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 September 30, 1999
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 )842-4200
(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: 1,006,810
-2-
3rd Qrtr 99
TIMBERLINE BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
9/30/99
ASSETS
CASH & DUE FROM BANKS $6,966
INTEREST BEARING DEPOSITS IN OTHER 100
FED FUNDS & RESALE SECURITY AGREE
TRADING ACCOUNT ASSETS
OTHER SHORT TERM 2,299
INVESTMENT SECURITIES
HELD FOR SALE 17,303
MATURITY 3,951
LOANS TOTAL 58,748
ALLOWANCE FOR LOAN LOSSES -423
UNEARNED INCOME -114
PREMISES & EQUIPMENT 1,908
DUE FROM CUSTOMERS, ACCEPTANCES
OTHER ASSETS 1,830
TOTAL $92,568
LIABILITIES
DEPOSITS, NON-INTREST BEARING $17,533
INTEREST BEARING 65,183
SHORT TERM BORROWING 1,300
BANK ACCEPTANCES
OTHER LIABILITIES 731
LONG TERM DEBT
COMMITMENTS & CONTINGENT LIAB
MINORITY INTERESTS
SHAREHOLDER EQUITY
PERFERED STOCK
COMMON STOCK 2,993
OTHER S/H EQUITY 4,828
TOTAL $92,568
Note: Held for Sell amount includes unrealized loss of $383.
-3-
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TIMBERLINE BANCSHARES, INC.
CONSOLIDATED INCOME STATEMENT
Periods Indicated
Q 9/30/99 YTD 9/30/99 Q 9/30/98 YTD 9/30/98
INTEREST AND FEES ON LOANS 1,318 3,765 1,240 3,693
INTEREST AND DIVIDENDS ON
INVESTMENT SECURITIES
HELD FOR SALE 244 650 201 569
HELD TO MATURITY 52 174 102 321
TRADING ACCOUNT INTEREST - - - -
OTHER INTEREST 51 295 184 507
TOTAL INTEREST INCOME 1,665 4,884 1,727 5,090
INTEREST ON DEPOSITS 544 1,670 617 1,806
INTEREST ON SHORT TERM BORROWING 3 3 - -
INTEREST ON LONG TERM DEBT - - - -
TOTAL INTEREST EXPENSE 547 1,673 617 1,806
NET INTEREST INCOME 1,118 3,211 1,110 3,284
PROVISION FOR LOAN LOSSES 9 27 22 60
NET INTEREST INCOME AFTER ALLOWANCE
FOR LOAN LOSSES 1,109 3,184 1,088 3,224
OTHER INCOME 103 311 106 320
OTHER EXPENSES 905 2,731 842 2,639
INCOME BEFORE TAX 307 764 352 905
INCOME TAX EXPENSE 71 185 98 226
INCOME BEFORE EXTRAORDINARY ITEMS 236 579 254 679
EXTRAORDINARY ITEM NET OF TAX
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES
NET INCOME 236 579 254 679
EARNINGS PER SHARE 0.23 0.58 0.25 0.67
Note 1: The financial statements 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.
-4-
TIMBERLINE BANCSHARES, INC.
CONSOLIDATED CASH FLOWS
CASH FLOW FROM OPERATING ACT YTD 9/30/99 YTD 9/30/98
NET INCOME 579 679
NON-CASH
DEPRECIATION 160 160
NET CHANGE BAD DEBTS PROV 45 -29
CUMU EFFECT ACCTG CH
(INCREASE) DECREASE IN
OTHER ASSETS -51 489
INCREASE (DECREASE) IN
ACCRUED EXPENSES 78 120
CASH PROVIDED BY OPS 811 1,419
CASH FROM INVESTING
INCREASE (DECREASE) IN
DEPOSITS 717 3,616
(INCREASE) DECREASE IN
SHORT TERM INVESTMENTS -938 -43
SECURITIES: FOR SALE -4,385 1,246
HOLD 1,587 602
FED FUNDS 9,800 -9,100
LOANS -6,352 2,793
(PURCHASE) SALE OF F.A. -107 -619
CASH (USED) PROVIDED 322 -1,505
CASH FROM FINANCING
SHORT TERM BORROWING 1,300 -
DIVIDENDS PAID -252 -252
ADDITIONAL PD IN CAP
CASH(APPLIED) PROVIDED 1,048 -252
NET CHANGE 2,181 -338
OPEN 4,785 5,224
CLOSE 6,966 4,886
-5-
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.
For further enhancement of shareholders value, management is pursuing the
possibility of opening, de novo, a bank in Southern Oregon in the early part
of 2000. The Bank currently serves customers in southern oregon in the lending
capacity through the Loan Production Office. This would make Timberline
Bancshares, inc., a multi-bank multi-state entity.
(b) Management's Discussion and Analysis of Financial condition and Results of
Operations
Net interest income has declined in 1999 as the Bank, and community banks across
the nation, has been caught in the interest crunch created by the low prime
rate. To maintain market share, the bank must pay it?s depositors at a
comparable rate of other community banks. Conversly, the rates charged on loans
must also be competitive with other financial institutions. Consequently, the
net interest spread suffers and income is reduced.
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.
In view of those economic conditions , the Bank has accelerated its program of
buying participations from other financial institutions outside its normal
lending area. Through this program, the bank has increased the loan to deposit
ratio somewhat and expects an increase in income from lending for the remainder
of the year.
As a relatively small bank in a sparsely populated county, the bank does not
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.
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
and has declared a second $.25 per share cash dividend to be paid in the third
quarter of the year.
-6-
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 10/25/99 SS/ROBERT J. YOUNGS
Robert J. Youngs, President &
CEO
Date 10/25/99 SS/HELEN L. GAULDEN
Helen L. Gaulden, Sr. V. P. &
Treasurer
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