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, 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 )842-6191
(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: 1,006,810
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TIMBERLINE BANCSHARES, INC.
CONSOLIDATED INCOME STATEMENT
Periods Indicated
QUARTER YTD QUARTER YTD
6/30/99 6/30/99 6/30/98 6/30/98
INTEREST AND FEES ON LOANS 1,206 2,447 1,240 2,453
INTEREST AND DIVIDENDS ON INVESTMENT
SECURITIES
HELD FOR SALE 226 406 197 368
HELD TO MATURITY 56 122 100 219
TRADING ACCOUNT INTEREST - - - -
OTHER INTEREST 106 244 159 323
TOTAL INTEREST INCOME 1,594 3,219 1,696 3,363
INTEREST ON DEPOSITS 556 1,126 609 1,189
INTEREST ON SHORT TERM BORROWING - - - -
INTEREST ON LONG TERM DEBT - - - -
TOTAL INTEREST EXPENSE 556 1,126 609 1,189
NET INTEREST INCOME 1,038 2,093 1,087 2,174
PROVISION FOR LOAN LOSSES (12) 18 18 38
NET INTEREST INCOME AFTER ALLOWANCE
FOR LOAN LOSSES 1,050 2,075 1,069 2,136
OTHER INCOME 103 208 106 214
OTHER EXPENSES 903 1,826 872 1,797
INCOME BEFORE TAX 250 457 303 553
INCOME TAX EXPENSE 51 114 68 128
INCOME BEFORE EXTRAORDINARY ITEMS 199 343 235 425
EXTRAORDINARY ITEM NET OF TAX
CUMULATIVE EFFECT OF ACCOUNTING
CHANGES
NET INCOME 199 343 235 425
EARNINGS PER SHARE 0.20 0.34 0.23 0.42
Note 1: The financial statements in this report are unaudited but, in the
opinion of management of the Corporationreflect 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.
-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.
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 the first half of 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. Conversely,
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 in the
second half of the year. In addition, the bank?s loan delinquency has
remained well below .06 percent so the bank reclaimed a portion of the
excessive loan loss reserve in the second quarter.
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
TIMBERLINE BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
6/30/99
ASSETS
CASH & DUE FROM BANKS $ 7,243
INTEREST BEARING DEPOSITS IN OTHER 100
FED FUNDS & RESALE SECURITY AGREE 1,600
TRADING ACCOUNT ASSETS -
OTHER SHORT TERM 2,030
INVESTMENT SECURITIES
HELD FOR SALE 17,509
MATURITY 4,285
LOANS TOTAL 53,693
ALLOWANCE FOR LOAN LOSSES (397)
UNEARNED INCOME (122)
PREMISES & EQUIPMENT 1,940
DUE FROM CUSTOMERS, ACCEPTANCES -
OTHER ASSETS 2,803
TOTAL $ 90,684
LIABILITIES
DEPOSITS, NON-INTREST BEARING $ 16,667
INTEREST BEARING 65,629
SHORT TERM BORROWING -
BANK ACCEPTANCES -
OTHER LIABILITIES 680
LONG TERM DEBT -
COMMITMENTS & CONTINGENT LIAB -
MINORITY INTERESTS -
SHAREHOLDER EQUITY
PERFERED STOCK -
COMMON STOCK 2,993
OTHER S/H EQUITY 4,715
TOTAL $ 90,684
Note: Held for Sell amount includes unrealized gain of $(427)
TIMBERLINE BANCSHARES, INC.
CONSOLIDATED CASH FLOWS
CASH FLOW FROM OPERATING ACT YTD 6/30/99 YTD 6/30/98
NET INCOME 343 425
NON-CASH - -
DEPRECIATION 107 153
NET CHANGE BAD DEBTS PROV 18 -14
CUMU EFFECT ACCTG CH - -
(INCREASE) DECREASE IN
OTHER ASSETS -1072 370
INCREASE (DECREASE) IN
ACCRUED EXPENSES 27 36
CASH PROVIDED BY OPS -577 970
CASH FROM INVESTING
INCREASE (DECREASE) IN
DEPOSITS 297 2187
(INCREASE) DECREASE IN
SHORT TERM INVESTMENTS -669 -27
SECURITIES: FOR SALE -4468 -992
HOLD 1253 723
FED FUNDS 8200 -2100
LOANS -1289 -551
(PURCHASE) SALE OF F.A. -38 -577
CASH (USED) PROVIDED 3286 -1337
CASH FROM FINANCING - -
DIVIDENDS PAID -252 -252
ADDITIONAL PD IN CAP - -
CASH(APPLIED) PROVIDED -252 -252
NET CHANGE 2457 -619
OPEN 4886 5224
CLOSE 7343 4605
-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 7/27/99 ss/Robert J. Youngs
Robert J. Youngs, President & CEO
Date 7/27/99 ss/Helen L. Gualden
Helen L. Gaulden, Sr. V. P. & Treasurer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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