<PAGE>
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 June 30, 1998
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
For the transition period from _____________ to ______________
Commission File Number : 0-28394
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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
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State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 807,482 (June 30, 1998)
-----------------------------
Transitional Small Business Disclosure Format: Yes X No
----- -----
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following Consolidated Financial Statements are presented for the
Registrant, Mountain Bank Holding Company, and its wholly owned subsidiaries,
Mt. Rainier National Bank and Mountain Real Estate Holdings, Inc.
PAGE:
1. Consolidated Balance Sheet for June 30, 1998 and December 31, 1997
2. Consolidated Statements of Income for the three months and six months ended
June 30, 1998 and 1997
3. Consolidated Statements of Cash Flows for the six months ended June 30,
1998 and 1997.
4. Notes to consolidated financial statements.
PART II - OTHER INFORMATION
5. Item 6 Exhibits and Reports on Form 8-K
Signatures
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MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
----------------------
(IN THOUSANDS)
<S> <C> <C>
Assets
Cash and due from banks $ 3,579 $ 2,827
Federal funds sold and interest bearing deposits in banks 4,105 2,448
Securities available for sale 24,620 22,962
Loans held for sale 463 332
Loans 43,324 42,577
Less allowance for possible credit losses (628) (555)
----------------------
Loans, net 42,696 42,022
----------------------
Premises and equipment 2,643 2,483
Accrued interest receivable and other assets 954 791
----------------------
Total assets $79,060 $ 73,865
----------------------
----------------------
Liabilities
Deposits:
Non-interest bearing $ 9,632 $ 8,991
Savings and interest-bearing demand 35,179 31,643
Time 25,711 25,387
----------------------
Total deposits 70,522 66,021
----------------------
Long-term debt 44 45
Other borrowed money 400 -
Accrued interest and other liabilities 597 648
----------------------
Total liabilities 71,563 66,714
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----------------------
Shareholders' Equity
Common stock (par value $1); authorized 5,000,000
shares; issued and outstanding: 1998 - 807,482 shares;
1997 - 803,374 shares 807 803
Paid-in capital 5,104 5,058
Retained earnings 1,525 1,227
Accumulated other comprehensive income 61 63
----------------------
Total shareholders' equity 7,497 7,151
----------------------
Total liabilities and shareholders' equity $79,060 $73,865
----------------------
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</TABLE>
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<PAGE>
MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------------------------------------------------
1998 1997 1998 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA) (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Interest Income
Loans $ 1,101 $ 1,002 $ 2,164 $ 1,944
Securities available for sale 351 309 699 555
Federal funds sold 80 21 134 87
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Total interest income 1,532 1,332 2,997 2,586
Interest Expense
Deposits 626 527 1,236 1,044
Long Term Debt 1 2 2 2
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Total Interest Expense 627 529 1,238 1,046
Net interest income 905 803 1,759 1,540
Provision for credit losses (39) (24) (78) (100)
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Net interest income after provision for credit losses 866 779 1,681 1,440
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Noninterest income
Service charges on deposit accounts 98 93 190 178
Origination fees and gains on loans sold 78 54 150 97
Gain (loss) on sales of securities available for sale 12 (5) 13 (12)
Other 45 37 84 65
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Total noninterest income 233 179 437 328
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Noninterest expense
Salaries and employee benefits 401 359 803 709
Occupancy and equipment 114 113 233 221
Other 324 253 614 501
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Total noninterest expenses 839 725 1,650 1,431
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Income before income taxes 260 233 468 337
Income taxes (93) (87) (171) (132)
---------------------------------------------------------------
Net income $ 167 $ 146 $ 297 $ 205
Other comprehensive income, net of tax:
Unrealized holding gains (losses) on securities $ 2 $ 88 $ 2 $ (5)
arising during the period
Comprehensive income $ 169 $ 234 $ 299 $ 200
---------------------------------------------------------------
---------------------------------------------------------------
Per share data:
Basic earnings per share $ 0.21 $ 0.21 $ 0.37 $ 0.29
Diluted earnings per share $ 0.20 $ 0.19 $ 0.35 $ 0.27
Weighted average number of common shares outstanding,
including dilutive stock options 856,349 752,110 855,953 751,793
Return on average assets 0.87% 0.91% 0.78% 0.64%
</TABLE>
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<PAGE>
MOUNTAIN BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1998 1997
(IN THOUSANDS)
<S> <C> <C>
Net income $ 297 $ 205
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for credit losses 78 100
Depreciation 141 135
(Gain)/loss on sales of securities available for sale (13) 12
Amortization, net of accretion 14 (1)
Gain on loans sold (150) (97)
Originations of loans held for sale (6,916) (3,974)
Proceeds from sales of loans 6,935 3,919
Other (211) (244)
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Net cash provided by operating activities 175 55
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Cash Flows from Investing Activities
Net (increase) decrease in Federal funds sold and interest bearing deposits in banks (1,657) 4,000
Purchase of securities available for sale (8,161) (11,475)
Proceeds from maturities and sales of securities available for sale 6,497 5,502
Increase in loans, net of principal collections (752) (1,313)
Additions to premises and equipment (305) (30)
Proceeds from disposition of premises and/or equipment 4 -
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Net cash used in investing activities (4,374) (3,316)
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Cash Flows from Financing
Net increase in deposits 4,501 813
Increase in other borrowed money 400 1,800
Common stock sold 50 19
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Net cash provided by financing activities 4,951 2,632
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Net increase (decrease) in cash $ 752 $ (629)
Cash and Due from Banks
Beginning of period 2,827 3,651
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End of period $ 3,579 $ 3,022
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest Paid $ 1,236 $ 1,059
Income Taxes Paid $ 171 $ 205
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Other comprehensive income 2 (5)
</TABLE>
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<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited 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 for interim financial information and
with general practice within the banking industry. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. Significant
intercompany transactions and amounts have been eliminated. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation are reflected in the financial statements.
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, 1997. The results of operations for the six months ended June 30,
1998, are not necessarily indicative of the results which may be obtained for
the full year ending December 31, 1998.
NOTE 2 - EARNINGS PER COMMON SHARE
Basic earnings per share is based on the average number of common shares
outstanding, assuming no dilution. Diluted earnings per common share is
computed assuming the exercise of stock options.
NOTE 3 - YEAR 2000
Mountain Bank Holding Company has initiated a program to prepare the Company's
computer systems and applications for the year 2000. The Board of Directors has
established the time frame for year 2000 compliance company-wide. The Year 2000
committee has been working on this effort for several months. The Company is to
have all products, services and and supporting technical systems year 2000
compliant by second quarter 1999. The Company's processing related to loans,
deposits, general ledger and other financial applications are provided by an
outside service bureau. The service bureau has advised the Company that it has
committed resources to perform and test any changes to its software to ensure
Year 2000 compatibility by December 31, 1998. The testing and conversion of
systems applications is not expected to result in a material cost to the
Company.
The Company is also evaluating the potential Year 2000 technology problems
related to entities with which it has significant relationships. Such
evaluation is expected to be completed by September 30, 1998.
NOTE 4 - ACCOUNTING CHANGE
In the quarter ended March 31, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income (SFAS No. 130),
which was effective for years beginning after December 15, 1997. SFAS No. 130
requires that an entity report and display comprehensive income with the same
prominence as other financial statements. Comprehensive income is defined as
the change in equity of a business enterprise during a period from transactions
and other events and circumstances from nonowner sources. It includes all
changes in equity during a period except those resulting from investments by
owners and distributions to owners. With regard to the Company, currently the
only items of comprehensive income are changes in the fair value of its
available for sale securities portfolio. Accordingly, changes in the value of
that portfolio during the period, net of tax, are reported as "Other
Comprehensive Income" in the accompanying Consolidated Statement of Income and
Comprehensive Income. Changes in the fair value of the available for sale
securities portfolio for the six months ended June 30, 1997, which were
previously reported in the Consolidated Statement of Shareholders' Equity, have
been reclassified and retroactively reported as Other Comprehensive Income. The
cumulative adjustment, net of taxes, to record the available for sale securities
portfolio at fair value at period end was previously reported as "Net unrealized
gain (loss) on securities available for sale, net of tax" in the Company's
consolidated balance sheets. That cumulative adjustment is now termed
"Accumulated other comprehensive income". There was no effect on previously
reported net income as a result of this reporting change.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
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: July 24, 1998 /s/ Roy T. Brooks
--------------------------------------------
Roy T. Brooks, President and Chief
Executive Officer
Dated: July 24, 1998 /s/ Sheila Brumley
--------------------------------------------
Sheila Brumley, Chief Financial Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,579
<INT-BEARING-DEPOSITS> 4,105
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,620
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 43,324
<ALLOWANCE> 628
<TOTAL-ASSETS> 79,060
<DEPOSITS> 70,522
<SHORT-TERM> 400
<LIABILITIES-OTHER> 597
<LONG-TERM> 44
0
0
<COMMON> 807
<OTHER-SE> 6,690
<TOTAL-LIABILITIES-AND-EQUITY> 79,060
<INTEREST-LOAN> 2,164
<INTEREST-INVEST> 699
<INTEREST-OTHER> 134
<INTEREST-TOTAL> 2997
<INTEREST-DEPOSIT> 1,236
<INTEREST-EXPENSE> 1,238
<INTEREST-INCOME-NET> 1,759
<LOAN-LOSSES> 78
<SECURITIES-GAINS> 13
<EXPENSE-OTHER> 1,650
<INCOME-PRETAX> 468
<INCOME-PRE-EXTRAORDINARY> 468
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 297
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0.35
<YIELD-ACTUAL> 5.02
<LOANS-NON> 499
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 555
<CHARGE-OFFS> 5
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 628
<ALLOWANCE-DOMESTIC> 628
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
