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<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1996
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
For the transition period from ________________ to ____________________
Commission File Number : 0-28394
MOUNTAIN BANK HOLDING COMPANY
(Exact Name of Small Business Issuer as Specified in Its Charter)
WASHINGTON 91-1602736
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number
501 ROOSEVELT AVENUE
ENUMCLAW, WASHINGTON 98022
(Address of Principal Executive Offices)
(360) 825-0100
(Issuer's Telephone Number, Including Area Code)
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
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 704,398
Traditional Small Business Disclosure Format: Yes X No
<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS
The following Consolidated Financial Statements are presented for the
Registrant, Mountain Bank Holding Company, and it's wholly owned subsidiary, Mt.
Rainier National Bank.
1. Consolidated Balance Sheet for September 30, 1996 and December 31, 1995
2. Consolidated Statements of Income for the nine months ended September
30, 1996 and 1995
3. Consolidated Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995.
4. Notes to consolidated financial statements.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOUNTAIN BANK HOLDING COMPANY
(Registrant)
Dated: November 12, 1996 /s/ Kenneth S. Borg
-----------------------------------------
Kenneth S. Borg, President and Chief
Executive Officer
Dated November 12, 1996 /s/ Sheila Brumley
-----------------------------------------
Sheila Brumley, Chief Accounting Officer
<PAGE> 4
MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
(in thousands)
<S> <C> <C>
Assets
Cash and due from banks $ 3,841 $ 4,346
Federal funds sold 1,125 2,825
Securities available for sale 11,919 8,110
Loans held for sale 183 415
Loans 35,501 30,834
Less allowance for possible credit losses (367) -334
------------------------
Loans, net 35,134 30,500
------------------------
Premises and equipment 2,216 2,385
Accrued interest receivable and other assets 556 434
------------------------
Total assets $ 54,974 $ 49,015
========================
Liabilities
Deposits:
Non-interest bearing $ 7,144 $ 6,250
Interest bearing 36,567 31,539
Certificates of deposit of $100,000 and over 5,816 5,892
------------------------
Total deposits 49,527 43,681
------------------------
Long-term debt 47 47
Accrued interest and other liabilities 284 274
------------------------
Total liabilities 49,858 44,002
------------------------
Redeemable stock
42,958 shares outstanding; 8% interest 447
Shareholders' Equity
Common stock (par value $1); authorized 5,000,000
shares; issued and outstanding: 1996 - 704,398 shares;
1995 - 660,710 shares 704 661
Paid-in capital 3,969 3,576
Retained earnings 516 321
Net unrealized gain (loss) on securities
available for sale, net of tax (73) 8
------------------------
Total shareholders' equity 5,116 4,566
------------------------
Total liabilities and shareholders' equity $ 54,974 $ 49,015
========================
</TABLE>
<PAGE> 5
MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------------------
1996 1995 1996 1995
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Interest Income
Loans $ 888 $ 776 $ 2,545 2,203
Securities available for sale 178 87 454 242
Federal funds sold 23 40 87 70
-----------------------------------------------------------
Total interest income 1,089 903 3,086 2,515
Interest Expense
Deposits 422 401 1,249 1,044
Long term debt -- -- 3 3
-----------------------------------------------------------
Total 422 401 1,252 1,047
-----------------------------------------------------------
Net interest income 667 502 1,834 1,468
Provision for possible credit losses 21 6 41 22
-----------------------------------------------------------
Net interest income after provision for possible credit losses 646 496 1,793 1,446
-----------------------------------------------------------
Non-interest income
Service charges on deposit accounts 91 79 266 209
Origination fees and gains on loans sold 66 86 178 216
Loss on securities sales (10) (11) --
Other 31 20 85 77
-----------------------------------------------------------
Total non-interest income 178 185 518 502
-----------------------------------------------------------
Non-interest income
Salaries and employee benefits 340 310 983 917
Occupancy and equipment 118 99 334 318
Other 255 221 704 663
-----------------------------------------------------------
Total non-interest expenses 713 630 2,021 1,898
-----------------------------------------------------------
Income before income taxes 111 51 290 50
Income taxes 43 11 113 20
-----------------------------------------------------------
Net income $ 68 $ 40 $ 177 $ 30
===========================================================
Per share data:
Primary:
Average adjusted Common shares outstanding 704,398 644,043 661,034 586,904
Net income $ 0.10 $ 0.06 $ 0.27 $ 0.05
Fully diluted:
Average adjusted Common shares outstanding 762,997 692,459 719,633 635,320
Net income $ 0.09 $ 0.06 $ 0.25 $ 0.05
</TABLE>
<PAGE> 6
MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1996 1995
(in thousands)
<S> <C> <C>
Net income (loss) $ 177 $ 30
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible credit losses 21 6
Depreciation 192 194
Gains on sales of securities available for sale 11 --
Amortization, net of accretion 6 28
Deferred Federal income tax
Gain on loans sold (60) (111)
Originations of loans held for sale (8,491) (8,656)
Proceeds from sales of loans 8,783 8,815
Other (74) (203)
----------------------
Net cash provided by (used in) operating activities 565 103
----------------------
Cash Flows from Investing Activities
Net (increase) decrease in Federal funds sold 1,700 (2,550)
Purchase of securities available for sale (9,290) (3,354)
Poceeds from maturities and sales of securities available for sale 5,343 1,700
Increase in loans, net of principal collections (4,655) (3,368)
Additions to premises and equipment (21) (560)
----------------------
Net cash used in investing activities (6,923) (8,132)
----------------------
Cash Flows from Financing
Net increase in deposits 5,846 9,033
Repayment of short-term borrowings -- (575)
Repayment of long-term debt -- (1)
Redeemable stock sold -- 430
Common stock sold 7 1,005
----------------------
Net cash provided by financing activities 5,853 9,892
----------------------
Net increase (decrease) in cash $ (505) $ 1,863
Cash and Due from Banks
Beginning of period 4,346 1,343
----------------------
End of period $ 3,841 $ 3,206
======================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest Paid $ 1,203 $ 992
Income Taxes Paid $ 60 $ --
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Increase (decrease) in fair value of securities available for sale,
net of deferred tax -81 23
</TABLE>
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Mountain Bank
Holding Company (the Company) and its wholly owned subsidiaries, Mt. Rainier
National Bank (the Bank), and Mountain Real Estate Holdings, Inc. The
consolidated financial statements have been prepared in conformity with
generally accepted accounting principles and with general practice within the
banking industry. Significant intercompany transactions and amounts have been
eliminated.
The consolidated balance sheet at September 30, 1996 and the consolidated
statements of income for the nine months ended September 30, 1996 and 1995 and
the consolidated statements of cash flows for the nine months ended September
30, 1996 and 1995 are unaudited, but, in the opinion of the Company, reflect all
adjustments necessary for a fair presentation. Reference is hereby made to the
notes to consolidated financial statements contained in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1995. The results of
operations for the nine months ended September 30, 1996 are not necessarily
indicative of the results which may be obtained for the full year ending
December 31, 1996.
NOTE 2 - EARNINGS PER COMMON SHARE
Primary earnings per share is based on the average number of common shares
outstanding, assuming no dilution, with the elimination of interest accrued on
redeemable stock. Fully diluted earnings per common share is computed assuming
the exercise of stock options.
NOTE 3 - REDEEMABLE STOCK
On June 25, 1995, the Company sold 140,000 shares of its common stock at a total
offering price of $1,400,000 ($10.00 per share). In March it was discovered that
42,958 shares in this offering had been sold to purchasers who were not existing
shareholders. As a result, the Company had a potential contingent liability for
the sale of unregistered securities totaling $429,580, plus interest at 8% from
the date of sale. The Company extended an offer to each purchaser who was not an
existing shareholder the right of recission to refund the amount paid for the
stock plus interest from the date of payment. All of these purchasers were given
fourteen days to rescind. The expiration date of the recission period was
September 17. As of September 30, 1996 the recission offer expired with no
purchasers accepting the offer therefore, the redeemable stock has been
reclassified as outstanding on the September 30, 1996 Consolidated Balance
Sheets.
<PAGE> 8
THE COMPOSITION OF THE LOAN PORTFOLIO IS SUMMARIZED AS FOLLOWS:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 DECEMBER 31, 1995 SEPTEMBER 30. 1995
-------------------------------------------------------------------
PERCENT PERCENT PERCENT
OF TOTAL OF TOTAL OF TOTAL
AMOUNTS LOANS AMOUNTS LOANS AMOUNTS LOANS
-------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial and agricultural $11,469 32.03% $13,622 44.18% $10,068 33.93%
Real Estate:
Construction 2,764 7.72% 1,847 5.99% 1,898 6.40%
Mortgage 16,781 46.86% 11,196 36.31% 13,678 46.10%
Consumer 4,798 13.40% 4,169 13.52% 4,027 13.57%
-------------------------------------------------------------------
Total loans $35,812 100.00% $30,834 100.00% $29,671 100.00%
===================================================================
</TABLE>
INVESTMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
SEPT. 30 DECEMBER 31, DOLLAR PERCENTAGE
1996 1995 CHANGE CHANGE
-------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C>
US Treasury securities $ 3,089 $ 3,644 $ (555) -15.23%
US Government and agency
securities 6,013 2,264 3,749 165.59%
Mortgage Backed Securities 1,480 -- 1,480 100.00%
Corporate bonds 621 1,490 (869) -58.32%
Municipal bonds 352 352 -- 0.00%
Equity Securities 364 360 4 1.11%
-------------------------------------------------
Total $11,919 $ 8,110 $ 3,809 46.97%
=================================================
</TABLE>
DEPOSIT LIABILITY COMPOSITION
<TABLE>
<CAPTION>
SEPT. 30, 1996 DECEMBER 31, 1995
------------------------------------------------------------------
PERCENT PERCENT
OF TOTAL OF TOTAL DOLLAR PERCENTAGE
AMOUNTS DEPOSITS AMOUNTS DEPOSITS CHANGE CHANGE
------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Non-interest bearing demand $ 7,144 14.42% $ 6,251 14.31% $ 893 14.29%
Interest-bearing demand 15,723 31.75% 13,060 29.90% 2,663 20.39%
Savings 7,669 15.48% 7,075 16.20% 594 8.40%
Certificates of deposit 13,175 26.60% 11,403 26.11% 1,772 15.54%
Certificates of deposit over $100,000 5,816 11.74% 5,892 13.49% (76) -1.29%
------------------------------------------------------------------
Total $49,527 100.00% $43,681 100.00 $ 5,846 13.38%
==================================================================
</TABLE>
<PAGE> 9
SUMMARY OF LOAN LOSS EXPERIENCE AND RELATED INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS TWELVE MONTHS NINE MONTHS
ENDED ENDED ENDED
SEPT. 30 DECEMBER 31, SEPT. 30
1996 1995 1995
-----------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Allowance for loan losses
(beginning of period) $ 33 $ 318 $ 318
Loans charged off:
Commercial and agricultural (16)
Real estate construction
Real estate mortgage
Consumer (8)
-----------------------------------------
Total (8) (16) --
-----------------------------------------
Recoveries of loans previously
charged off:
Commercial and agricultural
Real estate construction
Real estate mortgage
Consumer
-----------------------------------------
Total
-----------------------------------------
Net loans charged off (8) (16) --
Provision for possible loan losses 41 32 22
-----------------------------------------
Allowance for possible loan losses
(end of period) $ 367 $ 334 $ 340
=========================================
Loans outstanding:
Average $ 32,912 $ 27,511 $ 26,726
End of period 35,501 30,834 29,103
Ratio of allowance for loan loss
to total loans outstanding
Average 1.12% 1.21% 1.27%
End of period 1.03% 1.08% 1.17%
Ratio of net charge-offs to average
loans outstanding -0.02% -0.06% 0.00%
Percent of categories to total end of
period loans:
Commercial and agricultural 32.03% 44.18% 33.93%
Real estate construction 7.72% 5.99% 6.40%
Real estate mortgage 46.86% 36.31% 46.10%
Consumer 13.40% 13.52% 13.57%
-----------------------------------------
Total loans 100.00% 100.00% 100.00%
=========================================
</TABLE>
<PAGE> 10
DISTRIBUTION OF AVERAGE ASSETS, LIABILITY AND SHAREHOLDERS' EQUITY
AND INTEREST RATES
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPT. 30,
----------------------------------------------------------------------------------
1996 1995
ANNUALIZED ANNUALIZED
AVERAGE INT EARNED/ YIELD/ AVERAGE INT EARNED/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
----------------------------------------------------------------------------------
Assets (IN THOUSANDS)
Interest earning assets:
<S> <C> <C> <C> <C> <C> <C>
Loans $ 33,089 $ 2,545 10.26% $ 26,923 $ 2,175 10.77%
Investments 10,354 454 5.85% 6,097 242 5.29%
Federal funds sold 2,034 87 5.70% 1,480 69 6.22%
------------------------- -----------------------
Total interest earning assets 45,477 3,086 9.05% 34,500 2,486 9.61%
------------------------- -----------------------
Non-interest earning assets:
Cash and due from banks 2,859 1,991
Premises and equipment 2,302 2,358
Other assets 415 380
Reserve for possible loan losses (346) (311)
-------- --------
Total assets $ 50,707 $ 38,918
======== ========
Liabilities and shareholders' equity
Interest bearing liabilities:
Interest bearing demand deposits $ 5,295 85 2.14% 4,298 77 2.39%
Savings 16,137 422 3.49% 11,470 305 3.55%
Certificates of deposit 12,284 507 5.50% 9,435 395 5.58%
Certificates of deposit over $100,000 5,653 234 5.52% 4,070 198 6.49%
------------------------- -----------------------
Total interest bearing deposits 39,369 1,248 4.23% 29,273 975 4.44%
------------------------- -----------------------
Federal funds purchased 19 1 340 28 10.98%
Other borrowings 60 3 55 3 7.27%
------------------------- -----------------------
Total interest bearing liabilities 39,448 1,252 29,668 1,006
------------------------- -----------------------
Non-interest bearing liabilities:
Demand deposits 5,953 5,183
Other liabilities 261 152
Redeemable stock -- 154
Shareholders' equity 5,045 4,761
-------- --------
$ 50,707 $ 39,918
======== ========
Net interest income $ 1,834 $ 1,480
======== ========
Net interest margin 5.38% 5.72%
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<CIK> 0000898018
<NAME> MOUNTAIN BANK HOLDING COMPANY
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,841
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,125
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,919
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 35,501
<ALLOWANCE> 367
<TOTAL-ASSETS> 54,974
<DEPOSITS> 49,527
<SHORT-TERM> 0
<LIABILITIES-OTHER> 284
<LONG-TERM> 47
704
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 54,974
<INTEREST-LOAN> 2,545
<INTEREST-INVEST> 454
<INTEREST-OTHER> 87
<INTEREST-TOTAL> 3,086
<INTEREST-DEPOSIT> 1,249
<INTEREST-EXPENSE> 1,252
<INTEREST-INCOME-NET> 1,834
<LOAN-LOSSES> 41
<SECURITIES-GAINS> (11)
<EXPENSE-OTHER> 2,021
<INCOME-PRETAX> 290
<INCOME-PRE-EXTRAORDINARY> 290
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 177
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
<YIELD-ACTUAL> 5.38
<LOANS-NON> 25
<LOANS-PAST> 1
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 8
<ALLOWANCE-OPEN> 334
<CHARGE-OFFS> (8)
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 367
<ALLOWANCE-DOMESTIC> 367
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
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