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 March 31, 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
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TIMBERLINE BANCSHARES, INC.
CONSOLIDATED INCOME STATEMENT
For Periods Indicated
Year Prior Year
to Date to Date
03/31/99 03/31/98
1. Interest and Fees on Loans $1,241 $ 1,213
2. Interest on Securities:
Held for Sale 180 171
Held to Maturity 66 119
3. Trading Account interest -0- -0-
4. Other interest 138 164
5. Total Interest Income 1,625 1,667
6. Interest on Deposits 570 580
7. Interest on short term borrowing -0- -0-
8. Interest on long term debt -0- -0-
9. Total Interest Expense 570 580
10. Net Interest Income 1,055 1,087
11. Provision for Loan Losses 30 20
12. Net Interest Income after
Provision for loan losses 1,025 1,067
13. Other Income 105 108
14. Other Expenses 923 925
15. Income before Tax 207 250
16. Income Tax Expense 63 60
17. Income before extraordinary item 144 190
18. Extraordinary item net of tax -0- -0-
19. Cumulative effect of accounting changes -0- -0-
20. Net Income $ 144 $ 190
21. Earnings per share $ .14 $ .19
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
Periods Indicated
ASSETS 03/31/99 03/31/98
1. Cash and Due from Banks $ 6,476 $ 4,241
2. Interest Bearing Deposits other banks 100 -0-
3. Federal Funds sold and securities
purchased under resale agreement 10,000 16,400
4. Trading Account Assets -0- -0-
5. Other short-term investments 1,378 1,317
6. Investment securities:
Available for Sale 13,835 9,609
to be Held to Maturity 4,956 7,113
7. Loans, Total 51,867 46,727
Allowance for loan losses (385) (410)
Unearned Income (100) (73)
8. Premises and Equipment 1,977 2,504
9. Due from customers on acceptances -0- -0-
10. Other assets 1,846 999
11. Total Assets $91,950 $88,427
LIABILITIES
12. Deposits, non-interest bearing $16,451 $14,388
Interest bearing 66,809 65,835
13. Short-term borrowing -0- -0-
14. Bank Acceptances outstanding -0- -0-
15. Other liabilities 707 552
16. Long-term debt -0- -0-
17. Commitments and contingent liabilities -0- -0-
18. Minority Interests -0- -0-
SHAREHOLDERS EQUITY
19 & 20. Preferred stock -0- -0-
21. Common Stock 2,993 2,992
22. Other Shareholders equity 4,990 4,660
23. Total Liabilities and Shareholders Equity $91,950 $88,427
Note: Held for Sale amount includes unrealized gain of $(39).
-2-
TIMBERLINE BANCSHARES, INC
STATEMENT OF CASH FLOWS
For Periods Indicated
Year Prior Year
to Date to date
03/31/99 03/31/98
Cash Flow from Operating Activities
Net Income $ 144 190
Non-cash items included in income
Depreciation 52 105
Net change in Bad Debt Provision 7 9
(Increase)Decrease in:
Other Assets (114) 582
Increase(Decrease) in:
Accrued Expenses 52 11
Net cash provided by operations 141 897
Cash Flow from Investing Activities
Increase(Decrease) in:
Deposits 1,261 2,665
(Increase)Decrease in:
Short term investments (17) (14)
Securities - Held For Sale (570) 3,507
- Held to Maturity 582 92
Federal Funds Sold (200) (9,400)
Loans 515 1,847
(Purchase)Sale of Fixed assets (22) (577)
Net cash (used for) provided by
investing activities 1,549 (1,880)
Cash Flow from Financing Activities
Dividends Paid -0- -0-
Additional Paid in Capital
Net cash (applied to) provided by
financing activities -0- -0-
Net cash increase(decrease) in cash
and due from banks 1,690 (983)
Cash and Due from Banks at
beginning of year 4,886 5,224
Cash and Due from Banks at
end of period $ 6,576 $ 4,241
-3-
Item 2. Management's Discussion and Analysis or Plan of Operation.
(a) Plan of Operation
It is the intention of management that its wholly-owned subsidiary,
Timberline Community Bank, shall continue to function much as it has in the
past. When formed in June 1980, it was the intent of the Bank to serve the
needs of the communities of the County. This intention has not changed.
Efforts of management will now be concentrated on serving the customer base
with the personal service that only a community oriented bank can offer. It
will maintain and/or enhance the products most suited to the needs of the
community. Management will also pursue those activities such as lending and
investing that will enhance the bottom line.
(b) Management's Discussion and Analysis of Financial condition and Results of
Operations
As has happened to Community Banks across the nation, Timberline Community
Bank is experiencing a decline in net interest spread between interest income
and interest expense in the current low prime rate environment. While the
major banks have reduced their savings and interest checking rates to two
percent or less, the credit unions, regional and community banks have not.
Consequently, Timberline Community Bank has had to maintain savings rates to
maintain market share. Conversely, loan demand in the Bank's immediate lending
has declined steadily in the last three years for many reasons, including an
unemployment rate of thirteen percent, a decline in the forest industry, and
competition from other lending entities.
The Bank has been pursuing a loan participation program with banks in
Oregon through its Loan Production Office in Medford which is beginning to
produce satisfactory results and will greatly enhance the loan to deposit ratio
and net income.
The changes in income and expense from 1998 to 1999 are minimal in most
categories, with the exception of interest income on investments and other
interest (fed funds sold). This is the direct result of a one percent drop in
rates on investment instruments and fed funds sold and, as a result, net
interest income is down considerably from the previous year as is earnings per
share.
To offset the decline in investment income, management has had in place
stringent cost controls that have reduced operating expenses.
At the March 1999 meeting, the Board of Directors of the Holding Company,
declared the shareholders of record of March 15, 1999 eligible to vote at the
annual meeting to be held May 14, 1999. Proxy statements and annual reports as
submitted to the SEC with the 10KSB for 1998 were mailed to the shareholders on
April 5, 1999.
-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 4/29/99 ROBERT J. YOUNGS, PRES. & CEO
ss/Robert J. Youngs
Date 4/29/99 HELEN. L. GAULDEN, SR. VICE PRES
TREASURER
ss/Helen L Gaulden
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