provision of loan losses (83) ( 0) ( 15) ( 41) (230)
Net interest income
after provision for loan losses 4,277 4,267 4,060 4,102 3,717
Other income 428 430 395 440 666
Total operating expenses 3,482 3,363 3,105 3,125 3,181
Net income before taxes
and extraordinary item 1,223 1,334 1,350 1,417 1,202
Income Taxes (304) (347) (438) (479) (483)
Net Income 919 987 912 938 719
Weighted average shares
outstanding used for
computing earnings
per share 1,006,737 992,103 942,143 898,152 845,658
Net income per share $ .91 $ .99 $ .97 $ 1.04 $ .85
Cash Dividends $503 $502 $475 $ 451 $ 4
Cash Dividends per share : $.25 per share 5/98 and $.25 per share 10/98; $.25
per share 5/97 and $.25 per share 10/97; $.50 per share 4/96, 100% stock split
6/96, and $.25 per share 10/96; $.50 per share 4/95 and $.50 per share 10/95;
10% stock split plus $.50 per share - 1994; 10% stock split - 1993; 10% stock
split - 1992.
INREGULATION
The Corporation is a bank holding company registered under the Bank Holding
Company Act of 1956 and is subject to the supervision of the Board of Governors
of the Federal Reserve System.
The Bank is subject to supervision, regulation and regular examination by the
California State Banking Department. The deposits of the Bank are insured up to
the maximum legal limits by the Bank Insurance Fund, which is managed by the
Federal Deposit Insurance Corporation, and the Bank is therefore subject to
applicable provisions of the Federal Deposit Insurance Act and regulations of
the FDIC.
The statutes and regulations administered by these agencies govern all aspects
of the Bank's business, including required reserves against deposits, loans,
investments, dividends, compliance, internal controls, and the establishment of
new branches and other banking facilities.
Many new regulations have been passed since 1990 that impact the Bank and its
operations, such as the Community Reinvestment Act, the guidelines for a well
capitalized bank (10% risk based, 6% tier one capital, and 5% leveraged
capital), the guidelines for loan to value ratios, the Truth in Savings Act, and
many more.
Recent studies conducted by the federal government and other entities concerned
with the banking industry have shown that the cost of implementing and complying
with the many regulations passed in the last few years is onerous - especially
to small community banks.
One such proposed regulation is ?Know your Customer? which would require Bank?s
to monitor their customers accounts and report any ?unusual? activity to
regulatory authorities. There have been many articles written about this
proposed regulation and there is a bill currently being presented in Congress
would stop the regulation. Not only do banks feel that this regulation would be
an invasion of their customers? privacy, but the impact on small community banks
would be devestating.
IN OUR COMMUNITY
We continue to serve as the Bank, the Directors and the employees give not only
monetary donations but many hours of their time in support of the local
governments, civic organizations, charitable organizations and school
activities.
Over the years we have sponsored, or donated to, or participated in, or been a
member of the following:
Kiwanis, Rotary, The Siskiyou County Fair Board, Chambers of Commerce throughout
Siskiyou County, the city planning department, Soroptimists, Siskiyou Balloon
Faire, Yreka Banner Program, Madrone Hospice, Community Theater "At Last"
Program, Farm Bureau Scholarships, Timberline Community Bank Scholarship through
United Scholarships, Junior Golfers Tourney, Klamath River Fire Department Fund
Raisers, Yreka City Golf Tournament, High School Safe Graduation Programs, Lions
Auction, Annual "Rex Club Tournament" for sports activities, Elks Tournament,
Elks Crippled Children, DARE program Yreka YMCA program, United Way, March of
Dimes, Yreka Rotary Bike Event, Cancer Fund, Cancer Daffodil Days, National Teen
Leadership Conference, California Special Olympics, Siskiyou Child Care Council,
Yreka Community Television, Siskiyou General Hospital Building Fund, Christmas
Giving Tree, Siskiyou General Hospital Golf Tournament. Annual Fireman of the
Year awards dinner, donation of the City clock on the corner of Main and
Broadway, the arch in Weed, the skating rink in Mt. Shasta, the Humane Society,
and so on...
We intend to continue our support of our community in 1999 with active
participation in memberships and with donations as in the past.
MEMBERS OF THE BOARD OF DIRECTORS
STEPHEN P. BRADLEY, President and owner Shasta Forest Products
GARELD J. COLLINS, Chairman of the Board, Enterprise Investments
RICHARD S. DAY, Secretary of the Board, retired Business Executive
NORMAN E. FIOCK, Retired Rancher
DON L. HILTON, Personal Investments
JOHN A. LINTON, Executive Vice President, Timberline Community Bank
ROBERT J. YOUNGS, President and Chief Executive Officer
CHARLES J. COOLEY, Director Em
